Homeowners Protection Act of 1998
PL 105-216 (S.318), enacted 07/29/1998

PUBLIC LAW 105-216-^JULY 29, 1998 
112 STAT. 897 
Public Law 105-216 
105th Congress 
An Act 
To require automatic cancellation and notice of cancellation rights with respect 
to private mortgage insurance which is required as a condition for entering 
July 29, 1998 
into a residential mortgage transaction, to abolish the Thrift Depositor Protection 
is~318i 
Oversight Board, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled. 
Homeowners 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
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(a) SHORT TITLE.—This Act may be cited as the "Homeowners 
12 use 4901 
Protection Act of 1998". 
note. 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Definitions. 
Sec. 3. Termination of private mortgage insurance. 
Sec. 4. Disclosure requirements. 
Sec. 5. Notification upon cancellation or termination. 
Sec. 6. Disclosure requirements for lender paid mortgage insurance. 
Sec. 7. Fees for disclosures. 
Sec. 8. Civil liability. 
Sec. 9. Effect on other laws and agreements. 
Sec. 10. Enforcement. 
Sec. 11. Construction. 
Sec. 12. Amendment to Higher Education Act of 1965. 
Sec. 13. Effective date. 
Sec. 14. Abolishment of the Thrift Depositor Protection Oversight Board. 
SEC. 2. DEFINITIONS. 
12 USC 4901. 
In this Act, the following definitions shall apply: 
(1) ADJUSTABLE RATE MORTGAGE.—The term "adjustable 
rate mortgage" means a residential mortgage that has an 
interest rate that is subject to change. 
(2) CANCELLATION DATE.—The term "cancellation date" 
means— 
(A) with respect to a fixed rate mortgage, at the option 
of the mortgagor, the date on which the principal balance 
of the mortgage— 
(i) based solely on the initial amortization schedule 
for that mortgage, and irrespective of the outstanding 
balance for that mortgage on that date, is first sched-
uled to reach 80 percent of the original value of the 
property securing the login; or 
(ii) based solely on actual payments, reaches 80 
percent of the original value of the property securing 
the loan; £ind 
(B) with respect to an adjustable rate mortgage, at 
the option of the mortgagor, the date on which the principal 
balance of the mortgage— 
112 STAT. 898 
PUBLIC LAW 105-216-JULY 29, 1998 
(i) based solely on eunortization schedules for that 
mortgage, and irrespective of the outstanding balance 
for that mortgage on that date, is first scheduled to 
reach 80 percent of the original value of the property 
securing the loan; or 
(ii) based solely on actu£il payments, first reaches 
80 percent of the original value of the property securing 
the loan. 
(3) FIXED RATE MORTGAGE.—The term "fixed rate mortgage" 
means a residential mortgage that has an interest rate that 
is not subject to change. 
(4) GOOD PAYMENT HISTORY.—The term "good payment his-
tory" means, with respect to a mortgagor, that the mortgagor 
has not— 
(A) made a mortgage payment that was 60 days or 
longer past due during the 12-month period beginning 24 
months before the date on which the mortgage reaches 
the c£incellation date; or 
(B) made a mortgage payment that was 30 days or 
longer past due during the 12-month period preceding the 
date on which the mortgage reaches the cancellation date. 
(5) INITIAL AMORTIZATION SCHEDULE.—The term "initial 
amortization schedule" means a schedule established at the 
time at which a residential mortgage transaction is con-
summated with respect to a fixed rate mortgage, showing— 
(A) the amount of principal and interest that is due 
at regular intervals to retire the principal balance and 
accrued interest over the amortization period of the loan; 
and 
(B) the impaid principal balance of the loan after each 
scheduled pajonent is made. 
(6) MORTGAGE INSURANCE.—The term "mortgage insurance" 
means insurance, including any mortgage guareinty insurance, 
against the nonpayment of, or default on, an individual mort-
gage or loan involved in a residential mortgage transaction. 
(7) MORTGAGE INSURER.—The term "mortgage insurer" 
means a provider of private mortgage insurance, as described 
in this Act, that is authorized to transact such business in 
the State in which the provider is transacting such business. 
(8) MORTGAGEE.—The term "mortgagee" means the holder 
of a residential mortgage at the time at which that mortgage 
transaction is consummated. 
(9) MORTGAGOR.—The term "mortgagor" means the original 
' 
borrower under a residential mortgage or his or her successors 
or assignees. 
(10) ORIGINAL VALUE.—The term "original value", with 
respect to a residential mortgage, means the lesser of the 
sales price of the property securing the mortgage, as reflected 
in the contract, or the appraised value at the time at which 
the subject residential mortgage transaction was consummated. 
(11) 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 Housing 
Act of 1949. 
