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[House Report 111-94]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     111-94

======================================================================
 
             MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

                                _______
                                

  May 4, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1728]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 1728) to amend the Truth in Lending Act to reform 
consumer mortgage practices and provide accountability for such 
practices, to provide certain minimum standards for consumer 
mortgage loans, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    48
Background and Need for Legislation..............................    50
Hearings.........................................................    60
Committee Consideration..........................................    61
Committee Votes..................................................    61
Committee Oversight Findings.....................................    72
Performance Goals and Objectives.................................    72
New Budget Authority, Entitlement Authority, and Tax Expenditures    72
Committee Cost Estimate..........................................    72
Congressional Budget Office Estimate.............................    73
Federal Mandates Statement.......................................    77
Advisory Committee Statement.....................................    77
Constitutional Authority Statement...............................    77
Applicability to Legislative Branch..............................    77
Earmark Identification...........................................    77
Section-by-Section Analysis of the Legislation...................    77
Changes in Existing Law Made by the Bill, as Reported............    99
Dissenting Views.................................................   163

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Mortgage Reform and 
Anti-Predatory Lending Act''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

        TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Sec. 101. Definitions.
Sec. 102. Residential mortgage loan origination.
Sec. 103. Prohibition on steering incentives.
Sec. 104. Liability.
Sec. 105. Regulations.
Sec. 106. RESPA and TILA disclosure improvement.

               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Sec. 201. Ability to repay.
Sec. 202. Net tangible benefit for refinancing of residential mortgage 
loans.
Sec. 203. Safe harbor and rebuttable presumption.
Sec. 204. Liability.
Sec. 205. Defense to foreclosure.
Sec. 206. Additional standards and requirements.
Sec. 207. Rule of construction.
Sec. 208. Effect on State laws.
Sec. 209. Regulations.
Sec. 210. Amendments to civil liability provisions.
Sec. 211. Lender rights in the context of borrower deception.
Sec. 212. Six-month notice required before reset of hybrid adjustable 
rate mortgages.
Sec. 213. Credit risk retention.
Sec. 214. Required disclosures.
Sec. 215. Disclosures required in monthly statements for residential 
mortgage loans.
Sec. 216. Legal assistance for foreclosure-related issues.
Sec. 217. Effective date.
Sec. 218. Report by the GAO.
Sec. 219. State Attorney General enforcement authority.
Sec. 220. Tenant protection.

                     TITLE III--HIGH-COST MORTGAGES

Sec. 301. Definitions relating to high-cost mortgages.
Sec. 302. Amendments to existing requirements for certain mortgages.
Sec. 303. Additional requirements for certain mortgages.
Sec. 304. Regulations.
Sec. 305. Effective date.

                 TITLE IV--OFFICE OF HOUSING COUNSELING

Sec. 401. Short title.
Sec. 402. Establishment of Office of Housing Counseling.
Sec. 403. Counseling procedures.
Sec. 404. Grants for housing counseling assistance.
Sec. 405. Requirements to use HUD-certified counselors under HUD 
programs.
Sec. 406. Study of defaults and foreclosures.
Sec. 407. Definitions for counseling-related programs.
Sec. 408. Updating and simplification of mortgage information booklet.
Sec. 409. Home inspection counseling.

                      TITLE V--MORTGAGE SERVICING

Sec. 501. Escrow and impound accounts relating to certain consumer 
credit transactions.
Sec. 502. Disclosure notice required for consumers who waive escrow 
services.
Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 504. Truth in Lending Act amendments.
Sec. 505. Escrows included in repayment analysis.

                     TITLE VI--APPRAISAL ACTIVITIES

Sec. 601. Property appraisal requirements.
Sec. 602. Unfair and deceptive practices and acts relating to certain 
consumer credit transactions.
Sec. 603. Amendments relating to appraisal subcommittee of FIEC, 
appraiser independence, and approved appraiser education.
Sec. 604. Study required on improvements in appraisal process and 
compliance programs.
Sec. 605. Equal Credit Opportunity Act amendment.
Sec. 606. Real Estate Settlement Procedures Act of 1974 amendment 
relating to certain appraisal fees.

  TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT 
                      SPONSORED ENTERPRISES REFORM

Sec. 701. Sense of Congress regarding the importance of Government-
sponsored enterprises reform to enhance the protection, limitation, and 
regulation of the terms of residential mortgage credit.

        TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

SEC. 101. DEFINITIONS.

  Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended 
by adding at the end the following new subsection:
  ``(cc) Definitions Relating to Mortgage Origination and Residential 
Mortgage Loans.--
          ``(1) Commission.--Unless otherwise specified, the term 
        `Commission' means the Federal Trade Commission.
          ``(2) Federal banking agencies.--The term `Federal banking 
        agencies' means the Board of Governors of the Federal Reserve 
        System, the Comptroller of the Currency, the Director of the 
        Office of Thrift Supervision, the Federal Deposit Insurance 
        Corporation, and the National Credit Union Administration 
        Board.
          ``(3) Mortgage originator.--The term `mortgage originator'--
                  ``(A) means any person who, for direct or indirect 
                compensation or gain, or in the expectation of direct 
                or indirect compensation or gain--
                          ``(i) takes a residential mortgage loan 
                        application;
                          ``(ii) assists a consumer in obtaining or 
                        applying to obtain a residential mortgage loan; 
                        or
                          ``(iii) offers or negotiates terms of a 
                        residential mortgage loan;
                  ``(B) includes any person who represents to the 
                public, through advertising or other means of 
                communicating or providing information (including the 
                use of business cards, stationery, brochures, signs, 
                rate lists, or other promotional items), that such 
                person can or will provide any of the services or 
                perform any of the activities described in subparagraph 
                (A);
                  ``(C) does not include any person who is (i) not 
                otherwise described in subparagraph (A) or (B) and who 
                performs purely administrative or clerical tasks on 
                behalf of a person who is described in any such 
                subparagraph, or (ii) an employee of a retailer of 
                manufactured homes who is not described in clause (i) 
                or (iii) of subparagraph (A);
                  ``(D) does not include a person or entity that only 
                performs real estate brokerage activities and is 
                licensed or registered in accordance with applicable 
                State law, unless such person or entity is compensated 
                for performing such brokerage activities by a lender, a 
                mortgage broker, or other mortgage originator or by any 
                agent of such lender, mortgage broker, or other 
                mortgage originator; and
                  ``(E) does not include, with respect to a residential 
                mortgage loan, a person, estate, or trust that provides 
                mortgage financing for the sale of 1 property in any 36 
                month period, provided that such loan--
                          ``(i) is fully amortizing;
                          ``(ii) is with respect to a sale for which 
                        the seller determines in good faith and 
                        documents that the buyer has a reasonable 
                        ability to repay the loan;
                          ``(iii) has a fixed rate or an adjustable 
                        rate that is adjustable after 5 or more years, 
                        subject to reasonable annual and lifetime 
                        limitations on interest rate increases; and
                          ``(iv) meets any other criteria the Federal 
                        banking agencies may prescribe.
          ``(4) Nationwide mortgage licensing system and registry.--The 
        term `Nationwide Mortgage Licensing System and Registry' has 
        the same meaning as in the Secure and Fair Enforcement for 
        Mortgage Licensing Act of 2008.
          ``(5) Other definitions relating to mortgage originator.--For 
        purposes of this subsection, a person `assists a consumer in 
        obtaining or applying to obtain a residential mortgage loan' 
        by, among other things, advising on residential mortgage loan 
        terms (including rates, fees, and other costs), preparing 
        residential mortgage loan packages, or collecting information 
        on behalf of the consumer with regard to a residential mortgage 
        loan.
          ``(6) Residential mortgage loan.--The term `residential 
        mortgage loan' means any consumer credit transaction that is 
        secured by a mortgage, deed of trust, or other equivalent 
        consensual security interest on a dwelling or on residential 
        real property that includes a dwelling, other than a consumer 
        credit transaction under an open end credit plan or a reverse 
        mortgage or, for purposes of sections 129B and 129C and section 
        128(a)(16), (17), and (18), 128(a)(f) and 128(b)(4) and any 
        regulations promulgated thereunder, an extension of credit 
        relating to a plan described in section 101(53D) of title 11, 
        United States Code.
          ``(7) Secretary.--The term `Secretary', when used in 
        connection with any transaction or person involved with a 
        residential mortgage loan, means the Secretary of Housing and 
        Urban Development.
          ``(8) Securitization vehicle.--The term `securitization 
        vehicle' means a trust, corporation, partnership, limited 
        liability entity, special purpose entity, or other structure 
        that--
                  ``(A) is the issuer, or is created by the issuer, of 
                mortgage pass-through certificates, participation 
                certificates, mortgage-backed securities, or other 
                similar securities backed by a pool of assets that 
                includes residential mortgage loans; and
                  ``(B) holds such loans.
          ``(9) Securitizer.--The term `securitizer' means the person 
        that transfers, conveys, or assigns, or causes the transfer, 
        conveyance, or assignment of, residential mortgage loans, 
        including through a special purpose vehicle, to any 
        securitization vehicle, excluding any trustee that holds such 
        loans solely for the benefit of the securitization vehicle.
          ``(10) Servicer.--The term `servicer' has the same meaning as 
        in section 6(i)(2) of the Real Estate Settlement Procedures Act 
        of 1974.''.

SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

  (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129A the following 
new section:

``Sec. 129B. Residential mortgage loan origination

  ``(a) Finding and Purpose.--
          ``(1) Finding.--The Congress finds that economic 
        stabilization would be enhanced by the protection, limitation, 
        and regulation of the terms of residential mortgage credit and 
        the practices related to such credit, while ensuring that 
        responsible, affordable mortgage credit remains available to 
        consumers.
          ``(2) Purpose.--It is the purpose of this section and section 
        129C to assure that consumers are offered and receive 
        residential mortgage loans on terms that reasonably reflect 
        their ability to repay the loans and that are understandable 
        and not unfair, deceptive or abusive.
  ``(b) Duty of Care.--
          ``(1) Standard.--Subject to regulations prescribed under this 
        subsection, each mortgage originator shall, in addition to the 
        duties imposed by otherwise applicable provisions of State or 
        Federal law--
                  ``(A) be qualified and, when required, registered and 
                licensed as a mortgage originator in accordance with 
                applicable State or Federal law, including the Secure 
                and Fair Enforcement for Mortgage Licensing Act of 
                2008;
                  ``(B) with respect to each consumer seeking or 
                inquiring about a residential mortgage loan, diligently 
                work to present the consumer with a range of 
                residential mortgage loan products for which the 
                consumer likely qualifies and which are appropriate to 
                the consumer's existing circumstances, based on 
                information known by, or obtained in good faith by, the 
                originator;
                  ``(C) make full, complete, and timely disclosure to 
                each such consumer of--
                          ``(i) the comparative costs and benefits of 
                        each residential mortgage loan product offered, 
                        discussed, or referred to by the originator;
                          ``(ii) the nature of the originator's 
                        relationship to the consumer (including the 
                        cost of the services to be provided by the 
                        originator and a statement that the mortgage 
                        originator is or is not acting as an agent for 
                        the consumer, as the case may be); and
                          ``(iii) any relevant conflicts of interest 
                        between the originator and the consumer;
                  ``(D) certify to the creditor, with respect to any 
                transaction involving a residential mortgage loan, that 
                the mortgage originator has fulfilled all requirements 
                applicable to the originator under this section with 
                respect to the transaction; and
                  ``(E) include on all loan documents any unique 
                identifier of the mortgage originator provided by the 
                Nationwide Mortgage Licensing System and Registry.
          ``(2) Clarification of extent of duty to present range of 
        products and appropriate products.--
                  ``(A) No duty to offer products for which originator 
                is not authorized to take an application.--Paragraph 
                (1)(B) shall not be construed as requiring--
                          ``(i) a mortgage originator to present to any 
                        consumer any specific residential mortgage loan 
                        product that is offered by a creditor which 
                        does not accept consumer referrals from, or 
                        consumer applications submitted by or through, 
                        such originator; or
                          ``(ii) a creditor to offer products that the 
                        creditor does not offer to the general public.
                  ``(B) Appropriate loan product.--For purposes of 
                paragraph (1)(B), a residential mortgage loan shall be 
                presumed to be appropriate for a consumer if--
                          ``(i) the mortgage originator determines in 
                        good faith, based on then existing information 
                        and without undergoing a full underwriting 
                        process, that the consumer has a reasonable 
                        ability to repay and, in the case of a 
                        refinancing of an existing residential mortgage 
                        loan, receives a net tangible benefit, as 
                        determined in accordance with regulations 
                        prescribed under subsections (a) and (b) of 
                        section 129C; and
                          ``(ii) the loan does not have predatory 
                        characteristics or effects (such as equity 
                        stripping and excessive fees and abusive terms) 
                        as determined in accordance with regulations 
                        prescribed under paragraph (4).
          ``(3) Rules of construction.--No provision of this subsection 
        shall be construed as--
                  ``(A) creating an agency or fiduciary relationship 
                between a mortgage originator and a consumer if the 
                originator does not hold himself or herself out as such 
                an agent or fiduciary; or
                  ``(B) restricting a mortgage originator from holding 
                himself or herself out as an agent or fiduciary of a 
                consumer subject to any additional duty, requirement, 
                or limitation applicable to agents or fiduciaries under 
                any Federal or State law.
          ``(4) Regulations.--
                  ``(A) In general.--The Federal banking agencies, in 
                consultation with the Secretary, the Chairman of the 
                State Liaison Committee to the Financial Institutions 
                Examination Council, and the Commission, shall jointly 
                prescribe regulations to--
                          ``(i) further define the duty established 
                        under paragraph (1);
                          ``(ii) implement the requirements of this 
                        subsection;
                          ``(iii) establish the time period within 
                        which any disclosure required under paragraph 
                        (1) shall be made to the consumer; and
                          ``(iv) establish such other requirements for 
                        any mortgage originator as such regulatory 
                        agencies may determine to be appropriate to 
                        meet the purposes of this subsection.
                  ``(B) Complementary and nonduplicative disclosures.--
                The agencies referred to in subparagraph (A) shall 
                endeavor to make the required disclosures to consumers 
                under this subsection complementary and nonduplicative 
                with other disclosures for mortgage consumers to the 
                extent such efforts--
                          ``(i) are practicable; and
                          ``(ii) do not reduce the value of any such 
                        disclosure to recipients of such disclosures.
          ``(5) Compliance procedures required.--The Federal banking 
        agencies shall prescribe regulations requiring depository 
        institutions to establish and maintain procedures reasonably 
        designed to assure and monitor the compliance of such 
        depository institutions, the subsidiaries of such institutions, 
        and the employees of such institutions or subsidiaries with the 
        requirements of this section and the registration procedures 
        established under section 1507 of the Secure and Fair 
        Enforcement for Mortgage Licensing Act of 2008.''.
  (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129 the following new items:

``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.

SEC. 103. PROHIBITION ON STEERING INCENTIVES.

