I
105TH CONGRESS
1ST SESSION
H. R. 607
To amend the Truth in Lending Act to require notice of cancellation rights
with respect to private mortgage insurance which is required by a creditor
as a condition for entering into a residential mortgage transaction, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 5, 1997
Mr. HANSEN (for himself, Mr. BAKER, Mr. KENNEDY of Massachusetts, Mr.
CALVERT, Mr. WAXMAN, Ms. RIVERS, Mr. SAWYER, Mr. EVANS, Mr.
BOUCHER, Ms. FURSE, and Mr. FROST) introduced the following bill;
which was referred to the Committee on Banking and Financial Services
A BILL
To amend the Truth in Lending Act to require notice of
cancellation rights with respect to private mortgage in-
surance which is required by a creditor as a condition
for entering into a residential mortgage transaction, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Homeowners Insur-
ance Protection Act’’.
SEC. 2. NOTIFICATION OF CANCELLATION RIGHTS FOR PRI-
VATE MORTGAGE INSURANCE.
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting
after section 125 the following new section:
‘‘SEC. 126. NOTIFICATION OF CANCELLATION RIGHTS FOR
PRIVATE MORTGAGE INSURANCE.
‘‘(a) NOTICE OF RIGHT OR LACK OF RIGHT TO CAN-
CEL.—If a consumer is required to obtain and maintain
private mortgage insurance as a condition for entering
into a residential mortgage transaction, the creditor shall
disclose, in writing at the time the transaction is entered
into, whether or not the private mortgage insurance may
be canceled by the consumer at any time while the mort-
gage is outstanding.
‘‘(b) INFORMATION REQUIRED TO BE DISCLOSED IF
INSURANCE IS CANCELABLE.—If private mortgage insur-
ance is required for a residential mortgage transaction and
may be canceled by the consumer at any time while the
mortgage is outstanding, the creditor shall disclose in
writing the following information at the time the trans-
action is entered into:
‘‘(1) IDENTIFYING INFORMATION.—Such infor-
mation as may be necessary to permit the consumer
to communicate with the creditor and any subse-
quent servicer of the mortgage.
‘‘(2) CONDITIONS
ON
CANCELLATION.—Any
condition required to be met before the private mort-
gage insurance may be canceled by the consumer, in-
cluding the following:
‘‘(A) If a condition for canceling the pri-
vate mortgage insurance is based on a mini-
mum ratio between the principal on the loan re-
maining outstanding and either the original or
the current value of the property securing the
loan, such ratio.
‘‘(B) Information relating to any require-
ment for an appraisal of the property as a con-
dition for the cancellation of the insurance.
‘‘(C) Information relating to the time re-
quired for canceling the insurance.
‘‘(3) CANCELLATION PROCEDURES.—The proce-
dures required to be followed by the consumer in
canceling the private mortgage insurance.
‘‘(c) INFORMATION REQUIRED TO BE DISCLOSED
WITH EACH PERIODIC STATEMENT.—If a consumer is re-
quired to obtain and maintain private mortgage insurance
as a condition for entering into a residential mortgage
transaction, the person servicing the mortgage shall in-
clude in or with each written statement of account pro-
vided to the consumer after December 31, 1997, while
such insurance is in effect, but not less than annually—
‘‘(1) the information required to be disclosed
under subsection (b); or
‘‘(2) a clear and conspicuous written statement
containing—
‘‘(A) a statement that the consumer may
be able to cancel the private mortgage insur-
ance (if such is the case); and
‘‘(B) an address and telephone number
which the consumer may use to contact the
creditor or the person servicing the mortgage to
determine whether the consumer has the right
to cancel the private mortgage insurance and, if
so, the conditions and procedures for canceling
such insurance.
‘‘(d) NOTICE REQUIREMENT.—If a consumer main-
tains private mortgage insurance in connection with a resi-
dential mortgage transaction the original principal of
which exceeded 80 percent of the appraised value of the
residence (as of the date of the transaction), the person
servicing the mortgage shall send a letter to the consumer
containing the information required to be disclosed under
paragraphs (2) and (3) of subsection (b) and subsection
(c)(2) when the principal outstanding on the mortgage
first becomes equal to or less than the amount which is
80 percent of the appraised value of the residence (as of
the date of the transaction).
‘‘(e) NOTICES FURNISHED WITHOUT COST TO THE
CONSUMER.—No fee or other cost may be imposed on any
consumer with respect to the provision of any notice or
information to the consumer pursuant to this section.
‘‘(f) DEFINITIONS.—For purposes of this section, the
following definitions shall apply:
‘‘(1) MORTGAGE INSURANCE.—The term ‘mort-
gage insurance’ means insurance, including any
mortgage guaranty insurance, against the nonpay-
ment of, or default on, a mortgage or loan involved
in a residential mortgage transaction.
‘‘(2) 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 National
Housing Act of 1949.’’.
(b) AMENDMENT RELATING TO LIABILITY FOR VIO-
LATIONS.—Section 130(a) of the Truth in Lending Act
(15 U.S.C. 1640(a)) is amended by adding at the end the