Pub. L. 107-73, tit. II, sec. 206

Sec. 206. Section 251 of the National Housing Act (12 U.S.C. 1715z–16) is amended— (1) in subsection (b), by striking “issue regulations” and all that follows and inserting the following: “require that the mortgagee make available to the mortgagor, at the time of loan application, a written explanation of the features of an adjustable rate mortgage consistent with the disclosure requirements applicable to variable rate mortgages secured by a principal dwelling under the Truth in Lending Act.”; and (2) by adding the following new subsection at the end: “(d)(1) The Secretary may insure under this subsection a mortgage that meets the requirements of subsection (a), except that the effective rate of interest— “(A) shall be fixed for a period of not less than the first 3 years of the mortgage term; “(B) shall be adjusted by the mortgagee initially upon the expiration of such period and annually thereafter; and “(C) in the case of the initial interest rate adjustment, is subject to the 1 percent limitation only if the interest rate remained fixed for five or fewer years. “(2) The disclosure required under subsection (b) shall be required for a mortgage insured under this subsection.”.