§4903 — Title 12 Banks and Banking | U.S. Code

Summary

When private mortgage insurance (PMI) is required, the lender must give the borrower specific papers when the loan closes. For a fixed-rate loan the lender must give an initial payment schedule and a notice that explains when the borrower can ask to cancel PMI, that they might be able to cancel earlier based on actual payments, the date when PMI will end automatically, and whether any exceptions apply. For an adjustable-rate loan the lender must give a notice saying when the borrower can cancel, that the loan servicer will tell the borrower when that date arrives, when PMI will end automatically (or will end once the borrower is current), and whether any exceptions apply. The servicer must also send a yearly written statement telling the borrower their PMI cancellation or termination rights and a phone number and address to ask about canceling. These rules apply to loans made on or after the date that is 1 year after July 29, 1998. If PMI was required on a loan made before that effective date, the servicer must still send a yearly notice saying PMI may be cancelable in some cases (with the lender’s consent or under state law) and must include contact information. The required notices can be put on the annual escrow or interest statements, and the lender or servicer may use standard forms.

Title 12, §4903

Banks and Banking — Source: USLM XML via OLRC

(a)(1)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)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)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)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)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)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)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.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The

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.

Amendments

2000—Subsec. (a)(1). Pub. L. 106–569, §§ 402(c)(2)(A)(i), 403(b)(1)(A), 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(b)(1)(B), 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 Date

Section 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.

§4903 Disclosure Requirements

Summary

Title 12, §4903

Notes & Related Subsidiaries

Editorial Notes

References in Text

Effective Date

Effective Date

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Citations & Metadata