12 U.S.C. § 4907 — Civil liability

Page 1772 TITLE 12—BANKS AND BANKING § 4906 cordance with section 4902(a) of this title, and could automatically terminate on the termination date in accordance with section 4902(b) of this title; (B) that lender paid mortgage insurance— (i) usually results in a residential mort- gage having a higher interest rate than it would in the case of borrower paid mort- gage insurance; and (ii) terminates only when the residential mortgage is refinanced (under the meaning given such term in the regulations issued by the Board of Governors of the Federal Reserve System to carry out the Truth in Lending Act (15 U.S.C. 1601 et seq.)), 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 Fed- eral income taxes, if the mortgagor itemizes expenses for that purpose; and (2) not later than 30 days after the termi- nation date that would apply in the case of borrower paid mortgage insurance, the servicer shall provide to the mortgagor a writ- ten notice indicating that the mortgagor may wish to review financing options that could eliminate the requirement for private mort- gage insurance in connection with the residen- tial mortgage transaction. (d) Standard forms The servicer of a residential mortgage trans- action may develop and use a standardized form or forms for the provision of notices to the mortgagor, as required under subsection (c). (Pub. L. 105–216, § 6, July 29, 1998, 112 Stat. 904; Pub. L. 106–569, title IV, §§ 403(c), 406(a), Dec. 27, 2000, 114 Stat. 2957, 2959.) Editorial Notes REFERENCES IN TEXT The Truth in Lending Act, referred to in sub- sec.(c)(1)(B)(ii), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of Title 15 and Tables. AMENDMENTS 2000—Subsec. (c). Pub. L. 106–569, § 403(c)(1)(A), struck out ‘‘a residential mortgage or’’ before ‘‘a residential mortgage transaction’’ in introductory provisions. Subsec. (c)(1)(B)(ii). Pub. L. 106–569, § 406(a), inserted ‘‘(under the meaning given such term in the regula- tions issued by the Board of Governors of the Federal Reserve System to carry out the Truth in Lending Act (15 U.S.C. 1601 et seq.))’’ after ‘‘refinanced’’. Subsec. (c)(2). Pub. L. 106–569, § 403(c)(1)(B), inserted ‘‘transaction’’ before period at end. Subsec. (d). Pub. L. 106–569, § 403(c)(2), inserted ‘‘transaction’’ after ‘‘residential mortgage’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 year after July 29, 1998, see section 13 of Pub. L. 105–216, set out as a note under section 4901 of this title. § 4906. 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 pursu- ant to this chapter. (Pub. L. 105–216, § 7, July 29, 1998, 112 Stat. 905.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 year after July 29, 1998, see section 13 of Pub. L. 105–216, set out as a note under section 4901 of this title. § 4907. Civil liability (a) In general Any servicer, mortgagee, or mortgage insurer that violates a provision of this chapter 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 4909 of this title, any ac- tual 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 statu- tory 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 4909 of this title, such amount as the court may allow, except that the total recovery under this subparagraph in any class action or series of class actions aris- ing 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 sub- ject to section 4909 of this title, such amount as the court may allow, not to ex- ceed $1,000 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 per- cent 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. Page 1773 TITLE 12—BANKS AND BANKING § 4909 (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 chapter due to the failure of a mortgage insurer or a mort- gagee to comply with the requirements of this chapter, shall not be construed to be a viola- tion of this chapter by the servicer. (2) Rule of construction Nothing in paragraph (1) shall be construed to impose any additional requirement or li- ability on a mortgage insurer, a mortgagee, or a holder of a residential mortgage. (Pub. L. 105–216, § 8, July 29, 1998, 112 Stat. 905.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 year after July 29, 1998, see section 13 of Pub. L. 105–216, set out as a note under section 4901 of this title. § 4908. Effect on other laws and agreements (a) Effect on State law (1) In general With respect to any residential mortgage or residential mortgage transaction con- summated after the effective date of this chap- ter, and except as provided in paragraph (2), the provisions of this chapter 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, can- cellation or automatic termination of such private mortgage insurance, any disclosure of information addressed by this chapter, and any other matter specifically addressed by this chapter. (2) Protection of existing State laws (A) In general The provisions of this chapter do not su- persede protected State laws, except to the extent that the protected State laws are in- consistent with any provision of this chap- ter, and then only to the extent of the incon- sistency. (B) Inconsistencies A protected State law shall not be consid- ered to be inconsistent with a provision of this chapter if the protected State law— (i) requires termination of private mort- gage insurance or other mortgage guar- anty insurance— (I) at a date earlier than as provided in this chapter; or (II) when a mortgage principal balance is achieved that is higher than as pro- vided in this chapter; or (ii) requires disclosure of information— (I) that provides more information than the information required by this chapter; or (II) more often or at a date earlier than is required by this chapter. (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 connec- tion with residential mortgage trans- actions; (ii) that was enacted not later than 2 years after July 29, 1998; 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 chapter shall supersede any conflicting provision contained in any agreement relating to the servicing of a residen- tial mortgage loan entered into by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or any pri- vate investor or note holder (or any successors thereto). (Pub. L. 105–216, § 9, July 29, 1998, 112 Stat. 906.) Editorial Notes REFERENCES IN TEXT The effective date of this chapter, referred to in sub- sec. (a)(1), is 1 year after July 29, 1998, see section 13 of Pub. L. 105–216, set out as an Effective Date note under section 4901 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 year after July 29, 1998, see section 13 of Pub. L. 105–216, set out as a note under section 4901 of this title. § 4909. Enforcement (a) In general Subject to subtitle B of the Consumer Finan- cial Protection Act of 2010 [12 U.S.C. 5511 et seq.], compliance with the requirements imposed under this chapter shall be enforced under— (1) section 8 of the Federal Deposit Insur- ance Act [12 U.S.C. 1818], by the appropriate Federal banking agency (as defined in section 3(q) of that Act [12 U.S.C. 1813(q)]), with re- spect to— (A) insured depository institutions (as de- fined in section 3(c)(2) of that Act [12 U.S.C. 1813(c)(2)]); (B) depository institutions described in clause (i), (ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)] which are not insured deposi- tory institutions (as defined in section 3(c)(2) of the Federal Deposit Insurance Act [12 U.S.C. 1813(c)(2)]); and (C) depository institutions described in clause (v) or (vi) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)] which are not insured depository institu- tions (as defined in section 3(c)(2) of the Fed- eral Deposit Insurance Act [12 U.S.C. 1813(c)(2)]); (2) the Federal Credit Union Act [12 U.S.C. 1751 et seq.], by the National Credit Union Ad- ministration Board in the case of depository