(12) RESIDENTL^L MORTGAGE.—The term "residential mort-
gage" means a mortgage, loan, or other evidence of a security 
PUBLIC LAW 105-216—JULY 29, 1998 
112 STAT. 899 
interest created with respect to a single-family dwelling that 
is the primary residence of the mortgagor. 
(13) 
RESIDENTIAL 
MORTGAGE 
TRANSACTION.—The term 
s 
"residential mortgs^e transaction" means a transaction con-
summated on or after the date that is 1 year after the date 
of enactment of this Act, in which a mortgage, deed of trust, 
purchase money security interest arising under an installment 
sales contract, or equivalent consensual security interest is 
created or retained against a single-family dwelling that is 
the primary residence of the mortgagor to finance the acquisi-
tion, initial construction, or refinancing of that dwelling. 
(14) SERVICER.—^The term "servicer" has the same meaning 
as in section 6(i)(2) of the Real Estate Settlement Procedures 
Act of 1974, with respect to a residential mortgage. 
(15) SINGLE-FAMILY DWELLING.—The term "single-family 
dwelling" mesins a residence consisting of 1 family dwelling 
unit. 
(16) TERMINATION DATE.—The term "termination date" 
means— 
(A) with respect to a fixed rate mortgage, the date 
on which the principal balance of the mortgage, based 
solely on the initial amortization schedule for that mort-
gage, and irrespective of the outstanding balance for that 
mortgage on that date, is first scheduled to reach 78 percent 
' 
of the original value of the property securing the loan; 
and 
(B) with respect to an adjustable rate mortgage, the 
date on which the principal balance of the mortgage, based 
solely on amortization schedules for that mortgage, and 
irrespective of the outstanding balance for that mortgage 
on that date, is first scheduled to reach 78 percent of 
the original value of the property securing the loan. 
SEC. 3. TERMINATION OF PRIVATE MORTGAGE INSURANCE. 
12 USC 4902. 
(a) BORROWER CANCELLATION.—^A requirement for private mort-
gage insurance in connection with a residential mortgage trans-
action shall be canceled on the cancellation date, if the mortgagor— 
(1) submits a request in writing to the servicer that can-
cellation be initiated; 
(2) has a good pajrment history with respect to the residen-
tial mortgage; sind 
(3) has satisfied any requirement of the holder of the mort-
gage (as of the date of a request under paragrajdi (1)) for— 
(A) evidence (of a type established in advance and 
made known to the mortgagor by the servicer promptly 
upon receipt of a request under paragraph (1)) that the 
v£due of the property securing the mortgage has not 
r 
declined beltjw the original value of the property; and 
(B) certification that the equity of the mortgagor in 
the residence securing the mortgage is unencumbered by 
a subordinate lien. 
(b) AUTOMATIC TERMINATION.—^A reqtiirement for private mort-
gage insa^ance in connection with a residential mortgage trans-
acticHu shaii terminate with respect to iNi^nents for that mortgage 
insurance made by fee mortgager— 
112 STAT. 900 
PUBLIC LAW 105-216—JULY 29, 1998 
(1) on the termination date if, on that date, the mortgagor 
is current on the payments required by the terms of the residen-
tial mortgage transaction; or 
(2) on the date £tfter the termination date on which the 
mortgagor becomes current on the payments required by the 
terms of the residential mortgage transaction. 
(c) FINAL TERMINATION.—If a requirement for private mortgage 
insurance is not otherwise canceled or terminated in accordance 
with subsection (a) or (b), in no case may such a requirement 
be imposed beyond the first day of the month immediately following 
the date that is the midpoint of the amortization period of the 
loan if the mortgagor is current on tiie payments required by 
the terms of the mortgage. 
(d) No FURTHER PAYMENTS.—No payments or premiums may 
be required from the mortgagor in connection with a private mort-
gage insurance requirement terminated or canceled under this sec-
tion— 
(1) in the case of cancellation under subsection (a), more 
than 30 days after the later o
f
— 
(A) the date on which a request under subsection (aXD 
is received; or 
(B) the date on which the mortgagor satisfies any 
evidence and certification requirement under subsection 
(a)(3); 
_ 
(2) in the case of termination under subsection (b), more 
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than 30 days after the termination date or the date referred 
to in subsection (bX2), as applicable; and 
(3) in the case of termination luider subsection (c), more 
than 30 days after the final termination date established under 
that subsection. 
(e) RETURN OF UNEARNED PREMIUMS.— 
Deadline. 
(1) IN GENERAL.—Not later than 45 days after the termi-
nation or cancellation of a private mortgage insurance require-
ment under this section, all unearned premiums for private 
mortgage insurance shall be returned to the mortgagor by 
the servicer. 
Deadline. 
