[Congressional Record Volume 144, Number 93 (Tuesday, July 14, 1998)]
[House]
[Pages H5428-H5437]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   HOMEOWNERS PROTECTION ACT OF 1998

  Mr. LEACH. Mr. Speaker, I move to suspend the rules and pass the 
Senate bill (S. 318) to require automatic cancellation and notice of 
cancellation rights with respect to private mortgage insurance which is 
required as a condition for entering into a residential mortgage 
transaction, to abolish the Thrift Depositor Protection Oversight 
Board, and for other purposes, as amended.
  The Clerk read as follows:

                                 S. 318

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Homeowners 
     Protection Act of 1998''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Termination of private mortgage insurance.
Sec. 4. Disclosure requirements.
Sec. 5. Notification upon cancellation or termination.
Sec. 6. Disclosure requirements for lender paid mortgage insurance.
Sec. 7. Fees for disclosures.
Sec. 8. Civil liability.
Sec. 9. Effect on other laws and agreements.
Sec. 10. Enforcement.
Sec. 11. Construction
Sec. 12. Effective date.
Sec. 13. Abolishment of the Thrift Depositor Protection Oversight 
              Board.

     SEC. 2. DEFINITIONS.

       In this Act, the following definitions shall apply:
       (1) Adjustable rate mortgage.--The term ``adjustable rate 
     mortgage'' means a residential mortgage that has an interest 
     rate that is subject to change.
       (2) Cancellation date.--The term ``cancellation date'' 
     means--
       (A) with respect to a fixed rate mortgage, at the option of 
     the mortgagor, the date on which the principal balance of the 
     mortgage--
       (i) based solely on the initial amortization schedule for 
     that mortgage, and irrespective of the outstanding balance 
     for that mortgage on that date, is first scheduled to reach 
     80 percent of the original value of the property securing the 
     loan; or
       (ii) based solely on actual payments, reaches 80 percent of 
     the original value of the property securing the loan; and
       (B) with respect to an adjustable rate mortgage, at the 
     option of the mortgagor, the date on which the principal 
     balance of the mortgage--
       (i) based solely on amortization schedules for that 
     mortgage, and irrespective of the outstanding balance for 
     that mortgage on that date, is first scheduled to reach 80 
     percent of the original value of the property securing the 
     loan; or
       (ii) based solely on actual payments, first reaches 80 
     percent of the original value of the property securing the 
     loan.
       (3) Fixed rate mortgage.--The term ``fixed rate mortgage'' 
     means a residential mortgage that has an interest rate that 
     is not subject to change.
       (4) Good payment history.--The term ``good payment 
     history'' means, with respect to a mortgagor, that the 
     mortgagor has not--
       (A) made a mortgage payment that was 60 days or longer past 
     due during the 12-month period beginning 24 months before the 
     date on which the mortgage reaches the cancellation date; or
       (B) made a mortgage payment that was 30 days or longer past 
     due during the 12-month period preceding the date on which 
     the mortgage reaches the cancellation date.
       (5) Initial amortization schedule.--The term ``initial 
     amortization schedule'' means a schedule established at the 
     time at which a residential mortgage transaction is 
     consummated with respect to a fixed rate mortgage, showing--
       (A) the amount of principal and interest that is due at 
     regular intervals to retire the principal balance and accrued 
     interest over the amortization period of the loan; and
       (B) the unpaid principal balance of the loan after each 
     scheduled payment is made.
       (6) Mortgage insurance.--The term ``mortgage insurance'' 
     means insurance, including any mortgage guaranty insurance, 
     against the nonpayment of, or default on, an individual 
     mortgage or loan involved in a residential mortgage 
     transaction.
       (7) Mortgage insurer.--The term ``mortgage insurer'' means 
     a provider of private mortgage insurance, as described in 
     this Act, that is authorized to transact such business in the 
     State in which the provider is transacting such business.
       (8) Mortgagee.--The term ``mortgagee'' means the holder of 
     a residential mortgage at the time at which that mortgage 
     transaction is consummated.
       (9) Mortgagor.--The term ``mortgagor'' means the original 
     borrower under a residential mortgage or his or her 
     successors or assignees.
       (10) Original value.--The term ``original value'', with 
     respect to a residential mortgage, means the lesser of the 
     sales price of the property securing the mortgage, as 
     reflected in the contract, or the appraised value at the time 
     at which the subject residential mortgage transaction was 
     consummated.
       (11) Private mortgage insurance.--The term ``private 
     mortgage insurance'' means mortgage insurance other than 
     mortgage insurance made available under the National Housing 
     Act, title 38 of the United States Code, or title V of the 
     Housing Act of 1949.
       (12) Residential mortgage.--The term ``residential 
     mortgage'' means a mortgage, loan, or other evidence of a 
     security interest created with respect to a single-family 
     dwelling that is the primary residence of the mortgagor.
       (13) Residential mortgage transaction.--The term 
     ``residential mortgage transaction'' means a transaction 
     consummated on or after the date that is 1 year after the 
     date of enactment of this Act, in which a mortgage, deed of 
     trust, purchase money security interest arising under an 
     installment sales contract, or equivalent consensual security 
     interest is created or retained against a single-family 
     dwelling that is the primary residence of the mortgagor to 
     finance the acquisition, initial construction, or refinancing 
     of that dwelling.
       (14) Servicer.--The term ``servicer'' has the same meaning 
     as in section 6(i)(2) of the Real Estate Settlement 
     Procedures Act of 1974, with respect to a residential 
     mortgage.
       (15) Single-family dwelling.--The term ``single-family 
     dwelling'' means a residence consisting of 1 family dwelling 
     unit.
       (16) Termination date.--The term ``termination date'' 
     means--
       (A) with respect to a fixed rate mortgage, the date on 
     which the principal balance of the mortgage, based solely on 
     the initial amortization schedule for that mortgage, and 
     irrespective of the outstanding balance for that mortgage on 
     that date, is first scheduled to reach 78 percent of the 
     original value of the property securing the loan; and
       (B) with respect to an adjustable rate mortgage, the date 
     on which the principal balance of the mortgage, based solely 
     on amortization schedules for that mortgage, and irrespective 
     of the outstanding balance for that mortgage on that date, is 
     first scheduled to reach 78 percent of the original value of 
     the property securing the loan.

     SEC. 3. TERMINATION OF PRIVATE MORTGAGE INSURANCE.

       (a) Borrower Cancellation.--A requirement for private 
     mortgage insurance in connection with a residential mortgage 
     transaction shall be canceled on the cancellation date, if 
     the mortgagor--
       (1) submits a request in writing to the servicer that 
     cancellation be initiated;
       (2) has a good payment history with respect to the 
     residential mortgage; and
       (3) has satisfied any requirement of the holder of the 
     mortgage (as of the date of a request under paragraph (1)) 
     for--
       (A) evidence (of a type established in advance and made 
     known to the mortgagor by the servicer promptly upon receipt 
     of a request under paragraph (1)) that the value of the 
     property securing the mortgage has not declined below the 
     original value of the property; and
       (B) certification that the equity of the mortgagor in the 
     residence securing the

[[Page H5429]]

