An Act to further the national housing goal of encouraging homeownership by regulating certain lending practices and closing and settlement procedures in federally related mortgage transactions to the end that unnecessary costs and difficulties of purchasing housing are minimized, and for other purposes.
PL 93-533 (S.3164), enacted 12/22/1974

1724 
PUBLIC LAW 93-533-DEC. 22, 1974 
[88 STAT. 
Public Law 93-533 
December22, 1974 
AN A C T 
— 
To further the national housing goal of encouraging homeownership by regulat-
ing certain lending practices and closing and settlement procedures in federally 
related mortgage transactions to the end that unnecessary costs and difficulties 
of purchasing housing are minimized, and for other purposes. 
Be it enacted hy the Senate and House of Refveseiitathes 
of the 
semelnfnt'^pro- 
United Sttttes of America in Congress asse-mbled^ 
cedures Act of 
^^^'*- 
SHORT TITLE 
1
2 use 2601 
SECTION 1. This Act may be cited as the "Real Elstate Settlement 
Procedures Act of 1974". 
note. 
FINDINGS AND PURPOSE 
1
2 use 2601. 
SEC. 2. (a) The Congress finds that significant reforms in the real 
estate settlement process are needed to insure that consumers through-
out the Nation are provided with greater and more timely information 
on the nature and costs of the settlement process and are protected 
from unnecessarily high settlement charges caused by certain abusive 
practices that have developed in some areas of the country. The Con-
gress also finds that it has been over two years since the Secretary of 
Housing and Urban Development and the Administrator of Veterans' 
Affairs submitted their joint report to the Congress on "Mortgage 
Settlement Costs" and that the time has come for the recommendations 
for Federal legislative action made in that report to be implemented, 
(b) It is the purpose of this Act to effect certain changes in the 
settlement process for residential real estate that will result— 
(1) in more effective advance disclosure to home buyers and 
sellers of settlement costs; 
(2) in the elimination of kickbacks or referral fees that tend 
to increase unnecessarily the costs of certain settlement services; 
(3) in a reduction in the amounts home buyers are required 
to place in escrow accounts established to insure the payment of 
real estate taxes and insurance; and 
(4) in significant reform and modernization of local record-
keeping of land title information. 
DEFINITIONS 
1
2 use 2602. 
gj.(, 3 YoY purposes of this Act— 
(1) the term "federally related mortgage loan" includes any 
loan which— 
(A) is secured by residential real property (including 
individual units of condominiums and cooperatives) designed 
principally for the occupancy of from one to four families; 
and 
(B) (i) is made in whole or in part by any lender the 
deposits or accounts of which are insured by any agency of 
the Federal Government, or is made in whole or in part by 
any lender which is regulated by any agency of the Federal 
Government; or 
(ii) is made in whole or in part, or insured, guaranteed, 
supplemented, or assisted in any way, by the Secretary or 
any other officer or agency of the Federal Government or 
under or in connection with a housing or urban development 
88 STAT. ] 
PUBLIC LAW 93-533-DEC. 22, 1974 
1725 
program administered by the Secretary or a housing or re-
lated program administered by any other such officer or 
agency; or 
(iii) is eligible for purchase by the Federal National Mort-
gage Association, the Government National Mortgage Asso-
ciation, or the Federal Home Loan Mortgage Corporation, 
or from any financial institution from which it could be pur-
chased by the Federal Home Loan Mortgage Corporation; or 
(iv) is made in whole or in part by any "creditor", as 
defined in section 103(f) of the Consumer Credit Protection 
Act (15 U.S.C. 1602(f)), who makes or invests in residential 
real estate loans aggregating more than $1,000,000 per year; 
(2) the term "thing of value" includes any payment, advance, 
funds, loan, service, or other consideration; 
(3) the term "settlement services" includes any service provided 
in connection with a real estate settlement including, but not lim-
ited to, the following: title searches, title examinations, the pro-
vision of title certificates, title insurance, services rendered by an 
attorney, the preparation of documents, property surveys, the 
rendering of credit reports or appraisals, pest and fungus inspec-
tions, services rendered by a real estate agent or broker, and the 
handling of the processing, and closing or settlement; 
(4) the term "title company" means any institution which is 
qualified to issue title insurance, directly or through its agents, 
and also refers to any duly authorized agent of a title company; 
(5) the term "person" includes individuals, corporations, asso-
ciations, partnei-ships, and trusts; and 
(6) the term "Secretary" means the Secretary of Housing and 
Urban Development. 
