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function of servicing current federally related 
mortgage loans. 
‘‘(2) FEDERALLY RELATED MORTGAGE LOAN.—
The term ‘federally related mortgage loan’ has the 
meaning given to such term in section 3(1) of the 
Real Estate Settlement Procedures Act of 1974, ex-
cept that, for purposes of this section, such term in-
cludes only loans secured by first liens. 
‘‘(3) PERSON.—The term ‘person’ has the 
meaning given to such term in section 3(5) of the 
Real Estate Settlement Procedures Act of 1974. 
‘‘(4) 
SERVICER; 
SERVICING.—The 
terms 
‘servicer’ and ‘servicing’ have the meanings given to 
such terms in section 6(i) of the Real Estate Settle-
ment Procedures Act of 1974.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for the Fair Debt Collection Practices Act (15 U.S.C. 
1692 et seq.) is amended—
(1) by redesignating the item relating to section 
818 as section 819; and 
(2) by inserting after the item relating to sec-
tion 817 the following new item:
‘‘818. Mortgage servicer exemption.’’.
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SEC. 304. 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 
subsection: 
‘‘(k) SERVICER PROHIBITIONS.—A servicer of a fed-
erally related mortgage shall not—
‘‘(1) force place insurance unless there is a rea-
sonable basis to believe the borrower has failed to 
comply with the loan contract’s requirements to 
maintain property insurance; 
‘‘(2) charge fees for responding to valid quali-
fied written requests under this section; 
‘‘(3) fail to take timely action to respond to a 
borrower’s requests to correct errors relating to allo-
cation of payments, final balances for purposes of 
paying off the loan, or avoiding foreclosure, or other 
standard servicer’s duties; 
‘‘(4) fail to respond within 10 business days to 
a request from a borrower to provide the identity, 
address and other relevant information about the 
owner assignee of the loan; or 
‘‘(5) fail to comply with any other obligation 
found by the Secretary to be appropriate to carry 
out the consumer protection purposes of this Act.’’.
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(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) 
of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(f)) is amended—
(1) in paragraphs (1)(B) and (2)(B), by strik-
ing ‘‘$1,000’’ each place such term appears and in-
serting ‘‘$2,000’’; and 
(2) 
in 
paragraph 
(2)(B)(i), 
by 
striking 
‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(e)) is amended—
(1) in paragraph (1)(A), by striking ‘‘20 days’’ 
and inserting ‘‘15 days’’; 
(2) in paragraph (2), by striking ‘‘60 days’’ and 
inserting ‘‘30 days’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(4) 
LIMITED
EXTENSION
OF
RESPONSE 
TIME.—The 30-day period described in paragraph 
(2) may be extended for not more than 30 days if, 
before the end of such 30-day period, the servicer 
notifies the borrower of the extension and the rea-
sons for the delay in responding.’’. 
(d) REQUESTS
FOR PAY-OFF AMOUNTS.—Section 
6(e) of the Real Estate Settlement Procedures Act of 1974
103
(12 U.S.C. 2605(e)) is amended by inserting after para-
graph (4) (as added by subsection (c) of this section) the 
following new paragraph: 
‘‘(5) REQUESTS
FOR
PAY-OFF
AMOUNTS.—A 
creditor or servicer shall send a payoff balance with-
in 7 business days of receipt of a written request for 
such balance from or on behalf of the borrower by 
first-class mail.’’. 
(e) PROMPT REFUND OF ESCROW ACCOUNTS UPON 
PAYOFF.—Section 6(g) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(g)) is amended 
by adding at the end the following new sentence: ‘‘Any 
balance in any such account at the time the loan is paid 
off shall be promptly returned to the borrower.’’. 
SEC. 305. MORTGAGE SERVICING STUDIES REQUIRED. 
(a) MORTGAGE SERVICING FRAUD.—
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Board 
of Governors of the Federal Reserve System and the 
Federal Trade Commission, shall conduct a com-
prehensive study on mortgage servicing fraud. 
(2) ISSUES TO BE INCLUDED.—In addition to 
other issues the Secretary, Board, and Commission 
may determine to be appropriate and possibly perti-
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nent to the study conducted under paragraph (1), 
the study shall include the following issues: 
(A) A survey of the industry in order to 
examine the issue of the timely posting of pay-
ments by servicers. 
(B) The use of force placed insurance. 
(C) The employment of daily interest when 
payments are made after a due date. 
(D) The charging of late fees on the entire 
outstanding principal. 
(E) The charging of interest on servicing 
fees. 
(F) The utilization of abusive collection 
practices. 
(G) The charging of prepayment penalties 
when not authorized by either the note or law. 
(H) The employment of unconscionable 
forbearance agreements. 
(I) Foreclosure abuses. 
(3) REPORT.—Before the end of the 18-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
Services of the House of Representatives and the