     mortgage is unencumbered by a subordinate lien.
       (b) Automatic Termination.--A requirement for private 
     mortgage insurance in connection with a residential mortgage 
     transaction shall terminate with respect to payments for that 
     mortgage insurance made by the mortgagor--
       (1) on the termination date if, on that date, the mortgagor 
     is current on the payments required by the terms of the 
     residential mortgage transaction; or
       (2) on the date after the termination date on which the 
     mortgagor becomes current on the payments required by the 
     terms of the residential mortgage transaction.
       (c) Final Termination.--If a requirement for private 
     mortgage insurance is not otherwise canceled or terminated in 
     accordance with subsection (a) or (b), in no case may such a 
     requirement be imposed beyond the first day of the month 
     immediately following the date that is the midpoint of the 
     amortization period of the loan if the mortgagor is current 
     on the payments required by the terms of the mortgage.
       (d) No Further Payments.--No payments or premiums may be 
     required from the mortgagor in connection with a private 
     mortgage insurance requirement terminated or canceled under 
     this section--
       (1) in the case of cancellation under subsection (a), more 
     than 30 days after the later of--
       (A) the date on which a request under subsection (a)(1) is 
     received; or
       (B) the date on which the mortgagor satisfies any evidence 
     and certification requirements under subsection (a)(3);
       (2) in the case of termination under subsection (b), more 
     than 30 days after the termination date or the date referred 
     to in subsection (b)(2), as applicable; and
       (3) in the case of termination under subsection (c), more 
     than 30 days after the final termination date established 
     under that subsection.
       (e) Return of Unearned Premiums.--
       (1) In general.--Not later than 45 days after the 
     termination or cancellation of a private mortgage insurance 
     requirement under this section, all unearned premiums for 
     private mortgage insurance shall be returned to the mortgagor 
     by the servicer.
       (2) Transfer of funds to servicer.--Not later than 30 days 
     after notification by the servicer of termination or 
     cancellation of private mortgage insurance under this Act 
     with respect to a mortgagor, a mortgage insurer that is in 
     possession of any unearned premiums of that mortgagor shall 
     transfer to the servicer of the subject mortgage an amount 
     equal to the amount of the unearned premiums for repayment in 
     accordance with paragraph (1).
       (f) Exceptions for High Risk Loans.--
       (1) In general.--The termination and cancellation 
     provisions in subsections (a) and (b) do not apply to any 
     residential mortgage or mortgage transaction that, at the 
     time at which the residential mortgage transaction is 
     consummated, has high risks associated with the extension of 
     the loan--
       (A) as determined in accordance with guidelines published 
     by the Federal National Mortgage Association and the Federal 
     Home Loan Mortgage Corporation, in the case of a mortgage 
     loan with an original principal balance that does not exceed 
     the applicable annual conforming loan limit for the secondary 
     market established pursuant to section 305(a)(2) of the 
     Federal Home Loan Mortgage Corporation Act, so as to require 
     the imposition or continuation of a private mortgage 
     insurance requirement beyond the terms specified in 
     subsection (a) or (b) of section 3; or
       (B) as determined by the mortgagee in the case of any other 
     mortgage, except that termination shall occur--
       (i) with respect to a fixed rate mortgage, on the date on 
     which the principal balance of the mortgage, based solely on 
     the initial amortization schedule for that mortgage, and 
     irrespective of the outstanding balance for that mortgage on 
     that date, is first scheduled to reach 77 percent of the 
     original value of the property securing the loan; and
       (ii) with respect to an adjustable rate mortgage, on the 
     date on which the principal balance of the mortgage, based 
     solely on amortization schedules for that mortgage, and 
     irrespective of the outstanding balance for that mortgage on 
     that date, is first scheduled to reach 77 percent of the 
     original value of the property securing the loan.
       (2) Termination at midpoint.--A private mortgage insurance 
     requirement in connection with a residential mortgage or 
     mortgage transaction described in paragraph (1) shall 
     terminate in accordance with subsection (c).
       (3) Rule of construction.--Nothing in this subsection may 
     be construed to require a mortgage or mortgage transaction 
     described in paragraph (1)(A) to be purchased by the Federal 
     National Mortgage Association or the Federal Home Loan 
     Mortgage Corporation.
       (4) Gao report.--Not later than 2 years after the date of 
     the enactment of this Act, the Comptroller General of the 
     United States shall submit to the Congress a report 
     describing the volume and characteristics of residential 
     mortgages and residential mortgage transactions that, 
     pursuant to paragraph (1) of this subsection, are exempt from 
     the application of subsections (a) and (b). The report 
     shall--
       (A) determine the number or volume of such mortgages and 
     transactions compared to residential mortgages and 
     residential mortgage transactions that are not classified as 
     high-risk for purposes of paragraph (1); and
       (B) identify the characteristics of such mortgages and 
     transactions that result in their classification (for 
     purposes of paragraph (1)) as having high risks associated 
     with the extension of the loan and describe such 
     characteristics, including--
       (i) the income levels and races of the mortgagors involved;
       (ii) the amount of the downpayments involved and the 
     downpayments expressed as percentages of the acquisition 
     costs of the properties involved;
       (iii) the types and locations of the properties involved;
       (iv) the mortgage principal amounts; and
       (v) any other characteristics of such mortgages and 
     transactions that may contribute to their classification as 
     high risk for purposes of paragraph (1), including whether 
     such mortgages are purchase-money mortgages or refinancings 
     and whether and to what extent such loans are low-
     documentation loans.

     SEC. 4. DISCLOSURE REQUIREMENTS.

       (a) Disclosures for New Mortgages at Time of Transaction.--
       (1) Disclosures for non-exempted transactions.--In any case 
     in which private mortgage insurance is required in connection 
     with a residential mortgage or mortgage transaction (other 
     than a mortgage or mortgage transaction described in section 
     3(f)(1)), at the time at which the transaction is 
     consummated, the mortgagee shall provide to the mortgagor--
       (A) if the transaction relates to a fixed rate mortgage--
       (i) a written initial amortization schedule; and
       (ii) written notice--

       (I) that the mortgagor may cancel the requirement in 
     accordance with section 3(a) of this Act indicating the date 
     on which the mortgagor may request cancellation, based solely 
     on the initial amortization schedule;
       (II) that the mortgagor may request cancellation in 
     accordance with section 3(a) of this Act earlier than 
     provided for in the initial amortization schedule, based on 
     actual payments;
       (III) that the requirement for private mortgage insurance 
     will automatically terminate on the termination date in 
     accordance with section 3(b) of this Act, and what that 
     termination date is with respect to that mortgage; and
       (IV) that there are exemptions to the right to cancellation 
     and automatic termination of a requirement for private 
     mortgage insurance in accordance with section 3(f) of this 
     Act, and whether such an exemption applies at that time to 
     that transaction; and

       (B) if the transaction relates to an adjustable rate 
     mortgage, a written notice that--
       (i) the mortgagor may cancel the requirement in accordance 
     with section 3(a) of this Act on the cancellation date, and 
     that the servicer will notify the mortgagor when the 
     cancellation date is reached;
       (ii) the requirement for private mortgage insurance will 
     automatically terminate on the termination date, and that on 
     the termination date, the mortgagor will be notified of the 
     termination or that the requirement will be terminated as 
     soon as the mortgagor is current on loan payments; and
       (iii) there are exemptions to the right of cancellation and 
     automatic termination of a requirement for private mortgage 
     insurance in accordance with section 3(f) of this Act, and 
     whether such an exemption applies at that time to that 
     transaction.
       (2) Disclosures for excepted transactions.--In the case of 
     a mortgage or mortgage transaction described in section 
     3(f)(1), at the time at which the transaction is consummated, 
     the mortgagee shall provide written notice to the mortgagor 
     that in no case may private mortgage insurance be required 
     beyond the date that is the midpoint of the amortization 
     period of the loan, if the mortgagor is current on payments 
     required by the terms of the residential mortgage.
       (3) Annual disclosures.--If private mortgage insurance is 
     required in connection with a residential mortgage 
     transaction, the servicer shall disclose to the mortgagor in 
     each such transaction in an annual written statement--
       (A) the rights of the mortgagor under this Act to 
     cancellation or termination of the private mortgage insurance 
     requirement; and
       (B) an address and telephone number that the mortgagor may 
     use to contact the servicer to determine whether the 
     mortgagor may cancel the private mortgage insurance.
       (4) Applicability.--Paragraphs (1) through (3) shall apply 
     with respect to each residential mortgage transaction 
     consummated on or after the date that is 1 year after the 
     date of enactment of this Act.
       (b) Disclosures for Existing Mortgages.--If private 
     mortgage insurance was required in connection with a 
     residential mortgage entered into at any time before the 
     effective date of this Act, the servicer shall disclose to 
     the mortgagor in each such transaction in an annual written 
     statement--
       (1) that the private mortgage insurance may, under certain 
     circumstances, be canceled by the mortgagor (with the consent 
     of the mortgagee or in accordance with applicable State law); 
     and
       (2) an address and telephone number that the mortgagor may 
     use to contact the servicer to determine whether the 
     mortgagor may cancel the private mortgage insurance.
       (c) Inclusion in Other Annual Notices.--The information and 
     disclosures required

[[Page H5430]]

     under subsection (b) and paragraphs (1)(B) and (3) of 
     subsection (a) may be provided on the annual disclosure 
     relating to the escrow account made as required under the 
     Real Estate Settlement Procedures Act of 1974, or as part of 
     the annual disclosure of interest payments made pursuant to 
     Internal Revenue Service regulations, and on a form 
     promulgated by the Internal Revenue Service for that purpose.
       (d) Standardized Forms.--The mortgagee or servicer may use 
     standardized forms for the provision of disclosures required 
     under this section.

     SEC. 5. NOTIFICATION UPON CANCELLATION OR TERMINATION.

       (a) In General.--Not later than 30 days after the date of 
     cancellation or termination of a private mortgage insurance 
     requirement in accordance with this Act, the servicer shall 
     notify the mortgagor in writing--
       (1) that the private mortgage insurance has terminated and 
     that the mortgagor no longer has private mortgage insurance; 
     and
       (2) that no further premiums, payments, or other fees shall 
     be due or payable by the mortgagor in connection with the 
     private mortgage insurance.
       (b) Notice of Grounds.--
       (1) In general.--If a servicer determines that a mortgage 
     did not meet the requirements for termination or cancellation 
     of private mortgage insurance under subsection (a) or (b) of 
     section 3, the servicer shall provide written notice to the 
     mortgagor of the grounds relied on to make the determination 
     (including the results of any appraisal used to make the 
     determination).
       (2) Timing.--Notice required by paragraph (1) shall be 
     provided--
       (A) with respect to cancellation of private mortgage 
     insurance under section 3(a), not later than 30 days after 
     the later of--
       (i) the date on which a request is received under section 
     3(a)(1); or
       (ii) the date on which the mortgagor satisfies any evidence 
     and certification requirements under section 3(a)(3); and
       (B) with respect to termination of private mortgage 
     insurance under section 3(b), not later than 30 days after 
     the scheduled termination date.

     SEC. 6. DISCLOSURE REQUIREMENTS FOR LENDER PAID MORTGAGE 
                   INSURANCE.