(2) TRANSFER OF FUNDS TO SERVICER.—Not later than 30 
days after notification by the servicer of termination or cancella-
tion of private mortgage insurance under this Act with respect 
to a mortgagor, a mortgage insurer that is in possession of 
any unearned premiums of that mortgagor shall transfer to 
the servicer of the subject mortgage an amount equal to the 
amoimt of the unearned premiums for repayment in accordance 
with paragraph (1). 
(f) EXCEPTIONS FOR HiGH RiSK LOANS.— 
(1) IN GENERAL.—The termination and cancellation provi-
sions in subsections (a) and (b) do not apply to any residential 
mortgage or mortgage tr£uisaction that, at the time at which 
t^e residential mortgage transaction is consiunmated, has high 
risks associated with the extension of the loan— 
(A) as determined in accordance with guidelines pub-
lished by the Federal National Mortgage Association and 
the Federal Home Loan Mortgage Corporation, in the case 
of a mortgage loan with an original principal balance that 
does not exceed the applicable annual conforming loan 
limit for the secondary market established pursuant to 
PUBLIC LAW 105-216-JULY 29, 1998 
112 STAT. 901 
section 305(a)(2) of the Federal Home Loan Mortgage Cor-
poration Act, so as to require the imposition or continuation 
of a private mortgage insurance requirement beyond the 
terms specified in subsection (a) or (b) of section 3; or 
(B) as determined by the mortgagee in the case of 
any other mortgage, except that termination shall occur— 
(i) with respect to a fixed rate mortgage, on the 
date on which the principal balance of the mortgage, 
based solely on the initial amortization schedule for 
that mortgage, and irrespective of the outstanding bal-
ance for that mortgage on that date, is first scheduled 
to reach 77 percent of the original value of the property 
securing the loan; and 
(ii) with respect to an adjustable rate mortgage, 
on the date on which tiie principal balance of the 
mortgage, based solely on amortization schedules for 
that mortgage, and irrespective of the outstanding bal-
ance for that mortgage on that date, is first scheduled 
to reach 77 percent of the original value of the property 
seeming the loan. 
(2) TERMINATION AT MIDPOINT.—^A private mortgage insur-
ance requirement in connection with a residential mortgage 
or mortgage transaction described in paragraph (1) shall termi-
nate in accordance with subsection (c). 
(3) RULE OF CONSTRUCTION.—Nothing in this subsection 
may be construed to require a mortgage or mortgage transaction 
described in paragraph (1)(A) to be purchased by the Federal 
National Mortgage Association or the Federal Home Loan Mort-
gage Corporation. 
(4) GAO REPORT.—Not later than 2 years after the date Deadline, 
of the enactment of this Act, the Comptroller General of the 
United States shall submit to the Congress a report describing 
the volume and characteristics of residential mortgages and 
residential mortgage transactions that, pursuant to paragraph 
(1) of this subsection, are exempt fi*om the application of sub-
sections (a) and (b). The report shall— 
(A) determine the number or volume of such mortgages 
and transactions compared to residential mortgages and 
residential mortgage transactions that are not classified 
as high-risk for purposes of paragraph (1); and 
(B) identify the characteristics of such mortgages and 
transactions that result in their classification (for purposes 
of paragraph (1)) as having high risks associated with 
the extension of the loan and describe such characteristics, 
including— 
(i) the income levels and races of the mortgagors 
involved; 
(ii) the amount of the downpayments involved and 
the downpayments expressed as percentages of the 
acquisition costs of the properties involved; 
(iii) the t3rpes and locations of the properties 
involved; 
(iv) the mortgage principal amounts; and 
112 STAT. 902 
PUBLIC LAW 105-216—JULY 29, 1998 
(v) any other characteristics of such mortgages 
and transactions that may contribute to their classifica-
tion as high risk for purposes of paragraph (1), includ-
ing whether such mortgages are purchase-money mort-
gages or refinancings and whether and to what extent 
such loans are low-documentation loans. 
12 use 4903. 
SEC. 4. DISCLOSURE REQUIREMENTS. 
