H. R. 4173—805 
‘‘(3) pursuant to the requirements for the escrowing of 
flood insurance payments for regulated lending institutions in 
section 102(d) of the Flood Disaster Protection Act of 1973. 
‘‘(g) ADMINISTRATION
OF MANDATORY ESCROW
OR IMPOUND 
ACCOUNTS.— 
‘‘(1) IN GENERAL.—Except as may otherwise be provided 
for in this title or in regulations prescribed by the Board, 
escrow or impound accounts established pursuant to subsection 
(b) shall be established in a federally insured depository institu-
tion or credit union. 
‘‘(2) ADMINISTRATION.—Except as provided in this section 
or regulations prescribed under this section, an escrow or 
impound account subject to this section shall be administered 
in accordance with— 
‘‘(A) the Real Estate Settlement Procedures Act of 1974 
and regulations prescribed under such Act; 
‘‘(B) the Flood Disaster Protection Act of 1973 and 
regulations prescribed under such Act; and 
‘‘(C) the law of the State, if applicable, where the 
real property securing the consumer credit transaction is 
located. 
‘‘(3) APPLICABILITY OF PAYMENT OF INTEREST.—If prescribed 
by applicable State or Federal law, each creditor shall pay 
interest to the consumer on the amount held in any impound, 
trust, or escrow account that is subject to this section in the 
manner as prescribed by that applicable State or Federal law. 
‘‘(4) PENALTY COORDINATION WITH RESPA.—Any action or 
omission on the part of any person which constitutes a violation 
of the Real Estate Settlement Procedures Act of 1974 or any 
regulation prescribed under such Act for which the person 
has paid any fine, civil money penalty, or other damages shall 
not give rise to any additional fine, civil money penalty, or 
other damages under this section, unless the action or omission 
also constitutes a direct violation of this section. 
‘‘(h) DISCLOSURES
RELATING
TO
MANDATORY
ESCROW
OR 
IMPOUND ACCOUNT.—In the case of any impound, trust, or escrow 
account that is required under subsection (b), the creditor shall 
disclose by written notice to the consumer at least 3 business 
days before the consummation of the consumer credit transaction 
giving rise to such account or in accordance with timeframes estab-
lished in prescribed regulations the following information: 
‘‘(1) The fact that an escrow or impound account will be 
established at consummation of the transaction. 
‘‘(2) The amount required at closing to initially fund the 
escrow or impound account. 
‘‘(3) The amount, in the initial year after the consummation 
of the transaction, of the estimated taxes and hazard insurance, 
including flood insurance, if applicable, and any other required 
periodic payments or premiums that reflects, as appropriate, 
either the taxable assessed value of the real property securing 
the transaction, including the value of any improvements on 
the property or to be constructed on the property (whether 
or not such construction will be financed from the proceeds 
of the transaction) or the replacement costs of the property. 
‘‘(4) The estimated monthly amount payable to be escrowed 
for taxes, hazard insurance (including flood insurance, if
H. R. 4173—806 
applicable) and any other required periodic payments or pre-
miums. 
‘‘(5) The fact that, if the consumer chooses to terminate 
the account in the future, the consumer will become responsible 
for the payment of all taxes, hazard insurance, and flood insur-
ance, if applicable, as well as any other required periodic pay-
ments or premiums on the property unless a new escrow or 
impound account is established. 
‘‘(6) Such other information as the Board determines nec-
essary for the protection of the consumer. 
‘‘(i) DEFINITIONS.—For purposes of this section, the following 
definitions shall apply: 
‘‘(1) FLOOD INSURANCE.—The term ‘flood insurance’ means 
flood insurance coverage provided under the national flood 
insurance program pursuant to the National Flood Insurance 
Act of 1968. 
‘‘(2) HAZARD INSURANCE.—The term ‘hazard insurance’ shall 
have the same meaning as provided for ‘hazard insurance’, 
‘casualty insurance’, ‘homeowner’s insurance’, or other similar 
term under the law of the State where the real property 
securing the consumer credit transaction is located.’’. 
(b) EXEMPTIONS AND MODIFICATIONS.—The Board may prescribe 
rules that revise, add to, or subtract from the criteria of section 
129D(b) of the Truth in Lending Act if the Board determines that 
such rules are in the interest of consumers and in the public 
interest. 
(c) CLERICAL AMENDMENT.—The table of sections for chapter 
2 of the Truth in Lending Act is amended by inserting after the 
item relating to section 129C (as added by section 1411) the fol-
lowing new item: 
‘‘129D. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 1462. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO 
WAIVE ESCROW SERVICES. 
Section 129D of the Truth in Lending Act (as added by section 
1461) is amended by adding at the end the following new subsection: 
‘‘(j) DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE 
ESCROW SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an impound, trust, or other type of account for 
the payment of property taxes, insurance premiums, or 
other purposes relating to real property securing a con-
sumer credit transaction is not established in connection 
with the transaction; or 
‘‘(B) a consumer chooses, and provides written notice 
to the creditor or servicer of such choice, at any time 
after such an account is established in connection with 
any such transaction and in accordance with any statute, 
regulation, or contractual agreement, to close such account, 
the creditor or servicer shall provide a timely and clearly writ-
ten disclosure to the consumer that advises the consumer of 
the responsibilities of the consumer and implications for the 
consumer in the absence of any such account. 
‘‘(2) DISCLOSURE REQUIREMENTS.—Any disclosure provided 
to a consumer under paragraph (1) shall include the following:
H. R. 4173—807 
‘‘(A) Information concerning any applicable fees or costs 
associated with either the non-establishment of any such 
account at the time of the transaction, or any subsequent 
closure of any such account. 