UNIFORM 
SETTLEMENT 
STATEMENT 
SEC. 4. The Secretary, in consultation with the Administrator of 
1
2 use 2603. 
Veterans' Affairs, the Federal Deposit Insurance Corporation, and 
the Federal Home Loan Bank Board, shall develop and prescribe a 
standard form for the statement of settlement costs which shall be used 
(Avith such mininmm variations as may be necessary to reflect unavoid-
ablfe differences in legal and administrative requirements or practices 
in different areas of the country) as the standard real estate settlement 
form in all transactions in the United States which involve federally 
related mortgage loans; Such form shall conspicuously and clearly 
itemize all charges imposed upon the borroAver and all charges imposed 
upon the seller in connection with the settlement and shall indicate 
whether any title insurance premium included in such charges covers 
or insures the lender's interest in the property, the borrower's interest, 
or both. Such form shall include all, information and data required to 
be provided for such transactions under the Truth in Lending Act and 
^
^ "^c leoi 
the regulations issued thereunder by the Federal Reserve Board, and 
may be used in satisfaction of the disclosure requirements of that Act, 
and shall also include provision for execution of the waiver allowed by 
section 6(c). 
SPECIAL INFORMATION BOOKLETS 
SEC. 5. (a) The Secretary shall prepare and distribute booklets to 
^^ ^^^ 2^°"^-
help persons borrowing money to finance the purchase of residential 
real estate better to understand the nature and costs of real estate settle-
ment services. The Secretary shall distribute such booklets to all 
lenders which make federally related mortgage loans. 
1726 
PUBLIC LAW 93-533-DFX. 22, 1974 
[88 STAT. 
(b) Each booklet shall be in such form and detail as the Secretary 
shall prescribe and, in addition to such other information as the Sec-
retary may provide, shall include in clear and concise language— 
(1) a description and explanation of the nature and purpose of 
each cost incident to a real estate settlement; 
(2) an explanation and sample of the standard real estate set-
tlement form developed and prescribed under section 4; 
(3) a description and explanation of the nature and purpose of 
escrow accounts when used in connection with loans secured by 
residential real estate; 
(4) an explanation of the choices available to buyers of resi-
dential real estate in selecting persons to provide necessary serv-
ices incident to a real estate settlement; and 
(5) an explanation of the unfair practices and unreasonable or 
unnecessary charges to be avoided by the prospective buyer with 
respect to a real estate settlement. 
Such booklets shall take into consideration differences in real estate 
settlement procedures which may exist among the several States and 
territories of the United States and among separate political subdivi-
sions within the same State and territory. 
(c) Each lender referred to in subsection (a) shall provide the 
booklet described in such subsection to each person from whom it 
receives an application to borrow money to finance the purchase of 
residential real estate. Such booklet shall be provided at the time of 
receipt of such application. 
(d) Booklets may be printed and distributed by lenders if their 
form and content are approved by the Secretary as meeting the require-
ments of subsection (b) of this section. 
12 u s e 2605. 
ADVANCE DISCLOSURE OF SETTLEMENT COSTS 
SEC. B. (a) Any lender agreeing to make a federally related mortgage 
loan shall provide or cause to be provided to the prospective borrower, 
to the prospective seller, and to any officer or agency of the Federal 
Government proposing to insure, guarantee, supplement, or assist such 
loan, at the time of the loan commitment, but in no case later than 
twelve calendar days prior to settlement, upon the standard real estate 
settlement form developed and prescribed under section 4, or upon a 
form developed and prescribed by the Secretary specifically for the 
purposes of this section, and in accordance with regulations prescribed 
by the Secretary, an itemized disclosure in writing of each charge 
arising in connection with such settlement. For the purposes of com-
plying with this section, it shall be the duty of the lender agreeing 
to make the loan to obtain or cause to be obtained from persons who 
provide or will provide services in connection with such settlement 
the amount of each charge they intend to make. In the event the exact 
amount of any such charge is not available, a good faith estimate of 
such charge may be provided. 
