(a) Disclosures for new mortgages at time of transaction.
(1) In any case in which private mortgage
insurance is required in connection with a residential mortgage transaction
(other than a residential mortgage transaction described in section
3(g)(1)), at the time at which the transaction is consummated, 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
cancel the requirement in accordance with section 3(a) of this Act
indicating the date on which the mortgagor may request cancellation,
based solely on the initial amortization schedule;
(II) that the mortgagor may request cancellation
in accordance with section 3(a) of this Act earlier than provided
for in the initial amortization 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 are exemptions
to the right to cancellation and automatic termination of a requirement
for private mortgage insurance in accordance with section 3(g) of
this Act, and whether such an exemption applies 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 cancellation date, and that the servicer will notify the
mortgagor 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 payments; and
(iii) there are exemptions to the right of
cancellation and automatic termination of a requirement for private
mortgage insurance in accordance with section 3(g) of this Act, and
whether such an exemption applies at that time to that transaction.
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(2) In the case of a residential mortgage
transaction described in section 3(g)(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 payments required
by the terms of the residential mortgage.
(3) If private mortgage insurance is required
in connection with a residential mortgage transaction, 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 cancellation or termination of the private mortgage insurance
requirement; and
(B) 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.
(4) Paragraphs (1) through (3) shall apply
with respect to each residential mortgage transaction consummated
on or after the date that is 1 year after the date of enactment of
this Act.
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(b) Disclosures
for existing mortgages. If private mortgage insurance was required
in connection with a residential mortgage entered into at any time
before the effective date of this Act, the servicer shall disclose
to the mortgagor in each such transaction 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 accordance 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 under subsection (b) and subsection
(a)(3) 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 payments
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, which disclosures shall
relate to the mortgagor’s rights under this Act.
[12 USC 4903. As amended
by act of Dec. 27, 2000 (114 Stat. 2957).]
