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12 U.S.C. § 2609 — Limitation on requirement of advance deposits in escrow accounts
Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower—
(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or
(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total
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Source file: Laws/federal/codes/united-states-code/title-12/section-2609-limitation-on-requirement-of-advance-deposits-in-escrow-accounts--14378390a8.md
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Source location: Title 12, Chapter 27, § 2609; chapter-027-real-estate-settlement-procedures.md
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**(a) In general** A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower—
(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or
(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.
**(b) Notification of shortage in escrow account** If the terms of any federally related mortgage loan require the borrower to make payments to the servicer (as the term is defined in [section 2605(i) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2605/i&num=0&edition=prelim)) of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall notify the borrower not less than annually of any shortage of funds in the escrow account.
**(c) Escrow account statements**
(1) **Initial statement**
(A) *In general* — Any servicer that has established an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established a statement clearly itemizing the estimated taxes, insurance premiums, and other charges that are reasonably anticipated to be paid from the escrow account during the first 12 months after the establishment of the account and the anticipated dates of such payments.
(B) *Time of submission* — The statement required under subparagraph (A) shall be submitted to the borrower at closing with respect to the property for which the mortgage loan is made or not later than the expiration of the 45-day period beginning on the date of the establishment of the escrow account.
(C) *Initial statement at closing* — Any servicer may submit the statement required under subparagraph (A) to the borrower at closing and may incorporate such statement in the uniform settlement statement required under [section 2603 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2603&num=0&edition=prelim). The Bureau shall issue regulations prescribing any changes necessary to the uniform settlement statement under [section 2603 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2603&num=0&edition=prelim) that specify how the statement required under subparagraph (A) of this section shall be incorporated in the uniform settlement statement.
(2) **Annual statement**
(A) *In general* — Any servicer that has established or continued an escrow account in connection with a federally related mortgage loan shall submit to the borrower for which the escrow account has been established or continued a statement clearly itemizing, for each period described in subparagraph (B) (during which the servicer services the escrow account), the amount of the borrower’s current monthly payment, the portion of the monthly payment being placed in the escrow account, the total amount paid into the escrow account during the period, the total amount paid out of the escrow account during the period for taxes, insurance premiums, and other charges (as separately identified), and the balance in the escrow account at the conclusion of the period.
(B) *Time of submission* — The statement required under subparagraph (A) shall be submitted to the borrower not less than once for each 12-month period, the first such period beginning on the first January 1st that occurs after November 28, 1990, and shall be submitted not more than 30 days after the conclusion of each such 1-year period.
**(d) Penalties**
(1) **In general** — In the case of each failure to submit a statement to a borrower as required under subsection (c), the Secretary shall assess to the lender or escrow servicer failing to submit the statement a civil penalty of $50 for each such failure, but the total amount imposed on such lender or escrow servicer for all such failures during any 12-month period referred to in subsection (b) 11 So in original. Probably should be subsection “(c)”. may not exceed $100,000.
(2) **Intentional violations** — If any failure to which paragraph (1) applies is due to intentional disregard of the requirement to submit the statement, then, with respect to such failure—
(A) the penalty imposed under paragraph (1) shall be $100; and
(B) in the case of any penalty determined under subparagraph (A), the $100,000 limitation under paragraph (1) shall not apply.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Disclosure for mortgage loan transactions** The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements of this section and [section 2604 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2604&num=0&edition=prelim), in conjunction with the disclosure requirements of the Truth in Lending Act [[15 U.S.C. 1601](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1601&num=0&edition=prelim) et seq.] that, taken together, may apply to a transaction that is subject to both or either provisions of law. The purpose of such model disclosure shall be to facilitate compliance with the disclosure requirements of this chapter 11 See References in Text note below. and the Truth in Lending Act, and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. Such forms shall conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and shall indicate whether any title insurance premium included in such charges covers or insures the lender’s interest in the property, the borrower’s interest, or both. The Bureau may, by regulation, permit the deletion from the forms prescribed under this section of items which are not, under local laws or customs, applicable in any locality, except that such regulation shall require that the numerical code prescribed by the Bureau be retained in forms to be used in all localities. Nothing in this section may be construed to require that that part of the standard forms which relate
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2603
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** The Congress finds that significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country. The Congress also finds that it has been over two years since the Secretary of Housing and Urban Development and the Administrator of Veterans’ Affairs submitted their joint report to the Congress on “Mortgage Settlement Costs” and that the time has come for the recommendations for Federal legislative action made in that report to be implemented.
