To amend the Fair Credit Reporting Act with respect to requirements relating to information contained in consumer reports, and for other purposes.

Summary: Mortgage Credit Repair Act of 2008 - Amends the Fair Credit Reporting Act to define "front end ratio" as a ratio that indicates what portion of an individual's income is used to make mortgage payments, calculated by dividing an individual's gross monthly income by their housing expenses, particularly the mortgage principal, interest, taxes, and insurance (PITI).

Prohibits a consumer reporting agency from making a consumer report containing cases under title 11 or under the Bankruptcy Act that antedate the report by more than three years when certain criteria are met. Includes among such criteria that a consumer's front-end debt ratio on a mortgage instrument originated or refinanced on or after January 1, 2003, was 37% or higher for at least six months before and continuing through the time that the bankruptcy is filed.

Prohibits a consumer reporting agency from making a consumer report containing any adverse information excluding bankruptcy, but including closed accounts, amounts in collections, accounts charged to profit or loss, repossessions, and foreclosures, if certain circumstances have occurred.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mortgage Credit Repair Act of 
2008''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) The United States housing bubble effectively burst 
        towards the end of 2005, when default rates on subprime and 
        adjustable rate mortgages increased dramatically.
            (2) Mortgages with negative amelioration or any other 
        lending mechanism for which the loan payment on principal for 
        any period is less than the interest charged over that period 
        for some substantial period of time have high default and 
        foreclosure rates.
            (3) Mortgages in which there are incidences of fraud or 
        lender misconduct have high foreclosure rates, including those 
        in which--
                    (A) a mortgage was obtained despite the lender 
                fraudulently encouraging or requiring the borrower to 
                falsify or omit information which was then used to call 
                back the loan and leading to foreclosure;
                    (B) a mortgage was obtained despite the failure by 
                the lender to give the borrower proper documentation, 
                including Good Faith Requirements and Truth-in-Lending 
                Disclosures;
                    (C) a mortgage was obtained despite occasions where 
                the borrower was given incomplete forms to sign, with 
                the required information added by the lender after the 
                borrower's signature was obtained; and
                    (D) a mortgage was obtained despite having terms 
                which was substantially or wholly different at closing 
                than what was previously agreed to.
            (4) Standard, qualifying front-end debt ratios, that is the 
        monthly cost of a mortgage principal, interest, taxes, and 
        insurance (PITI) against the gross monthly income of the 
        borrower have historically been approximately 28%, increasing 
        for those with stellar credit histories.
            (5) However, many foreclosures and mortgage-related 
        bankruptcies involve borrowers who were given mortgages with 
        flat or adjustable rates that caused front-end ratios well over 
        36% in many cases.
            (6) The effects of foreclosure or a resulting bankruptcy 
        can have a negative impact on an individual's credit history 
        for up to 7 years (10 years for bankruptcy) for purchases under 
        $150,000 with related effects, and effects for purchases over 
        $150,000 lasting much longer.
            (7) Borrowers who unknowingly obtained bad, improper or 
        fraudulent mortgages which subsequently led to foreclosure, 
        should be given the opportunity to rebuild their credit in a 
        responsible way without the substantial and lingering effects 
        of foreclosure outweighing present and past responsible 
        borrowing practices.

SEC. 3. AMENDMENT TO DEFINITIONS.

    Section 603 of the Fair Credit Reporting Act (U.S.C. 1681a) is 
amended by adding at the end the following new subsection:
    ``y Front End Ratio.--The term `front end ratio' means a ratio that 
indicates what portion of an individual's income is used to make 
mortgage payments, calculated by dividing an individual's gross monthly 
income by their housing expenses, particularly the mortgage principal, 
interest, taxes, and insurance (PITI).''.

SEC. 4. SPECIAL CIRCUMSTANCE RELIEF.

    Section 605(a) of the Fair Credit Reporting Act (U.S.C. 1681c(a)) 
is amended--
            (1) by redesignating paragraphs (2), (3), (4), (5), and (6) 
        as paragraphs (3), (4), (5), (7), and (8), respectively;
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) Cases under title 11 or under the Bankruptcy Act 
        that, from the date of entry of the order for relief or the 
        date of the adjudication, as the case may be, antedate the 
        report by more than 3 years when each of the following are met:
                    ``(A) During a period not less than 6 months prior 
                to and continuing through the time that the bankruptcy 
                is filed, a consumer's front-end debt ratio on a 
                mortgage instrument originated or refinanced on or 
                after January 1, 2003, was 37% or higher.
                    ``(B) The consumer filed for bankruptcy no earlier 
                than January 1, 2004.
                    ``(C) The consumer has not disputed the accuracy of 
                their report under paragraph (6) during the period 
                beginning January 1, 2004.
                    ``(D) The consumer notifies the consumer reporting 
                agency directly and is able to submit documentation to 
                verify the above before March 31, 2009.''; and
            (3) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) Any adverse information excluding bankruptcy, but 
        including closed accounts, accounts in collections, accounts 
        charged to profit or loss, repossessions, and foreclosures, 
        shall be excluded if all of the following circumstances have 
        occurred:
                    ``(A) The adverse information in the consumer's 
                report was for new accounts and transactions added 
                after the first payment due date on the consumer's 
                mortgage note, where the front end ratio then became 
                37% or higher, but not earlier than January 1, 2004.
                    ``(B) The adverse information in the consumer's 
                report was not added more than 6 months after a 
                foreclosure on that consumer's primary residence or 
                March 31, 2009, whichever is earlier.
                    ``(C) The consumer notifies the consumer reporting 
                agency directly of their intent to seek relief under 
                this paragraph and is able to provide proper 
                documentation and verification before March 31, 
                2009.''.

SEC. 5. CONFORMING AMENDMENT.

    Subsection (b) of section 605 of the Fair Credit Reporting Act 
(U.S.C. 1681c(b)) is amended (in the matter preceding paragraph (1)) by 
striking ``paragraphs (1) through (5)'' and inserting ``paragraphs (1), 
(3), (4), (5), and (7)''.