127 
for such balance from or on behalf of the bor-
rower.’’. 
(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 that is within the servicer’s 
control at the time the loan is paid off shall be promptly 
returned to the borrower within 20 business days or cred-
ited to a similar account for a new mortgage loan to the 
borrower with the same lender.’’. 
SEC. 504. MORTGAGE SERVICING STUDIES REQUIRED. 
(a) MORTGAGE SERVICING PRACTICES.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Fed-
eral banking agencies, and the Federal Trade Com-
mission, shall conduct a comprehensive study on 
mortgage servicing practices and their potential for 
fraud and abuse. 
(2) ISSUES TO BE INCLUDED.—In addition to 
other issues the Secretary of Housing and Urban 
Development, the Federal banking agencies, and the 
Federal Trade Commission may determine to be ap-
propriate and possibly pertinent to the study con-
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128 
ducted 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 or effective 
posting of payments by servicers. 
(B) The employment of daily interest when 
payments are made after a due date. 
(C) The charging of late fees on the entire 
outstanding principal. 
(D) The charging of interest on servicing 
fees. 
(E) The utilization of collection practices 
that failed to comply with the Fair Debt Collec-
tion Practices Act. 
(F) The charging of prepayment penalties 
when not authorized by either the note or law. 
(G) The employment of unconscionable for-
bearance agreements. 
(H) Foreclosure abuses. 
(3) REPORT.—Before the end of the 12-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 
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129 
Committee on Banking, Housing, and Urban Affairs 
of the Senate. 
(b) MORTGAGE SERVICING IMPROVEMENTS.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Fed-
eral banking agencies, and the Federal Trade Com-
mission, shall conduct a comprehensive study on 
means to improve the best practices of the mortgage 
servicing industry, and Federal and State laws gov-
erning such industry. 
(2) 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 
Committee on Banking, Housing, and Urban Affairs 
of the Senate, together with such recommendations 
for administrative or legislative action as the Sec-
retary, in consultation with the Board and the Com-
mission, may determine to be appropriate. 
SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 
(a) IN GENERAL.—Section 128(b) of the Truth in 
Lending Act (15 U.S.C. 1638(b)) is amended by adding 
at the end the following new paragraph: 
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‘‘(4) REPAYMENT ANALYSIS REQUIRED TO IN-
CLUDE ESCROW PAYMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
consumer credit transaction secured by a first 
mortgage or lien on the principal dwelling of 
the consumer, other than a consumer credit 
transaction under an open end credit plan or a 
reverse mortgage, for which an impound, trust, 
or other type of account has been or will be es-
tablished in connection with the transaction for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property, the information required to be pro-
vided under subsection (a) with respect to the 
number, amount, and due dates or period of 
payments scheduled to repay the total of pay-
ments shall take into account the amount of 
any monthly payment to such account for each 
such repayment in accordance with section 
10(a)(2) of the Real Estate Settlement Proce-
dures Act of 1974. 
‘‘(B) ASSESSMENT
VALUE.—The amount 
taken into account under subparagraph (A) for 
the payment of property taxes, hazard and flood 
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(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property shall reflect the taxable assessed value 
of the real property securing the transaction 
after the consummation of the transaction, in-
cluding the value of any improvements on the 
property or to be constructed on the property 
(whether or not such construction will be fi-
nanced from the proceeds of the transaction), if 
known, and the replacement costs of the prop-
erty for hazard insurance, in the initial year 
after the transaction.’’. 
TITLE VI—APPRAISAL 
ACTIVITIES 
SEC. 601. PROPERTY APPRAISAL REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (u) (as 
added by section 303(f)) the following new subsection: 
‘‘(v) PROPERTY APPRAISAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit in the form of a mortgage referred to in sec-
tion 103(aa) to any consumer without first obtaining 
a written appraisal of the property to be mortgaged 
prepared in accordance with the requirements of this 
subsection. 
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