  Section 129B of the Truth in Lending Act (as added by section 102(a)) 
is amended by inserting after subsection (b) the following new 
subsection:
  ``(c) Prohibition on Steering Incentives.--
          ``(1) In general.--For any mortgage loan, the total amount of 
        direct and indirect compensation from all sources permitted to 
        a mortgage originator may not vary based on the terms of the 
        loan (other than the amount of the principal).
          ``(2) Regulations.--The Federal banking agencies, in 
        consultation with the Secretary and the Commission, shall 
        jointly prescribe regulations to prohibit--
                  ``(A) mortgage originators from steering any consumer 
                to a residential mortgage loan that--
                          ``(i) the consumer lacks a reasonable ability 
                        to repay (in accordance with regulations 
                        prescribed under section 129C(a));
                          ``(ii) in the case of a refinancing of a 
                        residential mortgage loan, does not provide the 
                        consumer with a net tangible benefit (in 
                        accordance with regulations prescribed under 
                        section 129C(b)); or
                          ``(iii) has predatory characteristics or 
                        effects (such as equity stripping, excessive 
                        fees, or abusive terms);
                  ``(B) mortgage originators from steering any consumer 
                from a residential mortgage loan for which the consumer 
                is qualified that is a qualified mortgage (as defined 
                in section 129C(c)(3)) to a residential mortgage loan 
                that is not a qualified mortgage;
                  ``(C) abusive or unfair lending practices that 
                promote disparities among consumers of equal credit 
                worthiness but of different race, ethnicity, gender, or 
                age; and
                  ``(D) mortgage originators from assessing excessive 
                points and fees (as such term is described under 
                section 103(aa)(4) of the Truth in Lending Act (15 
                U.S.C. 1602(aa)(4))) to a consumer for the origination 
                of a residential mortgage loan based on such consumer's 
                decision to finance all or part of the payment through 
                the rate for such points and fees.
          ``(3) Rules of construction.--No provision of this subsection 
        shall be construed as--
                  ``(A) permitting yield spread premiums or other 
                similar incentive compensation;
                  ``(B) affecting the mechanism for providing the total 
                amount of direct and indirect compensation permitted to 
                a mortgage originator;
                  ``(C) limiting or affecting the amount of 
                compensation received by a creditor upon the sale of a 
                consummated loan to a subsequent purchaser;
                  ``(D) restricting a consumer's ability to finance, 
                including through rate or principal, any origination 
                fees or costs permitted under this subsection, or the 
                mortgage originator's ability to receive such fees or 
                costs (including compensation) from any person, so long 
                as such fees or costs were fully and clearly disclosed 
                to the consumer earlier in the application process as 
                required by 129B(b)(1)(C)(i) and do not vary based on 
                the terms of the loan (other than the amount of the 
                principal) or the consumer's decision about whether to 
                finance such fees or costs; or
                  ``(E) prohibiting incentive payments to a mortgage 
                originator based on the number of residential mortgage 
                loans originated within a specified period of time.''.

SEC. 104. LIABILITY.

  Section 129B of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 103) the following new 
subsection:
  ``(d) Liability for Violations.--
          ``(1) In general.--For purposes of providing a cause of 
        action for any failure by a mortgage originator to comply with 
        any requirement imposed under this section and any regulation 
        prescribed under this section, subsections (a) and (b) of 
        section 130 shall be applied with respect to any such failure 
        by substituting `mortgage originator' for `creditor' each place 
        such term appears in each such subsection.
          ``(2) Maximum.--The maximum amount of any liability of a 
        mortgage originator under paragraph (1) to a consumer for any 
        violation of this section shall not exceed the greater of 
        actual damages or an amount equal to 3 times the total amount 
        of direct and indirect compensation or gain accruing to the 
        mortgage originator in connection with the residential mortgage 
        loan involved in the violation, plus the costs to the consumer 
        of the action, including a reasonable attorney's fee.''.

SEC. 105. REGULATIONS.

  (a) Discretionary Regulatory Authority.--Section 129B of the Truth in 
Lending Act is amended by inserting after subsection (d) (as added by 
section 104) the following new subsection:
  ``(e) Discretionary Regulatory Authority.--
          ``(1) In general.--The Federal banking agencies shall, by 
        regulations issued jointly, prohibit or condition terms, acts 
        or practices relating to residential mortgage loans that the 
        agencies find to be abusive, unfair, deceptive, predatory, 
        inconsistent with reasonable underwriting standards, necessary 
        or proper to effectuate the purposes of this section and 
        section 129C, to prevent circumvention or evasion thereof, or 
        to facilitate compliance with such sections, or are not in the 
        interest of the borrower.
          ``(2) Application.--The regulations prescribed under 
        paragraph (1) shall be applicable to all residential mortgage 
        loans and shall be applied in the same manner as regulations 
        prescribed under section 105.
  ``(f) Section 129B and any regulations promulgated thereunder do not 
apply to an extension of credit relating to a plan described in section 
101(53D) of title 11, United States Code.''.
  (b) Effective Date.--The regulations required or authorized to be 
prescribed under this title or the amendments made by this title--
          (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
          (2) shall take effect not later than 18 months after the date 
        of the enactment of this Act.
  (c) Truth in Lending Final Rule.--Notwithstanding any other provision 
of this Act, the regulations adopted by the Board concerning Truth in 
Lending, 73 Fed. Reg. 44522 (July 30, 2008), shall take effect as 
decided by the Board with such exceptions or revisions as the Board 
determines necessary.
  (d) Technical and Conforming Amendments.--Section 129(l)(2) of the 
Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by inserting 
``referred to in section 103(aa)'' after ``loans'' each place such term 
appears.

SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT.

  (a) Compatible Disclosures.--The Secretary of Housing and Urban 
Development and the Board of Governors of the Federal Reserve shall, 
not later than the expiration of the 6-month period beginning upon the 
date of the enactment of this Act, jointly issue for public comment 
proposed regulations providing for compatible disclosures for borrowers 
to receive at the time of mortgage application and at the time of 
closing.
  (b) Requirements.--Such disclosures shall--
          (1) provide clear and concise information to borrowers on the 
        terms and costs of residential mortgage transactions and 
        mortgage transactions covered by the Truth in Lending Act (12 
        U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures 
        Act of 1974 (12 U.S.C. 2601 et seq.);
          (2) satisfy the requirements of section 128 of the Truth in 
        Lending Act (12 U.S.C. 1638) and section 4 and 5 of the Real 
        Estate Settlement Procedures Act of 1974; and
          (3) comprise early disclosures under the Truth in Lending Act 
        and the good faith estimate disclosures under the Real Estate 
        Settlement Procedures Act of 1974 and final Truth in Lending 
        Act disclosures and the uniform settlement statement 
        disclosures under Real Estate Settlement Procedures Act of 1974 
        and provide for standardization to the greatest extent possible 
        among such disclosures from mortgage origination through the 
        mortgage settlement.
          (4) shall include, with respect to a residential home 
        mortgage loan, a written statement of--
                  (A) the principal amount of the loan;
                  (B) the term of the loan;
                  (C) whether the loan has a fixed rate of interest or 
                an adjustable rate of interest;
                  (D) the annual percentage rate of interest under the 
                loan as of the time of the disclosure;
                  (E) if the rate of interest under the loan can adjust 
                after the disclosure, for each such possible 
                adjustment--
                          (i) when such adjustment will or may occur; 
                        and
                          (ii) the maximum annual percentage rate of 
                        interest to which it can be adjusted;
                  (F) the total monthly payment under the loan 
                (including loan principal and interest, property taxes, 
                and insurance) at the time of the disclosure;
                  (G) the maximum total estimated monthly maximum 
                payment pursuant to each such possible adjustment;
                  (H) the total settlement charges in connection with 
                the loan and the amount of any downpayment and cash 
                required at settlement; and
                  (I) whether or not the loan has a prepayment penalty 
                or balloon payment and the terms, timing, and amount of 
                any such penalty or payment.
  (c) Suspension of 2008 Respa Rule.--
          (1) Requirement.--The Secretary of Housing and Urban 
        Development shall, during the period beginning on the date of 
        the enactment of this Act and ending upon issuance of proposed 
        regulations pursuant to subsection (a), suspend implementation 
        of any provisions of the final rule referred to in paragraph 
        (2) that would establish and implement a new standardized good 
        faith estimate and a new standardized uniform settlement 
        statement. Any such provisions shall be replaced by the 
        regulations issued pursuant to subsections (a) and (b).
          (2) 2008 rule.--The final rule referred to in this paragraph 
        is the rule of the Department of Housing and Urban Development 
        published on November 17, 2008, on pages 68204-68288 of Volume 
        73 of the Federal Register (Docket No. FR-5180-F-03; relating 
        to ``Real Estate Settlement Procedures Act (RESPA): Rule to 
        Simplify and Improve the Process of Obtaining Mortgages and 
        Reduce Consumer Settlement Costs'').
  (d) Implementation.--The regulations required under subsection (a) 
shall take effect, and shall provide an implementation date for the new 
disclosures required under such regulations, not later than the 
expiration of the 12-month period beginning upon the date of the 
enactment of this Act.
  (e) Failure to Issue Compatible Disclosures.--If the Secretary of 
Housing and Urban Development and the Board of Governors of the Federal 
Reserve System cannot agree on compatible disclosures pursuant to 
subsections (a) and (b), the Secretary and the Board shall submit a 
report to the Congress, after the 6-month period referred to in 
subsection (a), explaining the reasons for such disagreement. After the 
15-day period beginning upon submission of such report, the Secretary 
and the Board may separately issue for public comment regulations 
providing for disclosures under the Real Estate Settlement Procedures 
Act of 1974 and the Truth in Lending Act, respectively. Any final 
disclosures as a result of such regulations issued by the Secretary and 
the Board shall take effect on the same date, and not later than the 
expiration of the 12-month period beginning on the date of the 
enactment of this Act. If either the Secretary or the Board fails to 
act during such 12-month period, either such agency may act 
independently and implement final regulations.

