1996 Update to 1974 HUD RESPA Act

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[Congressional Record: September 28, 1996 (House)]

[Page H11746-H11796]

From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

TITLE II--ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION

Sec. 2001. SHORT TITLE; TABLE OF CONTENTS; DEFINITIONS

(a) Short Title.--This title may be cited as the ``Economic Growth and Regulatory Paperwork Reduction Act of 1996''.

(b) Table of Contents.--The table of contents for this title is as follows:

TITLE II--ECONOMIC GROWTH AND REGULATORY PAPERWORK REDUCTION

Sec. 2001. Short title; table of contents; definitions

Subtitle A--Streamlining the Home Mortgage Lending Process

Sec. 2101. Simplification and unification of disclosures required under RESPA and TILA for mortgage transactions.

Sec. 2102. General exemption authority for loans.

Sec. 2103. Reductions in Real Estate Settlement Procedures Act of 1974 regulatory burdens.

Sec. 2104. Waiver for certain borrowers.

Sec. 2105. Alternative disclosures for adjustable rate mortgages.

Sec. 2106. Restitution for violations of the Truth in Lending Act.

Sec. 2107. Limitation on liability under the Truth in Lending Act.

Subtitle B--Streamlining Government Regulation

Chapter 1--Eliminating Unnecessary Regulatory Requirements and Procedures

Sec. 2201. Elimination of redundant approval requirement for Oakar transactions.

Sec. 2202. Elimination of duplicative requirements imposed upon bank holding companies.

Sec. 2203. Elimination of the per branch capital requirement for national banks and State member banks.

Sec. 2204. Elimination of branch application requirements for automatic teller machines.

Sec. 2205. Elimination of requirement for approval of investments in bank premises for well capitalized and well managed banks.

Sec. 2206. Elimination of approval requirement for divestitures.

Sec. 2207. Streamlined nonbanking acquisitions by well capitalized and well managed banking organizations.

Sec. 2208. Elimination of unnecessary filing for officer and director appointments.

Sec. 2209. Amendments to the Depository Institution Management Interlocks Act.

Sec. 2210. Elimination of recordkeeping and reporting requirements for officers.

Sec. 2211. Repayment of Treasury loan.

Sec. 2212. Branch closures.

Sec. 2213. Foreign banks.

Sec. 2214. Disposition of foreclosed assets.

Sec. 2215. Exemption authority for antitying provision.

Sec. 2216. FDIC approval of new State bank powers.

Chapter 2--Eliminating Unnecessary Regulatory Burdens

Sec. 2221. Small bank examination cycle.

Sec. 2222. Required review of regulations.

Sec. 2223. Repeal of identification of nonbank financial institution customers.

Sec. 2224. Repeal of certain reporting requirements.

Sec. 2225. Increase in home mortgage disclosure exemption threshold.

Sec. 2226. Elimination of stock loan reporting requirement.

Sec. 2227. Credit availability assessment.

Chapter 3--Regulatory Micromanagement

Sec. 2241. National bank directors.

Sec. 2242. Paperwork reduction review.

Sec. 2243. State bank representation on Board of Directors of the FDIC.

Sec. 2244. Consultation among examiners.

Subtitle C--Regulatory Impact on Cost of Credit and Credit Availability

Sec. 2301. Audit costs.

Sec. 2302. Incentives for self-testing.

Sec. 2303. Qualified thrift investment amendments.

Sec. 2304. Limited purpose banks.

Sec. 2305. Amendment to Fair Debt Collection Practices Act.

Sec. 2306. Increase in certain credit union loan ceilings.

Sec. 2307. Bank investments in Edge Act and agreement corporations.

Subtitle D--Consumer Credit

Chapter 1--Credit Reporting Reform

Sec. 2401. Short title.

Sec. 2402. Definitions.

Sec. 2403. Furnishing consumer reports; use for employment purposes.

Sec. 2404. Use of consumer reports for prescreening and direct marketing; prohibition on unauthorized or uncertified use of information.

Sec. 2405. Consumer consent required to furnish consumer report containing medical information.

Sec. 2406. Obsolete information and information contained in consumer reports.

Sec. 2407. Compliance procedures.

Sec. 2408. Consumer disclosures.

Sec. 2409. Procedures in case of the disputed accuracy of any information in a consumer's file.

Sec. 2410. Charges for certain disclosures.

Sec. 2411. Duties of users of consumer reports.

Sec. 2412. Civil liability.

Sec. 2413. Responsibilities of persons who furnish information to consumer reporting agencies.

Sec. 2414. Investigative consumer reports.

Sec. 2415. Increased criminal penalties for obtaining information under false pretenses.