Liability. 
^^^ j£ g^j^y lender fails to provide a prospective borrower or seller 
with the disclosure as required by subsection (a), it shall be liable to 
such borrower or seller, as the casa may be, in an amount equal to— 
(1) the actual damages involved or $500, Avhichever is greater, 
and 
(2) in the case of any successful action to enforce the foregoing 
liability, the court costs of the action together with a reasonable 
attorney"s fee as determined by the court; 
except that" a lender may not be held liable for a violation in aiy 
action brought under this subsection if it shows by a preponderance 
of the evidence that the violation was not intentional and resulted 
STAT. ] 
PUBLIC LAW 93-533-DEC. 22, 1974 
1727 
from a bona fide error notwithstanding the maintenance of procedures 
adopted to avoid any such error. 
(c) Tlie provisions of subsection (a) shall be deemed to be satisfied 
with respect to a borrower or seller in connection with any settlement 
involving a federally related mortgage loan if the disclosure required 
by subsection (a) is provided at any time prior to settlement and the 
prospective borrower or seller, as the case may be, executes, under 
terms and conditions prescribed by regulations to be issued by the 
Secretary after consultation with the appropriate Federal agencies, a 
waiver of the requirement that the disclosure be provided at least 
twelve calendar days prior to such settlement. In issuing such regula-
tions, the Secretary shall take into account the need to protect the 
borrower's and the seller's right to a timely disclosure. 
d) With respect to any particular transaction involving a federally 
related mortgage loan, no borrower shall maintain an action or 
separate actions against any lender under both the provisions of this 
section and the provisions of section 130 of the Consumer Credit Pro-
tection Act (15 U.S.C. 1640). 
(e) The provisions of this Act shall supersede the provisions of sec-
tion 121(c) of the Consumer Credit Protection Act insofar as the lat-
ter applies to federally related mortgage loans as defined in this Act. 
15 u s e 1631. 
DISCLOSURE o r PREVIOUS SELLING PRICE OF EXISTING REAL PROPERTY 
SEC. 7. (a) No lender shall make any commitment for a federally 
related mortgage loan on a residence on which construction has been 
completed more than twelve months pi'ior to the date of such commit-
ment unless it has confirmed that the following information has been 
disclosed in Avriting by the seller or his agent to the buyer— 
(1) the name and address of the present owner of the pi'operty 
being sold; 
(2) the date the property was acquired by the present owner 
(the year only if the pi'operty was acquired more than two years 
previously) ; and 
(3) if the seller has not owned the property for at least two years 
prior to the date of the loan application and has not used the prop-
erty as a place of residence, the date and purchase price of the last 
arm's length transfer of the property, a list of any subsequent 
improvements made to the property (excluding maintenance 
repairs) and the cost of such improvements. 
(b) the obligations imposed upon a lender by this section shall be 
deemed satisfied and a commitment for a federally related mortgage 
loan may thereafter be made if the lender receives a copy of the written 
statement provided by the seller to the buyer supplying the informa-
tion required by subsection (a). 
(c) Whoever knowingly and willfully provides false information 
under this section or otherwise willfully fails to comply with its 
requirements shall be fined not moi-e than $10,000 or imprisoned for 
not more than one year, or both. 
12 u s e 2606. 
Noncompliance, 
penalty. 
PROHIBITION 
AGAINST KICKBACKS AND UNEARNED 
FEES 
SEC. 8. (a) No person shall give and no person shall accept any fee, 
kickback, or thing of value pursuant to any agreement or understand-
ing, oral or otherwise, that business incident to or a part of a real estate 
settlement service involving a federally related mortgage loan shall 
be referred to any person. 
(b) No person shall give and no person shall accept any portion, 
split, or percentage of any charge made or received for the rendering 
12 u s e 2607. 
