Consumer Mortgage Protection Act of 2000

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Mortgage Protection Act of 
2000.''

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) especially vulnerable consumers are not adequately 
        protected by current Federal law from the abusive practices of 
        a few participants in the residential mortgage industry;
            (2) additional legislation is necessary and appropriate to 
        ensure that such consumers are better protected against abusive 
        lending practices; and
            (3) there is a need to streamline the framework regulating 
        mortgage originations.
    (b) Purpose.--The purpose of this Act is--
            (1) to establish additional substantive protections for 
        certain especially vulnerable consumers;
            (2) to ensure that such consumers are able to protect the 
        equity in their homes;
            (3) to initiate the process of streamlining the regulatory 
        framework for mortgage originations; and
            (4) to clarify mortgage broker compensation.

SEC. 3. AMENDMENTS TO THE TRUTH IN LENDING ACT.

    (a) Section 103(aa)(1)(A).--Section 103(aa)(1)(A) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)(1)(A)) is amended by striking ``by more 
than 10 percentage points'' and by striking ``creditor; or'' and 
inserting the following: ``creditor by more than--
            ``(i) 8 percentage points, in the case of a transaction 
        secured by a first-lien security interest in the property; or
            ``(ii) 9 percentage points, in the case of a transaction 
        secured by a subordinate-lien security interest in the 
        property; or''.
    (b) Section 103(aa)(1)(B)(i).--Section 103(aa)(1)(B)(i) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(1)(B)(i)) is amended by 
striking ``8 percent'' and inserting ``6 percent, in the case of a 
transaction secured by a first-lien security interest in the property, 
or 7 percent, in the case of a transaction secured by a subordinate-
lien security interest in the property''.
    (c) Section 103(aa)(4).--Section 103(aa)(4) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)(4)) is amended by striking ``For purposes of 
paragraph (1)(B),'' and inserting ``For purposes of paragraph (1)(B) 
and section 129(h) of this Act''.
    (d) Section 103(aa)(5).--Section 103(aa)(5) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)(5)) is amended by inserting after ``extension 
of credit'' the following: ``, except as provided in section 129(h) of 
this Act''.
    (e) Section 129.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by striking subsections (a) and (b), 
redesignating subsections (c) through (i) as subsections (a) through 
(g), respectively, and redesignating subsections (j) through (l) as 
subsections (m) through (o), respectively.
    (f)(1) Section 129(a)(2).--Section 129(a)(2) of the Truth in 
Lending Act (15 U.S.C. 1639(a)(2)), as redesignated by subsection (e), 
is amended by striking subparagraphs (A) and (B) and inserting the 
following:
                    ``(A) the amount of the penalty does not exceed 3 
                percent of the total loan amount, if the prepayment 
                occurs during the 1-year period beginning on the date 
                on which the mortgage is consummated;
                    ``(B) the amount of the penalty does not exceed 2 
                percent of the total loan amount, if the prepayment 
                occurs during the 1-year period beginning on the date 
                of expiration of the 1-year period identified in 
                subparagraph (A);
                    ``(C) the amount of the penalty does not exceed 1 
                percent of the total loan amount, if the prepayment 
                occurs during the 1-year period beginning on the date 
                of the expiration of the 1-year period identified in 
                subparagraph (B);'',
and by redesignating subparagraphs (C) and (D) as subparagraphs (D) and 
(E), respectively.
    (2) Section 129(a)(2)(D).--Section 129(a)(2)(D) of the Truth in 
Lending Act (15 U.S.C. 1639(a)(2)(D)), as redesignated by subsection 
(e) and paragraph (1), is amended by striking ``5-year period'' and 
inserting
``3-year period''.
    (g) Section 129(e).--Section 129(e) of the Truth in Lending Act (15 
U.S.C. 1639(e)), as redesignated by subsection (e), is amended by 
striking ``more than 2'' and inserting ``any''.
    (h) Section 129(h).--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after section 129(g), as 
redesignated by subsection (e), the following:
    ``(h) Restrictions on the Charging of Closing Costs.--A creditor 
shall not make a mortgage referred to in section 103(aa) the proceeds 
of which will be used to pay the outstanding balance of an existing 
mortgage referred to in section 103(aa) within 1 year of the date of 
consummation of such existing mortgage, unless--
            ``(1) all points and fees, imposed directly or indirectly 
        by the creditor in connection with the transaction, are 
        calculated solely on the basis of the new advances received by 
        the borrower in connection with the refinancing; or
            ``(2) the annual percentage rate of the refinance loan is 
        lower by 2 or more percentage points than the annual percentage 
        rate of the existing mortgage.''.
    (i) Section 129(i).--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after section 129(h), as created 
by subsection (h), the following:
    ``(i) No Encouragement of Default.--A creditor shall not recommend 
to a consumer, at any time in connection with the making of a mortgage 
referred to in section 103(aa), that the consumer fail to make any 
payment as and when due and payable under the terms of any existing 
debt obligation of the consumer.''.
    (j) Section 129(j).--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after section 129(i), as created 
by subsection (i), the following:
    ``(j) Reporting of Payment History.--A creditor shall report both 
favorable and unfavorable payment history information relating to any 
consumer of a mortgage referred to in section 103(aa) to a nationally 
recognized credit bureau at least quarterly each year.''.
    (k) Section 129(k).--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after section 129(j), as created 
by subsection (j), the following:
    ``(k) No Profit From Foreclosure.--A creditor shall not profit 
monetarily from the sale at foreclosure of any property securing a 
mortgage referred to in section 103(aa), whether directly from such a 
foreclosure sale or indirectly through a resale after the purchase of 
the property by the creditor at such a foreclosure sale.''.
    (l) Section 129(l).--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after section 129(k), as created 
by subsection (k), the following:
    ``(l) Providing a Statement of the Amount of Satisfaction.--Upon 
receipt of a written or oral request, a creditor or any subsequent 
assignee who holds a mortgage referred to in section 103(aa) shall 
provide a written statement setting forth the amounts necessary to pay 
in full and satisfy the debt obligation of a mortgage referred to in 
section 103(aa) within 3 business days of receipt of the request.''.
    (n) Section 130(b).--Section 130(b) of the Truth in Lending Act (15 
U.S.C. 1640(b)) is amended by striking all after ``the creditor or 
assignee notifies the person concerned of the error and'' and inserting 
``the creditor or assignee--
            ``(1) in the case of a failure to comply consisting of a 
        finance charge or annual percentage rate actually disclosed 
        that is lower than that which should have been disclosed, makes 
        whatever adjustments in the appropriate account are necessary 
        to ensure that the person will not be required to pay an amount 
        in excess of the charge actually disclosed, or the dollar 
        equivalent of the annual percentage rate actually disclosed, 
        whichever is lower; or
            ``(2) in the case of any other failure to comply, executes 
        and offers to the person for execution a legally effective 
        instrument that modifies the underlying transaction such that 
        the failure to comply is eliminated.''.