Sec. 2416. Administrative enforcement.

Sec. 2417. State enforcement of Fair Credit Reporting Act.

Sec. 2418. Federal Reserve Board authority.

Sec. 2419. Preemption of State law.

Sec. 2420. Effective date.

Sec. 2421. Relationship to other law.

Sec. 2422. Federal Reserve Board study.

Chapter 2--Credit Repair Organizations

Sec. 2451. Regulation of credit repair organizations.

Sec. 2452. Credit worthiness.

Subtitle E--Asset Conservation, Lender Liability, and Deposit Insurance Protection

Sec. 2501. Short title.

Sec. 2502. CERCLA lender and fiduciary liability limitations amendments.

Sec. 2503. Conforming amendment.

Sec. 2504. Lender liability rule.

Sec. 2505. Effective date.

Subtitle F--Miscellaneous

Sec. 2601. Federal Reserve Board study.

Sec. 2602. Treatment of claims arising from breach of contracts executed by the receiver or conservator.

Sec. 2603. Criminal sanctions for fictitious financial instruments and counterfeiting.

Sec. 2604. Amendments to the Truth in Savings Act.

Sec. 2605. Consumer Leasing Act amendments.

Sec. 2606. Study of corporate credit unions.

Sec. 2607. Report on the reconciliation of differences between regulatory accounting principles and generally accepted accounting principles.

Sec. 2608. State-by-State and metropolitan area-by-metropolitan area study of bank fees.

[[Page H11750]]

Sec. 2609. Prospective application of gold clauses in contracts.

Sec. 2610. Qualified family partnerships.

Sec. 2611. Cooperative efforts between depository institutions and farmers and ranchers in drought-stricken areas.

Sec. 2612. Streamlining process for determining new nonbanking activities.

Sec. 2613. Authorizing bank service companies to organize as limited liability partnerships.

Sec. 2614. Retirement certificates of deposits.

Sec. 2615. Prohibitions on certain depository institution associations with Government-sponsored enterprises.

Subtitle G--Deposit Insurance Funds

Sec. 2701. Short title.

Sec. 2702. Special assessment to capitalize SAIF.

Sec. 2703. Financing corporation funding.

Sec. 2704. Merger of BIF and SAIF.

Sec. 2705. Creation of SAIF special reserve.

Sec. 2706. Refund of amounts in deposit insurance fund in excess of designated reserve amount.

Sec. 2707. Assessment rates for SAIF members may not be less than assessment rates for BIF members.

Sec. 2708. Assessments authorized only if needed to maintain the reserve ratio of a deposit insurance fund.

Sec. 2709. Treasury study of common depository institution charter.

Sec. 2710. Definitions.

Sec. 2711. Deductions for special assessments.

(c) Definitions.--Except as otherwise specified in this title, the following definitions shall apply for purposes of this title:

(1) Appraisal subcommittee.--The term ``Appraisal Subcommittee'' means the Appraisal Subcommittee established under section 1011 of the Federal Financial Institutions Examination Council Act of 1978 (as in existence on the day before the date of enactment of this Act).

(2) Appropriate Federal banking agency.--The term ``appropriate Federal banking agency'' has the same meaning as in section 3 of the Federal Deposit Insurance Act.

(3) Board.--The term ``Board'' means the Board of Governors of the Federal Reserve System.

(4) Corporation.--The term ``Corporation'' means the Federal Deposit Insurance Corporation.

(5) Council.--The term ``Council'' means the Financial Institutions Examination Council established under section 1004 of the Federal Financial Institutions Examination Council Act of 1978.

(6) Insured credit union.--The term ``insured credit union'' has the same meaning as in section 101 of the Federal Credit Union Act.

(7) Insured depository institution.--The term ``insured depository institution'' has the same meaning as in section 3 of the Federal Deposit Insurance Act.

Subtitle A--Streamlining the Home Mortgage Lending Process

Sec. 2101. SIMPLIFICATION AND UNIFICATION OF DISCLOSURES REQUIRED UNDER RESPA AND TILA FOR MORTGAGE TRANSACTIONS.

(a) In General.--With respect to credit transactions which are subject to the Real Estate Settlement Procedures Act of 1974 and the Truth in Lending Act, the Board of Governors of the Federal Reserve System (hereafter in this section referred to as the ``Board'') and the Secretary of Housing and Urban Development (hereafter in this section referred to as the ``Secretary'') shall take such action as may be necessary before the end of the 6-month period beginning on the date of enactment of this Act--

(1) to simplify and improve the disclosures applicable to such transactions under such Acts, including the timing of the disclosures; and

(2) to provide a single format for such disclosures which will satisfy the requirements of each such Act with respect to such transactions.

