§2604 — Title 12 Banks and Banking | U.S. Code

Summary

The Director of the Bureau of Consumer Financial Protection must make a booklet at least once every 5 years to help people applying for federally related mortgage loans understand settlement costs and the mortgage process. The booklet must be made in different languages and cultural styles so homebuyers from different backgrounds can use it. The Bureau must give copies to all lenders and also give them lists, by location, of homeownership counselors certified under section 1701x(e). The booklet must explain key topics in plain language, including settlement costs and trade-offs like closing costs versus interest, a sample uniform settlement statement (see section 2603), banned or unfair lending practices, questions borrowers should ask, the right of rescission (see sections 125 and 129 of the Truth in Lending Act, 15 U.S.C. 1635, 1639), adjustable-rate and home equity credit basics, counseling services, escrow accounts, appraisals versus inspections, loan fraud resources, flood insurance, borrowers’ responsibilities, and more. Each lender must give the booklet, a good-faith estimate of likely settlement charges, and a local list of certified counselors to every person who applies in writing for a mortgage. The lender must provide these within 3 business days after getting the application unless the lender denies the application before the 3 days end. Lenders may print and use their own copies if the Bureau approves the content.

Title 12, §2604

Banks and Banking — Source: USLM XML via OLRC

(a)The Director of the Bureau of Consumer Financial Protection (hereafter in this section referred to as the “Director”) shall prepare, at least once every 5 years, a booklet to help consumers applying for federally related mortgage loans to understand the nature and costs of real estate settlement services. The Director shall prepare the booklet in various languages and cultural styles, as the Director determines to be appropriate, so that the booklet is understandable and accessible to homebuyers of different ethnic and cultural backgrounds. The Director shall distribute such booklets to all lenders that make federally related mortgage loans. The Director shall also distribute to such lenders lists, organized by location, of homeownership counselors certified under section 1701x(e) of this title for use in complying with the requirement under subsection (c) of this section.

(b)Each booklet shall be in such form and detail as the Director shall prescribe and, in addition to such other information as the Director may provide, shall include in plain and understandable language the following information:

(1)A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a federally related mortgage loan. The description and explanation shall provide general information about the mortgage process as well as specific information concerning, at a minimum—

(A)balloon payments;

(B)prepayment penalties;

(C)the advantages of prepayment; and

(D)the trade-off between closing costs and the interest rate over the life of the loan.

(2)An explanation and sample of the uniform settlement statement required by section 2603 of this title.

(3)A list and explanation of lending practices, including those prohibited by the Truth in Lending Act or other applicable Federal law, and of other unfair practices and unreasonable or unnecessary charges to be avoided by the prospective buyer with respect to a real estate settlement.

(4)A list and explanation of questions a consumer obtaining a federally related mortgage loan should ask regarding the loan, including whether the consumer will have the ability to repay the loan, whether the consumer sufficiently shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan will benefit the borrower.

(5)An explanation of the right of rescission as to certain transactions provided by section 125 and 129 of the Truth in Lending Act [15 U.S.C. 1635, 1639].

(6)A brief explanation of the nature of a variable rate mortgage and a reference to the booklet entitled “Consumer Handbook on Adjustable Rate Mortgages”, published by the Director, or to any suitable substitute of such booklet that the Director may subsequently adopt pursuant to such section.

(7)A brief explanation of the nature of a home equity line of credit and a reference to the pamphlet required to be provided under section 127A of the Truth in Lending Act [15 U.S.C. 1637a].

(8)Information about homeownership counseling services made available pursuant to section 1701x(a)(4) of this title, a recommendation that the consumer use such services, and notification that a list of certified providers of homeownership counseling in the area, and their contact information, is available.

(9)An explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate and the requirements under section 2609 of this title regarding such accounts.

(10)An explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary services incidental to a real estate settlement.

(11)An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction.

(12)An explanation of the nature and purpose of real estate appraisals, including the difference between an appraisal and a home inspection.

(13)Notice that the Office of Housing of the Department of Housing and Urban Development has made publicly available a brochure regarding loan fraud and a World Wide Web address and toll-free telephone number for obtaining the brochure.

(14)An explanation of flood insurance and the availability of flood insurance under the National Flood Insurance Program or from a private insurance company, whether or not the real estate is located in an area having special flood hazards, and the following statement: “Although you may not be required to maintain flood insurance on all structures, you may still wish to do so, and your mortgage lender may still require you to do so to protect the collateral securing the mortgage. If you choose to not maintain flood insurance on a structure, and it floods, you are responsible for all flood losses relating to that structure.”.

(c)Each lender shall include with the booklet a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement as prescribed by the Bureau. Each lender shall also include with the booklet a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 1701x(e) of this title and located in the area of the lender.