**(b)** It is the purpose of this chapter to effect certain changes in the settlement process for residential real estate that will result—
(1) in more effective advance disclosure to home buyers and sellers of settlement costs;
(2) in the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services;
(3) in a reduction in the amounts home buyers are required to place in escrow accounts established to insure the payment of real estate taxes and insurance; and
(4) in significant reform and modernization of local recordkeeping of land title information.
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2601
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Definitions.—** For purposes of this section—
(1) the term “agency” means agency as defined in section 552(e) 11 See References in Text note below. of this title;
(2) the term “individual” means a citizen of the United States or an alien lawfully admitted for permanent residence;
(3) the term “maintain” includes maintain, collect, use, or disseminate;
(4) the term “record” means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his education, financial transactions, medical history, and criminal or employment history and that contains his name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or a photograph;
(5) the term “system of records” means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual;
(6) the term “statistical record” means a record in a system of records maintained for statistical research or reporting purposes only and not used in whole or in part in making any determination about an identifiable individual, except as provided by [section 8 of title 13](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title13-section8&num=0&edition=prelim);
(7) the term “routine use” means, with respect to the disclosure of a record, the use of such record for a purpose which is compatible with the purpose for which it was collected;
(8) the term “matching program”—
(A) means any computerized comparison of—
(i) two or more automated systems of records or a system of records with non-Federal records for the purpose
Source: Supplied U.S. Code snapshot — release unconfirmed · 5 U.S.C. § 552a
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Federal law — U.S. Code and appendices · legal_authorities
For purposes of this chapter—
(1) the term “federally related mortgage loan” includes any loan (other than temporary financing such as a construction loan) which—
(A) is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property; and
(B)
(i) is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender which is regulated by any agency of the Federal Government, or
(ii) is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or
(iii) is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a financial institution from which it is to be purchased by the Federal Home Loan Mortgage Corporation; or
(iv) is made in whole or in part by any “creditor”, as defined in section 1602(f) 11 See References in Text note below. of title 15, who makes or invests in residential real estate loans aggregating more than $1,000,000 per year, except that for the purpose of this chapter, the term “creditor” does not include any agency or instrumentality of any State;
(2) the te
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2602
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Preparation and distribution** The Director of the Bureau of Consumer Financial Protection (hereafter in this section referred to as the “Director”) shall prepare, at least once every 5 years, a booklet to help consumers applying for federally related mortgage loans to understand the nature and costs of real estate settlement services. The Director shall prepare the booklet in various languages and cultural styles, as the Director determines to be appropriate, so that the booklet is understandable and accessible to homebuyers of different ethnic and cultural backgrounds. The Director shall distribute such booklets to all lenders that make federally related mortgage loans. The Director shall also distribute to such lenders lists, organized by location, of homeownership counselors certified under [section 1701x(e) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1701x/e&num=0&edition=prelim) for use in complying with the requirement under subsection (c) of this section.
**(b) Contents** Each booklet shall be in such form and detail as the Director shall prescribe and, in addition to such other information as the Director may provide, shall include in plain and understandable language the following information:
(1) A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a federally related mortgage loan. The description and explanation shall provide general information about the mortgage process as well as specific information concerning, at a minimum—
(A) balloon payments;
(B) prepayment penalties;
(C) the advantages of prepayment; and
(D) the trade-off between closing costs and the interest rate over the life of the loan.
