Text: H.R.2112 — 101st Congress (1989-1990)All Information (Except Text)

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HR 2112 IH
101st CONGRESS
1st Session
 H. R. 2112
To amend the Real Estate Settlement Procedures Act of 1974 to prevent
unwarranted accumulation of amounts in escrow accounts of homebuyers with
federally related mortgage loans.
IN THE HOUSE OF REPRESENTATIVES
April 26, 1989
Mr. BENNETT introduced the following bill; which was referred to the Committee
on Banking, Finance and Urban Affairs
A BILL
To amend the Real Estate Settlement Procedures Act of 1974 to prevent
unwarranted accumulation of amounts in escrow accounts of homebuyers with
federally related mortgage loans.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Interest on Escrow Accounts Deposit Act
  of 1989'.
SEC. 2. LIMITATION ON BALANCE IN ESCROW ACCOUNT.
  Section 10(2) of the Real Estate Settlement Procedures Act of 1974 (12
  U.S.C. 2609(2)) is amended--
  (1) by striking `the sum of (A)'; and
  (2) by striking `, plus (B)' and all that follows through `twelve-month
  period'.
SEC. 3. INTEREST AND STATEMENTS RELATING TO ESCROW ACCOUNTS.
  (a) IN GENERAL- Section 10 of the Real Estate Settlement Procedures Act
  of 1974 (12 U.S.C. 2609) is amended--
  (1) by inserting `(a)' after the section designation; and
  (2) by adding at the end the following new subsections:
  `(b)(1)(A) Any lender that establishes or continues any escrow account (as
  described in subsection (a)(1)) in connection with any federally related
  mortgage loan shall pay interest on amounts deposited in each account at
  a rate of not less than 5 percent per year.
  `(B) Interest under this subsection shall be computed on the daily balances
  in the escrow account from the date the funds are received to the date the
  funds are disbursed under paragraph (2)(B) and debit balances resulting
  from advances made by the lender may be taken into account in computing
  the interest.
  `(C)(i) Except as provided in clause (ii), interest under this subsection
  for each month shall be credited to the escrow account on the last day of
  the month that is not a Saturday, Sunday, or legal public holiday.
  `(ii) If any escrow account is discontinued or the mortgage loan is
  fully paid off, the interest for the month during which the account is
  discontinued or the loan is paid off shall be credited to the escrow
  account on the date of such discontinuance or paying off.
  `(2)(A) Except as provided in subparagraph (B), the interest credited
  to the escrow account under paragraph (1)(C) shall be credited to the
  remaining principal balance on the mortgage loan, paid to the borrower
  (or the successors or assigns of the borrower), or credited to the escrow
  account, according to the election of the borrower (or the successors or
  assigns of the borrower) and within 90 days after the end of each calendar
  year. If the borrower (or the successors or assigns of the borrower)
  fails to make an election under this subparagraph, the interest shall be
  returned to the borrower (or the successors or assigns of the borrower).
  `(B) If the mortgage loan is fully paid off, the interest shall be paid
  to the borrower (or the successors or assigns of the borrower) within 15
  days after the date that the loan is fully paid.
  `(3) A lender may not charge a borrower any fee for the administration or
  service of an escrow account under this subsection.
  `(c)(1) Any lender that has established an escrow account in connection
  with a federally related mortgage loan shall submit to the borrower for
  which the escrow account has been established, not later than 45 days after
  the establishment of the escrow account, a statement clearly itemizing the
  estimated taxes, insurance premiums, and other charges which are reasonably
  anticipated to be paid from the escrow account during the first 12 months
  after the establishment of the account and the anticipated dates of such
  payments.
  `(2) Any lender that has established or continued an escrow account in
  connection with a federally related mortgage loan shall submit to each
  borrower for which an escrow account has been established or continued,
  not later than January 31 of each year, an annual statement clearly
  itemizing for the previous year the payments made to the escrow account,
  the amount paid from the escrow account for taxes, insurance premiums,
  and other charges paid from the escrow account, the amount of interest
  earned on the balance in the escrow account for the previous year, and
  the balance in the escrow account at the end of the year.
  `(d)(1) Any lender that violates the provisions of this section may be
  assessed a civil penalty by the Secretary of not more than $3,000 for each
  violation. The Secretary may issue an order assessing a civil penalty under
  this section only after notice and an opportunity for a hearing on the record
  according to the provisions of section 554 of title 5, United States Code.
  `(2) In addition to the penalty provided in paragraph (1), any lender that
  violates the provisions of this section shall be liable to the borrower in
  an amount equal to 3 times the amount determined to have been improperly
  retained by the lender.
  `(3) The Secretary or the attorney general of any State may bring an action
  to enjoin violations of this section.
  `(4) In any private action brought pursuant to this section, the court may
  award to the prevailing party the court costs of the action together with
  reasonable attorneys fees.'.
  (b) CONFORMING AMENDMENT- Section 16 of the Real Estate Settlement Procedures
  Act (12 U.S.C. 2614) is amended by striking `or 9' and inserting `, 9,
  or 10'.
SEC. 4. PROHIBITION OF FEES FOR ESCROW ACCOUNT STATEMENTS.
  Section 12 of the Real Estate Settlement Procedures Act (12 U.S.C. 2610)
  is amended--
  (1) by striking the section heading, and inserting the following:
  `PROHIBITION OF FEES FOR PREPARATION OF UNIFORM SETTLEMENT, TRUTH-IN-LENDING,
  AND ESCROW ACCOUNT STATEMENTS'; and
  (2) by striking `and 6' and inserting `or 10(c)'.
SEC. 5. APPLICABILITY.
  The amendments made by this Act shall apply to any escrow account established
  or in existence on or after the expiration of the 60-day period beginning
  on the date of the enactment of this Act.