       (a) Definitions.--For purposes of this section--
       (1) the term ``borrower paid mortgage insurance'' means 
     private mortgage insurance that is required in connection 
     with a residential mortgage transaction, payments for which 
     are made by the borrower;
       (2) the term ``lender paid mortgage insurance'' means 
     private mortgage insurance that is required in connection 
     with a residential mortgage transaction, payments for which 
     are made by a person other than the borrower; and
       (3) the term ``loan commitment'' means a prospective 
     mortgagee's written confirmation of its approval, including 
     any applicable closing conditions, of the application of a 
     prospective mortgagor for a residential mortgage loan.
       (b) Exclusion.--Sections 3 through 5 do not apply in the 
     case of lender paid mortgage insurance.
       (c) Notices to Mortgagor.--In the case of lender paid 
     mortgage insurance that is required in connection with a 
     residential mortgage or a residential mortgage transaction--
       (1) not later than the date on which a loan commitment is 
     made for the residential mortgage transaction, the 
     prospective mortgagee shall provide to the prospective 
     mortgagor a written notice--
       (A) that lender paid mortgage insurance differs from 
     borrower paid mortgage insurance, in that lender paid 
     mortgage insurance may not be canceled by the mortgagor, 
     while borrower paid mortgage insurance could be cancelable by 
     the mortgagor in accordance with section 3(a) of this Act, 
     and could automatically terminate on the termination date in 
     accordance with section 3(b) of this Act;
       (B) that lender paid mortgage insurance--
       (i) usually results in a residential mortgage having a 
     higher interest rate than it would in the case of borrower 
     paid mortgage insurance; and
       (ii) terminates only when the residential mortgage is 
     refinanced, paid off, or otherwise terminated; and
       (C) that lender paid mortgage insurance and borrower paid 
     mortgage insurance both have benefits and disadvantages, 
     including a generic analysis of the differing costs and 
     benefits of a residential mortgage in the case lender paid 
     mortgage insurance versus borrower paid mortgage insurance 
     over a 10-year period, assuming prevailing interest and 
     property appreciation rates;
       (D) that lender paid mortgage insurance may be tax-
     deductible for purposes of Federal income taxes, if the 
     mortgagor itemizes expenses for that purpose; and
       (2) not later than 30 days after the termination date that 
     would apply in the case of borrower paid mortgage insurance, 
     the servicer shall provide to the mortgagor a written notice 
     indicating that the mortgagor may wish to review financing 
     options that could eliminate the requirement for private 
     mortgage insurance in connection with the residential 
     mortgage.
       (d) Standard Forms.--The servicer of a residential mortgage 
     may develop and use a standardized form or forms for the 
     provision of notices to the mortgagor, as required under 
     subsection (c).

     SEC. 7. FEES FOR DISCLOSURES.

       No fee or other cost may be imposed on any mortgagor with 
     respect to the provision of any notice or information to the 
     mortgagor pursuant to this Act.

     SEC. 8. CIVIL LIABILITY.

       (a) In General.--Any servicer, mortgagee, or mortgage 
     insurer that violates a provision of this Act shall be liable 
     to each mortgagor to whom the violation relates for--
       (1) in the case of an action by an individual, or a class 
     action in which the liable party is not subject to section 
     10, any actual damages sustained by the mortgagor as a result 
     of the violation, including interest (at a rate determined by 
     the court) on the amount of actual damages, accruing from the 
     date on which the violation commences;
       (2) in the case of--
       (A) an action by an individual, such statutory damages as 
     the court may allow, not to exceed $2,000; and
       (B) in the case of a class action--
       (i) in which the liable party is subject to section 10, 
     such amount as the court may allow, except that the total 
     recovery under this subparagraph in any class action or 
     series of class actions arising out of the same violation by 
     the same liable party shall not exceed the lesser of $500,000 
     or 1 percent of the net worth of the liable party, as 
     determined by the court; and
       (ii) in which the liable party is not subject to section 
     10, such amount as the court may allow, not to exceed $1000 
     as to each member of the class, except that the total 
     recovery under this subparagraph in any class action or 
     series of class actions arising out of the same violation by 
     the same liable party shall not exceed the lesser of $500,000 
     or 1 percent of the gross revenues of the liable party, as 
     determined by the court;
       (3) costs of the action; and
       (4) reasonable attorney fees, as determined by the court.
       (b) Timing of actions.--No action may be brought by a 
     mortgagor under subsection (a) later than 2 years after the 
     date of the discovery of the violation that is the subject of 
     the action.
       (c) Limitations on Liability.--
       (1) In general.--With respect to a residential mortgage 
     transaction, the failure of a servicer to comply with the 
     requirements of this Act due to the failure of a mortgage 
     insurer or a mortgagee to comply with the requirements of 
     this Act, shall not be construed to be a violation of this 
     Act by the servicer.
       (2) Rule of construction.--Nothing in paragraph (1) shall 
     be construed to impose any additional requirement or 
     liability on a mortgage insurer, a mortgagee, or a holder of 
     a residential mortgage.

     SEC. 9. EFFECT ON OTHER LAWS AND AGREEMENTS.

       (a) Effect on State Law.--
       (1) In general.--With respect to any residential mortgage 
     or residential mortgage transaction consummated after the 
     effective date of this Act, and except as provided in 
     paragraph (2), the provisions of this Act shall supersede any 
     provisions of the law of any State relating to requirements 
     for obtaining or maintaining private mortgage insurance in 
     connection with residential mortgage transactions, 
     cancellation or automatic termination of such private 
     mortgage insurance, any disclosure of information addressed 
     by this Act, and any other matter specifically addressed by 
     this Act.
       (2) Protection of existing state laws.--
       (A) In general.--The provisions of this Act do not 
     supersede protected State laws, except to the extent that the 
     protected State laws are inconsistent with any provision of 
     this Act, and then only to the extent of the inconsistency.
       (B) Inconsistencies.--A protected State law shall not be 
     considered to be inconsistent with a provision of this Act if 
     the protected State law--
       (i) requires termination of private mortgage insurance or 
     other mortgage guaranty insurance--

       (I) at a date earlier than as provided in this Act; or
       (II) when a mortgage principal balance is achieved that is 
     higher than as provided in this Act; or

       (ii) requires disclosure of information--

       (I) that provides more information than the information 
     required by this Act; or
       (II) more often or at a date earlier than is required by 
     this Act.

       (C) Protected state laws.--For purposes of this paragraph, 
     the term ``protected State law'' means a State law--
       (i) regarding any requirements relating to private mortgage 
     insurance in connection with residential mortgage 
     transactions;
       (ii) that was enacted not later than 2 years after the date 
     of the enactment of this Act; and
       (iii) that is the law of a State that had in effect, on or 
     before January 2, 1998, any State law described in clause 
     (i).
       (b) Effect on Other Agreements.--The provisions of this Act 
     shall supersede any conflicting provision contained in any 
     agreement relating to the servicing of a residential mortgage 
     loan entered into by the Federal National Mortgage 
     Association, the Federal Home Loan Mortgage Corporation, or 
     any private investor or note holder (or any successors 
     thereto).

[[Page H5431]]

     SEC. 10. ENFORCEMENT.

       (a) In General.--Compliance with the requirements imposed 
     under this Act shall be enforced under--
       (1) section 8 of the Federal Deposit Insurance Act--
       (A) by the appropriate Federal banking agency (as defined 
     in section 3(q) of the Federal Deposit Insurance Act) in the 
     case of insured depository institutions (as defined in 
     section 3(c)(2) of such Act);
       (B) by the Federal Deposit Insurance Corporation in the 
     case of depository institutions described in clause (i), 
     (ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve 
     Act that are not insured depository institutions (as defined 
     in section 3(c)(2) of the Federal Deposit Insurance Act); and
       (C) by the Director of the Office of Thrift Supervision in 
     the case of depository institutions described in clause (v) 
     and or (vi) of section 19(b)(1)(A) of the Federal Reserve Act 
     that are not insured depository institutions (as defined in 
     section 3(c)(2) of the Federal Deposit Insurance Act);
       (2) the Federal Credit Union Act, by the National Credit 
     Union Administration Board in the case of depository 
     institutions described in clause (iv) of section 19(b)(1)(A) 
     of the Federal Reserve Act; and
       (3) part C of title V of the Farm Credit Act of 1971 (12 
     U.S.C. 2261 et seq.), by the Farm Credit Administration in 
     the case of an institution that is a member of the Farm 
     Credit System.
       (b) Additional Enforcement Powers.--
       (1) Violation of this act treated as violation of other 
     acts.--For purposes of the exercise by any agency referred to 
     in subsection (a) of such agency's powers under any Act 
     referred to in such subsection, a violation of a requirement 
     imposed under this Act shall be deemed to be a violation of a 
     requirement imposed under that Act.
       (2) Enforcement authority under other acts.--In addition to 
     the powers of any agency referred to in subsection (a) under 
     any provision of law specifically referred to in such 
     subsection, each such agency may exercise, for purposes of 
     enforcing compliance with any requirement imposed under this 
     Act, any other authority conferred on such agency by law.
       (c) Enforcement and Reimbursement.--In carrying out its 
     enforcement activities under this section, each agency 
     referred to in subsection (a) shall--
       (1) notify the mortgagee or servicer of any failure of the 
     mortgagee or servicer to comply with 1 or more provisions of 
     this Act;
       (2) with respect to each such failure to comply, require 
     the mortgagee or servicer, as applicable, to correct the 
     account of the mortgagor to reflect the date on which the 
     mortgage insurance should have been canceled or terminated 
     under this Act; and
       (3) require the mortgagee or servicer, as applicable, to 
     reimburse the mortgagor in an amount equal to the total 
     unearned premiums paid by the mortgagor after the date on 
     which the obligation to pay those premiums ceased under this 
     Act.