(d)Each lender referred to in subsection (a) shall provide the booklet described in such subsection to each person from whom it receives or for whom it prepares a written application to borrow money to finance the purchase of residential real estate. The lender shall provide the booklet in the version that is most appropriate for the person receiving it. Such booklet shall be provided by delivering it or placing it in the mail not later than 3 business days after the lender receives the application, but no booklet need be provided if the lender denies the application for credit before the end of the 3-day period.

(e)Booklets may be printed and distributed by lenders if their form and content are approved by the Bureau as meeting the requirements of subsection (b) of this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsec. (a), was in the original “this title” and was translated as reading “this Act”, meaning Pub. L. 93–533, which is classified principally to this chapter, to reflect the probable intent of Congress, because Pub. L. 93–533 does not contain titles. The Truth in Lending Act, referred to in subsec. (b)(3), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. Two section 129 of the Act have been enacted and are classified to section 1639 and 1639a of Title 15. For complete classification of this Act to the Code, see

Short Title

note set out under section 1601 of Title 15 and Tables.

Amendments

2014—Subsec. (b)(14). Pub. L. 113–89 inserted before period at end “, and the following statement: ‘Although you may not be required to maintain flood insurance on all structures, you may still wish to do so, and your mortgage lender may still require you to do so to protect the collateral securing the mortgage. If you choose to not maintain flood insurance on a structure, and it floods, you are responsible for all flood losses relating to that structure.’ ” and transferred par. (14) to appear after par. (13). 2012—Subsec. (b)(14). Pub. L. 112–141 added par. (14) at end of subsec. (b). 2010—Pub. L. 111–203, § 1450(1), substituted “Home buying” for “Special” in section catchline. Pub. L. 111–203, § 1098(3)(A), substituted “Bureau” for “Secretary” wherever appearing. Subsec. (a). Pub. L. 111–203, § 1450(2), added subsec. (a) and struck out former subsec. (a). Prior to amendment, text read as follows: “The Bureau shall prepare and distribute booklets jointly addressing compliance with the requirements of the Truth in Lending Act and the provisions of this chapter, in order to help persons borrowing money to finance the purchase of residential real estate better to understand the nature and costs of real estate settlement services. The Bureau shall distribute such booklets to all lenders which make federally related mortgage loans.” Pub. L. 111–203, § 1098(3)(B), substituted “The Bureau shall prepare and distribute booklets jointly addressing compliance with the requirements of the Truth in Lending Act and the provisions of this chapter, in order to help persons borrowing money to finance the purchase of residential real estate better to understand the nature and costs of real estate settlement services.” for “The Secretary shall prepare and distribute booklets to help persons borrowing money to finance the purchase of residential real estate better to understand the nature and costs of real estate settlement services.” Subsec. (b). Pub. L. 111–203, § 1450(2), added subsec. (b) and struck out former subsec. (b) which related to form and detail, cost elements, standard settlement form, escrow accounts, selection of persons for settlement services; and consideration of differences in settlement procedures. Subsec. (c). Pub. L. 111–203, § 1450(3), inserted at end “Each lender shall also include with the booklet a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 1701x(e) of this title and located in the area of the lender.” Subsec. (d). Pub. L. 111–203, § 1450(4), inserted “The lender shall provide the booklet in the version that is most appropriate for the person receiving it.” after the first sentence. 1992—Subsec. (d). Pub. L. 102–550 substituted “Such booklet shall be provided by delivering it or placing it in the mail not later than 3 business days after the lender receives the application, but no booklet need be provided if the lender denies the application for credit before the end of the 3-day period.” for “Such booklet shall be provided at the time of receipt or preparation of such application.” 1976—Subsecs. (c) to (e). Pub. L. 94–205 added subsec. (c), redesignated former subsec. (c) as (d), substituted “or for whom it prepares a written application” for “an application” and inserted “or preparation” after “receipt”, and redesignated former subsec. (d) as (e).

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by section 1098(3) of Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. Amendment by section 1450 of Pub. L. 111–203 effective on the date on which final

Regulations

implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such

Regulations

have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of Title 15, Commerce and Trade.

Effective Date

of 1976 AmendmentAmendment by Pub. L. 94–205 effective Jan. 2, 1976, with the Secretary authorized to suspend for up to 180 days from Jan. 2, 1976, any provision of this section as amended by Pub. L. 94–205, see section 12 of Pub. L. 94–205, set out as a note under section 2602 of this title.

Effective Date

Section effective 180 days after Dec. 22, 1974, see section 20 of Pub. L. 93–533, set out as a note under section 2601 of this title.

§2604 Home buying information booklets

Summary

Title 12, §2604

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Regulations

Regulations

Effective Date

Effective Date

Citations & Metadata