(a) DISCLOSURES FOR NEW MORTGAGES AT TIME OF TRANS-
ACTION.— 
(1) 
DISCLOSURES FOR NON-EXEMPTED TRANSACTIONS.—In 
any case in which private mortgage insurance is required in 
connection with a residential mortgage or mortgage treinsaction 
(other than a mortgage or mortgage transaction described in 
section 3(f)(1)), at the time at which the transaction is con-
summated, the mortgagee shall provide to the mortgagor— 
(A) if the transaction relates to a fixed rate mortgage— 
(i) a written initial amortization schedule; and 
(ii) written notice— 
(I) that the mortgagor may c£incel the require-
ment in accordance with section 3(a) of this Act 
indicating the date on which the mortgagor may 
request csincellation, based solely on the initial 
Eimortization schedule; 
(II) that the mortgagor may request cancella-
tion in accordance with section 3(a) of this Act 
earlier than provided for in the initial simortization 
schedule, based on actual payments; 
(III) that the requirement for private mortgage 
insurance will automatically terminate on the 
termination date in accordance with section 3(b) 
of this Act, and what that termination date is 
with respect to that mortgage; and 
(IV) that there axe exemptions to the right 
to cancellation and automatic termination of a 
requirement for private mortgage insurance in 
accordance with section 3(f) of this Act, and 
whether such an exemption appUes at that time 
to that transaction; and 
(B) if the transaction relates to an adjustable rate 
mortgage, a written notice that— 
(i) the mortgagor may cancel the requirement in 
accordance with section 3(a) of this Act on the cancella-
tion date, and that the servicer will notify the mortga-
gor when the cancellation date is reached; 
(ii) the requirement for private mortgage insurance 
will automatically terminate on the termination date, 
and that on the termination date, the mortgagor will 
be notified of the termination or that the requirement 
will be terminated as soon as the mortgagor is current 
on loan pajonents; and 
(iii) there are exemptions to the right of cancella-
tion and automatic termination of a requirement for 
private mortgage insurance in accordance with section 
3(f) of this Act, smd whether such an exemption applies 
at that time to that transaction. 
PUBLIC LAW 105-216—JULY 29, 1998 
112 STAT. 903 
(2) DISCLOSURES FOR EXCEPTED TRANSACTIONS.—In the case 
of a mortgage or mortgage transaction described in section 
3(f)(1), at the time at which the transaction is consummated, 
the mortgagee shall provide written notice to the mortgagor 
that in no case may private mortgage insurance be required 
beyond the date that is the midpoint of the amortization period 
of the loan, if the mortgagor is current on pa5anents required 
by the terms of the residential mortgage. 
(3) ANNUAL DISCLOSURES.—If private mortgage insurance 
is required in connection with a residential mortgage trans-
action, the servicer shall disclose to the mortgagor in each 
such transaction in an annual written statement— 
(A) the rights of the mortgagor under this Act to can-
cellation or termination of the private mortgage insurance 
requirement; and 
(B) an address and telephone number that the mortga-
gor may use to contact the servicer to determine whether 
the mortgagor may cancel the private mortgage insurance. 
(4) APPLICABILITY.—Paragraphs (1) through (3) shall apply 
with respect to each residential mortgage transaction con-
summated on or after the date that is 1 year after the date 
of enactment of this Act. 
(b) DISCLOSURES FOR EXISTING MORTGAGES.—If private mort-
gage insurance was required in connection with a residential mort-
gage entered into at any time before the effective date of this 
Act, the servicer shall disclose to the mortgagor in each such trans-
action in an annual written statement— 
(1) that the private mortgage insurance may, under certain 
circumstances, be canceled by the mortgagor (with the consent 
of the mortgagee or in accordsince with applicable State law); 
and 
(2) an address and telephone number that the mortgagor 
may use to contact the servicer to determine whether the 
mortgagor may cancel the private mortgage insurance. 
(c) INCLUSION IN OTHER ANNUAL NOTICES.—The information 
and disclosures required imder subsection (b) and paragraphs (1)(B) 
and (3) of subsection (a) may be provided on the annual disclosure 
relating to the escrow account made as required under the Real 
Estate Settlement Procedures Act of 1974, or as part of the annual 
disclosure of interest pajnnents made pursuant to Internal Revenue 
Service regulations, and on a form promulgated by the Internal 
Revenue Service for that purpose. 
(d) STANDARDIZED FORMS.—The mortgagee or servicer may use 
standardized forms for the provision of disclosures required under 
this section. 
SEC. 5. NOTIFICATION UPON CANCELLATION OR TERMINATION. 
12 USC 4904. 
(a) IN GENERAL.—Not later than 30 days after the date of Deadline, 
cancellation or termination of a private mortgage insurance require-
ment in accordance with this Act, the servicer shall notify the 
mortgagor in writing— 
(1) that the private mortgage insurance has terminated 
and that the mortgagor no longer has private mortgage insur-
ance; and 
(2) that no further premiums, payments, or other fees 
shall be due or payable by the mortgagor in connection with 
the private mortgage insurance. 
112 STAT. 904 
PUBLIC LAW 105-216-JULY 29, 1998 
(b) NOTICE OF GROUNDS.— 
(1) IN GENERAL.—If a servicer determines that a mortgage 
did not meet the requirements for termination or cancellation 
of private mortgage insurance under subsection (a) or (b) of 
section 3, the servicer shall provide written notice to the mort-
gagor of the groiuids relied on to make the determination 
(including the results of any appraisal used to make the deter-
mination). 
(2) TIMING.—^Notice required by paragraph (1) shall be 
provided— 
(A) with respect to cancellation of private mortgage 
insurance under section 3(a), not later than 30 days after 
the later of— 
(i) the date on which a request is received imder 
section 3(aXl); or 
(ii) the date on which the mortgagor satisfies any 
evidence and certification requirements under section 
3(a)(3); and 
(B) with respect to termination of private mortgage 
insurance under section 3(b), not later than 30 days after 
the scheduled termination date. 