1728 
PUBLIC LAW 93-533-DEC. 22, 1974 
[88 STAT. 
of a real estate settlement service in connection Avith a transaction 
involving a federally related mortgage loan other than for services 
actually performed. 
(c) Nothing in this section shall be construed as prohibiting (1) 
the payment of a fee (A) to attorneys at law for services actually 
rendered or (B) by a title company to its duly appointed agent for 
services actually performed in the issuance of a policy of title insur-
ance or (C) by a lender to its duly appointed agent for services actually 
performed in the making of a loan, or (2) the payment to any person 
of a bona fide salary or compensation or other payment for goods or 
facilities actually furnished or for services actually performed. 
Penalties. 
(d)(1) Auy pcrsou Or persons who violate the provisions of this 
section shall be fined not more than $10,000 or imprisoned for not 
more than one year, or both. 
(2) In addition to the penalties provided by paragraph (1) of this 
subsection, any person or persons who violate the provisions of subsec-
tion (a) shall be jointly and severally liable to the person or persons 
whose business has been referred in an amount equal to three times 
the value or amount of the fee or thing of value, and any peison or 
persons who violate the provisions of subsection (b) shall be jointly 
and severally liable to the person or persons charged for the settlement 
services involved in an amount equal to three times the amount of the 
portion, split, or percentage. In any successful action to enforce the 
liability under this paragraph, the court may award the court costs 
of the action together with a reasonable attorney's fee as determined 
by the court. 
TITLE COMPANIES 
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g^^ g
_ ^^^ j ^ ^ Seller of property that will be purchased with the 
assistance of a federally related mortgage loan shall require directly 
or indirectly, as a condition to selling the property, that title insurance 
covering the property be purchased by the buyer from any particular 
title company. 
Liability. 
^1^^ ^j^y seiigj. ^j^Q violates the provisions of subsection (a) shall 
be liable to the buyer in an amount equal to three times all charges 
made for such title insurance. 
LIMITATION O
N REQUIREMENT OP A
D
V
A
N
C
E DEPOSITS IN E
S
C
R
O
W 
ACCOUNTS 
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SEC 10. No lender, in connection with a federally related mortgage 
loan, shall require the borrower or prospective borrower— 
(1) to deposit in any escrow account which may be established 
in connection with such loan for the purpose of assuring payment 
of taxes and insurance premiums with respect to the pi'operty, 
prior to or upon the date of settlement, an aggregate sum (for 
such purpose) in excess of— 
(A) in any jurisdiction where such taxes and insurance 
premiums are postpaid, the total amount of such taxes and 
insurance premiums which will actually be due and payable 
on the date of settlement and the pro rata portion thereof 
which has accrued, or 
(B) in any jurisdiction where such taxes and insurance 
premiums are prepaid, a pro rata portion of the estimated 
taxes and insurance premiums corresponding to the number 
of months from the last date of payment to the date of 
settlement, 
plus one-twelfth of the estimated total amount of such taxes and 
insurance premiums which will become due and payable during 
the twelve-month period beginning on the date of settlement; or 
88 STAT. ] 
PUBLIC LAW 93-533-DEC. 22, 1974 
1729 
(2) to deposit in any such escrow account in any month begin-
ning after the date of settlement a sum (for the purpose of assur-
ing payment of taxes and insurance premiums with respect to the 
property) in excess of one-twelfth of the total amount of the 
estimated taxes and insurance premiums which will become due 
and payable during the twelve-month period beginning on the first 
day of such month, except that in the event the lender determines 
there will be a deficiency on the due date he shall not be prohibited 
from requiring additional monthly deposits in such escrow account 
of pro rata portions of the deficiency corresponding to the number 
of months from the date of the lender's determmation of such 
deficiency to the date upon which such taxes and insurance premi-
ums become due and payable. 