(2) An explanation and sample of th
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2604
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Disclosure to applicant relating to assignment, sale, or transfer of loan servicing** Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.
**(b) Notice by transferor of loan servicing at time of transfer**
(1) **Notice requirement** — Each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person.
(2) **Time of notice**
(A) *In general* — Except as provided under subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not less than 15 days before the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).
(B) *Exception for certain proceedings* — The notice required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage loan (with respect to which such notice is made) in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by—
(i) termination of the contract for servicing the loan for cause;
(ii) commencement of proceedings for bankruptcy of the servicer; or
(iii) commencement of proceedings by the Federal Deposit Insurance Corporation or the Resolution Trust Corporation for conservatorship or receivership of the servicer (or an entity by which the servicer is owned or controlled).
(C) *Exception for notice provided at closing* — The provisions of s
Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 2605
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Amount and term of coverage** After the expiration of sixty days following December 31, 1973, no Federal officer or agency shall approve any financial assistance for acquisition or construction purposes for use in any area that has been identified by the Administrator as an area having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968 [[42 U.S.C. 4001](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section4001&num=0&edition=prelim) et seq.], unless the building or mobile home and any personal property to which such financial assistance relates is covered by flood insurance in an amount at least equal to its development or project cost (less estimated land cost) or to the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968, whichever is less: Provided, That if the financial assistance provided is in the form of a loan or an insurance or guaranty of a loan, the amount of flood insurance required need not exceed the outstanding principal balance of the loan and need not be required beyond the term of the loan. The requirement of maintaining flood insurance shall apply during the life of the property, regardless of transfer of ownership of such property.
**(b) Requirement for mortgage loans**
(1) **Regulated lending institutions** — Each Federal entity for lending regulation (after consultation and coordination with the Financial Institutions Examination Council established under the Federal Financial Institutions Examination Council Act of 1974 [[12 U.S.C. 3301](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section3301&num=0&edition=prelim) et seq.]) shall
Source: Supplied U.S. Code snapshot — release unconfirmed · 42 U.S.C. § 4015a
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Federal law — U.S. Code and appendices · legal_authorities
Page 1454
TITLE 12—BANKS AND BANKING
§ 2608
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94–205 effective Jan. 2, 1976,
see section 12 of Pub. L. 94–205, set out as a note under
section 2602 of this title.
EFFECTIVE DATE
Section effective 180 days after Dec. 22, 1974, see sec-
tion 20 of Pub. L. 93–533, set out as a note under section
2601 of this title.
TRANSFER OF FUNCTIONS
Federal Home Loan Bank Board abolished and func-
tions transferred, see sections 401 to 406 of Pub. L.
101–73, set out as a note under section 1437 of this title.
§ 2608. Title companies; liability of seller
(a) No seller of property that will be purchased
with the assistance of a federally related mort-
gage loan shall require directly or indirectly, as
a condition to selling the property, that title in-
surance covering the property be purchased by
the buyer from any particular title company.
(b) Any seller who violates the provisions of
subsection (a) shall be liable to the buyer in an
amount equal to three times all charges made
for such title insurance.
(Pub. L. 93–533, § 9, Dec. 22, 1974, 88 Stat. 1728.)
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE
Section effective 180 days after Dec. 22, 1974, see sec-
tion 20 of Pub. L. 93–533, set out as a note under section
2601 of this title.
§ 2609. Limitation on requirement of advance de-
posits in escrow accounts
(a) In general
A lender, in connection with a federally re-
lated mortgage loan, may not require the bor-
rower or prospective borrower—
(1) to deposit in any escrow account which
may be established in connection with such
loan for the purpose of assuring payment of
taxes, insurance premiums, or other charges
with respect to the property, in connection
with the settlement, an aggregate sum (f
Source: Supplied 2024 U.S. Code historical extraction · 12 U.S.C. § 2609
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