12 U.S.C. § 4903 — Disclosure requirements

Page 1770 TITLE 12—BANKS AND BANKING § 4903 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. § 4903. Disclosure requirements (a) Disclosures for new mortgages at time of transaction (1) Disclosures for non-exempted transactions In any case in which private mortgage insur- ance is required in connection with a residen- tial mortgage transaction (other than a resi- dential mortgage transaction described in sec- tion 4902(g)(1) of this title), 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 sched- ule; and (ii) written notice— (I) that the mortgagor may cancel the requirement in accordance with section 4902(a) of this title indicating the date on which the mortgagor may request can- cellation, based solely on the initial am- ortization schedule; (II) that the mortgagor may request cancellation in accordance with section 4902(a) of this title 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 ac- cordance with section 4902(b) of this title, and what that termination date is with respect to that mortgage; and (IV) that there are exemptions to the right to cancellation and automatic ter- mination of a requirement for private mortgage insurance in accordance with section 4902(g) of this title, and whether such an exemption applies at that time to that transaction; and (B) if the transaction relates to an adjust- able rate mortgage, a written notice that— (i) the mortgagor may cancel the re- quirement in accordance with section 4902(a) of this title 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 ter- mination date, the mortgagor will be noti- fied of the termination or that the require- ment 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 insur- ance in accordance with section 4902(g) of this title, and whether such an exemption applies at that time to that transaction. (2) Disclosures for excepted transactions In the case of a residential mortgage trans- action described in section 4902(g)(1) of this title, 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 re- quired 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 trans- action, the servicer shall disclose to the mort- gagor in each such transaction in an annual written statement— (A) the rights of the mortgagor under this chapter to cancellation or termination of the private mortgage insurance require- ment; and (B) an address and telephone number that the mortgagor may use to contact the servicer to determine whether the mort- gagor may cancel the private mortgage in- surance. (4) Applicability Paragraphs (1) through (3) shall apply with respect to each residential mortgage trans- action consummated on or after the date that is 1 year after July 29, 1998. (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 chapter, the servicer shall disclose to the mort- gagor 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 under subsection (b) and subsection (a)(3) may be provided on the annual disclosure relating to the escrow account made as required under the Real Estate Settlement Procedures Act of 1974 [12 U.S.C. 2601 et seq.], 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 standard- ized forms for the provision of disclosures re- quired under this section, which disclosures shall relate to the mortgagor’s rights under this chapter. (Pub. L. 105–216, § 4, July 29, 1998, 112 Stat. 902; Pub. L. 106–569, title IV, §§ 402(c)(2), 403(b), Dec. 27, 2000, 114 Stat. 2957.) Editorial Notes REFERENCES IN TEXT The effective date of this chapter, referred to in sub- sec. (b), is 1 year after July 29, 1998, see section 13 of Page 1771 TITLE 12—BANKS AND BANKING § 4905 1 See References in Text note below. Pub. L. 105–216, set out as an Effective Date note under section 4901 of this title. The Real Estate Settlement Procedures Act of 1974, referred to in subsec. (c), is Pub. L. 93–533, Dec. 22, 1974, 88 Stat. 1724, which is classified principally to chapter 27 (§ 2601 et seq.) of this title. For complete classifica- tion of this Act to the Code, see Short Title note set out under section 2601 of this title and Tables. AMENDMENTS 2000—Subsec. (a)(1). Pub. L. 106–569, §§ 402(c)(2)(A)(i), 403(b)(1)(A), substituted ‘‘residential mortgage trans- action (other than a residential mortgage transaction described in section 4902(g)(1) of this title)’’ for ‘‘resi- dential mortgage or mortgage transaction (other than a mortgage or mortgage transaction described in sec- tion 4902(f)(1) of this title)’’ in introductory provisions. Subsec. (a)(1)(A)(ii)(IV), (B)(iii). Pub. L. 106–569, § 402(c)(2)(A)(ii), (iii), substituted ‘‘section 4902(g) of this title’’ for ‘‘section 4902(f) of this title’’. Subsec. (a)(2). Pub. L. 106–569, §§ 402(c)(2)(B), 403(b)(1)(B), substituted ‘‘residential mortgage trans- action’’ for ‘‘mortgage or mortgage transaction’’ and ‘‘section 4902(g)(1) of this title’’ for ‘‘section 4902(f)(1) of this title’’. Subsec. (c). Pub. L. 106–569, § 403(b)(2), substituted ‘‘subsection (a)(3)’’ for ‘‘paragraphs (1)(B) and (3) of sub- section (a)’’. Subsec. (d). Pub. L. 106–569, § 403(b)(3), inserted before period at end ‘‘, which disclosures shall relate to the mortgagor’s rights under this chapter’’. 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. § 4904. Notification upon cancellation or termi- nation (a) In general Not later than 30 days after the date of can- cellation or termination of a private mortgage insurance requirement in accordance with this chapter, 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 mort- gagor 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 4902 of this title, 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 de- termination). (2) Timing Notice required by paragraph (1) shall be provided— (A) with respect to cancellation of private mortgage insurance under section 4902(a) of this title, not later than 30 days after the later of— (i) the date on which a request is re- ceived under section 4902(a)(1) of this title; or (ii) the date on which the mortgagor sat- isfies any evidence and certification re- quirements under section 4902(a)(3) 1 of this title; and (B) with respect to termination of private mortgage insurance under section 4902(b) of this title, not later than 30 days after the scheduled termination date. (Pub. L. 105–216, § 5, July 29, 1998, 112 Stat. 903.) Editorial Notes REFERENCES IN TEXT Section 4902(a)(3) of this title, referred to in subsec. (b)(2)(A)(ii), was redesignated section 4902(a)(4) of this title by Pub. L. 106–569, title IV, § 404(1)(C), Dec. 27, 2000, 114 Stat. 2958. 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. § 4905. Disclosure requirements for lender paid mortgage insurance (a) Definitions For purposes of this section— (1) the term ‘‘borrower paid mortgage insur- ance’’ 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 insur- ance’’ 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 clos- ing conditions, of the application of a prospec- tive mortgagor for a residential mortgage loan. (b) Exclusion Sections 4902 through 4904 of this title do not apply in the case of lender paid mortgage insur- ance. (c) Notices to mortgagor In the case of lender paid mortgage insurance that is required in connection with a residential mortgage transaction— (1) not later than the date on which a loan commitment is made for the residential mort- gage transaction, the prospective mortgagee shall provide to the prospective mortgagor a written notice— (A) that lender paid mortgage insurance differs from borrower paid mortgage insur- ance, 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 ac-