     SEC. 11. CONSTRUCTION.

       (a) PMI Not Required.--Nothing in this Act shall be 
     construed to impose any requirement for private mortgage 
     insurance in connection with a residential mortgage 
     transaction.
       (b) No Preclusion of Cancellation or Termination 
     Agreements.--Nothing in this Act shall be construed to 
     preclude cancellation or termination, by agreement between a 
     mortgagor and the holder of the mortgage, of a requirement 
     for private mortgage insurance in connection with a 
     residential mortgage transaction before the cancellation or 
     termination date established by this Act for the mortgage.

     SEC. 12. EFFECTIVE DATE.

       This Act, other than section 13, shall become effective 1 
     year after the date of enactment of this Act.

     SEC. 13. ABOLISHMENT OF THE THRIFT DEPOSITOR PROTECTION 
                   OVERSIGHT BOARD.

       (a) In General.--Effective at the end of the 3-month period 
     beginning on the date of enactment of this Act, the Thrift 
     Depositor Protection Oversight Board established under 
     section 21A of the Federal Home Loan Bank Act (hereafter in 
     this section referred to as the ``Oversight Board'') is 
     hereby abolished.
       (b) Disposition of Affairs.--
       (1) Power of chairperson.--Effective on the date of 
     enactment of this Act, the Chairperson of the Oversight Board 
     (or the designee of the Chairperson) may exercise on behalf 
     of the Oversight Board any power of the Oversight Board 
     necessary to settle and conclude the affairs of the Oversight 
     Board.
       (2) Availability of funds.--Funds available to the 
     Oversight Board shall be available to the Chairperson of the 
     Oversight Board to pay expenses incurred in carrying out 
     paragraph (1).
       (c) Savings Provision.--
       (1) Existing rights, duties, and obligations not 
     affected.--No provision of this section shall be construed as 
     affecting the validity of any right, duty, or obligation of 
     the United States, the Oversight Board, the Resolution Trust 
     Corporation, or any other person that--
       (A) arises under or pursuant to the Federal Home Loan Bank 
     Act, or any other provision of law applicable with respect to 
     the Oversight Board; and
       (B) existed on the day before the abolishment of the 
     Oversight Board in accordance with subsection (a).
       (2) Continuation of suits.--No action or other proceeding 
     commenced by or against the Oversight Board with respect to 
     any function of the Oversight Board shall abate by reason of 
     the enactment of this section.
       (3) Liabilities.--
       (A) In general.--All liabilities arising out of the 
     operation of the Oversight Board during the period beginning 
     on August 9, 1989, and the date that is 3 months after the 
     date of enactment of this Act shall remain the direct 
     liabilities of the United States.
       (B) No substitution.--The Secretary of the Treasury shall 
     not be substituted for the Oversight Board as a party to any 
     action or proceeding referred to in subparagraph (A).
       (4) Continuations of orders, resolutions, determinations, 
     and regulations pertaining to the resolution funding 
     corporation.--
       (A) In general.--All orders, resolutions, determinations, 
     and regulations regarding the Resolution Funding Corporation 
     shall continue in effect according to the terms of such 
     orders, resolutions, determinations, and regulations until 
     modified, terminated, set aside, or superseded in accordance 
     with applicable law if such orders, resolutions, 
     determinations, or regulations--
       (i) have been issued, made, and prescribed, or allowed to 
     become effective by the Oversight Board, or by a court of 
     competent jurisdiction, in the performance of functions 
     transferred by this section; and
       (ii) are in effect at the end of the 3-month period 
     beginning on the date of enactment of this section.
       (B) Enforceability of orders, resolutions, determinations, 
     and regulations before transfer.--Before the effective date 
     of the transfer of the authority and duties of the Resolution 
     Funding Corporation to the Secretary of the Treasury under 
     subsection (d), all orders, resolutions, determinations, and 
     regulations pertaining to the Resolution Funding Corporation 
     shall be enforceable by and against the United States.
       (C) Enforceability of orders, resolutions, determinations, 
     and regulations after transfer.--On and after the effective 
     date of the transfer of the authority and duties of the 
     Resolution Funding Corporation to the Secretary of the 
     Treasury under subsection (d), all orders, resolutions, 
     determinations, and regulations pertaining to the Resolution 
     Funding Corporation shall be enforceable by and against the 
     Secretary of the Treasury.
       (d) Transfer of Thrift Depositor Protection Oversight Board 
     Authority and Duties of Resolution Funding Corporation to 
     Secretary of the Treasury.--Effective at the end of the 3-
     month period beginning on the date of enactment of this Act, 
     the authority and duties of the Oversight Board under 
     sections 21A(a)(6)(I) and 21B of the Federal Home Loan Bank 
     Act are transferred to the Secretary of the Treasury (or the 
     designee of the Secretary).
       (e) Membership of the Affordable Housing Advisory Board.--
     Effective on the date of enactment of this Act, section 
     14(b)(2) of the Resolution Trust Corporation Completion Act 
     (12 U.S.C. 1831q note) is amended--
       (1) by striking subparagraph (C); and
       (2) by redesignating subparagraphs (D) and (E) as 
     subparagraphs (C) and (D), respectively.
       (f) Time of Meetings of the Affordable Housing Advisory 
     Board.--
       (1) In general.--Section 14(b)(6)(A) of the Resolution 
     Trust Corporation Completion Act (12 U.S.C. 1831q note) is 
     amended--
       (A) by striking ``4 times a year, or more frequently if 
     requested by the Thrift Depositor Protection Oversight Board 
     or'' and inserting ``2 times a year or at the request of''; 
     and
       (B) by striking the second sentence.
       (2) Clerical amendment.--Section 14(b)(6)(A) of the 
     Resolution Trust Corporation Completion Act (12 U.S.C. 1831q 
     note) is amended, in the subparagraph heading, by striking 
     ``and location''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Iowa (Mr. Leach) and the gentleman from New York (Mr. LaFalce) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Iowa (Mr. Leach).
  (Mr. LEACH asked and was given permission to revise and extend his 
remarks.)
  Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of S. 318, the Homeowners 
Protection Act. This legislation is about saving money for America's 
homeowners by ensuring that they do not overpay for private mortgage 
insurance, or PMI.
  Private mortgage insurance, although paid by the homeowner, is 
designed to protect lenders from mortgage default risk, and it is 
usually required when the homeowner has less than 20 percent equity in 
his or her home. While most industry standards allow for cancellation 
of PMI once the 20 percent equity level is achieved, homeowners are not 
always aware of how it can be terminated. It is estimated that some 
borrowers are paying $240 to $1,200 annually for mortgage insurance 
that is no longer needed.
  By requiring that automatic termination of PMI when insurance is no

[[Page H5432]]

longer necessary and by requiring mortgage companies and other 
financial institutions to provide homeowners with information on the 
terms and conditions of this insurance and how it can be canceled, S. 
318 protects homeowners from paying for PMI after all parties in the 
mortgage process agree that it is no longer needed.

