HR 3725 IHCommentsClose CommentsPermalink

To amend the Real Estate Settlement Procedures Act of 1974 to require the submission to each borrower under a federally related mortgage loan of a one-page description of the essential terms of the loan.CommentsClose CommentsPermalink

October 2, 2007

Mr. AL GREEN of Texas (for himself and Mr. MCHENRY) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink

To amend the Real Estate Settlement Procedures Act of 1974 to require the submission to each borrower under a federally related mortgage loan of a one-page description of the essential terms of the loan.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the `Mortgage Disclosure Simplification Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. REQUIRED DISCLOSURES REGARDING LOAN TERMS.

The Real Estate Settlement Procedures Act of 1974 is amended by inserting after section 4 (12 U.S.C. 2603) the following new section:CommentsClose CommentsPermalink

`SEC. 4A. REQUIRED DISCLOSURES REGARDING LOAN TERMS.

`(a) Development- The Secretary, in consultation with appropriate Federal lending regulation agencies, shall develop and prescribe standard written forms under subsection (c) for statement of the essential terms of a federally related mortgage loan.CommentsClose CommentsPermalink





`(b) Requirement To Use- The Secretary shall require that--CommentsClose CommentsPermalink





`(1) the forms developed pursuant to subsection (a) be used in all transactions in the United States that involve federally related mortgage loans; andCommentsClose CommentsPermalink





`(2) that in any such a transaction--CommentsClose CommentsPermalink





`(A) the form under subsection (c)(1) shall be appropriately and accurately completed by the lender or mortgage broker, or both; andCommentsClose CommentsPermalink





`(B) the completed form under subsection (c)(1) shall be provided to the borrower, together with the form under subsection (c)(2), not later than three days after the application for the federally related mortgage loan is made.CommentsClose CommentsPermalink





`(c) Contents- With respect to a federally related mortgage loan, the standard written forms required under this subsection are as follows:CommentsClose CommentsPermalink





`(1) STATEMENT OF LOAN TERMS- A single page, written disclosure regarding the federally related mortgage loan that, when completed by the lender or mortgage broker, or both, sets forth, in accordance with such requirements as the Secretary shall by regulation establish--CommentsClose CommentsPermalink





`(A) a best possible estimate of--CommentsClose CommentsPermalink





`(i) the total loan amount under the federally related mortgage loan;CommentsClose CommentsPermalink





`(ii) the loan-to-value ratio for the loan;CommentsClose CommentsPermalink





`(iii) the final maturity date for the loan;CommentsClose CommentsPermalink





`(iv) the amount and due date for any balloon payment under the loan;CommentsClose CommentsPermalink





`(v) the amount of any prepayment fee to be charged if the loan is paid in full before the final maturity date for the loan;CommentsClose CommentsPermalink





`(vi) the initial interest rate under the loan expressed as an annual percentage rate, and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink





`(vii) the duration during which such initial interest rate will be charged;CommentsClose CommentsPermalink





`(viii) the fully indexed rate of interest under the loan expressed as an annual percentage rate and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink





`(ix) the maximum possible rate of interest under the loan expressed as an annual percentage rate and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink





`(x) the monthly household income of the borrower upon which the loan is based;CommentsClose CommentsPermalink





`(xi) the amount of initial monthly payment due under the loan, and the amount of such initial monthly payment plus monthly amounts due for taxes and insurance on the property for which the loan is made, both expressed as a percentage of the monthly household income of the borrower;CommentsClose CommentsPermalink





`(xii) the amount of the fully indexed monthly payment due under the loan, and the amount of such fully indexed monthly payment plus monthly amounts due for taxes and insurance on the property for which the loan is made, both expressed as a percentage of the monthly household income of the borrower;CommentsClose CommentsPermalink





`(xiii) the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of such charges that are included in the loan amount and the amount of such charges the borrower must pay at closing, the aggregate amount of lender's fees connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan; andCommentsClose CommentsPermalink





`(xiv) the aggregate amount of fees paid to the mortgage broker in connection with the loan, the amount of such fees paid directly by the borrower, and any additional amount received by the broker from the lender based on the interest rate of the loan (commonly referred to as a yield spread premium);CommentsClose CommentsPermalink





`(B) a name, telephone number, and electronic mail address that may be used by the borrower to obtain information regarding the loan; andCommentsClose CommentsPermalink





`(C) a prominent statement that the amounts to be provided by the lender or mortgage broker, or both, under the federally related mortgage loan shall be subject to final underwriting of the loan.CommentsClose CommentsPermalink





`(2) STATEMENT OF DEFINITIONS AND EXPLANATIONS- A two-page written disclosure that sets forth, in accordance with such requirements as the Secretary shall, by regulation, establish, basic easy-to-understand definitions or explanations, of terms relating to residential mortgage loans, including each of the following terms: appraised value, types of loans, initial interest rate, fully indexed rate of interest, maximum possible rate of interest, monthly household income, monthly loan payment including taxes and insurance, fully indexed housing expense ratio, prepayment fee, balloon payment, payment option loan, points, closing costs, settlement services, settlement charges, lender's fees, and mortgage broker.CommentsClose CommentsPermalink





`(d) Savings Clause- Notwithstanding disclosure pursuant to subsection (c)(1)(A) of best possible estimates of the information required under such subsection with respect to a federally related mortgage loan, the amounts to be provided by the lender or mortgage broker, or both, under the loan shall be subject to final underwriting of the loan.'.CommentsClose CommentsPermalink