SEC-942 -- MORTGAGE 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) In General.-" after the section designation;
and
 
 (2) by adding at the end the following new subsections:
 
 "(b) Notification of Shortage in Escrow Account.-If the terms of any
federally related mortgage loan require the borrower to make payments
to the servicer (as the term is defined in section 6(i)) of the loan for
deposit into an escrow account for the purpose of assuring payment of
taxes, insurance premiums, and other charges with respect to the
property, the servicer shall notify the borrower not less than annually
of any shortage of funds in the escrow account.
 
 "(c) Escrow Account Statements.-
 
 "(1) Initial statement.-
 
 "(A) In general.-Any servicer 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 a statement
clearly itemizing the estimated taxes, insurance premiums, and other
charges that 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.
 
 "(B) Time of submission.-The statement required under subparagraph (A)
shall be submitted to the borrower at closing with respect to the
property for which the mortgage loan is made or not later than the
expiration of the 45-day period beginning on the date of the
establishment of the escrow account.
 
 "(C) Initial statement at closing.-Any servicer may submit the
statement required under subparagraph (A) to the borrower at closing and
may incorporate such statement in the uniform settlement statement
required under section 4. 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 Secretary shall issue regulations
prescribing any changes necessary to the uniform settlement statement
under section 4 that specify how the statement required under
subparagraph (A) of this section shall be incorporated in the uniform
settlement statement.
 
 "(2) Annual statement.-
 
 "(A) In general.-Any servicer that has established or continued an
escrow account in connection with a federally related mortgage loan
shall submit to the borrower for which the escrow account has been
established or continued a statement clearly itemizing, for each period
described in subparagraph (B) (during which the servicer services the
escrow account), the amount of the borrower's current monthly payment,
the portion of the monthly payment being placed in the escrow account,
the total amount paid into the escrow account during the period, the
total amount paid out of the escrow account during the period for taxes,
insurance premiums, and other charges (as separately identified), and
the balance in the escrow account at the conclusion of the period.
 
 "(B) Time of submission.-The statement required under subparagraph (A)
shall be submitted to the borrower not less than once for each 12-month
period, the first such period beginning on the first January 1st that
occurs after the date of the enactment of the Cranston-Gonzalez National
Affordable Housing Act, and shall be submitted not more than 30 days
after the conclusion of each such 1-year period.
 
 "(d) Penalties.-
 
 "(1) In general.-In the case of each failure to submit a statement to
a borrower as required under subsection (c), the Secretary shall assess
to the lender or escrow servicer failing to submit the statement a civil
penalty of $50 for each such failure, but the total amount imposed on
such lender or escrow servicer for all such failures during any 12-month
period referred to in subsection (b) may not exceed $100,000.
 
 "(2) Intentional violations.-If any failure to which paragraph (1)
applies is due to intentional disregard of the requirement to submit the
statement, then, with respect to such failure-
 
 "(A) the penalty imposed under paragraph (1) shall be $100; and
 
 "(B) in the case of any penalty determined under subparagraph (A), the
$100,000 limitation under paragraph (1) shall not apply.".
 
 (b) Prohibition of Fees for Escrow Account Statements.-Section 12 of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2610) is
amended-
 
 (1) by inserting after the first comma the following: "or by a
servicer (as the term is defined under section 6(i)),";
 
 (2) by striking "lender" the second place it appears and inserting
"lender or servicer";
 
 (3) by striking "6" and inserting "10(c)"; and
 
 (4) by striking the section heading and inserting the following new
section heading:
"prohibition of fees for preparation of truth-in-lending, uniform
settlement, and escrow account statements".