LIMITATIONS AND DISCLOSURES WITH RESPECT TO CERTAIN FEDERALLY 
RELATED MORTGAGE LOANS 
SEC. 11. (a) The Federal Deposit Insurance Act is amended by add-
ing at the end thereof the following new section: 
"SEC. 25. (a) No insured bank, or mutual savings or cooperative bank 
^^ "^^ isaib. 
which is not an insured bank, shall make any federally related mort-
gage loan to any agent, trustee, nominee, or other person acting in a 
fiduciary capacity without the prior condition that the identity of the 
person receiving the beneficial interest of such loan shall at all times 
be revealed to the bank. At the request of the Corporation, the bank 
Report, 
shall report to the Corporation on the identity of such person and the 
nature and amount of the loan, discount, or other extension of credit. 
"(b) In addition to other available remedies, this section may be 
enforced with respect to mutual savings and cooperative banks which 
are not insured banks in accordance with section 8 of this Act, and for 
such purpose such mutual savings and cooperative banks shall be held 
and considered to be State nonmember insured banks and the appro-
priate Federal agency with respect to such mutual savings and coop-
erative banks shall be the Federal Deposit Insurance Corporation." 
(b) Title IV of the National Housing Act is amended by adding at 
the end thereof the following new section: 
"SEC. 413. No insured institution shall make any federally related 
^^ ^^^ ^^^°^-
mortgage loan to any agent, trustee, nominee, or other person acting 
in a fiduciary capacity without the prior condition that the identity of 
the person receiving the beneficial interest of such loan shall at all 
times be revealed to the institution. At the request of the Federal 
Home Loan Bank Board, the insured institution shall report to the 
Board on the identity of such person and the nature and amount of 
the loan." 
(c) The Federal Deposit Insurance Corporation or the Federal 
^^ ^^^ ^^^^^ 
Home Loan Bank Board as appropriate may by regulation exempt 
classes or types of transactions from the provisions added by this sec-
tion if the Corporation or the Board determines that the purposes of 
such provisions would not be advanced materially by their application 
to such transactions. 
FEE FOR PREPARATION OF TRUTH-IN-LENDING AND UNIFORM 
SETTLEMENT 
STATEMENTS 
SEC. 12. No fee shall be imposed or charge made upon any other 
1
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person (as a part of settlement costs or othewise) by a lender in con-
nection with a federally related mortgage loan made by it (or a loan 
for the purchase of a mobile home), for or on account of the prepara-
tion and submission by such lender of the statement or statements 
required (in connection with such loan) by sections 4 and 6 of this 
Act or by the Truth in Lending Act. 
le use leoi 
'' 
: 
^ 
note. 
1730 
PUBLIC LAW 93-533-DEC. 22, 1974 
[88 STAT. 
ESTABLISHMENT OX DEMONSTRATION BASIS OF LAND PARCEL 
RECORDATION 
SYSTEM 
1
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gj,^. 23. The Secretary shall establish and place in operation on a 
demonstration basis, in representative political subdivisions (selected 
by him) in various areas of the United States, a model system or sys-
tems fo,r the recordation of land title information in a manner and 
form calculated to facilitate and simplify land transfers and mortgage 
transactions and reduce the cost thereof, with a view to the possible 
development (utilizing the information and experience gained under 
this section) of a nationally uniform system of land parcel recordation. 
REPORT OF T H E SECRETARY ON NECESSITY FOR FURTHER 
CONGRESSIONAL 
ACTION 
Report to 
§£<-_ 14_ (a) The Secreta^ry, after consultation with the Administra-
°iTusc'26i2. 
tor of Veterans' Affairs, the Federal Deposit Insurance Corporation, 
and the Federal Home Loan Bank Board, and after such study, 
investigation, and hearings (at which representatives of consumers 
groups shall be allowed to testify) as he deems appropriate, shall, not 
less than three years nor more than five years from the effective date 
of this Act, report to the Congress on whether, in view of the imple-
mentation of the provisions of this Act imposing certain requirements 
and prohibiting ce,rtain practices in connection with real estate set-
tlements, there is any necessity for further legislation in this area. 
Report to 
(b) If tlie Secretary concludes that there is necessity for further 
ongress. 