12 USE 4905. 
SEC. 6. DISCLOSURE REQUIREMENTS FOR LENDER PAID MORTGAGE 
INSURANCE. 
(a) DEFINITIONS.—For purposes of this section— 
(1) the term "borrower paid mortgage insurance" means 
private mortgage insurance that is required in connection with 
a residential mortgage transaction, pa3rments for which are 
made by the borrower; 
(2) the term "lender paid mortgage insursmce" means pri-
vate mortgage insurance that is required in connection with 
a residential mortgage transaction, payments for which are 
made by a person other than the borrower; and 
(3) the term "loan commitment" means a prospective mort-
gagee's written confirmation of its approvsd, including any 
appUcable closing conditions, of the application of a prospective 
mortgagor for a residential mortgage loan. 
(b) EXCLUSION.—Sections 3 through 5 do not apply in the 
case of lender paid mortgage insurance. 
(c) NOTICES TO MORTGAGOR.—In the case of lender paid mort-
gage insurance that is required in connection with a residential 
mortgage or a residential mortgage transaction— 
(1) not later than the date on which a loan commitment 
is made for the residential mortgage transaction, the prospec-
tive mortgagee shall provide to the prospective mortgagor a 
written notice— 
(A) that lender paid mortgage insurance differs fi:om 
borrower paid mortgage insurance, in that lender paid 
mortgage insurance may not be canceled by the mortgagor, 
while 
borrower 
paid 
mortgage 
insurance 
could 
be 
cancelable by the mortgagor in accordance with section 
3<a) of this Act, and could automatically terminate on the 
termination date in accordance with section 3(b) of this 
Act; 
(B) that lender paid mortgage insurance— 
**eti ' t-*?-,!^;* 
PUBLIC LAW 105-216-JULY 29, 1998 
112 STAT. 905 
(i) usually results in a residential mortgage having 
a higher interest rate than it would in the case of 
borrower paid mortgage insurance; and 
(ii) terminates only when the residential mortgage 
is refinanced, paid off, or otherwise terminated; and 
(C) that lender paid mortgage insurance and borrower 
paid mortgage insurance both have benefits and disadvan-
tages, including a generic analysis of the differing costs 
and benefits of a residential mortgage in the case lender 
paid mortgage insurance versus borrower paid mortgage 
insurance over a 10-year period, assuming prevafling 
interest and property appreciation rates; 
(D) that lender paid mortgage insurance may be tax-
deductible for purposes of Federal income taxes, if the 
mortgagor itemizes expenses for that purpose; and 
(2) not later than 30 days after the termination date that Deadline, 
would apply in the case of borrower paid mortgage insurance, 
the servicer shall provide to the mortgagor a written notice 
indicating that the mortgagor may wish to review financing 
options that could eliminate the requirement for private mort-
gage insurance in connection with the residential mortgage, 
(d) STANDARD FORMS.—The servicer of a residential mortgage 
may develop and use a standardized form or forms for the provision 
of notices to the mortgagor, as required under subsection (c). 
SEC. 7. FEES FOR DISCLOSURES. 
12USC4906. 
No fee or other cost may be imposed on any mortgagor with 
respect to the provision of any notice or information to the mortga-
gor pursuant to this Act. 
SEC. 8. CIVIL LIABILITY. 
12 USC 4907. 
(a) IN GENERAL.—^Any servicer, mortgagee, or mortgage insurer 
that violates a provision of this Act shall be liable to each mortgagor 
to whom the violation relates for— 
(1) in the case of an action by an individual, or a class 
action in which the liable party is not subject to section 10, 
any actual damages sustained by the mortgagor as a result 
of the violation, including interest (at a rate determined by 
the court) on the amount of actual damages, accruing from 
the date on which the violation commences; 
(2) in the case of— 
(A) an action by an individual, such statutory damages 
as the court may allow, not to exceed $2,000; and 
(B) in the case of a class action— 
(i) in which the liable party is subject to section 
10, such amount as the court may allow, except that 
the total recovery under this subparagraph in any 
class action or series of class actions arising out of 
the same violation by the same liable party shall not 
exceed the lesser of $500,000 or 1 percent of the net 
worth of the liable party, as determined by the court; 
and 
(ii) in which the liable party is not subject to 
section 10. such amount as the court may allow, not 
to exceed $1,000 as to each member of the class, except 
that the total recovery under this subparagraph in 
any class action or series of class actions arising out 
of the S£ime violation by the same liable party shall 
112 STAT. 906 
PUBLIC LAW 105-216—JULY 29, 1998 
not exceed the lesser of $500,000 or 1 percent of the 
gross revenues of the liable party, as determined by 
the court; 
(3) costs of the action; and 
(4) reasonable attorney fees, as determined by the court. 