                              {time}  1515

  Over the last 30 years, the mortgage financial markets have evolved 
with innovative products that leverage private sector resources in a 
manner that facilitates and expands affordable home ownership 
opportunities. In fact, the United States home ownership rate is at a 
record level today, with 66 percent of Americans owning their own home.
  The Senate bill, S. 318, will further enhance home ownership 
opportunities by making home ownership less expensive and by providing 
the industry with clear and certain Federal rules on when and how 
mortgage insurance can be canceled.
  The bill before us, which represents a compromise agreed to by the 
Senate Committee on Banking, is based on legislation originally 
introduced by the gentleman from Utah (Mr. Hansen). The gentleman's 
firsthand difficulties in canceling PMI and the mortgage secured by his 
condominium led him to introduce legislation, H.R. 607, on this 
subject.
  The Committee on Banking and Financial Services reported out the 
Hansen bill on March 20, 1997, and the full House approved by a vote of 
421 to 7 on April 16, 1997. The Senate followed suit last fall in 
approving its version of PMI legislation, which is before the House 
today.
  The homeowner protections contained in this bill cover owners of 
condominiums and cooperatives as well as owners of single-family 
detached homes. Under S. 318, the PMI disclosure and cancellation 
mandates cover residential mortgages and mortgage transactions for 
single-family dwellings. In the context of this legislation, the term 
``single-family dwellings'' applies to condominium and cooperative home 
ownership arrangements.
  In closing, I would like to thank my colleague, the gentleman from 
Utah (Mr. Hansen), for his perseverance in his fight for the average 
homeowner, and the gentlewoman from Connecticut (Mrs. Roukema), the 
gentleman from New York (Mr. Lazio), the gentleman from New York (Mr. 
LaFalce), the gentleman from Minnesota (Mr. Vento), the gentleman from 
Massachusetts (Mr. Kennedy), the gentlewoman from California (Ms. 
Waters), the gentlewoman from Texas (Ms. Jackson-Lee) and other members 
of this committee who have been such constructive participants in 
crafting the legislation before the House today.
  Mr. Speaker, I urge my colleagues to support this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, I thank the chairman of the Committee on 
Banking and Financial Services for his kind words. This has been a very 
bipartisan and collegial process that has brought us to the floor 
today.
  The fact is, if you are a homeowner today, or are thinking of 
becoming one, you do not want to spend any more money than you have to, 
especially on unnecessary payments. But, unfortunately, between 250,000 
to 400,000 families nationwide are now doing exactly that. They are 
making unnecessary payments. They are paying up to $100 each month and 
thousands of dollars over the life of their mortgages for unnecessary 
private mortgage insurance.
  There is nothing inherently wrong with private mortgage insurance, or 
PMI. It can be a valuable and essential tool used by many families who 
want to buy a home but are unable to finance a full 20 percent down 
payment. Fully 54 percent of mortgages offered last year did require 
PMI, private mortgage insurance.
  That means the lender requires the borrower to buy and pay for 
insurance to protect the lender in case of a borrower's default. As a 
result, lenders have then been able to issue mortgages to families with 
smaller down payments who otherwise could not afford homes. So far, so 
good.
  The problem with PMI arises once you have established approximately 
20 percent equity in your home. This is the figure generally accepted 
by the mortgage industry as a benchmark of the risk they take in 
financing your home. At that point, PMI should no longer be necessary, 
since there is minimal risk to the lender. After all, the lender holds 
title to the home if you should default, and can always sell the 
property. But many homeowners are never even notified that they can 
discontinue their private mortgage insurance, and just keep on paying 
and paying and paying. It adds up to thousands of dollars.
  Continuing to pay insurance to protect the lender after a borrower no 
longer represents a serious risk is an unjustified windfall to 
insurance companies, and an unfair burden on homeowners. That practice 
must stop, and our action today will insure that it does stop.
  Mr. Speaker, I give special credit to the gentleman from Utah (Mr. 
Hansen) for bringing this issue to the attention of our Committee on 
Banking and Financial Services and for bringing it to the attention of 
the full House of Representatives.
  The bill he introduced initially would have required disclosure to 
homebuyers, both at the mortgage signing and in annual statements, of 
the precise conditions that might enable them to cancel payments of 
that insurance. But after committee members had time to reflect upon 
it, we believed that that would be helpful but not helpful enough. Some 
argued we should move beyond disclosure and also create a right to 
terminate, at least after certain conditions were met.
  But many thought, well, even that is not good enough. We should go 
further still. This was my position. Simple disclosure and creation of 
a right to cancel is not enough. Unnecessary insurance payments should 
be terminated as a matter of law. No borrower in his right mind would 
choose to pay for insurance to protect a lender against the borrower's 
own default unless forced to do so.
  Therefore, rather than create a right to reject and cancel insurance, 
which any reasonable person would always exercise, we argued we should 
legislate, instead, the actual termination of the insurance once 
certain conditions are met. That is the bill we have before us today.
  The bill protects the consumer's right to initiate cancellation of 
the private mortgage insurance once 20 percent of the mortgage is 
satisfied, and requires servicers to cancel a consumer's mortgage 
insurance once 22 percent of the mortgage is satisfied.
  Nonetheless, I am convinced we could have and should have gone even 
further. For instance, the bill does not afford the same automatic 
cancellation rights to so-called high-risk consumers, whose PMI will be 
canceled at the half-life of the mortgage. The bill does direct the 
housing enterprises, FNMA and FreddieMac, to establish industry 
guidelines defining what constitutes a risky borrower.
  I assume and hope, and will watch to see, that the GSEs use their 
authority prudently, but I want to be clear that this provision was not 
included to enable lenders or investors to circumvent the intent of 
this legislation or to discriminate against certain types of borrowers. 
We will be watching this very closely.
  With that in mind, I have asked that the bill require the GAO to 
evaluate how the high-risk exception is being applied, and report the 
findings to the Congress after enactment.
  With regard to State preemption, again, I much preferred the House 
version. At least in this case the bill does protect State PMI 
cancellation and consumer laws in effect prior to January 2, 1998, and 
provides those States, eight of them, 2 years to revise and amend their 
laws: California, Minnesota, New York, Colorado, Connecticut, Maryland, 
Massachusetts, and Missouri.
  I would have strongly preferred that the bill simply respect the 
rights of all States to enact stronger cancellation and disclosure 
laws, or had allowed the eight States with laws on the books to amend 
their laws without limitation. Nonetheless, I am pleased that we are 
now protecting stronger State consumer laws in States like New York, 
where they already do exist.

[[Page H5433]]

  All in all, this is a strong consumer bill. It could have been 
stronger, and we might make it even stronger in future years. I urge my 
colleagues now to join me in supporting S. 318.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 5 minutes to the distinguished 
gentleman from Utah (Mr. Hansen), the author of this bill and our good 
friend and great leader on this subject.
  (Mr. HANSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. HANSEN. Mr. Speaker, I thank the chairman of the committee, the 
gentleman from Iowa (Mr. Jim Leach), for the great leadership he has 
shown on this legislation, and the gentleman from New York (Mr. 
LaFalce) for what he has done on this. I just say amen to what they 
have said. Both of them have hit it on the head.
  Let me add a little, if I may. What is PMI? What is private mortgage 
insurance? It is a good thing, and I am grateful that the lending 
institutions have come up with this creative way in which to help 
people who could not pay at least 20 percent down on their loans. So 
they get into these things, they buy the house, they are elated, they 
are given the key to the house, this is a big moment, and they walk in.
  Then after that goes away after a short time, they start looking at 
that payment bill that comes in. Anywhere between $20 to $100 they see 
every month, and say, what am I paying this for? They find that they 
are paying private mortgage insurance. When we think of insurance, we 
think of something that we buy to help us. This is not the case in this 
instance. This is something we buy to take care of the lender in case 
we do not make our payments.
  It is an interesting history. I have to admit I did not know too much 
about it. After my first term I sold my place out in Virginia and 
bought a little condo across from the Pentagon. I wanted to be close to 
the House. I noticed that when I got my bill, there was something about 
private mortgage insurance. I did not even know what it was.
  I called up the lending institution and said, what is this, anyway? 
They explained it to me, as it has been explained today. I said, that 
is all well and good, how do I get rid of it? They said, you send us a 
check for x amount of dollars and we will take it off.
  I sent them the check. They did not take it off. I said, why did you 
not take it off? They said, we do not have to take it off. But if you 
will have an independent appraisal done on your place, we will be happy 
to consider it. How much is that? $1,200. Now, the average American 
paying between $20 to $100 for this, he is not going to see a lawyer, 
he is not going to fuss, he is going to be mad and hunker down and do 
it.
  They did not do it after the appraisal. So I called them up again and 
they said, we do not have to take it off. Then, just like most people 
in our business, I started using this speech around America, and lo and 
behold, half the people in the audience would come up and say, I have 
this same problem. I have been paying this year after year after year.
  A couple of attorneys came to see me, one from Alabama. He had a 
class action going of two or three thousand people who had faithfully 
made payments on their PMI, and they would not take it off. Then we 
started getting letters. I have stacks of letters now in my office 
where people would write in and show me the sarcastic and cavalier way 
that many of the banks, lending institutions, would come up with, and 
say, we do not have to take it off. Pay it the rest of your life.
  That is what has happened, Mr. Speaker. Many people in America have 
paid it the rest of their lives. It would be interesting some day to 
see all of the letters we have, such as from a little lady in Texas, 
one in Nevada, one in Massachusetts, scattered all over America, who 
have faithfully made their payments on time and are enriching insurance 
companies, servicers, and lending institutions to the point of millions 
of dollars which did not have to be paid.
  This is a piece of consumer legislation which I think is extremely 
important. I would like to point out that the language as we got it 
from the Senate says ``single-family dwelling.'' If you go into a 
homeowner's policy or a policy such as that, that is interpreted to 
mean a freestanding place and only one family living in it. I think the 
gentleman from Iowa (Mr. Leach) adequately addressed this, but if 
someone wants to try this case, I think it comes down to the idea that 
we mean a single family in a condo, in any other area, a unit which 
they are buying, so we do not exclude all those particular people.
  As the gentleman from New York (Mr. LaFalce) pointed out, this bill 
will require full disclosure of what PMI is. It will require 
notification of their right to cancel, and will have some information 
in the bill about automatic cancellation if they live up to it.
  I want to thank the members of the Committee on Banking and Financial 
Services, who have worked so diligently on this. I really feel that 
this is a good piece of legislation. The Senate and the House have 
worked diligently to do it. In my humble opinion, this is one of the 
better pieces of consumer legislation we have come up with this in 
term. I would urge the support of my colleagues in passing this 
legislation.
  Mr. LaFALCE. Mr. Speaker, I yield 4 minutes to the gentleman from 
Minnesota (Mr. Vento).
  (Mr. VENTO asked and was given permission to revise and extend his 
remarks.)
  Mr. VENTO. Mr. Speaker, I rise in support of this measure. It has a 
Senate number but, candidly, the catalyst for this was, as has been 
indicated, our colleague, the gentleman from Utah (Mr. Jim Hansen), and 
the measure that we worked on, H.R. 607, which I think was a good 
proposal in terms of disclosure, in terms of bringing the issue into 
focus, and one in which we worked to in fact provide an automatic 
cancellation.
  In fact, private mortgage insurance (PMI) is a good product. We have, 
of course, some Federal programs, the Federal Housing Administration 
and the insurance that it provides, it means that if a person has a 
lower down payment, they can become a homeowner with this insurance 
providing a pool of dollars that will provide for default or 
delinquency in the case that default occurs with regard to the 
mortgage.