Icgislatiou, he shall report to the Congress on the specific practices or 
problems that should be the subject of such legislation and the cor-
rective measures that need to be taken. In addition, the Secretary shall 
include in his report— 
(1) recommendations on the desirability of requiring lenders 
of federally related mortgage loans to bear the costs of particular 
real estate settlement services that would otherwise be paid for 
by borrowers; 
(2) recommendations on whether Federal regulation of the 
charges for real estate settlement services in federally related 
mortgage transactions is necessary and desirable, and, if he con-
cludes that such regulation is necessary and desirable, a descrip-
tion and analysis of the regulatory scheme he believes Congress 
should adopt; and 
(3) recommendations on the ways in which the Federal Gov-
ernment can assist and encourage local governments to modernize 
their methods for the recordation of land title information, 
including the feasibility of providing financial assistance or 
incentives to local governments that seek to adopt one of the model 
systems developed by the Secretary in accordance with the provi-
sions of section 13 of this Act. 
DEMONSTRATION TO DETERMINE FEASIBILITY OF INCLUDING 
STATEMENTS 
OF SETTLEMENT COSTS I N SPECIAL INFORMATION BOOKLETS 
1
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gj,^ 25. The Secretary shall, on a demonstration basis in selected 
housing market areas, have prepared and included in the special infor-
mation booklets required to be furnished under section 5 of this Act, 
statements of the range of costs for specific settlement services in such 
cfrTresV" 
aTcas. Not later than June 30, 1976, the Secretary shall transmit to 
the Congress a full report on the demonstration conducted under this 
section. Such report shall contain the Secretary's assessment of the 
88 STAT. ] 
PUBLIC LAW 93-534-DEC. 22, 1974 
1731 
feasibility of preparing and including settlement cost range state-
ments for all housing market areas in the special information booklets 
for such areas. 
JURISDICTION OF COURTS 
SEC. 16. Any action to recover damages pursuant to the provisions 
1
2 use 2614. 
of section 6, 8, or 9 may be brought in the United States district court 
for the district in which the property involved is located, or in any 
other court of competent jurisdiction, within one year from the date 
of the occurrence of the violation. 
12 u s e 2615. 
12 u s e 2616. 
VALIDITY OF CONTRACTS AND LIENS 
SEC. 17. Nothing in this Act shall affect the validity or enforce-
ability of any sale or contract for the sale of real property or any 
loan, loan agreement, mortgage, or lien made or arising in connection 
with a federally related mortgage loan. 
RELATION TO STATE LAWS 
SEC. 18. (a) This Act does not annul, alter, or affect, or exempt 
any person subject to the provisions of this Act from complying 
with, the laws of any State with respect to settlement practices, except 
to the extent that those laws are inconsistent with any provision of this 
Act, and then only to the extent of the inconsistency. The Secretary 
is authorized to determine whether such inconsistencies exist. The 
Secretary may not determine that any State law is inconsistent with 
any provision of this Act if the Secretary determines that such law 
gives greater protection to the consumer. In making these determina-
tions the Secretary shall consult with the appropriate Federal agencies. 
(b) No provision of this Act or of the laws of any State imposing 
any liability shall apply to any act done or omitted in good faith in 
conformity with any rule, regulation, or interpretation thereof by 
the Secretary, notwithstanding that after such act or omission has 
occurred, such rule, regulation, or interpretation is amended, rescinded, 
or determined by judicial or other authority to be invalid for any 
reason. 
EFFECTIVE DATE 
SEC. 19. The provisions of this Act, and the amendments made ^ 1
2 use 2601 
thereby, shall become effective one hundred and eighty days after the 
date of the enactment of this Act. 
Approved December 22, 1974. 
Public Law 93-534 
A N A C T 
December 22, 1974 
To allow advance payment of subscription charges for publication for official 
\^ 
' ^°^^^ 
use prepared for auditory as well as visual usage. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled.^ That the Act of ^ Publications 
June 12, 1930 (46 Stat. 580, 31 U.S.C. 530a), as amended, is hereby °Advance ^
a
^
y
-
* 
amended by adding at the end thereof the following new section: 
^ent. 
"SEC. 2. For the purposes of this Act, the term 'other publications' 
"^^ ^^°*'' 
shall include any publication printed, microfilmed, photocopied, or 
magnetically or otherwise recorded for auditory or visual usage." 
Approved December 22, 1974.