Collapse to view only § 4909. Enforcement
- § 4901. Definitions
- § 4902. Termination of private mortgage insurance
- § 4903. Disclosure requirements
- § 4904. Notification upon cancellation or termination
- § 4905. Disclosure requirements for lender paid mortgage insurance
- § 4906. Fees for disclosures
- § 4907. Civil liability
- § 4908. Effect on other laws and agreements
- § 4909. Enforcement
- § 4910. Construction
§ 4901. DefinitionsIn this chapter, the following definitions shall apply:
(1) Adjustable rate mortgage
(2) Cancellation dateThe 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 the amortization schedule then in effect 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
(4) Good payment historyThe 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 later of (i) the date on which the mortgage reaches the cancellation date, or (ii) the date that the mortgagor submits a request for cancellation under section 4902(a)(1) of this title; or
(B) made a mortgage payment that was 30 days or longer past due during the 12-month period preceding the later of (i) the date on which the mortgage reaches the cancellation date, or (ii) the date that the mortgagor submits a request for cancellation under section 4902(a)(1) of this title.
(5) Initial amortization scheduleThe 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) Amortization schedule then in effectThe term “amortization schedule then in effect” means, with respect to an adjustable rate mortgage, a schedule established at the time at which the residential mortgage transaction is consummated or, if such schedule has been changed or recalculated, is the most recent schedule under the terms of the note or mortgage, which shows—
(A) the amount of principal and interest that is due at regular intervals to retire the principal balance and accrued interest over the remaining amortization period of the loan; and
(B) the unpaid balance of the loan after each such scheduled payment is made.
(7) Midpoint of the amortization period
(8) Mortgage insurance
(9) Mortgage insurer
(10) Mortgagee
(11) Mortgagor
(12) Original value
(13) Private mortgage insurance
(14) Residential mortgage
(15) Residential mortgage transaction
(16) Servicer
(17) Single-family dwelling
(18) Termination dateThe 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 the amortization schedule then in effect 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.
(Pub. L. 105–216, § 2, July 29, 1998, 112 Stat. 897; Pub. L. 106–569, title IV, §§ 402(a)(1), (b), 405(a), 406(b)–(d), Dec. 27, 2000, 114 Stat. 2956, 2958, 2959.)
§ 4902. Termination of private mortgage insurance
(a) Borrower cancellationA requirement for private mortgage insurance in connection with a residential mortgage transaction shall be canceled on the cancellation date or any later date that the mortgagor fulfills all of the requirements under paragraphs (1) through (4), 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;
(3) is current on the payments required by the terms of the residential mortgage transaction; and
(4) 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 mortgage is unencumbered by a subordinate lien.
(b) Automatic terminationA 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) if the mortgagor is not current on the termination date, on the first day of the first month beginning after the date that the mortgagor becomes current on the payments required by the terms of the residential mortgage transaction.
(c) Final termination
(d) Treatment of loan modifications
(e) No further paymentsNo 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)(4);
(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.
(f) Return of unearned premiums
(1) In general
(2) Transfer of funds to servicer
(g) Exceptions for high risk loans
(1) In generalThe termination and cancellation provisions in subsections (a) and (b) do not apply to any residential 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 1454(a)(2) of this title, so as to require the imposition or continuation of a private mortgage insurance requirement beyond the terms specified in subsection (a) or (b) of this section; 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 the amortization schedule then in effect 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
(3) Rule of construction
(4) GAO reportNot later than 2 years after July 29, 1998, 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.
(h) Accrued obligation for premium payments
(Pub. L. 105–216, § 3, July 29, 1998, 112 Stat. 899; Pub. L. 106–569, title IV, §§ 402(a)(2), (c)(1), 403(a), 404, 405(b), (c), Dec. 27, 2000, 114 Stat. 2956–2958.)
§ 4903. Disclosure requirements
(a) Disclosures for new mortgages at time of transaction
(1) Disclosures for non-exempted transactionsIn any case in which private mortgage insurance is required in connection with a residential mortgage transaction (other than a residential mortgage transaction described in section 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 schedule; 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 cancellation, based solely on the initial amortization 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 accordance 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 termination 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 adjustable rate mortgage, a written notice that—
(i) the mortgagor may cancel the requirement 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 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 4902(g) of this title, and whether such an exemption applies at that time to that transaction.
(2) Disclosures for excepted transactions
(3) Annual disclosuresIf 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 chapter 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
(b) Disclosures for existing mortgagesIf 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 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
(d) Standardized forms
(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.)
§ 4904. Notification upon cancellation or termination
(a) In generalNot later than 30 days after the date of cancellation 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 mortgagor in connection with the private mortgage insurance.
(b) Notice of grounds
(1) In general
(2) TimingNotice 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 received under section 4902(a)(1) of this title; or
(ii) the date on which the mortgagor satisfies any evidence and certification requirements under section 4902(a)(3) 1
1 See References in Text note below.
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.)
§ 4905. Disclosure requirements for lender paid mortgage insurance
(a) DefinitionsFor 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
(c) Notices to mortgagorIn 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 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 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 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 (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 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 transaction.
(d) Standard forms
(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.)
§ 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 pursuant to this chapter.
(Pub. L. 105–216, § 7, July 29, 1998, 112 Stat. 905.)
§ 4907. Civil liability
(a) In generalAny 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 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 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 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 4909 of this title, such amount as the court may allow, not to exceed $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 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
(c) Limitations on liability
(1) In general
(2) Rule of construction
(Pub. L. 105–216, § 8, July 29, 1998, 112 Stat. 905.)
§ 4908. Effect on other laws and agreements
(a) Effect on State law
(1) In general
(2) Protection of existing State laws
(A) In general
(B) InconsistenciesA protected State law shall not be considered to be inconsistent with a provision of this chapter 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 chapter; or(II) when a mortgage principal balance is achieved that is higher than as provided 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 lawsFor 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 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
(Pub. L. 105–216, § 9, July 29, 1998, 112 Stat. 906.)
§ 4909. Enforcement
(a) In generalSubject to subtitle B of the Consumer Financial 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 Insurance 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 respect to—
(A) insured depository institutions (as defined 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 depository 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 institutions (as defined in section 3(c)(2) of the Federal 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 Administration Board in the case of depository institutions described in clause (iv) of section 19(b)(1)(A) of the Federal Reserve Act [12 U.S.C. 461(b)(1)(A)];
(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; and
(4) subtitle E of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5561 et seq.], by the Bureau of Consumer Financial Protection, with respect to any person subject to this chapter.
(b) Additional enforcement powers
(1) Violation of this chapter treated as violation of other Acts
(2) Enforcement authority under other Acts
(c) Enforcement and reimbursementIn 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 chapter;
(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 chapter; 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 chapter.
(Pub. L. 105–216, § 10, July 29, 1998, 112 Stat. 907; Pub. L. 111–203, title X, § 1095, July 21, 2010, 124 Stat. 2101.)
§ 4910. Construction
(a) PMI not required
(b) No preclusion of cancellation or termination agreements
(Pub. L. 105–216, § 11, July 29, 1998, 112 Stat. 908.)