                              {time}  1530

  But clearly if you make a large enough down payment, you can 
completely avert, such insurance whether it is FHA insurance or if it 
is PMI insurance. The case here is that after someone has paid for even 
the half-life of the mortgage or paid down to the loan-to-value ratio 
of 80 percent, they should be entitled and should have the opportunity 
to discharge this responsibility, cost and this insurance because it is 
no longer necessary. There is not the risk in that loan. The homeowner 
is paying a fair rate of interest on the loan. They should not have to 
pay, on a $100,000 mortgage, as is indicated, this could be anywhere 
from $40 to $80 a month over the course of a $100,000 mortgage on a 
home. That can easily obviously be $1000 a year in insurance payments 
that they are making that would not be necessary. This bill provides 
for the termination of such insurance and the cost to the consumer.
  There are some concerns about the bill specifically with regard to 
the high risk mortgages because that is left somewhat undefined. I know 
our colleagues in the House were in agreement that we should define hi 
risk mortgages. We should be more specific and not leave any 
uncertainty. But we were not able to convince our Senate colleagues who 
rely upon the Federal National Mortgage Association and others to help 
in terms of such guidelines to follow guidelines in terms of defining 
high risk mortgages. But if it proves to be a problem, we have, I 
think, put in place a measure where we will get needed information from 
the General Accounting Office and others to in fact lead us in a 
direction to resolve such problems.
  This is an important measure because it means that housing, 
homeownership will be facilitated. It will cost less. It is fair. It is 
fair to those that extend the mortgages. It is fair to the insurance 
companies that are making the dollars on real risk and assuming real 
risk, and it is certainly fair to the homeowners. So this is a step in 
the right direction.
  I again commend my colleagues. This is an important issue in terms of

[[Page H5434]]

achieving homeownership, and it is fair to the States that have already 
taken actions, such as my State of Minnesota, which has a private 
mortgage insurance provision, and the 7 or 8 other States which have 
similar provisions. So it is a good measure.
  I am pleased to join my colleague from Utah and the others on my 
committee in terms of support of the measure and hope to see it signed 
into law by President Clinton.
  Mr. Speaker, I rise in support of S. 318, the Homeowners Protection 
Act of 1998.
  Over a year ago, this House passed a similar but better bill that was 
drafted on a bipartisan basis using the measure introduced by Mr. 
Hansen, H.R. 607, as the vehicle.
  We come before the House today having reconciled with the Senate a 
bill which will serve the needs of millions of American homeowners 
covered by private mortgage insurance.
  Consumers spend hundreds of dollars a year extra in mortgage 
insurance even though they have paid down the mortgage by 20%, 25% or 
more, to a point where such insurance is not required or necessary. 
This bill will provide some equity for those homebuyers who make their 
payments faithfully for years.
  The agreed upon bill prospectively (one year after enactment) 
provides for the automatic cancellation of private mortgage insurance 
when borrowers have 22% equity, or a 78% loan-to-value (LTV) ratio, in 
their homes (based on the original value of the home). Premiums paid 
past that date will be refunded.
  The bill allows for cancellation of PMI at 80% LTV ratio based on the 
initial amortization schedules and would not preclude borrowers from 
seeking cancellation using home price appreciation if it is agreed upon 
between the lender and the borrower.
  Importantly, the bill also provides for the disclosure of borrowers' 
rights and protections under this law. Existing loans will get annual 
statements that their PMI may be cancelable. Future borrowers will be 
informed of their rights at or before closing along with the annual 
disclosure.
  There is, unfortunately, a provision about which I have great 
concern. It is because of this concern that changes to the S. 318 were 
sought and made. It has been part of the reason for the delay in 
considering this Senate-passed bill.
  The bill as passed by the Senate would allow FNMA (Fannie May) and 
FHLMC (Freddie Mac) to set the standards for a whole class of loans to 
be called ``high risk'' that would be exempt from the automatic 
termination and cancellation rights. This exemption, undefined and 
unregulated, could be used to avoid this entire law or could be used to 
discriminate against certain borrowers. That indeed would frustrate the 
implementation and results that could be attained from this proposed 
new law.
  While we could not sway the other body to define ``high risk''; to 
have a regulator define it; OR, to simply modify the trigger level for 
all to accommodate riskier loans; we were successful in mandating in 
this measure a GAO report that will let us know how this exemption is 
being used and for whom it is being used or abused if that is the case 
in the future. We will be looking very carefully at the results of this 
report for possible future policy actions in the event of high risk 
misunderstandings.
  Mortgage insurance helps provide an opportunity to people to purchase 
homes when they cannot come up with a 20% down payment. On a $100.000 
home, that would be a hefty $20,000. Private mortgage insurance on a 
$100,000 house ranges from $28 to $76 a month depending on down 
payment. That works out to $336 to $912 a year! And of course, in many 
cities in this nation, including Washington, D.C., you cannot buy most 
homes for $100,000, so down payments are tougher to make and consumer 
premiums and costs also go up as does the size of the mortgage.
  The consensus bill will not preempt state laws in the eight states 
that have passed laws on termination or disclosure of rights and rules 
to govern terminating private mortgage insurance. Since one of those 
innovative states is Minnesota, I wanted to be sure that our good and 
fairly simple law would not be unnecessarily preempted. Under the 
agreement, all of these states also have two years to further perfect 
their own law. While I would have liked to have seen more time and, in 
fact, no limitation on changes to those laws, two years is better than 
none and seven more states exempted from the initial Senate bill is 
better than only the state of New York.
  Finally, although I do have some reservations about the complexity of 
the many trigger points for cancellation or termination of PMI 
generated by this bill's requirements, it is a step forward and a 
fairly good consensus bill to bring to our Colleagues in the House. I 
hope that should the four basic trigger points be found to be too 
complex for consumers or servicers that we can revisit this bill and 
perhaps find a more uniform and fair trigger point for automatic 
cancellation.
  Mr. Speaker, I urge my Colleagues to support this very important 
consumer legislation. This bill will provide hundreds of dollars in 
relief to home buyers who have paid their way out of PMI, but have not 
yet found relief. More than phantom tax cut measures or phoney tax code 
revisions, this bill will produce real consumer savings in the purse of 
consumers paying PMI premiums today. Let's pass this pro-consumer 
legislation now and see it signed into law by President Clinton.
  Mr. LEACH. Mr. Speaker, I yield 2 minutes to the gentleman from 
Delaware (Mr. Castle).
  Mr. CASTLE. Mr. Speaker, I thank the gentleman very much for yielding 
me the time.
  Let me join the others who have congratulated the gentleman from Utah 
(Mr. Hansen) who I think really spotted a problem. I am sort of 
embarrassed that I did not see it sooner. I actually did some of this 
work when I was a lawyer, not for the PMI people but for the consumers. 
I should have recognized the fact that there was a problem.
  I often raised the question. We never could get exactly correct 
answers as to what happened after a period of time. The people did pay 
this for some time. I think by spotlighting it, he has brought forward 
all of the concerns of a lot of people of this country. This is not the 
most major thing that we are going to do in Congress this year, but in 
terms of being very black and white, this is that. This is something 
that is absolutely correct to do. It is clear. I do not see how anybody 
could possibly oppose it. I think that the Homeowners Protection Act is 
just good common sense protection for homeowners across the United 
States of America to protect them when they have paid down their 
private mortgage insurance sufficiently so that there is enough equity 
in their home, and the various mortgages companies will be protected.
  I think and I agree with those who have said that this is a valuable 
service. Without this, quite frankly, a lot of people would not have 
been able to buy homes. I am not up here to decry PMI or say that it 
was a bad service or whatever it may be. But the bottom line is that I 
think often by inattention as much as anything else, people continue to 
pay this for years and years after they should have stopped. And when 
you start to add up $30 or $40 a month over a period of time, indeed it 
becomes a significant sum of money.
  This indeed is consumer protection. This is why we in Congress should 
be here, to protect our constituents from problems such as this. This 
is a problem that is a hidden problem, I think, by and large, but I 
think it is a problem which is very real nonetheless. For that reason, 
I think it should go forward.
  I have often questioned, frankly, whether it should go down to 20 
percent or, as we say in this case, perhaps as far as 22 percent before 
we cut it off, but that seems to be a number which is agreed to by the 
lending industry and even by those who watch over consumers. So indeed 
I judge that it is good enough for us.
  The bottom line is that this is good legislation. I hope we would all 
support it and be proud of a good record. Congratulations again to the 
gentleman from Utah (Mr. Hansen).
  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes and 30 seconds to the 
gentleman from North Carolina (Mr. Watt).
  Mr. WATT of North Carolina. Mr. Speaker, I appreciate the gentleman 
yielding time to me.
  I rise in support of this legislation, although I do so with some 
ambivalence.
  The bill that we have to consider today in some respects is a better 
bill than the bill we passed out of the House originally, but in other 
respects it is not as good a bill as we passed out of the House 
originally. But clearly it is a bill that is worthy of being supported 
because it is better than nothing and it moves us in the right 
direction.
  I would like to spend a moment talking about some of the concerns I 
have about the bill that we are addressing though. First concern is 
that we are preempting State law, at least partially preempting State 
law, I should not say we are fully preempting it, but there are 8 
States that have stronger laws in this area than we are passing here 
today. We protect those laws for a