(b) TIMING OF ACTIONS.—No action may be brought by a mortga-
gor under subsection (a) later than 2 years after the date of the 
discovery of the violation that is the subject of the action. 
(c) LIMITATIONS ON LIABILITY.— 
(1) IN GENERAL.—^With respect to a residential mortgage 
transaction, the failure of a servicer to comply with the require-
ments of this Act due to the failure of a mortgage insurer 
or a mortgagee to comply with the requirements of this Act, 
shall not be construed to be a violation of this Act by the 
servicer. 
(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1) 
shall be construed to impose any additional requirement or 
liability on a mortgage insurer, a mortgagee, or a holder of 
a residential mortgage. 
12 use 4908. 
SEC. 9. EFFECT ON OTHER LAWS AND AGREEMENTS. 
(a) EFFECT ON STATE LAW.— 
(1) IN GENERAL.—^With respect to any residential mortgage 
or residential mortgage transaction consummated after the 
effective date of this Act, and except as provided in paragraph 
(2), the provisions of this Act shall supersede any provisions 
of the law of any State relating to requirements for obtaining 
or maintaining private mortgage insurance in connection with 
residential mortgage transactions, cancellation or automatic 
termination of such private mortgage insurance, any disclosure 
of information addressed by this Act, and any other matter 
specifically addressed by this Act. 
(2) PROTECTION OF EXISTING STATE LAWS.— 
(A) IN GENERAL.—The provisions of this Act do not 
supersede protected State laws, except to the extent that 
the protected State laws are inconsistent with any provision 
of this Act, and then only to the extent of the inconsistency. 
(B) INCONSISTENCIES.—A protected State law shall not 
be considered to be inconsistent with a provision of this 
Act if the protected State law— 
(i) requires termination of private mortgage insur-
ance or other mortgage guaranty insurance— 
(I) at a date earlier than as provided in this 
Act; or 
(II) when a mortgage principal balance is 
achieved that is higher than as provided in this 
Act; or 
(ii) requires disclosure of information— 
(I) that provides more information than the 
information required by this Act; or 
(II) more often or at a date earlier than is 
required by this Act. 
(C) PROTECTED STATE LAWS.—For purposes of this 
paragraph, the term "protected State law" means a State 
law— 
PUBLIC LAW 105-216-^ULY 29, 1998 
112 STAT. 907 
(i) regarding any requirements relating to private 
mortgage insurance in connection with residential 
mortgage transactions; 
(ii) that was enacted not later than 2 years after 
the date of the enactment of this Act; and 
(iii) that is the law of a State that had in effect, 
on or before January 2, 1998, any State law described 
in clause (i). 
(b) EFFECT ON OTHER AGREEMENTS.—The provisions of this 
Act shall supersede any conflicting provision contained in any agree-
ment relating to the servicing of a residential mortgage loan entered 
into by the Federal National Mortgage Association, the Federal 
Home Loan Mortgage Corporation, or any private investor or note 
holder (or any successors thereto). 
SEC. 10. ENFORCEMENT. 
12 USC 4909. 
(a) IN GENERAL.—CompUance with the requirements imposed 
under this Act shall be enforced under— 
(1) section 8 of the Federal Deposit Insurance Act— 
(A) by the appropriate Federal banking agency (as 
defined in section 3(q) of the Federal Deposit Insurance 
Act) in the case of insured depository institutions (as 
defined in section 3(c)(2) of such Act); 
(B) by the Federal Deposit Insurance Corporation in 
the case of depository institutions described in clause (i), 
(ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve 
Act that are not insured depository institutions (as defined 
in section 3(c)(2) of the Federal Deposit Insurance Act); 
and 
(C) by the Director of the Office of Thrift Supervision 
in the case of depository institutions described in clause 
(v) and or (vi) of section 19(b)(1)(A) of the Federal Reserve 
Act that are not insured depository institutions (as defined 
in section 3(c)(2) of the Federal Deposit Insurance Act); 
(2) the Federal Credit Union Act, by the National Credit 
Union Administration Board in the case of depository institu-
tions described in clause (iv) of section 19(b)(1)(A) of the Federal 
(3) part C of title V of the Farm Credit Act of 1971 (12 
U.S.C. 2261 et seq.), by the Farm Credit Administration in 
the case of an institution that is a member of the Farm Credit 
System. 
(b) ADDITIONAL ENFORCEMENT POWERS.— 
(1) VIOLATION OF THIS ACT TREATED AS VIOLATION OF OTHER 
ACTS.—For purposes of the exercise by any agency referred 
to in subsection (a) of such agenc/s powers under any Act 
referred to in such subsection, a violation of a requirement 
imposed under this Act shall be deemed to be a violation 
of a requirement imposed imder that Act. 
