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PUBLIC LAW 94-205—JAN. 2, 1976

89 STAT. 1157

Public Law 94-205
94th Congress
An Act
To amend the Real Estate Settlement Procedures Act of 1974.

Be it enacted hy the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may
be cited as the "Real Estate Settlement Procedures Act Amendments
of 1975".
SEC- 2. Section 3(1) of the Real Estate Settlement Procedures Act
of 1974 is amended—
(1) by inserting "(other than temporary financing such as a
construction loan)" immediately after "includes any loan";
(2) by inserting "a first lien on" immediately after "is secured
by" in subparagraph ( A ) ;
(3) by striking out "is eligible for purchase by" in subparagraph (B) (iii) and inserting in lieu thereof "is intended to be sold
by the originating lender to";
(4) by striking out "or" the first time it appears in subparagraph (B) (iii);
(5) by striking out "from any" and "could" in subparagraph
(B) (iii) and inserting in lieu thereof "a" and "is to", respectively; and
(6) by inserting the following immediately before the semicolon at the end ot subparagraph (B) (iv) : ", except that for the
purpose of this Act, the term 'creditor' does not include any
agency or instrumentality of any State".
SEC. 3. Section 4 of the Real Estate Settlement Procedures Act of
1974 is amended—
(1) by inserting " ( a ) " immediately before "The Secretary" in
the first sentence;
(2) by striking out the words "minimum" and "unavoidable"
in the parenthetical phrase in the first sentence;
(3) by striking out the last sentence thereof and inserting in
lieu thereof the following new sentences: "The Secretary may, by
regulation, permit the deletion from the form prescribed under
this section of items which are not, under local laws or customs,
applicable in any locality, except that such regulation shall require
that the numerical code prescribed by the Secretary be retained
in forms to be used in all localities. Nothing in this section may be.
construed to require that that part of the standard form which
relates to the borrower's transaction be furnished to the seller, or
to require that that part of the standard form which relates to the
seller be furnished to the borrower."; and
(4) by adding at the end thereof the following new subsection:
"(b) The form prescribed under this section shall be completed and
made available for inspection by the borrower at or before settlement
by the person conducting the settlement, except that (1) the Secretary
may exempt from the requirements of this section settlements occurring in localities where the final settlement statement is not customarily
provided at or before the date of settlement, or settlements where such
requirements are impractical and (2) the borrower may, in accordance

Jan. 2, 1976
[S. 2327]
Real Estate
Settlement
Procedures Act
Amendments of
1975.
12 u s e 2601
note.
12 u s e 2602.

12 u s e 2603.

89 STAT. 1158

12 use 2604.

Repeal12 use 2605.
Repeal.
12 use 2606.
12 use 2607.

12 use 2609.

PUBLIC LAW 94-205—JAN. 2, 1976
with regulations of the Secretary, waive his right to have the form
made available at such time. Upon the request of the borrower to
inspect the form prescribed under this section during the business day
immediately preceding the day of settlement, the person who will
conduct the settlement shall permit the borrower to inspect those items
which are known to such person during such preceding day.".
SEC. 4. Section 5 of the Eeal Estate Settlement Procedures Act of
1974 is amended—
(1) by redesignating subsections (c) and (d) as subsections (d)
and (e), respectively;
(2) by inserting after subsection (b) the following new subsection :
"(c) Each lender shall include with the booklet a good faith estimate of the amount or range of charges for specific settlement services
the borrower is likely to incur in connection with the settlement as
prescribed by the Secretary.";
(3) by striking out "an application" in the first sentence of
subsection (d), as redesignated by paragraph (1) of this section,
and inserting in lieu thereof "or for whom it prepares a written
application"; and
(4) by inserting "or preparation" immediately aft^r "receipt"
in the second sentence of subsection (d), as redesignated by paragraph (1) of this section.
SEC. 5. Section 6 of the Real Estate Settlement Procedures Act of
1974 is repealed.
SEC. 6. Section 7 of the Real Estate Settlement Procedures Act of
1974 is repealed.
SEC. 7. Section 8 of the Real Estate Settlement Procedures Act of
1974 is amended in subsection (c) by striking out "or" immediately
before " (2)", and by inserting before the period at the end thereof the
following: ", or (3) payments pursuant to cooperative brokerage and
referral arrangements or agreements between real estate agents and
brokers, or (4) such other payments or classes of payments or other
transfers as are specified in regulations prescribed by the Secretary,
after consultation with the Attorney General, the Administrator of
Veterans' Affairs, the Federal Home Loan Bank Board, the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal
Reserve System, and the Secretary of Agriculture".
SEC. 8. Section 10 of the Real Estate Settlement Procedures Act of
1974 is amended to read as follows:
a ESCROW ACCOUNTS

"SEC. 10. 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

PUBLIC LAW 94-205—JAN. 2, 1976

89 STAT. 1159

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.".
SEC. 9. Section 18 of the Real Estate Settlement Procedures Act of'
1974 is amended by striking out subsection (b) and by striking out 12 USC 2616,
" ( a ) " in subsection (a).
SEC. 10. The Real Estate Settlement Procedures Act of 1974 is 12 USC 2601
amended by redesignating section 19 as section 20 and by inserting the notefollowing new section immediately after section 18:
"AUTHORITY or THE SECRETARY

"SEC. 19. (a) The Secretary is authorized to prescribe such rules
and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to
achieve the purposes of this Act.
"(b) No provision of this Act or the laws of any State imposing any
liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the
Secretary or the Attorney General, notwithstanding that after such
act or omission has occurred, such rule, regulation, or interpretation
is amended, rescinded, or determined by judicial or other authority to
be invalid for any reason.".
SEC. 11. Section 121(c) of the Truth in Lending Act is repealed.

Rules and
regulations,
^^ ^^^ 2617.

Repeal.
15 USC 1631.

89 STAT. 1160
Effective date.
12 u s e 2602
°°*®'
12 u s e 2603,

2604.

PUBLIC LAW 94-205—JAN. 2, 1976
SEO. 12. T h e provisions of this Act and the amendments made hereby
shall become effective upon enactment. T h e Secretary may suspend
for u p to one hundred and eighty days from the date of enactment
of this Act any provision of section 4 and section 5 of t h e Eeal Estate
Settlement Procedures Act of 1974, as amended by this Act.
'

-^

Approved January 2, 1976.

LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 94-667 (Comm. on Banking, Currency, and Housing) and
94-769 (Comm. of Conference).
SENATE REPORT No. 94-410 (Comm. on Banking, Housing, and Urban Affairs).
CONGRESSIONAL RECORD, Vol. 121 (1975):
Oct. 9, considered and passed Senate.
Nov. 17, considered and passed House, amended.
Dec. 8, Senate concurred in House amendments with amendments.
Dec. 19, House and Senate agreed to conference report.