[[Page H5435]]

period of 2 years but, after that, we do not give them the protection 
that they deserve to have going forward for States that have stronger 
laws.
  Second, and a more important concern, is this high risk loan 
situation. If you get a loan that is categorized as a high risk loan, 
then you have got to pay 50 percent of the value of that loan before 
this law is of any benefit to you. For other people, you pay 22 percent 
of the loan or possibly 20 percent of the loan, if you have got an 
appraisal, 22 percent of the loan in some circumstances, 23 percent of 
the loan in other circumstances, but if you have a high risk loan, 
regardless of the value of your house going forward, if you have got a 
loan that starts off being categorized as a high risk loan, even if 
your area goes through an urban renewal, the value of your home 
continues to appreciate, you can not get the benefit of the 80 percent 
provision in this bill or the 78 percent provision in this bill or the 
77 percent provision in this bill.
  So you are kind of stuck with that henceforth now and forever. That 
is a concern that we need to pay particular attention to in the future.
  On balance, support the bill. It is better than nothing.
  Mr. LEACH. Mr. Speaker, I yield myself 1 minute simply to offer a 
clarification. On the two-year provision, let me just clarify that 
States that have laws can further modify these laws during a two-year 
period, but the laws will stay in effect as long as the State wants to 
keep those laws in effect. So it is not a cancellation of the law 
itself.
  Mr. VENTO. Mr. Speaker, will the gentleman yield?
  Mr. LEACH. I yield to the gentleman from Minnesota.
  Mr. VENTO. Mr. Speaker, I think that the House bill was much more 
clear with regard to some of these bend points. I think the gentleman 
from North Carolina raises a good point in terms of the complexity that 
is added to this and hopefully we will not see the type of frustration 
of the intent of this measure. But I think we did the best we could 
with the sponsors in the Senate.
  Mr. LEACH. In that regard, I share some of the concerns of both the 
gentleman from Minnesota and the gentleman from North Carolina.
  Mr. WATT of North Carolina. Mr. Speaker, will the gentleman yield?
  Mr. LEACH. I yield to the gentleman from North Carolina.
  Mr. WATT of North Carolina. Mr. Speaker, I think it was my inartful 
articulation of what I was trying to say. I understood that these 8 
States have their laws protected going forward, but I appreciate the 
gentleman clarifying that. I was not trying to mislead anyone on that 
point.
  Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from New York (Mr. Lazio).
  Mr. LAZIO of New York. Mr. Speaker, I want to begin by commending the 
gentleman from Iowa (Mr. Leach) for his hard work in improving this 
bill and his dedication in bringing it to the floor today and our 
colleague, the gentleman from Utah (Mr. Hansen), whose diligence on 
this issue has raised consumer awareness of private mortgage insurance. 
And I think it is not too strong to say that he is really a consumer 
hero today to homeowners around America.
  The mortgage financial markets have experienced dramatic change over 
the last few decades, allowing more low and moderate income families to 
attain the American dream of homeownership.
  One important change is the emergence of private mortgage insurance. 
Before PMI, as it is known, families were typically required to make a 
20 percent down payment for a new home. Now families who are 
creditworthy but are cash strapped can buy a house with down payments 
as low as 3 percent or 5 percent. And this private mortgage insurance 
also lowers the lender's risk of loss from mortgage defaults.
  Private mortgage insurance is a crucial element in achieving our 
goals of helping all Americans buy homes so they can give their 
families a better quality of life. We should celebrate that our Nation 
now has the highest homeownership rate in our history. This is because 
of the new tools of the mortgage market, such as PMI, and our hard-
earned Balanced Budget Agreement which lowered interest rates and 
created a strong economy.
  While we provide a tool for the lenders to provide their investments, 
we also need to ensure that home buyers are safeguarded. If we can 
prevent homeowners from being exploited, American families can have 
peace of mind in buying a home. It is already a right of most 
homeowners to cancel their mortgage insurance when the equity in their 
homes reaches 20 percent. But many Americans are unaware of these 
rights and so they continue to pay the insurance premiums even after 
reaching the 20 percent level.
  The average rate of private mortgage insurance is between $20 and 
$100 per month. That is an annual rate of $1,200. This is $1,200 that 
could instead be more money in the pocket of an average American 
family. It is food money, school costs, doctor bills and much more. How 
can we allow consumers to pay for private mortgage insurance long after 
they are considered good borrowers with little risk of default just 
because they are not aware of the applicable rules and laws?
  I look forward to passage of this bill.
  Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Bentsen).
  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I rise in strong support of S. 318. I 
congratulate our colleague from Utah for his work on this bill.
  I came to this body from the banking industry where I looked at a 
great number of mortgage portfolios. The standard by which one is 
required to attain PMI insurance is when you are putting down less 
money than what would require you to get to an 80 percent loan-to-value 
ratio.
  Like the previous speaker, the gentleman from New York, PMI is a good 
tool because it does allow millions of Americans to be able to purchase 
a home by only having to put down a small percentage. So it does open 
the mortgage market to those Americans. But what is not a good deal is 
when you have paid down on your mortgage to a level below the 80 
percent loan-to-value ratio and you are still paying for something that 
the market says you do not need anymore. That is the problem that the 
gentleman from Utah found and that millions of Americans have found and 
why this bill is necessary today.
  I understand the gentleman from North Carolina's concerns. I 
appreciate those concerns. But this is a step in the right direction. 
This will help 5 million Americans, it is estimated, immediately who 
are paying for PMI insurance, in some cases $30, $60, $90 a month, for 
which they really are receiving nothing, because what would happen in a 
default is that the PMI company would never have to shell out anything 
but they would gain the benefits of all the premiums.
  So this is a good piece of consumer legislation. This may well be the 
most important piece of consumer legislation that this Congress adopts.
  I appreciate the efforts on the part of the chairman of the 
committee, the subcommittee and the ranking member on our side of the 
full committee and the ranking member of the subcommittee.

                              {time}  1545

  Mr. LaFALCE. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Texas (Ms. Jackson-Lee).
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman for 
yielding me this time. I wish to say ``hats off'' to the gentleman from 
Utah (Mr. Hansen). This is an excellent, excellent response to the 
needs for housing in America, particularly in districts like mine.
  Just a few weeks ago we participated in the Habitat for Humanity. 
That is one form of housing. But there is another form of housing where 
the working Americans are at a certain level and they are looking 
forward to having the opportunity to have and purchase homes. This bill 
allows homeowners to voluntarily cancel their private mortgage 
insurance when the loan-to-value ratio of the mortgage reaches 80 
percent of the original value of the property, but only for loans 
originating 1 year after the enactment. It moves us forward.

[[Page H5436]]