(2) ENFORCEMENT AUTHORITY UNDER OTHER ACTS.—In addi-
tion to the powers of any agency referred to in subsection 
(a) under any provision of law specifically referred to in such 
subsection, each such agency may exercise, for purposes of 
enforcing compliance with any requirement imposed under this 
Act, any other authority conferred on such agency by law. 
112 STAT. 908 
PUBLIC LAW 105-216—JULY 29, 1998 
Notification. 
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note. 
Effective date. 
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note. 
(c) ENFORCEMENT AND REIMBURSEMENT.—In carrying out its 
enforcement activities under this section, each agency referred to 
in subsection (a) shall— 
(1) notify the mortgagee or servicer of any failure of the 
mortgagee or servicer to comply with 1 or more provisions 
of this Act; 
(2) with respect to each such failure to comply, require 
the mortgagee or servicer, as applicable, to correct the account 
of the mortgagor to reflect the date on which the mortgage 
insurance should have been canceled or terminated under this 
Act; and 
(3) require the mortgagee or servicer, as applicable, to 
reimburse the mortgagor in an amount equal to the total 
unearned premiums paid by the mortgagor after the date on 
which the obligation to pay those premiums ceased under this 
Act. 
SEC. 11. CONSTRUCTION. 
(a) PMI NOT REQUIRED.—Nothing in this Act shall be construed 
to impose any requirement for private mortgage insurance in 
connection with a residential mortgage transaction. 
(b) No PRECLUSION OF CANCELLATION OR TERMINATION AGREE-
MENTS.—Nothing in this Act shall be construed to preclude cancella-
tion or termination, by agreement between a mortgagor and the 
holder of the mortgage, of a requirement for private mortgage 
insurance in connection with a residential mortgage transaction 
before the cancellation or termination date established by this Act 
for the mortgage. 
SEC. 12. AMENDMENT TO HIGHER EDUCATION ACT OF 1965. 
Section 481(a)(4) of the Higher Education Act of 1965 (20 U.S.C. 
1088(a)(4)) is amended by— 
(1) inserting the subparagraph designation "(A)" imme-
diately after the paragraph designation "(4)"; 
(2) redesignating subparagraphs (A) and (B) as clauses 
(i) and (ii), respectively; £ind 
(3) adding at the end thereof the following new subpara-
graph: 
"(B) Subparagraph (A)(i) shall not apply to a nonprofit 
institution whose primary function is to provide health 
care educational services (or an affiliate of such an institu-
tion that has the power, by contract or ownership interest, 
to direct or cause the direction of the institution's msmage-
ment or policies) that files for bsinkruptcy under chapter 
11 of title 11 of the United States Code between July 
1, and December 31,1998.". 
SEC. 13. EFFECTIVE DATE. 
This Act, other than section 14, shall become effective 1 year 
after the date of enactment of this Act. 
SEC. 
14. ABOLISHMENT OF THE THRIFT DEPOSITOR PROTECTION 
OVERSIGHT 
BOARD. 
(a) IN GENERAL.—Effective at the end of the 3-month period 
beginning on the date of enactment of this Act, the Thrift Depositor 
Protection Oversight Board established under section 21A of the 
Federal Home Loan Bank Act (hereafter in this section referred 
to as the "Oversight Board") is hereby abolished. 
PUBLIC LAW 105-216—JULY 29, 1998 
112 STAT. 909 
(b) DISPOSITION OF AFFAIRS.— 
(1) POWER OF CHAIRPERSON.—Effective on the date of enact-
ment of this Act, the Chairperson of the Oversight Board (or 
the designee of the Chairperson) may exercise on behalf of 
the Oversight Board any power of the Oversight Board nec-
essary to settle and conclude the affairs of the 0>versight Board. 
(2) AVAILABILITY OF FUNDS.—Fimds available to the Over-
sight Board shall be available to the Chairperson of the Over-
sight Board to pay expenses incurred in carrying out paragraph 
(1). 
(c) SAVINGS PROVISION.— 
(1) 
EXISTING 
RIGHTS, 
DUTIES, 
AND 
OBLIGATIONS NOT 
AFFECTED.—No provision of this section shall be construed as 
affecting the validity of any right, duty, or obligation of the 
United States, the (Oversight Board, the Resolution Trust Cor-
poration, or any other person that— 
(A) arises under or pursuant to the Federal Home 
Loan Bank Act, or any other provision of law applicable 
with respect to the Oversight Board; and 
(B) existed on the day before the abolishment of the 
Oversight Board in accordance with subsection (a). 
(2) CONTINUATION OF SUITS.—^No action or other proceeding 
commenced by or against the Oversight Board with respect 
to any function of the Oversight Board shall abate by reason 
of the enactment of this section. 