               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

SEC. 201. ABILITY TO REPAY.

  (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129B (as added by 
section 102(a)) the following new section:

``Sec. 129C. Minimum standards for residential mortgage loans

  ``(a) Ability To Repay.--
          ``(1) In general.--In accordance with regulations prescribed 
        jointly by the Federal banking agencies, in consultation with 
        the Commission, no creditor may make a residential mortgage 
        loan unless the creditor makes a reasonable and good faith 
        determination based on verified and documented information 
        that, at the time the loan is consummated, the consumer has a 
        reasonable ability to repay the loan, according to its terms, 
        and all applicable taxes, insurance, and assessments.
          ``(2) Multiple loans.--If the creditor knows, or has reason 
        to know, that 1 or more residential mortgage loans secured by 
        the same dwelling will be made to the same consumer, the 
        creditor shall make a reasonable and good faith determination, 
        based on verified and documented information, that the consumer 
        has a reasonable ability to repay the combined payments of all 
        loans on the same dwelling according to the terms of those 
        loans and all applicable taxes, insurance, and assessments.
          ``(3) Basis for determination.--A determination under this 
        subsection of a consumer's ability to repay a residential 
        mortgage loan shall include consideration of the consumer's 
        credit history, current income, expected income the consumer is 
        reasonably assured of receiving, current obligations, debt-to-
        income ratio, employment status, and other financial resources 
        other than the consumer's equity in the dwelling or real 
        property that secures repayment of the loan.
          ``(4) Nonstandard loans.--
                  ``(A) Variable rate loans that defer repayment of any 
                principal or interest.--For purposes of determining, 
                under this subsection, a consumer's ability to repay a 
                variable rate residential mortgage loan that allows or 
                requires the consumer to defer the repayment of any 
                principal or interest, the creditor shall use a fully 
                amortizing repayment schedule.
                  ``(B) Interest-only loans.--For purposes of 
                determining, under this subsection, a consumer's 
                ability to repay a residential mortgage loan that 
                permits or requires the payment of interest only, the 
                creditor shall use the payment amount required to 
                amortize the loan by its final maturity.
                  ``(C) Calculation for negative amortization.--In 
                making any determination under this subsection, a 
                creditor shall also take into consideration any balance 
                increase that may accrue from any negative amortization 
                provision.
                  ``(D) Calculation process.--For purposes of making 
                any determination under this subsection, a creditor 
                shall calculate the monthly payment amount for 
                principal and interest on any residential mortgage loan 
                by assuming--
                          ``(i) the loan proceeds are fully disbursed 
                        on the date of the consummation of the loan;
                          ``(ii) the loan is to be repaid in 
                        substantially equal monthly amortizing payments 
                        for principal and interest over the entire term 
                        of the loan with no balloon payment, unless the 
                        loan contract requires more rapid repayment 
                        (including balloon payment), in which case the 
                        contract's repayment schedule shall be used in 
                        this calculation; and
                          ``(iii) the interest rate over the entire 
                        term of the loan is a fixed rate equal to the 
                        fully indexed rate at the time of the loan 
                        closing, without considering the introductory 
                        rate.
          ``(5) Fully-indexed rate defined.--For purposes of this 
        subsection, the term `fully indexed rate' means the index rate 
        prevailing on a residential mortgage loan at the time the loan 
        is made plus the margin that will apply after the expiration of 
        any introductory interest rates.''.
  (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129B (as added by section 102(b)) the following new item:

``129C. Minimum standards for residential mortgage loans.''.

SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE 
                    LOANS.

  Section 129C of the Truth in Lending Act (as added by section 201(a)) 
is amended by inserting after subsection (a) the following new 
subsection:
  ``(b) Net Tangible Benefit for Refinancing of Residential Mortgage 
Loans.--
          ``(1) In general.--In accordance with regulations prescribed 
        under paragraph (3), no creditor may extend credit in 
        connection with any residential mortgage loan that involves a 
        refinancing of a prior existing residential mortgage loan 
        unless the creditor reasonably and in good faith determines, at 
        the time the loan is consummated and on the basis of 
        information known by or obtained in good faith by the creditor, 
        that the refinanced loan will provide a net tangible benefit to 
        the consumer.
          ``(2) Certain loans providing no net tangible benefit.--A 
        residential mortgage loan that involves a refinancing of a 
        prior existing residential mortgage loan shall not be 
        considered to provide a net tangible benefit to the consumer if 
        the costs of the refinanced loan, including points, fees and 
        other charges, exceed the amount of any newly advanced 
        principal without any corresponding changes in the terms of the 
        refinanced loan that are advantageous to the consumer.
          ``(3) Net tangible benefit.--The Federal banking agencies 
        shall jointly prescribe regulations defining the term `net 
        tangible benefit' for purposes of this subsection.''.

SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

  Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (b) (as added by section 202) the following new 
subsection:
  ``(c) Presumption of Ability To Repay and Net Tangible Benefit.--
          ``(1) In general.--Any creditor with respect to any 
        residential mortgage loan, and any assignee or securitizer of 
        such loan, may presume that the loan has met the requirements 
        of subsections (a) and (b), if the loan is a qualified 
        mortgage.
          ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                  ``(A) Qualified mortgage.--The term `qualified 
                mortgage' means any residential mortgage loan--
                          ``(i) that does not allow a consumer to defer 
                        repayment of principal or interest, or is not 
                        otherwise deemed a `non-traditional mortgage' 
                        under guidance, advisories, or regulations 
                        prescribed by the Federal Banking Agencies;
                          ``(ii) that does not provide for a repayment 
                        schedule that results in negative amortization 
                        at any time;
                          ``(iii) for which the terms are fully 
                        amortizing and which does not result in a 
                        balloon payment, where a `balloon payment' is a 
                        scheduled payment that is more than twice as 
                        large as the average of earlier scheduled 
                        payments;
                          ``(iv) which has an annual percentage rate 
                        that does not exceed the average prime offer 
                        rate for a comparable transaction, as of the 
                        date the interest rate is set--
                                  ``(I) by 1.5 or more percentage 
                                points, in the case of a first lien 
                                residential mortgage loan having a 
                                original principal obligation amount 
                                that does not exceed the amount of the 
                                maximum limitation on the original 
                                principal obligation of mortgage in 
                                effect for a residence of the 
                                applicable size, as of the date of such 
                                interest rate set, pursuant to the 
                                sixth sentence of section 305(a)(2) the 
                                Federal Home Loan Mortgage Corporation 
                                Act (12 U.S.C. 1454(a)(2)); and
                                  ``(II) by 2.5 or more percentage 
                                points, in the case of a first lien 
                                residential mortgage loan having a 
                                original principal obligation amount 
                                that exceeds the amount of the maximum 
                                limitation on the original principal 
                                obligation of mortgage in effect for a 
                                residence of the applicable size, as of 
                                the date of such interest rate set, 
                                pursuant to the sixth sentence of 
                                section 305(a)(2) the Federal Home Loan 
                                Mortgage Corporation Act (12 U.S.C. 
                                1454(a)(2));
                          ``(v) for which the income and financial 
                        resources relied upon to qualify the obligors 
                        on the loan are verified and documented;
                          ``(vi) in the case of a fixed rate loan, for 
                        which the underwriting process is based on a 
                        payment schedule that fully amortizes the loan 
                        over the loan term and takes into account all 
                        applicable taxes, insurance, and assessments;
                          ``(vii) in the case of an adjustable rate 
                        loan, for which the underwriting is based on 
                        the maximum rate permitted under the loan 
                        during the first seven years, and a payment 
                        schedule that fully amortizes the loan over the 
                        loan term and takes into account all applicable 
                        taxes, insurance, and assessments;
                          ``(viii) that does not cause the consumer's 
                        total monthly debts, including amounts under 
                        the loan, to exceed a percentage established by 
                        regulation of the consumer's monthly gross 
                        income or such other maximum percentage of such 
                        income as may be prescribed by regulation under 
                        paragraph (4), and such rules shall also take 
                        into consideration the consumer's income 
                        available to pay regular expenses after payment 
                        of all installment and revolving debt;
                          ``(ix) for which the total points and fees 
                        payable in connection with the loan do not 
                        exceed 2 percent of the total loan amount, 
                        where `points and fees' means points and fees 
                        as defined by Section 103(aa)(4) of the Truth 
                        in Lending Act (15 U.S.C. 1602(aa)(4)); and
                          ``(x) for which the term of the loan does not 
                        exceed 30 years, except as such term may be 
                        extended under paragraph (4).
                  ``(B) Average prime offer rate.--The term `average 
                prime offer rate' means an annual percentage rate that 
                is derived from average interest rates, points, and 
                other loan pricing terms currently offered to consumers 
                by a representative sample of creditors for mortgage 
                transactions that have low risk pricing 
                characteristics.
          ``(3) Publication of average prime offer rate.--The Board--
                  ``(A) shall publish, and update at least weekly, 
                average prime offer rates; and
                  ``(B) may publish multiple rates based on varying 
                types of mortgage transactions.
          ``(4) Regulations.--
                  ``(A) In general.--The Federal banking agencies shall 
                jointly prescribe regulations to carry out the purposes 
                of this subsection.
                  ``(B) Revision of safe harbor criteria.--
                          ``(i) In general.--The Federal banking 
                        agencies may jointly prescribe regulations that 
                        revise, add to, or subtract from the criteria 
                        that define a qualified mortgage upon a finding 
                        that such regulations are necessary and 
                        appropriate to effectuate the purposes of this 
                        section and section 129B, to prevent 
                        circumvention or evasion thereof, or to 
                        facilitate compliance with such sections.
                          ``(ii) Loan definition.--The following 
                        agencies shall prescribe rules defining the 
                        types of loans they insure, guarantee or 
                        administer, as the case may be, that are 
                        Qualified Mortgages for purposes of subsection 
                        (c)(1)(A) upon a finding that such rules are 
                        consistent with the purposes of this section 
                        and section 129B, to prevent circumvention or 
                        evasion thereof, or to facilitate compliance 
                        with such sections--
                                  ``(I) The Department of Housing and 
                                Urban Development, with regard to 
                                mortgages insured under title II of the 
                                National Housing Act (12 U.S.C. 1707 et 
                                seq.);
                                  ``(II) The Secretary of Veterans 
                                Affairs, with regard to a loan made or 
                                guaranteed by the Secretary of Veterans 
                                Affairs;
                                  ``(III) The Secretary of Agriculture, 
                                with regard loans guaranteed by the 
                                Secretary of Agriculture pursuant to 42 
                                U.S.C. 1472(h);
                                  ``(IV) The Federal Housing Finance 
                                Agency, with regard to loans meeting 
                                the conforming loan standards of the 
                                Federal National Mortgage Corporation 
                                or the Federal Home Loan Mortgage 
                                Corporation; and
                                  ``(V) The Rural Housing Service, with 
                                regard to loans insured by the Rural 
                                Housing Service.''.

SEC. 204. LIABILITY.

  Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 203) the following new 
subsection:
  ``(d) Liability for Violations.--
          ``(1) In general.--
                  ``(A) Rescission.--In addition to any other liability 
                under this title for a violation by a creditor of 
                subsection (a) or (b) (for example under section 130) 
                and subject to the statute of limitations in paragraph 
                (9), a civil action may be maintained against a 
                creditor for a violation of subsection (a) or (b) with 
                respect to a residential mortgage loan for the 
                rescission of the loan, and such additional costs as 
                the obligor may have incurred as a result of the 
                violation and in connection with obtaining a rescission 
                of the loan, including a reasonable attorney's fee.
                  ``(B) Cure.--A creditor shall not be liable for 
                rescission under subparagraph (A) with respect to a 
                residential mortgage loan if, no later than 90 days 
                after the receipt of notification from the consumer 
                that the loan violates subsection (a) or (b), the 
                creditor provides a cure.
          ``(2) Limited assignee and securitizer liability.--
        Notwithstanding sections 125(e) and 131 and except as provided 
        in paragraph (3), a civil action which may be maintained 
        against a creditor with respect to a residential mortgage loan 
        for a violation of subsection (a) or (b) may be maintained 
        against any assignee or securitizer of such residential 
        mortgage loan, who has acted in good faith, for the following 
        liabilities only:
                  ``(A) Rescission of the loan.
                  ``(B) Such additional costs as the obligor may have 
                incurred as a result of the violation and in connection 
                with obtaining a rescission of the loan, including a 
                reasonable attorney's fee.
          ``(3) Assignee and securitizer exemption.--No assignee or 
        securitizer of a residential mortgage loan that has exercised 
        reasonable due diligence in complying with the requirements of 
        subsections (a) and (b) shall be liable under paragraph (2) 
        with respect to such loan if, no later than 90 days after the 
        receipt of notification from the consumer that the loan 
        violates subsection (a) or (b), the assignee or securitizer 
        provides a cure so that the loan satisfies the requirements of 
        subsections (a) and (b).
          ``(4) Absent parties.--
                  ``(A) Absent creditor.--Notwithstanding the exemption 
                provided in paragraph (3), if the creditor with respect 
                to a residential mortgage loan made in violation of 
                subsection (a) or (b) has ceased to exist as a matter 
                of law or has filed for bankruptcy protection under 
                title 11, United States Code, or has had a receiver, 
                conservator, or liquidating agent appointed, a consumer 
                may maintain a civil action against an assignee to cure 
                the residential mortgage loan, plus the costs and 
                reasonable attorney's fees incurred in obtaining such 
                remedy.
                  ``(B) Absent creditor and assignee.--Notwithstanding 
                the exemption provided in paragraph (3), if the 
                creditor with respect to a residential mortgage loan 
                made in violation of subsection (a) or (b) and each 
                assignee of such loan have ceased to exist as a matter 
                of law or have filed for bankruptcy protection under 
                title 11, United States Code, or have had receivers, 
                conservators, or liquidating agents appointed, the 
                consumer may maintain the civil action referred to in 
                subparagraph (A) against the securitizer.
          ``(5) Cure defined.--For purposes of this subsection, the 
        term `cure' means, with respect to a residential mortgage loan 
        that violates subsection (a) or (b), the modification or 
        refinancing, at no cost to the consumer, of the loan to provide 
        terms that satisfy the requirements of subsections (a) and (b) 
        and the payment of such additional costs as the obligor may 
        have incurred in connection with obtaining a cure of the loan, 
        including a reasonable attorney's fee.
          ``(6) Disagreement over cure.--If any creditor, assignee, or 
        securitizer and a consumer fail to reach agreement on a cure 
        with respect to a residential mortgage loan that violates 
        subsection (a) or (b), or the consumer fails to accept a cure 
        proffered by a creditor, assignee, or securitizer--
                  ``(A) the creditor, assignee, or securitizer may 
                provide the cure; and
                  ``(B) the consumer may challenge the adequacy of the 
                cure during the 6-month period beginning when the cure 
                is provided.
        If the consumer's challenge, under this paragraph, of a cure is 
        successful, the creditor, assignee, or securitizer shall be 
        liable to the consumer for rescission of the loan and such 
        additional costs under paragraph (2).
          ``(7) Inability to provide or obtain rescission.--If a 
        creditor, assignee, or securitizer cannot provide, or a 
        consumer cannot obtain, rescission under paragraph (1) or (2), 
        the liability of such creditor, assignee, or securitizer shall 
        be met by providing the financial equivalent of a rescission, 
        together with such additional costs as the obligor may have 
        incurred as a result of the violation and in connection with 
        obtaining a rescission of the loan, including a reasonable 
        attorney's fee.
          ``(8) No class actions against assignee or securitizer under 
        paragraph (2).--Only individual actions may be brought against 
        an assignee or securitizer of a residential mortgage loan for a 
        violation of subsection (a) or (b).
          ``(9) Statute of limitations.--The liability of a creditor, 
        assignee, or securitizer under this subsection shall apply in 
        any original action against a creditor under paragraph (1) or 
        an assignee or securitizer under paragraph (2) which is brought 
        before--
                  ``(A) in the case of any residential mortgage loan 
                other than a loan to which subparagraph (B) applies, 
                the end of the 3-year period beginning on the date the 
                loan is consummated; or
                  ``(B) in the case of a residential mortgage loan that 
                provides for a fixed interest rate for an introductory 
                period and then resets or adjusts to a variable rate or 
                that provides for a nonamortizing payment schedule and 
                then converts to an amortizing payment schedule, the 
                earlier of--
                          ``(i) the end of the 1-year period beginning 
                        on the date of such reset, adjustment, or 
                        conversion; or
                          ``(ii) the end of the 6-year period beginning 
                        on the date the loan is consummated.
          ``(10) Pools and investors in pools excluded.--In the case of 
        residential mortgage loans acquired or aggregated for the 
        purpose of including such loans in a pool of assets held for 
        the purpose of issuing or selling instruments representing 
        interests in such pools including through a securitization 
        vehicle, the terms `assignee' and `securitizer', as used in 
        this section, do not include the securitization vehicle, the 
        pools of such loans or any original or subsequent purchaser of 
        any interest in the securitization vehicle or any instrument 
        representing a direct or indirect interest in such pool.
  ``(e) Obligation of Securitizers, and Preservation of Borrower 
Remedies.--
          ``(1) Obligation to retain access.--Any securitizer of a 
        residential mortgage loan sold or to be sold as part of a 
        securitization vehicle shall, in any document or contract 
        providing for the transfer, conveyance, or the establishment of 
        such securitization vehicle, reserve the right and preserve the 
        ability--
                  ``(A) to identify and obtain access to any such loan;
                  ``(B) to acquire any such loan in the event of a 
                violation of subsections (a) or (b) of this section; 
                and
                  ``(C) to provide to the consumer any and all remedies 
                provided for under this title for any violation of this 
                title.
          ``(2) Additional damages.--Any creditor, assignee, or 
        securitizer of a residential mortgage loan that is subject to a 
        remedy under subsection (d) and has failed to comply with 
        paragraph (1) shall be subject to additional exemplary or 
        punitive damages not to exceed the original principal balance 
        of such loan.
          ``(3) Contact information notice.--The servicer with respect 
        to a residential mortgage loan shall provide a written notice 
        to a consumer identifying the name and contact information of 
        the creditor or any assignee or securitizer who should be 
        contacted by the consumer for any reason concerning the 
        consumer's rights with respect to the loan. Such notice shall 
        be provided--
                  ``(A) upon request of the consumer;
                  ``(B) whenever there is a change in ownership of a 
                residential mortgage loan; or
                  ``(C) on a regular basis, not less than annually.
  ``(f) Rules to Establish Process.--The Board shall promulgate rules 
to govern the rescission process established for violations of 
subsections (a) and (b) of this section. Such rules shall provide that 
notice given to a servicer or holder is sufficient notice regardless of 
the identity of the party or the parties liable under this title.''.

SEC. 205. DEFENSE TO FORECLOSURE.

  Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (f) (as added by section 204) the following new 
subsections:
  ``(g) Defense to Foreclosure.--Notwithstanding any other provision of 
law--
          ``(1) when the holder of a residential mortgage loan or 
        anyone acting for such holder initiates a judicial or 
        nonjudicial foreclosure--
                  ``(A) a consumer who has the right to rescind under 
                this section with respect to such loan against the 
                creditor or any assignee or securitizer may assert such 
                right as a defense to foreclosure or counterclaim to 
                such foreclosure against the holder, or
                  ``(B) if the foreclosure proceeding begins after the 
                end of the period during which a consumer may bring an 
                action for rescission under subsection (d) and the 
                consumer would have had a valid basis for such an 
                action if it had been brought before the end of such 
                period, the consumer may seek actual damages incurred 
                by reason of the violation which gave rise to the right 
                of rescission, together with costs of the action, 
                including a reasonable attorney's fee against the 
                creditor or any assignee or securitizer; and
          ``(2) such holder or anyone acting for such holder or any 
        other applicable third party may sell, transfer, convey, or 
        assign a residential mortgage loan to a creditor, any assignee, 
        or any securitizer, or their designees, to effect a rescission 
        or cure.''.

SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS.