(b) Regulations.--To the extent that it is necessary to prescribe any regulation in order to effect any changes required to be made under subsection (a), the proposed regulation shall be published in the Federal Register before the end of the 6-month period referred to in subsection (a).

(c) Recommendations for Legislation.--If the Board and the Secretary find that legislative action may be necessary or appropriate in order to simplify and unify the disclosure requirements under the Real Estate Settlement Procedures Act of 1974 and the Truth in Lending Act, the Board and the Secretary shall submit a report containing recommendations to the Congress concerning such action.

Sec. 2102. GENERAL EXEMPTION AUTHORITY FOR LOANS.

(a) Regulatory Flexibility.--Section 104 of the Truth in Lending Act (15 U.S.C. 1603) is amended--

(1) by redesignating paragraphs (5) and (6) as paragraphs (6) and (7), respectively; and

(2) by inserting after paragraph (4) the following new paragraph:

``(5) Transactions for which the Board, by rule, determines that coverage under this title is not necessary to carry out the purposes of this title.''.

(b) Exemption Authority.--Section 105 of the Truth in Lending Act (15 U.S.C. 1604) is amended by adding at the end the following new subsection:

``(f) Exemption Authority.--

``(1) In general.--The Board may exempt, by regulation, from all or part of this title any class of transactions, other than transactions involving any mortgage described in section 103(aa), for which, in the determination of the Board, coverage under all or part of this title does not provide a meaningful benefit to consumers in the form of useful information or protection.

``(2) Factors for consideration.--In determining which classes of transactions to exempt in whole or in part under paragraph (1), the Board shall consider the following factors and publish its rationale at the time a proposed exemption is published for comment:

``(A) The amount of the loan and whether the disclosures, right of rescission, and other provisions provide a benefit to the consumers who are parties to such transactions, as determined by the Board.

``(B) The extent to which the requirements of this title complicate, hinder, or make more expensive the credit process for the class of transactions.

``(C) The status of the borrower, including--

``(i) any related financial arrangements of the borrower, as determined by the Board;

``(ii) the financial sophistication of the borrower relative to the type of transaction; and

``(iii) the importance to the borrower of the credit, related supporting property, and coverage under this title, as determined by the Board;

``(D) whether the loan is secured by the principal residence of the consumer; and

``(E) whether the goal of consumer protection would be undermined by such an exemption.''.

Sec. 2103. REDUCTIONS IN REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 REGULATORY BURDENS.

(a) Unnecessary Disclosure.--Section 6(a) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(a)) is amended to read as follows:

``(a) Disclosure to Applicant Relating to Assignment, Sale, or Transfer of Loan Servicing.--Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.''.

(b) Consistency of Real Estate Settlement Procedures Act and Truth in Lending Act Exemption of Business Loans.-- Section 7 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2606) is amended--

(1) by striking ``This Act'' and inserting the following:

``(a) In General.--This Act''; and

(2) by adding at the end the following new subsection:

``(b) Interpretation.--In prescribing regulations under section 19(a), the Secretary shall ensure that, with respect to subsection (a) of this section, the exemption for credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, as provided in section 7(1) of the Real Estate Settlement Procedures Act of 1974 shall be the same as the exemption for such credit transactions under section 104(1) of the Truth in Lending Act.''.

(c) Redesignation of Controlled Business Arrangements as Affiliated Business Arrangements.--The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) is amended--

(1) in section 3(7), by striking ``controlled business arrangement'' and inserting ``affiliated business arrangement''; and

(2) in subsections (c)(4) and (d)(6) of section 8, by striking ``controlled business arrangements'' and inserting ``affiliated business arrangements''.

(d) Disclosures by Telephone or Electronic Media.--Section 8(c)(4) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2607(c)(4)(A)) is amended by striking subparagraph (A) and inserting the following ``(A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred (i) in the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business); (ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone, (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or (iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 5(c) are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral),''.

(e) Limitation on Claims Arising From Violations of Requirements for Servicing Mortgages and Administering Escrow Accounts.--Section 16 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2614) is amended--

(1) by striking ``section 8 or 9'' and inserting ``section 6, 8, or 9''; and

(2) by striking ``within one year'' and inserting ``within 3 years in the case of a violation of section 6 and 1 year in the case of a violation of section 8 or 9''.

