12 U.S. Code § 4905 - Disclosure requirements for lender paid mortgage insurance
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, payments for which are made by the borrower;
(2) the term “lender paid mortgage insurance” means private 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
(c) Notices to mortgagor
In the case of lender paid mortgage insurance that is required in connection with a residential mortgage transaction—
(1) not later than the date on which a loan commitment is made for the residential mortgage transaction, the prospective mortgagee shall provide to the prospective mortgagor a written notice—
(A) that lender paid mortgage insurance differs from 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 4902 (a) of this title, and could automatically terminate on the termination date in accordance with section 4902 (b) of this title;
(B) that lender paid mortgage insurance—
(i) usually results in a residential mortgage having a higher interest rate than it would in the case of borrower paid mortgage insurance; and
(C) that lender paid mortgage insurance and borrower paid mortgage insurance both have benefits and disadvantages, 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 prevailing interest and property appreciation rates;
(2) not later than 30 days after the termination date that 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 mortgage insurance in connection with the residential mortgage transaction.
Source(Pub. L. 105–216, § 6,July 29, 1998, 112 Stat. 904; Pub. L. 106–569, title IV, §§ 403(c), 406(a),Dec. 27, 2000, 114 Stat. 2957, 2959.)
References in Text
The Truth in Lending Act, referred to in subsec.(c)(1)(B)(ii), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, as amended, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of Title 15 and Tables.
2000—Subsec. (c). Pub. L. 106–569, § 403(c)(1)(A), struck out “a residential mortgage or” before “a residential mortgage transaction” in introductory provisions.
Subsec. (c)(1)(B)(ii). Pub. L. 106–569, § 406(a), inserted “(under the meaning given such term in the regulations issued by the Board of Governors of the Federal Reserve System to carry out the Truth in Lending Act (15 U.S.C. 1601 et seq.))” after “refinanced”.
Subsec. (c)(2). Pub. L. 106–569, § 403(c)(1)(B), inserted “transaction” before period at end.
Subsec. (d). Pub. L. 106–569, § 403(c)(2), inserted “transaction” after “residential mortgage”.