  (a) In General.--Section 129C of the Truth in Lending Act is amended 
by inserting after subsection (g) (as added by section 205) the 
following new subsections:
  ``(h) Prohibition on Certain Prepayment Penalties.--
          ``(1) Prohibited on certain loans.--A residential mortgage 
        loan that is not a `qualified mortgage' may not contain terms 
        under which a consumer must pay a prepayment penalty for paying 
        all or part of the principal after the loan is consummated. For 
        purposes of this subsection, a `qualified mortgage' may not 
        include a residential mortgage loan that has an adjustable 
        rate.
          ``(2) Phased-out penalties on qualified mortgages.--A 
        qualified mortgage (as defined in subsection (c)) may not 
        contain terms under which a consumer must pay a prepayment 
        penalty for paying all or part of the principal after the loan 
        is consummated in excess of the following limitations:
                  ``(A) During the 1-year period beginning on the date 
                the loan is consummated, the prepayment penalty shall 
                not exceed an amount equal to 3 percent of the 
                outstanding balance on the loan.
                  ``(B) During the 1-year period beginning after the 
                period described in subparagraph (A), the prepayment 
                penalty shall not exceed an amount equal to 2 percent 
                of the outstanding balance on the loan.
                  ``(C) During the 1-year period beginning after the 1-
                year period described in subparagraph (B), the 
                prepayment penalty shall not exceed an amount equal to 
                1 percent of the outstanding balance on the loan.
                  ``(D) After the end of the 3-year period beginning on 
                the date the loan is consummated, no prepayment penalty 
                may be imposed on a qualified mortgage.
          ``(3) Prohibited after initial period on loans with a 
        reset.--A qualified mortgage with a fixed interest rate for an 
        introductory period that adjusts or resets after such period 
        may not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the principal 
        after the beginning of the 3-month period ending on the date of 
        the adjustment or reset.
          ``(4) Option for no prepayment penalty required.--A creditor 
        may not offer a consumer a residential mortgage loan product 
        that has a prepayment penalty for paying all or part of the 
        principal after the loan is consummated as a term of the loan 
        without offering the consumer a residential mortgage loan 
        product that does not have a prepayment penalty as a term of 
        the loan.
  ``(i) Single Premium Credit Insurance Prohibited.--No creditor may 
finance, directly or indirectly, in connection with any residential 
mortgage loan or with any extension of credit under an open end 
consumer credit plan secured by the principal dwelling of the consumer 
(other than a reverse mortgage), any credit life, credit disability, 
credit unemployment or credit property insurance, or any other 
accident, loss-of-income, life or health insurance, or any payments 
directly or indirectly for any debt cancellation or suspension 
agreement or contract, except that--
          ``(1) insurance premiums or debt cancellation or suspension 
        fees calculated and paid in full on a monthly basis shall not 
        be considered financed by the creditor; and
          ``(2) this subsection shall not apply to credit unemployment 
        insurance for which the unemployment insurance premiums are 
        reasonable, the creditor receives no direct or indirect 
        compensation in connection with the unemployment insurance 
        premiums, and the unemployment insurance premiums are paid 
        pursuant to another insurance contract and not paid to an 
        affiliate of the creditor.
  ``(j) Arbitration.--
          ``(1) In general.--No residential mortgage loan and no 
        extension of credit under an open end consumer credit plan 
        secured by the principal dwelling of the consumer, other than a 
        reverse mortgage, may include terms which require arbitration 
        or any other nonjudicial procedure as the method for resolving 
        any controversy or settling any claims arising out of the 
        transaction.
          ``(2) Post-controversy agreements.--Subject to paragraph (3), 
        paragraph (1) shall not be construed as limiting the right of 
        the consumer and the creditor, any assignee, or any securitizer 
        to agree to arbitration or any other nonjudicial procedure as 
        the method for resolving any controversy at any time after a 
        dispute or claim under the transaction arises.
          ``(3) No waiver of statutory cause of action.--No provision 
        of any residential mortgage loan or of any extension of credit 
        under an open end consumer credit plan secured by the principal 
        dwelling of the consumer (other than a reverse mortgage), and 
        no other agreement between the consumer and the creditor 
        relating to the residential mortgage loan or extension of 
        credit referred to in paragraph (1), shall be applied or 
        interpreted so as to bar a consumer from bringing an action in 
        an appropriate district court of the United States, or any 
        other court of competent jurisdiction, pursuant to section 130 
        or any other provision of law, for damages or other relief in 
        connection with any alleged violation of this section, any 
        other provision of this title, or any other Federal law.
  ``(k) Mortgages With Negative Amortization.--No creditor may extend 
credit to a borrower in connection with a consumer credit transaction 
under an open or closed end consumer credit plan secured by a dwelling 
or residential real property that includes a dwelling, other than a 
reverse mortgage, that provides or permits a payment plan that may, at 
any time over the term of the extension of credit, result in negative 
amortization unless, before such transaction is consummated--
          ``(1) the creditor provides the consumer with a statement 
        that--
                  ``(A) the pending transaction will or may, as the 
                case may be, result in negative amortization;
                  ``(B) describes negative amortization in such manner 
                as the Federal banking agencies shall prescribe;
                  ``(C) negative amortization increases the outstanding 
                principal balance of the account; and
                  ``(D) negative amortization reduces the consumer's 
                equity in the dwelling or real property; and
          ``(2) in the case of a first-time borrower with respect to a 
        residential mortgage loan that is not a qualified mortgage, the 
        first-time borrower provides the creditor with sufficient 
        documentation to demonstrate that the consumer received 
        homeownership counseling from organizations or counselors 
        certified by the Secretary of Housing and Urban Development as 
        competent to provide such counseling.''.
  (b) Conforming Amendment Relating to Enforcement.--Section 108(a) of 
the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting 
after paragraph (6) the following new paragraph:
          ``(7) sections 21B and 21C of the Securities Exchange Act of 
        1934, in the case of a broker or dealer, other than a 
        depository institution, by the Securities and Exchange 
        Commission.''.

SEC. 207. RULE OF CONSTRUCTION.

  Except as otherwise expressly provided in section 129B or 129C of the 
Truth in Lending Act (as added by this Act), no provision of such 
section 129B or 129C shall be construed as superseding, repealing, or 
affecting any duty, right, obligation, privilege, or remedy of any 
person under any other provision of the Truth in Lending Act or any 
other provision of Federal or State law.

SEC. 208. EFFECT ON STATE LAWS.

  (a) In General.--Except as provided in subsection (b), section 
129C(d) of the Truth in Lending Act (as added by section 204) shall 
supersede any State law to the extent that it provides additional 
remedies against any assignee, securitizer, or securitization vehicle 
for a violation of subsection (a) or (b) of section 129C of such Act or 
any other State law the terms of which address the specific subject 
matter of subsection (a) (determination of ability to repay) or (b) 
(requirement of a net tangible benefit) of section 129C of such Act, 
and the remedies described in section 129C(d) shall constitute the sole 
remedies against any assignee, securitizer, or securitization vehicle 
for such violations.
  (b) Rules of Construction.--No provision of this section shall be 
construed as limiting--
          (1) the application of any State law, or the availability of 
        remedies under such law, against a creditor for a particular 
        residential mortgage loan regardless of whether such creditor 
        also acts as an assignee, securitizer, or securitization 
        vehicle for such loan;
          (2) the application of any State law, or the availability of 
        remedies under such law, against an assignee, securitizer, or 
        securitization vehicle under State law, other than a provision 
        of such law the terms of which address the specific subject 
        matter of subsection (a) (determination of ability to repay) or 
        (b) (requirement of a net tangible benefit) of section 129C of 
        such Act;
          (3)(A) the application of any State law, or the availability 
        of remedies under such law, against an assignee, securitizer or 
        securitization vehicle for its participation in or direction of 
        the credit or underwriting decisions of a creditor relating to 
        the making of a residential mortgage loan; or
          (B) the ability of a consumer to assert any rights against or 
        obtain any remedies from an assignee, securitizer or 
        securitization vehicle with respect to a residential mortgage 
        loan as a defense to foreclosure under section 129C(g); or
          (4) the availability of any equitable remedies, including 
        injunctive relief, under State law.

SEC. 209. REGULATIONS.

  Regulations required or authorized to be prescribed under this title 
or the amendments made by this title--
          (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
          (2) shall take effect not later than 18 months after the date 
        of the enactment of this Act.

SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

  (a) Increase in Amount of Civil Money Penalties for Certain 
Violations.--Section 130(a)(2) of the Truth in Lending Act (15 U.S.C. 
1640(a)(2)) is amended--
          (1) by striking ``$100'' and inserting ``$200'';
          (2) by striking ``$1,000'' and inserting ``$2,000''; and
          (3) by striking ``$500,000'' and inserting ``$1,000,000''.
  (b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 
amended--
          (1) in the first sentence, by striking ``Any action'' and 
        inserting ``Except as provided in the subsequent sentence, any 
        action''; and
          (2) by inserting after the first sentence the following new 
        sentence: ``Any action under this section with respect to any 
        violation of section 129 may be brought in any United States 
        district court, or in any other court of competent 
        jurisdiction, before the end of the 3-year period beginning on 
        the date of the occurrence of the violation.''.

SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

  Section 130 of the Truth in Lending Act is amended by adding at the 
end the following new subsection:
  ``(k) Exemption From Liability and Rescission in Case of Borrower 
Fraud or Deception.--In addition to any other remedy available by law 
or contract, no creditor, assignee, or securitizer shall be liable to 
an obligor under this section, nor shall it be subject to the right of 
rescission of any obligor under 129B, if such obligor, or co-obligor, 
knowingly, or willfully and with actual knowledge furnished material 
information known to be false for the purpose of obtaining such 
residential mortgage loan.''.

SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE 
                    RATE MORTGAGES.