  I appreciate very much the story that the gentleman from Utah 
recounted for us because so many others have not caught that. And so we 
look forward to the fact that in America we encourage home ownership, 
we encourage people to pay down on their loans, and then we reward them 
by taking away the private mortgage insurance when it is not needed.
  This is good legislation. I hope we pass it quickly.
  Mr. Speaker, I strongly support this bill. Given the prosperity of 
our current economic climate, I believe that we should create 
mechanisms that make home buying easier and more practical. Such acts 
will protect these consumers who are so vital to the American economy.
  It seems to me that automatic cancellation of private mortgage 
insurance (PMI) would create a buyer-friendly environment in the 
residential housing industry by ending the current problems associated 
with PMI.
  Under the status quo, lenders usually require borrowers to purchase 
PMI if the borrower makes a downpayment on a home of less than 20 
percent (i.e., if the mortgage loan will account for more than 80 
percent of the home's purchase price). It is intended to offset the 
risk to lenders of making low downpayment loans.
  However, many homeowners have reported difficulty in canceling PMI 
after paying down their loan to a level where it constitutes less than 
80 percent of the home's value, and other homeowners have been unaware 
that they can cancel their policies at a certain point--often 
continuing to pay up to $100 a month for PMI.
  By establishing three levels at which PMI must be automatically 
terminated by a mortgage service firm, the difficulties associated with 
PMI, and homebuying in general, would be alleviated to a limited 
extent.
  The bill generally establishes three levels at which PMI paid for by 
a borrower must be canceled automatically by a mortgage servicing firm. 
Such automatic termination occurs when (1) the loan-to-value ratio of 
the mortgage reaches 78 percent of the original value of the property, 
(2) the loan-to-value ratio reaches 77 percent for larger ``non-
conforming'' loans, or (3) the mid-point or ``half-life'' of the 
mortgage payment schedule for ``high risk'' loans (loans with higher 
risks of default).
  The bill also allows homeowners to voluntarily cancel their PMI when 
the loan-to-value ratio of the mortgage reaches 80 percent of the 
original value of the property--but only for loans originated beginning 
one year after enactment, and only if the homeowner meets three 
requirements.
  It appears that this bill adequately solves the problem before us. I 
do maintain some reservations about the involvement of Fannie Mae and 
Freddie Mac because the definition of ``high risk'' loans would be 
determined by these two entities. I would have preferred the use of a 
Federal regulator, instead of a private body acting as a government 
entity, but Fannie Mae and Freddie Mac have served us well in the past, 
and I believe that they are up to the task at hand.
  With this measure, we can simultaneously create an incentive for 
homebuyers and protection for homeowners allow homebuyers to more 
easily terminate private mortgage insurance (PMI) once they have paid a 
requisite portion of their loan.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  I support this legislation strongly for a good many reasons, most of 
which I have already articulated. Let me make three points, however.
  One of the primary reasons I am supporting this legislation is 
because we are now going to provide for automatic termination for 
homeowners in each of the 50 States, whereas today there are only three 
states that provide for automatic termination. That makes this probably 
the most important consumer bill that will have passed the Congress in 
this session.
  There are some difficulties, however. With the exception of a limited 
exemption for eight states, we preempt States from enacting stronger 
consumer protection legislation. This is offensive, especially because 
it involves the insurance industry. The Federal Government has had 
little role regarding, or knowledge or experience with the insurance 
industry, certainly not so much that we should go in and say we know so 
much more than all the other States that we are going to preempt them. 
We should not be doing that if the states think they can pass even 
stronger consumer protection laws. The Senate insisted upon that. We 
could have done better.
  Third, I do not like the process of avoiding conferences between the 
House and the Senate. We have been ping-ponging this bill back and 
forth. That is a permissible process, but it is not as good as a direct 
dialogue with the Members of the United States Senate. I do not want 
the Senate to think that it is going to be able to do this in other 
legislation, whether it is credit union legislation, financial services 
modernization, et cetera, virtually saying to the House take it or 
leave it. That is not an appropriate approach.
  I support this bill and I go along with this approach because we are 
providing for automatic termination for homeowners in 50 States, 
whereas it now only exists in three states. But I have great 
difficulties with high-risk mortgages, the general state preemption and 
the process itself.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume and 
simply say, in conclusion, that I would like to stress that, as has 
been uttered by others, this is extraordinarily important consumer 
legislation, it is extraordinarily important home ownership 
legislation, it is common sense, and I would hope this body would adopt 
it unanimously.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume 
to point out that the chairman of the committee, the gentleman from 
Iowa (Mr. Leach), has been a champion on this issue. He has been 
totally cooperative, and we have been in lockstep on virtually each and 
every issue that we have discussed today. I thank him and his staff.
  Mrs. ROUKEMA. Mr. Speaker, I rise in strong support of S. 318 and 
want to commend my colleague from Utah, Congressman Hansen, for his 
perseverance on this important legislation. This legislation evolved 
out of Congressman Hansen's personal trials and tribulations of trying 
to cancel his own Private Mortgage Banking Insurance. And 
Representative Hansen's testimony before the committee defined the 
problem and the solution. Think of this as a ``Consumer Bill of 
Rights.''
  Private Mortgage Insurance is both an important but little understood 
instrument in the current mortgage industry. PMI enables families to 
purchase homes with as little as a 3-5 percent downpayment by insuring 
the mortgage lender against default. In 1996, more than 1 million 
people bought or refinanced a home with PMI. It made homeowners out of 
more than 16 million families.
  PMI is normally required whenever a borrower does not have a 20-
percent downpayment. PMI costs homeowners between $20 to $100 per month 
and protects the lender against the risk of loss on low-downpayment 
loans. PMI can be canceled under certain conditions, when a good 
payment history is met and 30 percent or more is achieved on the cost 
of the home.
  The problem arises when homeowners are not informed of what PMI is 
and when and how they can stop paying it. Overpayment of PMI is 
potentially costing hundreds of thousands of homeowners millions of 
dollars per year.
  Passage of this bill will ensure that homeowners will be better 
equipped to understand what PMI is, who it insures, and what rights the 
homeowner has to cancel it. This legislation requires automatic 
termination of private mortgage insurance after the homeowner attains a 
certain equity level in his or her home. In addition, the bill would 
require the mortgage companies and financial institutions that 
originate and service mortgages provide homeowners with information on 
the terms and conditions of PMI and how it can be canceled, both 
voluntarily and by law.
  It is time to correct this problem and to stop overcharging the 
consumer. This is good public policy and I urge my colleagues to 
support it.
  Mr. LaFALCE. Mr. Speaker, it has been a very bipartisan and collegial 
process that has brought us to the floor today, and I thank the 
Chairman of the Committee on Banking and Financial Services.
  All in all, I believe this is probably one of the most important 
consumer bills that will have passed the Congress this session. One of 
the primary reasons I am supporting it is that we are now going to 
provide for automatic termination of private mortgage insurance (PMI), 
and therefore the considerable reduction of the costs associated with 
homeownership, for homeowners in each of the 50 states. Today there are 
only three states that provide for automatic termination. Extending 
that right to homeowners in all of the fifty states is an enormous step 
forward for consumers.
  The fact is, if you are a homeowner today, or are thinking of 
becoming one, you do not want to spend any more money than you have

[[Page H5437]]

to, especially on unnecessary payments. But, unfortunately, between 
250,000 to 400,000 families nationwide are now doing exactly that. They 
are paying up to $100 each month and thousands of dollars over the life 
of their mortgages for unnecessary private mortgage insurance.
  There is nothing inherently wrong with private mortgage insurance, or 
PMI. It can be a valuable and essential tool used by many families who 
want to buy a home but are unable to finance a full 20 percent down 
payment. Fully 54 percent of mortgages offered last year did require 
PMI.
  That means the lender requires the borrowers to buy and pay for 
insurance to protect the lender in case of a borrower's default. As a 
result, lenders have then been able to issue mortgages to families with 
smaller down payments, who otherwise could not afford homes. that is of 
benefit to the consumer. So far, so good.
  The problem with PMI arises once you have established approximately 
20 percent equity in your home. This is the figure generally accepted 
by the mortgage industry as a benchmark of the risk they take in 
financing your home. At that point, PMI should no longer be necessary, 
since there is minimal risk to the lender. After all, the lender holds 
title to the home if you should default, and can always sell the 
property.
  But many homeowners are never even notified that they can discontinue 
their private mortgage insurance, and just keep on paying and paying 
and paying. It adds up to thousands of dollars. Continuing to pay 
insurance to protect the lender after a borrower no longer represents a 
serious risk is an unjustified windfall to insurance companies, and an 
unfair burden on homeowners. That practice must stop, and our action 
today will insure that it does stop.
  Mr. Speaker, I give special credit to the gentleman from Utah (Mr. 
Hansen) for bringing this issue to the attention of our Committee on 
Banking and Financial Services and for bringing it to the attention of 
the full House of Representatives.
  The bill Congressman Hansen introduced initially would have required 
disclosure to homebuyers, both at the mortgage signing and in annual 
statements, of the precise conditions that might enable them to cancel 
payments of private mortgage insurance. But after Committee Members had 
time to reflect upon it, we believed that that would be helpful but not 
helpful enough. Some argued we should move beyond disclosure and also 
create a right to terminate, at least after certain conditions were 
met.
  Many thought that even that was insufficient and we should go further 
still. This was my position. Simple disclosure and creation of a right 
to cancel is not enough. Unnecessary insurance payments should be 
terminated as a matter of law. Certainly, no sensible borrower would 
choose to pay for insurance to protect a lender against the borrower's 
own default unless forced to do so.
  Therefore, rather than create a right to reject and cancel insurance, 
which any reasonable person would always exercise, we argued we should 
legislate instead the actual termination of the insurance once certain 
conditions were met. That is an essential element of the bill we have 
before us today.
  The bill protects the consumer's right to initiate cancellation of 
the private mortgage insurance once 20 percent of the mortgage is 
satisfied, and requires servicers to cancel a consumer's mortgage 
insurance once 22 percent of the mortgage is satisfied.
  Nonetheless, I am convinced we could have and should have gone even 
further. For instance, the bill does not afford the same automatic 
cancellation rights to so-called high-risk consumers, whose PMI will be 
canceled at the half-life of the mortgage. The bill does direct the 
housing enterprises, FNMA and Freddie Mac, to establish industry 
guidelines defining what constitutes a risky borrower.
  I assume and hope, and will watch to see, that the GSEs use their 
authority prudently. But I want to be clear that this provision was not 
included to enable lenders or investors to circumvent the intent of 
this legislation or to discriminate against certain types of borrowers. 
We will be watching implementation of this provision very closely.
  With that in mind, I have asked that the bill require the GAO to 
evaluate how the high-risk exception is being applied, and report the 
findings to the Congress after enactment.
  With regard to state preemption, again, I much preferred the House 
version. At least in this case, the bill we have before us does protect 
state PMI cancellation and consumer laws in effect prior to January 2, 
1998, and provides those states, eight of them, two years to revise and 
amend their laws: California, Minnesota, New York, Colorado, 
Connecticut, Maryland, Massachusetts and Missouri.
  I would have strongly preferred that the bill simply respect the 
rights of all states to enact stronger cancellation and disclosure 
laws, or had allowed the eight states with laws on the books to amend 
their laws without limitation. But the Senate would not agree to this 
approach. Nonetheless, I am pleased that we are now protecting stronger 
state consumer laws in states like New York, where they already do 
exist.
  All in all, this is a strong consumer bill. It could have been 
stronger in some regards, and we might make it even stronger in future 
years. But it represents real and significant progress for consumers. I 
urge my colleagues now to join me in supporting S. 318.
  Mr. LaFALCE. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Hayworth). The question is on the motion 
offered by the gentleman from Iowa (Mr. Leach) that the House suspend 
the rules and pass the Senate bill, S. 318, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof), the rules were suspended and the Senate bill, as amended, was 
passed.
  A motion to reconsider was laid on the table.

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