(3) LL^BILITIES.-
(A) IN GENERAL.—^All liabihties arising out of the oper-
ation of the Oversight Board during the period beginning 
on August 9, 1989, and the date uiat is 3 months after 
the date of enactment of this Act shall remain the direct 
liabilities of the United States. 
(B) No SUBSTITUTION.—The Secretary of the Treasury 
shall not be substituted for the Oversight Board as a party 
to any action or proceeding referred to in subparagraph 
(A). 
(4) CONTINUATIONS OF ORDERS, RESOLUTIONS, DETERMINA-
TIONS, AND REGULATIONS PERTAINING TO THE RESOLUTION FUND-
ING CORPORATION.— 
(A) IN GENERAL.—^All orders, resolutions, determina-
tions, and regulations regarding the Resolution Funding 
Corporation shall continue in effect according to the terms 
of such orders, resolutions, determinations, and regulations 
until modified, terminated, set aside, or superseded in 
accordance witii applicable law if such orders, resolutions, 
determinations, or regulations— 
(i) have been issued, made, and prescribed, or 
allowed to become effective by the Oversight Board, 
or by a court of competent jurisdiction, in the perform-
ance of functions transferred by this section; and 
(ii) are in effect at the end of the 3-month period 
beginning on the date of enactment of this section. 
(B) ENFORCEABIUTY OF ORDERS, RESOLUTIONS, DETER-
MINATIONS, AND REGULATIONS BEFORE TRANSFER.—Before 
the effective date of the transfer of the auHiority and 
duties of tihe Resolution Funding Corporation to the Sec-
retary of the Treasury under subsection (d), all orders, 
resolutions, determinations, and regulations pertaining to 
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note. 
Effective date. 
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note. 
112 STAT. 910 
PUBLIC LAW 105-216^JULY 29, 1998 
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12 use 1441a 
note. 
Effective date. 
the Resolution Funding Corporation shall be enforceable 
by and against the United States. 
(C) ENFORCEABILITY O F ORDERS, RESOLUTIONS, DETER-
MINATIONS, AND REGULATIONS AFTER TRANSFER.—On and 
after the effective date of the transfer of the authority 
^ 
and duties of the Resolution Funding Corporation to the 
Secretary of the Treasury under subsection (d), all orders, 
resolutions, determinations, and regulations pertaining to 
the Resolution Funding Corporation shall be enforceable 
by and against the Secretary of the Treasury. 
(d) TRANSFER OF THRIFT DEPOSITOR PROTECTION 
OVERSIGHT 
BOARD AUTHORITY AND DUTIES OF RESOLUTION FUNDING CORPORA-
TION TO SECRETARY OF THE TREASURY.—Effective at the end of 
the 3-month period beginning on the date of enactment of this 
Act, the authority and duties of the Oversight Board under sections 
21A(a)(6)(I) and 2 IB of the Federal Home Loan Bank Act are 
transferred to the Secretary of the Treasury (or the designee of 
the Secretary). 
(e) 
MEMBERSHIP 
OF THE AFFORDABLE 
HOUSING 
ADVISORY 
BOARD.—Effective on the date of enactment of this Act, section 
14(b)(2) of the Resolution Trust Corporation Completion Act (12 
U.S.C. 1831q note) is amended— 
(1) by striking subparagraph (C); and 
(2) by redesignating subparagraphs (D) and (E) as subpara-
graphs (C) and (D), respectively. 
(f) TIME OF MEETINGS OF THE AFFORDABLE HOUSING ADVISORY 
BOARD.— 
(1) IN GENERAL.—Section 14(b)(6)(A) of the Resolution Trust 
Corporation Completion Act (12 U.S.C. 1831q note) is amend-
ed— 
(A) by striking "4 times a year, or more frequently 
if requested by the Thrift Depositor Protection Oversight 
Board or" £m.d inserting "2 times a year or at the request 
of; and 
(B) by striking the second sentence. 
(2) CLERICAL AMENDMENT.—Section 14(b)(6)(A) of the Reso-
lution Trust Corporation Completion Act (12 U.S.C. 1831q note) 
is amended, in the subparagraph heading, by striking "AND 
LOCATION". 
Approved July 29, 1998. 
LEGISLATIVE HISTORY—S. 318 (H.R. 607): 
HOUSE REPORTS: No. 105-55 accompanying H.R. 607 (Comm. on Banking and Fi-
nancial Services). 
SENATE REPORTS: No. 105-129 (Comm. on Banking, Housing, and Urban Af-
fairs). 
CONGRESSIONAL RECORD: 
Vol. 143 (1997): Nov. 9, considered and passed Senate. 
Vol. 144 (1998): July 14, considered and passed House, amended. 
July 15, Senate concurred in House amendments with 
amendme&ts. 
July 16, House concurred in Senate amendments. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998): 
July 29, Presidential statement.