SEC. 4. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT.

    (a) Section 4(a).--The second sentence of section 4(a) of the Real 
Estate Settlement Procedures Act (12 U.S.C. 2603(a)) is amended by 
striking ``Such form shall conspicuously and clearly itemize all 
charges imposed upon the borrower and all charges imposed upon the 
seller in connection with the settlement and'' and inserting ``Such 
form shall conspicuously and clearly itemize all charges imposed 
directly upon the borrower and all charges imposed directly upon the 
seller (whether paid outside of closing or otherwise) in connection 
with the settlement. This subsection shall not be construed to require 
that the standard form shall itemize fees earned by any settlement 
service provider in connection with the transaction to the extent such 
fees are paid by the lender and reflect the present value of interest 
yielded by the federally related mortgage loan. Such form also''.
    (b) Section 5(b).--Section 5(b) of the Real Estate Settlement 
Procedures Act (12 U.S.C. 2604(b)) is amended by striking ``and'' at 
the end of paragraph (4), striking the period at the end of paragraph 
(5) and inserting
``; and'' and by adding after paragraph (5) the following:
            ``(6) an explanation of the fact that a mortgage broker may 
        be compensated for its services provided in connection with the 
        federally related mortgage loan with funds derived from (A) 
        direct payments made by the borrower, (B) payments made by the 
        lender that reflect the present value of interest yielded by 
        the federally related mortgage loan, or (C) a combination of 
        both the foregoing sources.''.
    (c)(1) Section 5(c).--Section 5(c) of the Real Estate Settlement 
Procedures Act (12 U.S.C. 2604(c)) is amended by striking ``the 
borrower is likely to incur'' and inserting ``likely to be imposed 
directly upon the borrower''.
    (2) Section 5(c).--Section 5(c) of the Real Estate Settlement 
Procedures Act (12 U.S.C. 2604(c)) is amended by inserting after 
paragraph (6) at the end thereof the following: ``The good faith 
estimate required by this subsection shall include the following 
statement in conspicuous type size: `If you obtain this loan, the 
lender will have a mortgage on your home. You could lose your home, and 
any money you have put into it, if you do not meet your obligations 
under the loan.'''.

SEC. 5. FEDERAL PREEMPTION.

    (a) In General.--No requirement or prohibition may be imposed under 
the laws of any State with respect to the subject matter covered by the 
amendments made by this Act, including limitations or prohibitions in 
connection with high-cost or high-fee mortgage loans for which it is 
perceived that consumers should be afforded additional substantive 
protections.
    (b) Interpretation.--In response to a request from any person, the 
Board of Governors of the Federal Reserve System or any official or 
employee of the Board of Governors of the Federal Reserve System duly 
authorized by the Board, shall promptly issue an interpretation which 
determines whether the specific State laws that are identified in such 
request are preempted by operation of subsection (a). Any 
interpretation issued under this subsection shall have the effect of 
law.

SEC. 6. EFFECTIVE DATE; IMPLEMENTING REGULATIONS.

    (a) Effective Date.--This Act and the amendments made by this Act 
shall take effect 6 months after the date of its enactment.
    (b) Regulations by the Board.--The Board of Governors of the 
Federal Reserve System shall make such regulations as are necessary to 
implement the amendments made by section 3 within 120 days after the 
date of its enactment.
    (c) Regulations by the Secretary of Housing and Urban 
Development.--The Secretary of Housing and Urban Development shall make 
such regulations as are necessary to implement the amendments made by 
section 4 within 120 days after the date of its enactment.

Summary: Requires a creditor to report a consumer's mortgage payment history to a nationally recognized credit bureau at least quarterly. Prohibits creditor profit from the sale at foreclosure of property securing a high-cost mortgage. Requires a high-cost mortgage creditor to respond within three business days to a request for a written statement setting forth the amounts necessary to fully satisfy the debt obligation. Redraws creditor liability guidelines. Amends the Real Estate Settlement Procedures Act to revise guidelines for: (1) standard Federal forms for the statement of settlement costs. And (2) information booklets that advise the consumer of certain sources of mortgage broker compensation. Establishes Federal preemption of State law concerning subject matter under this Act. Empowers the Board of Governors of the Federal Reserve System to interpret Federal preemption issues under this Act.