[105th Congress Public Law 216]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ216.105]
[[Page 112 STAT. 897]]
Public Law 105-216
105th Congress
An Act
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. <<NOTE: July 29, 1998 - [S. 318]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Homeowners ProtectionAct
of1998.>> assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short <<NOTE: 12 USC 4901 note.>> 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. Amendment to Higher Education Act of 1965.
Sec. 13. Effective date.
Sec. 14. Abolishment of the Thrift Depositor Protection Oversight Board.
SEC. <<NOTE: 12 USC 4901.>> 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--
[[Page 112 STAT. 898]]
(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
[[Page 112 STAT. 899]]
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. <<NOTE: 12 USC 4902.>> 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 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--
[[Page 112 STAT. 900]]
(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 <<NOTE: Deadline.>> 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 <<NOTE: Deadline.>> 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
[[Page 112 STAT. 901]]
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 <<NOTE: Deadline.>> 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
[[Page 112 STAT. 902]]
(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. <<NOTE: 12 USC 4903.>> 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.
[[Page 112 STAT. 903]]
(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 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. <<NOTE: 12 USC 4904.>> 5. NOTIFICATION UPON CANCELLATION OR
TERMINATION.
(a) In <<NOTE: Deadline.>> 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.
[[Page 112 STAT. 904]]
(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. <<NOTE: 12 USC 4905.>> 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--
[[Page 112 STAT. 905]]
(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) <<NOTE: Deadline.>> 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. <<NOTE: 12 USC 4906.>> 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. <<NOTE: 12 USC 4907.>> 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 $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
[[Page 112 STAT. 906]]
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. <<NOTE: 12 USC 4908.>> 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--
[[Page 112 STAT. 907]]
(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).
SEC. <<NOTE: 12 USC 4909.>> 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.
[[Page 112 STAT. 908]]
(c) Enforcement and Reimbursement.--In carrying out its enforcement
activities under this section, each agency referred to in subsection (a)
shall--
(1) <<NOTE: Notification.>> 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. <<NOTE: 12 USC 4910.>> 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. AMENDMENT TO HIGHER EDUCATION ACT OF 1965.
Section 481(a)(4) of the Higher Education Act of 1965 (20 U.S.C.
1088(a)(4)) is amended by--
(1) inserting the subparagraph designation ``(A)''
immediately after the paragraph designation ``(4)'';
(2) redesignating subparagraphs (A) and (B) as clauses (i)
and (ii), respectively; and
(3) adding at the end thereof the following new
subparagraph:
``(B) Subparagraph (A)(i) shall not apply to a
nonprofit institution whose primary function is to
provide health care educational services (or an
affiliate of such an institution that has the power, by
contract or ownership interest, to direct or cause the
direction of the institution's management or policies)
that files for bankruptcy under chapter 11 of title 11
of the United States Code between July 1, and December
31, 1998.''.
SEC. <<NOTE: 12 USC 4901 note.>> 13. EFFECTIVE DATE.
This Act, other than section 14, shall become effective 1 year after
the date of enactment of this Act.
SEC. 14. ABOLISHMENT OF THE THRIFT DEPOSITOR PROTECTION OVERSIGHT
BOARD.
(a) In <<NOTE: Effective date. 12 USC 1441a note.>> 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.
[[Page 112 STAT. 909]]
(b) Disposition <<NOTE: 12 USC 1441a note. Effective date.>> 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 <<NOTE: 12 USC 1441a note.>> 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
[[Page 112 STAT. 910]]
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 <<NOTE: Effective date. 12 USC 1441a note.>> 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 <<NOTE: Effective date.>> 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''.
Approved July 29, 1998.
LEGISLATIVE HISTORY--S. 318 (H.R. 607):
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HOUSE REPORTS: No. 105-55 accompanying H.R. 607 (Comm. on Banking and
Financial Services).
SENATE REPORTS: No. 105-129 (Comm. on Banking, Housing, and Urban
Affairs).
CONGRESSIONAL RECORD:
Vol. 143 (1997):
Nov. 9, considered and passed
Senate.
Vol. 144 (1998):
July 14, considered and passed
House, amended.
July 15, Senate concurred in House
amendments with amendments.
July 16, House concurred in Senate
amendments.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
July 29, Presidential statement.
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