[[Page H11751]]

(f) Delay of Effectiveness of Recent Final Regulation Relating to Payments to Employees.--Section 19 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2617) is amended by adding at the end the following new subsection:

``(d) Delay of Effectiveness of Recent Final Regulation Relating to Payments to Employees.--

``(1) In general.--The amendment to part 3500 of title 24 of the Code of Federal Regulations contained in the final regulation prescribed by the Secretary and published in the Federal Register on June 7, 1996, which will, as of the effective date of such amendment--

``(A) eliminate the exemption for payments by an employer to employees of such employer for referral activities which is currently codified as section 3500.14(g)(1)(vii) of such title 24; and

``(B) replace such exemption with a more limited exemption in new clauses (vii), (viii), and (ix) of section 3500.14 of such title 24, shall not take effect before July 31, 1997.

``(2) Continuation of prior rule.--The regulation codified as section 3500.14(g)(1)(vii) of title 24 of the Code of Federal Regulations, relating to employer-employee payments, as in effect on May 1, 1996, shall remain in effect until the date the amendment referred to in paragraph (1) takes effect in accordance with such paragraph.

``(3) Public notice of effective date.--The Secretary shall provide public notice of the date on which the amendment referred to in paragraph (1) will take effect in accordance with such paragraph not less than 90 days and not more than 180 days before such effective date.''.

(g) Technical and Conforming Amendments.--

(1) Section 4(a) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603(a)) is amended by striking ``Federal Home Loan Bank Board'' and inserting ``Director of the Office of Thrift Supervision''.

(2) Section 10(c)(1)(C) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2609(c)(1)(C)) is amended by striking ``Not later than the expiration of the 90-day period beginning on the date of the enactment of the Cranston-Gonzalez National Affordable Housing Act, the'' and inserting ``The''.

(h) Repeal of Obsolete Provisions.--The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) is amended by striking sections 13, 14 and 15.

Sec. 2104. WAIVER FOR CERTAIN BORROWERS. Section 105 of the Truth in Lending Act (15 U.S.C. 1604) is amended by adding at the end the following new subsection:

``(g) Waiver for Certain Borrowers.--

``(1) In general.--The Board, by regulation, may exempt from the requirements of this title certain credit transactions if--

``(A) the transaction involves a consumer--

``(i) with an annual earned income of more than $200,000; or

``(ii) having net assets in excess of $1,000,000 at the time of the transaction; and

``(B) a waiver that is handwritten, signed, and dated by the consumer is first obtained from the consumer.

``(2) Adjustments by the board.--The Board, at its discretion, may adjust the annual earned income and net asset requirements of paragraph (1) for inflation.''.

Sec. 2105. ALTERNATIVE DISCLOSURES FOR ADJUSTABLE RATE MORTGAGES.

Section 128(a) of the Truth in Lending Act (15 U.S.C. 1638(a)) is amended by adding at the end the following new paragraph:

``(14) In the case of any variable interest rate residential mortgage transaction, in disclosures provided at application as prescribed by the Board for a variable rate transaction secured by the consumer's principal dwelling, at the option of the creditor, a statement that the periodic payments may increase or decrease substantially, and the maximum interest rate and payment for a $10,000 loan originated at a recent interest rate, as determined by the Board, assuming the maximum periodic increases in rates and payments under the program, or a historical example illustrating the effects of interest rate changes implemented according to the loan program.''.

Sec. 2106. RESTITUTION FOR VIOLATIONS OF THE TRUTH IN LENDING ACT.

Section 108(e)(3) of the Truth in Lending Act (15 U.S.C. 2602(3)) is amended--

(1) by striking ``ordered (A) if'' and inserting the following: ``ordered--

``(A) if'';

(2) by striking ``may require a partial'' and inserting ``may-- `

`(i) require a partial'';

(3) by striking ``, except that with respect'' and all that follows through ``Act, the agency shall require'' and inserting ``; or

``(ii) require'';

(4) by striking ``reasonable, (B) the'' and inserting the following: ``reasonable, if (in the case of an agency referred to in paragraph (1), (2), or (3) of subsection (a)), the agency determines that a partial adjustment or making partial payments over an extended period is necessary to avoid causing the creditor to become undercapitalized pursuant to section 38 of the Federal Deposit Insurance Act;

``(B) the''; and

(5) by striking ``(C) except'' and inserting the following:

``(C) except''.

Sec. 2107. LIMITATION ON LIABILITY UNDER THE TRUTH IN LENDING ACT.

(a) In General.--Section 139(a) of the Truth in Lending Act

(15 U.S.C. 1649(a)) is amended by striking ``For any consumer credit transaction subject to this title'' and inserting ``For any closed end consumer credit transaction that is secured by real property or a dwelling, that is subject to this title, and''.

(b) Effective Date.--The amendment made by subsection (a) shall be effective as of September 30, 1995.