‘‘(B) A clear and prominent statement that the con-
sumer is responsible for personally and directly paying 
the non-escrowed items, in addition to paying the mortgage 
loan payment, in the absence of any such account, and 
the fact that the costs for taxes, insurance, and related 
fees can be substantial. 
‘‘(C) A clear explanation of the consequences of any 
failure to pay non-escrowed items, including the possible 
requirement for the forced placement of insurance by the 
creditor or servicer and the potentially higher cost 
(including any potential commission payments to the 
servicer) or reduced coverage for the consumer in the event 
of any such creditor-placed insurance. 
‘‘(D) Such other information as the Board determines 
necessary for the protection of the consumer.’’. 
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 
AMENDMENTS. 
(a) SERVICER PROHIBITIONS.—Section 6 of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended 
by adding at the end the following new subsections: 
‘‘(k) SERVICER PROHIBITIONS.— 
‘‘(1) IN GENERAL.—A servicer of a federally related mortgage 
shall not— 
‘‘(A) obtain force-placed hazard insurance unless there 
is a reasonable basis to believe the borrower has failed 
to comply with the loan contract’s requirements to maintain 
property insurance; 
‘‘(B) charge fees for responding to valid qualified writ-
ten requests (as defined in regulations which the Bureau 
of Consumer Financial Protection shall prescribe) under 
this section; 
‘‘(C) fail to take timely action to respond to a borrower’s 
requests to correct errors relating to allocation of payments, 
final balances for purposes of paying off the loan, or 
avoiding foreclosure, or other standard servicer’s duties; 
‘‘(D) fail to respond within 10 business days to a 
request from a borrower to provide the identity, address, 
and other relevant contact information about the owner 
or assignee of the loan; or 
‘‘(E) fail to comply with any other obligation found 
by the Bureau of Consumer Financial Protection, by regula-
tion, to be appropriate to carry out the consumer protection 
purposes of this Act. 
‘‘(2) FORCE-PLACED INSURANCE DEFINED.—For purposes of 
this subsection and subsections (l) and (m), the term ‘force- 
placed insurance’ means hazard insurance coverage obtained 
by a servicer of a federally related mortgage when the borrower 
has failed to maintain or renew hazard insurance on such 
property as required of the borrower under the terms of the 
mortgage. 
‘‘(l) REQUIREMENTS FOR FORCE-PLACED INSURANCE.—A servicer 
of a federally related mortgage shall not be construed as having
H. R. 4173—808 
a reasonable basis for obtaining force-placed insurance unless the 
requirements of this subsection have been met. 
‘‘(1) WRITTEN NOTICES TO BORROWER.—A servicer may not 
impose any charge on any borrower for force-placed insurance 
with respect to any property securing a federally related mort-
gage unless— 
‘‘(A) the servicer has sent, by first-class mail, a written 
notice to the borrower containing— 
‘‘(i) a reminder of the borrower’s obligation to main-
tain hazard insurance on the property securing the 
federally related mortgage; 
‘‘(ii) a statement that the servicer does not have 
evidence of insurance coverage of such property; 
‘‘(iii) a clear and conspicuous statement of the 
procedures by which the borrower may demonstrate 
that the borrower already has insurance coverage; and 
‘‘(iv) a statement that the servicer may obtain such 
coverage at the borrower’s expense if the borrower 
does not provide such demonstration of the borrower’s 
existing coverage in a timely manner; 
‘‘(B) the servicer has sent, by first-class mail, a second 
written notice, at least 30 days after the mailing of the 
notice under subparagraph (A) that contains all the 
information described in each clause of such subparagraph; 
and 
‘‘(C) the servicer has not received from the borrower 
any demonstration of hazard insurance coverage for the 
property securing the mortgage by the end of the 15-day 
period beginning on the date the notice under subparagraph 
(B) was sent by the servicer. 
‘‘(2) SUFFICIENCY OF DEMONSTRATION.—A servicer of a fed-
erally related mortgage shall accept any reasonable form of 
written confirmation from a borrower of existing insurance 
coverage, which shall include the existing insurance policy 
number along with the identity of, and contact information 
for, the insurance company or agent, or as otherwise required 
by the Bureau of Consumer Financial Protection. 
‘‘(3) TERMINATION OF FORCE-PLACED INSURANCE.—Within 
15 days of the receipt by a servicer of confirmation of a bor-
rower’s existing insurance coverage, the servicer shall— 
‘‘(A) terminate the force-placed insurance; and 
‘‘(B) refund to the consumer all force-placed insurance 
premiums paid by the borrower during any period during 
which the borrower’s insurance coverage and the force- 
placed insurance coverage were each in effect, and any 
related fees charged to the consumer’s account with respect 
to the force-placed insurance during such period. 
‘‘(4) CLARIFICATION
WITH
RESPECT
TO
FLOOD
DISASTER 
PROTECTION ACT.—No provision of this section shall be con-
strued as prohibiting a servicer from providing simultaneous 
or concurrent notice of a lack of flood insurance pursuant 
to section 102(e) of the Flood Disaster Protection Act of 1973. 
‘‘(m) LIMITATIONS
ON FORCE-PLACED INSURANCE CHARGES.— 
All charges, apart from charges subject to State regulation as the 
business of insurance, related to force-placed insurance imposed 
on the borrower by or through the servicer shall be bona fide 
and reasonable.’’.