§ 2609. Limitation on requirement of advance deposits in escrow accounts

Footnotes

1. 1 So in original. Probably should be subsection “(c)”.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1974

   Real Estate Settlement Procedures Act of 1974

   Pub. L. 93–533 § 10 · 88 Stat. 1724

   Enacted · 12 U.S.C. § 2609

   Pub. L. 93–533, § 10, Dec. 22, 1974, 88 Stat. 1728

   Source evidence

   Code source credit
   Pub. L. 93–533, § 10, Dec. 22, 1974, 88 Stat. 1728

   Enacted provision · exact public law section
   Sec. 10. limitation on requirement of advance deposits in escrow accounts No lender, in connection with a federally related mortgage loan, shall require the borrower or prospective borrower— (1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes and insurance premiums with respect to the property, prior to or upon the date of settlement, an aggregate sum (for such purpose) in excess of— (A) in any jurisdiction where such taxes and insurance premiums are postpaid, the total amount of such taxes and insurance premiums which will actually be due and payable on the date of settlement and the pro rata portion thereof which has accrued, or (B) in any jurisdiction where such taxes and insurance premiums are prepaid, a pro rata portion of the estimated taxes and insurance premiums corresponding to the number of months from the last date of payment to the date of settlement, plus one-twelfth of the estimated total amount of such taxes and insurance premiums which will become due and payable during the twelve-month period beginning on the date of settlement; or (2) to deposit in any such escrow account in any month beginning after the date of settlement a sum (for the purpose of assuring payment of taxes and insurance premiums with respect to the property) in excess of one-twelfth of the total amount of the estimated taxes and insurance premiums which will become due and payable during the twelve-month period beginning on the first day of such month, except that in the event the lender determines there will lie a deficiency on the due date he shall not be prohibited from requiring additional monthly deposits in such escrow account of pro rata portions of the deficiency corresponding to the number of months from the date of the lender’s determination of such deficiency to the date upon which such taxes and insurance premiums become due and payable.

2. 1976

   Real Estate Settlement Procedures Act Amendments of 1975

   Pub. L. 94–205 § 8 · 89 Stat. 1157

   Changed · 12 U.S.C. § 2609

   Pub. L. 94–205 provided that in addition to amounts required for the payment of taxes, insurance premiums, and other charges due at settlement, the buyer could not be required at settlement to place into an escrow account more than one-sixth of the estimated total amount of such taxes, insurance premiums, and other charges payable within a twelve month period beginning on the date of settlement, but the buyer could be required to make monthly payments into an escrow account sufficient to maintain a surplus of one-sixth of the estimated total amount payable in the coming twelve month period

   Source evidence

   Code amendment note
   Pub. L. 94–205 provided that in addition to amounts required for the payment of taxes, insurance premiums, and other charges due at settlement, the buyer could not be required at settlement to place into an escrow account more than one-sixth of the estimated total amount of such taxes, insurance premiums, and other charges payable within a twelve month period beginning on the date of settlement, but the buyer could be required to make monthly payments into an escrow account sufficient to maintain a surplus of one-sixth of the estimated total amount payable in the coming twelve month period.

   Enacted provision · exact public law section
   Sec. 8. Section 10 of the Real Estate Settlement Procedures Act of 12 USC 2609. 1974 is amended to read as follows: “Sec. 10. “escrow accounts A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower— “(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or “(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.”.

3. 1990

   Cranston-Gonzalez National Affordable Housing Act

   Pub. L. 101–625 title IX § 942(a) · 104 Stat. 4079

   1. Amended · 12 U.S.C. § 2609

      Pub. L. 101–625 designated existing provisions as subsec. (a)

   2. Inserted · 12 U.S.C. § 2609

      Pub. L. 101–625 inserted heading

   3. Added · 12 U.S.C. § 2609

      Pub. L. 101–625 added subsecs. (b) to (d)

   Source evidence

   Code amendment note
   Pub. L. 101–625 designated existing provisions as subsec. (a), inserted heading, and added subsecs. (b) to (d).

   Enacted provision · exact public law section
   (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 Regulations. 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.”.

4. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 div. A title II § 2103(g)(2) · 110 Stat. 3009

   Substituted · 12 U.S.C. § 2609(c)(1)(C)

   Pub. L. 104–208 substituted “The Secretary” for “Not later than the expiration of the 90-day period beginning on November 28, 1990, the Secretary” in second sentence

   Source evidence

   Code amendment note
   Subsec. (c)(1)(C). Pub. L. 104–208 substituted “The Secretary” for “Not later than the expiration of the 90-day period beginning on November 28, 1990, the Secretary” in second sentence.

   Enacted provision · exact public law section
   (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”.

5. 2010

   Consumer Financial Protection Act of 2010

   Pub. L. 111–203 title X § 1098(8) · 124 Stat. 1376

   Substituted · 12 U.S.C. § 2609(c)(1)(C)

   Pub. L. 111–203, which directed amendment of “section 10(c) (12 U.S.C. 2609(c) and (d))” by substituting “Bureau” for “Secretary”, was executed by making the substitution only in subsec. (c) as directed

   Source evidence

   Code amendment note
   Subsec. (c)(1)(C). Pub. L. 111–203, which directed amendment of “section 10(c) (12 U.S.C. 2609(c) and (d))” by substituting “Bureau” for “Secretary”, was executed by making the substitution only in subsec. (c) as directed.

   Enacted provision · exact public law section
   (8) in section 10(c) (12 U.S.C. 2609(c) and (d)), by striking “Secretary” and inserting “Bureau”;

   Effective date note
   Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

7 of 7 references resolved to an enrolled provision