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Public Law 105-216, 105th Congress

[DOCID: f:publ216.105]

[[Page 112 STAT. 897]]

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):
---------------------------------------------------------------------------

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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