|
|
The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 1463
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES
ACT OF 1974 AMENDMENTS.
(a) SERVICER PROHIBITIONS.—Section
6 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2605) is amended by adding at the end the following new
subsections:
‘‘(k) SERVICER
PROHIBITIONS.—
‘‘(1) IN GENERAL.—A servicer of a
federally related mortgage shall not—
‘‘(A) obtain
force-placed hazard insurance unless there is a reasonable basis
to believe the borrower has failed to comply with the loan
contract’s requirements to maintain property insurance;
‘‘(B) charge fees for responding to valid qualified written
requests (as defined in regulations which the Bureau of Consumer
Financial Protection shall prescribe) under this section;
‘‘(C) fail to take timely action to respond to a borrower’s
requests to correct errors relating to allocation of payments,
final balances for purposes of paying off the loan, or avoiding
foreclosure, or other standard servicer’s duties;
‘‘(D)
fail to respond within 10 business days to a request from a
borrower to provide the identity, address, and other relevant
contact information about the owner or assignee of the loan; or
‘‘(E) fail to comply with any other obligation found by the
Bureau of Consumer Financial Protection, by regulation, to be
appropriate to carry out the consumer protection purposes of this
Act.
‘‘(2) FORCE-PLACED INSURANCE
DEFINED.—For purposes of this subsection and subsections
(l) and (m), the term ‘forceplaced insurance’ means hazard
insurance coverage obtained by a servicer of a federally related
mortgage when the borrower has failed to maintain or renew hazard
insurance on such property as required of the borrower under the
terms of the mortgage.
‘‘(l)
REQUIREMENTS FOR FORCE-PLACED INSURANCE.—A servicer of a
federally related mortgage shall not be construed as having a
reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
‘‘(1)
WRITTEN NOTICES TO BORROWER.—A
servicer may not impose any charge on any borrower for
force-placed insurance with respect to any property securing a
federally related mortgage unless—
‘‘(A) the servicer has
sent, by first-class mail, a written notice to the borrower
containing—
‘‘(i) a reminder of the borrower’s obligation
to maintain hazard insurance on the property securing the
federally related mortgage;
‘‘(ii) a statement that the
servicer does not have evidence of insurance coverage of such
property;
‘‘(iii) a clear and conspicuous statement of the
procedures by which the borrower may demonstrate that the borrower
already has insurance coverage; and
‘‘(iv) a statement that
the servicer may obtain such coverage at the borrower’s expense if
the borrower does not provide such demonstration of the borrower’s
existing coverage in a timely manner;
‘‘(B) the servicer
has sent, by first-class mail, a second written notice, at least
30 days after the mailing of the notice under subparagraph (A)
that contains all the information described in each clause of such
subparagraph; and
‘‘(C) the servicer has not received from
the borrower any demonstration of hazard insurance coverage for
the property securing the mortgage by the end of the 15-day period
beginning on the date the notice under subparagraph (B) was sent
by the servicer.
‘‘(2) SUFFICIENCY OF
DEMONSTRATION.—A servicer of a federally related mortgage
shall accept any reasonable form of written confirmation from a
borrower of existing insurance coverage, which shall include the
existing insurance policy number along with the identity of, and
contact information for, the insurance company or agent, or as
otherwise required by the Bureau of Consumer Financial Protection.
‘‘(3) TERMINATION OF FORCE-PLACED
INSURANCE.—Within 15 days of the receipt by a servicer of
confirmation of a borrower’s existing insurance coverage, the
servicer shall—
‘‘(A) terminate the force-placed insurance;
and
‘‘(B) refund to the consumer all force-placed insurance
premiums paid by the borrower during any period during which the
borrower’s insurance coverage and the forceplaced insurance
coverage were each in effect, and any related fees charged to the
consumer’s account with respect to the force-placed insurance
during such period.
‘‘(4)
CLARIFICATION WITH RESPECT TO FLOOD DISASTER PROTECTION ACT.—No
provision of this section shall be construed as prohibiting a
servicer from providing simultaneous or concurrent notice of a
lack of flood insurance pursuant to section 102(e) of the Flood
Disaster Protection Act of 1973.
‘‘(m)
LIMITATIONS ON FORCE-PLACED INSURANCE
CHARGES.— All charges, apart from charges subject to State
regulation as the business of insurance, related to force-placed
insurance imposed on the borrower by or through the servicer shall
be bona fide and reasonable.’’.
(b)
INCREASE IN PENALTY AMOUNTS.—Section 6(f) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is
amended—
(1) in paragraphs (1)(B) and (2)(B), by striking
‘‘$1,000’’ each place such term appears and inserting ‘‘$2,000’’;
and
(2) in paragraph (2)(B)(i), by striking ‘‘$500,000’’
and inserting ‘‘$1,000,000’’.
(c)
DECREASE IN RESPONSE TIMES.—Section 6(e) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended—
(1) in paragraph (1)(A), by striking ‘‘20 days’’ and inserting
‘‘5 days’’;
(2) in paragraph (2), by striking ‘‘60 days’’
and inserting ‘‘30 days’’; and
(3) by adding at the end the
following new paragraph:
‘‘(4)
LIMITED EXTENSION OF RESPONSE TIME.—The 30-day period
described in paragraph (2) may be extended for not more than 15
days if, before the end of such 30-day period, the servicer
notifies the borrower of the extension and the reasons for the
delay in responding.’’.
(d) 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
credited to a similar account for a new mortgage loan to the
borrower with the same lender.’’.
Return to Index
Return to the Table of Contents
Visit the
international Association of Risk and Compliance Professionals
(IARCP)
|
|
|
