12 U.S.C. § 4903

Current through P.L. 118-106 (published on www.congress.gov on 10/04/2024)

Section 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 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

In the case of 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 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 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

Paragraphs (1) through (3) shall apply with respect to each residential mortgage transaction 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 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 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 standardized forms for the provision of disclosures required under this section, which disclosures shall relate to the mortgagor's rights under this chapter.

12 U.S.C. § 4903

Pub. L. 105-216, §4, July 29, 1998, 112 Stat. 902; Pub. L. 106-569, title IV, §§402(c)(2), Dec. 27, 2000, 403, Dec. 27, 2000, 114 Stat. 2957.

EDITORIAL NOTES

REFERENCES IN TEXTThe effective date of this chapter, referred to in subsec. (b), 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.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 classification of this Act to the Code, see Short Title note set out under section 2601 of this title and Tables.

AMENDMENTS2000-Subsec. (a)(1). Pub. L. 106-569, §§402(c)(2)(A)(i), 403, substituted "residential mortgage transaction (other than a residential mortgage transaction described in section 4902(g)(1) of this title)" for "residential mortgage or mortgage transaction (other than a mortgage or mortgage transaction described in section 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, substituted "residential mortgage transaction" 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 subsection (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 DATESection 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.

State: The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands or any federally recognized Indian tribe, as defined by the Secretary of the Interior under section 5131(a) of title 25.
adjustable rate mortgage: The term "adjustable rate mortgage" means a residential mortgage that has an interest rate that is subject to change. A residential mortgage that: (A) does not fully amortize over the term of the obligation; and (B) contains a conditional right to refinance or modify the unamortized principal at the maturity date of the term, shall be considered to be an adjustable rate mortgage for purposes of this chapter.
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-(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.
fixed rate mortgage: The term "fixed rate mortgage" means a residential mortgage that has an interest rate that is not subject to change.
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.
midpoint of the amortization period: The term "midpoint of the amortization period" means, with respect to a residential mortgage transaction, the point in time that is halfway through the period that begins upon the first day of the amortization period established at the time a residential mortgage transaction is consummated and ends upon the completion of the entire period over which the mortgage is scheduled to be amortized.
mortgagee: The term "mortgagee" means the holder of a residential mortgage at the time at which that mortgage transaction is consummated.
mortgagor: The term "mortgagor" means the original borrower under a residential mortgage or his or her successors or assignees.
private mortgage insurance: The term "private mortgage insurance" means mortgage insurance other than mortgage insurance made available under the National Housing Act [ 12 U.S.C. 1701 et seq.], title 38, or title V of the Housing Act of 1949 [ 42 U.S.C. 1471 et seq.].
residential mortgage transaction: The term "residential mortgage transaction" means a transaction consummated on or after the date that is 1 year after July 29, 1998, 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 principal residence of the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling.
residential mortgage: The term "residential mortgage" means a mortgage, loan, or other evidence of a security interest created with respect to a single-family dwelling that is the principal residence of the mortgagor.
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 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.