  (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 128 the following 
new section:

``Sec. 128A. Reset of hybrid adjustable rate mortgages

  ``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of this 
section, the term `hybrid adjustable rate mortgage' means a consumer 
credit transaction secured by the consumer's principal residence with a 
fixed interest rate for an introductory period that adjusts or resets 
to a variable interest rate after such period.
  ``(b) Notice of Reset and Alternatives.--During the 1-month period 
that ends 6 months before the date on which the interest rate in effect 
during the introductory period of a hybrid adjustable rate mortgage 
adjusts or resets to a variable interest rate or, in the case of such 
an adjustment or resetting that occurs within the first 6 months after 
consummation of such loan, at consummation, the creditor or servicer of 
such loan shall provide a written notice, separate and distinct from 
all other correspondence to the consumer, that includes the following:
          ``(1) Any index or formula used in making adjustments to or 
        resetting the interest rate and a source of information about 
        the index or formula.
          ``(2) An explanation of how the new interest rate and payment 
        would be determined, including an explanation of how the index 
        was adjusted, such as by the addition of a margin.
          ``(3) A good faith estimate, based on accepted industry 
        standards, of the creditor or servicer of the amount of the 
        monthly payment that will apply after the date of the 
        adjustment or reset, and the assumptions on which this estimate 
        is based.
          ``(4) A list of alternatives consumers may pursue before the 
        date of adjustment or reset, and descriptions of the actions 
        consumers must take to pursue these alternatives, including--
                  ``(A) refinancing;
                  ``(B) renegotiation of loan terms;
                  ``(C) payment forbearances; and
                  ``(D) pre-foreclosure sales.
          ``(5) The names, addresses, telephone numbers, and Internet 
        addresses of counseling agencies or programs reasonably 
        available to the consumer that have been certified or approved 
        and made publicly available by the Secretary of Housing and 
        Urban Development or a State housing finance authority (as 
        defined in section 1301 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989).
          ``(6) The address, telephone number, and Internet address for 
        the State housing finance authority (as so defined) for the 
        State in which the consumer resides.''.
  (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 128 the following new item:

``128A. Reset of hybrid adjustable rate mortgages.''.

SEC. 213. CREDIT RISK RETENTION.

  Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (k) (as added by section 206) the following new 
subsection:
  ``(l) Credit Risk Retention.--
          ``(1) In general.--The Federal banking agencies shall 
        prescribe regulations jointly to require any creditor that 
        makes a residential mortgage loan that is not a qualified 
        mortgage (as defined in section 129C(c)(2)(A)), to retain an 
        economic interest in a material portion of the credit risk for 
        any such loan that the creditor transfers, sells or conveys to 
        a third party.
          ``(2) Standards for regulations.--Regulations prescribed 
        under paragraph (1) shall--
                  ``(A) apply only to residential mortgage loans that 
                are not qualified mortgages (as so defined);
                  ``(B) prohibit creditors from directly or indirectly 
                hedging or otherwise transferring the credit risk 
                creditors are required to retain under the regulations 
                with respect to any residential mortgage loan;
                  ``(C) require creditors to retain at least 5 percent 
                of the credit risk on any non-qualified mortgage that 
                is transferred, sold or conveyed; and
                  ``(D) specify the permissible forms of the required 
                risk retention (for example, first loss position or pro 
                rata vertical slice) and the minimum duration of the 
                required risk retention.
          ``(3) Exceptions and adjustments.--
                  ``(A) In general.--The Federal banking agencies shall 
                have authority to provide exceptions or adjustments to 
                the requirements of this subsection, including 
                exceptions or adjustments relating to the 5 percent 
                risk retention threshold and the hedging prohibition.
                  ``(B) Applicable standards.--Any exceptions or 
                adjustments granted by the Federal banking agencies 
                shall--
                          ``(i) be consistent with the purpose of this 
                        subsection to help ensure high quality 
                        underwriting standards for mortgage lenders; 
                        and
                          ``(ii) facilitate appropriate risk management 
                        practices by mortgage lenders, improve access 
                        of consumers to mortgage credit on reasonable 
                        terms, or otherwise serve the public interest.
          ``(4) Alternative risk retention for securitization 
        sponsors.--The Federal banking agencies shall have discretion 
        to apply the risk retention requirements of this subsection to 
        securitizers of non-qualified mortgages in addition to or in 
        place of creditors that make non-qualified mortgages if the 
        agencies determine that applying the requirements to 
        securitization sponsors rather than originators would--
                  ``(A) be consistent with the purpose of this 
                subsection to help ensure high quality underwriting 
                standards for mortgage lenders; and
                  ``(B) facilitate appropriate risk management 
                practices by mortgage lenders, or improve access of 
                consumers to mortgage credit on reasonable terms.
  ``(m) Section 129C and any regulations promulgated thereunder do not 
apply to an extension of credit relating to a plan described in section 
101(53D) of title 11, United States Code.''.

SEC. 214. REQUIRED DISCLOSURES.

  (a) Additional Information.--Section 128(a) of Truth in Lending Act 
(15 U.S.C. 1638(a)) is amended by adding at the end the following new 
paragraphs:
          ``(16) In the case of a variable rate residential mortgage 
        loan for which an escrow or impound account will be established 
        for the payment of all applicable taxes, insurance, and 
        assessments--
                  ``(A) the amount of initial monthly payment due under 
                the loan for the payment of principal and interest, and 
                the amount of such initial monthly payment including 
                the monthly payment deposited in the account for the 
                payment of all applicable taxes, insurance, and 
                assessments; and
                  ``(B) the amount of the fully indexed monthly payment 
                due under the loan for the payment of principal and 
                interest, and the amount of such fully indexed monthly 
                payment including the monthly payment deposited in the 
                account for the payment of all applicable taxes, 
                insurance, and assessments.
          ``(17) In the case of a residential mortgage loan, the 
        aggregate amount of settlement charges for all settlement 
        services provided in connection with the loan, the amount of 
        charges that are included in the loan and the amount of such 
        charges the borrower must pay at closing, the approximate 
        amount of the wholesale rate of funds in connection with the 
        loan, and the aggregate amount of other fees or required 
        payments in connection with the loan.
          ``(18) In the case of a residential mortgage loan, the 
        aggregate amount of fees paid to the mortgage originator in 
        connection with the loan, the amount of such fees paid directly 
        by the consumer, and any additional amount received by the 
        originator from the creditor.''.
  (b) Timing.--Section 128(b) of the Truth in Lending Act (15 U.S.C. 
1638(b)) is amended by adding at the end the following new paragraph:
          ``(4) Residential mortgage loan disclosures.--In the case of 
        a residential mortgage loan, the information required to be 
        disclosed under subsection (a) with respect to such loan shall 
        be disclosed before the earlier of--
                  ``(A) the time required under the first sentence of 
                paragraph (1); or
                  ``(B) the end of the 3-business-day period beginning 
                on the date the application for the loan from a 
                consumer is received by the creditor.''.

SEC. 215. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL 
                    MORTGAGE LOANS.

  Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended 
by adding at the end the following new subsection:
  ``(f) Periodic Statements for Residential Mortgage Loans.--
          ``(1) In general.--The creditor, assignee, or servicer with 
        respect to any residential mortgage loan shall transmit to the 
        obligor, for each billing cycle, a statement setting forth each 
        of the following items, to the extent applicable, in a 
        conspicuous and prominent manner:
                  ``(A) The amount of the principal obligation under 
                the mortgage.
                  ``(B) The current interest rate in effect for the 
                loan.
                  ``(C) The date on which the interest rate may next 
                reset or adjust.
                  ``(D) The amount of any prepayment fee to be charged, 
                if any.
                  ``(E) A description of any late payment fees.
                  ``(F) A telephone number and electronic mail address 
                that may be used by the obligor to obtain information 
                regarding the mortgage.
                  ``(G) Such other information as the Board may 
                prescribe in regulations.
          ``(2) Development and use of standard form.--The Federal 
        banking agencies shall jointly develop and prescribe a standard 
        form for the disclosure required under this subsection, taking 
        into account that the statements required may be transmitted in 
        writing or electronically.''.

SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

  (a) Establishment.--The Secretary of Housing and Urban Development 
(hereafter in this section referred to as the ``Secretary'' shall 
establish a program for making grants for providing a full range of 
foreclosure legal assistance to low- and moderate-income homeowners and 
tenants related to home ownership preservation, home foreclosure 
prevention, and tenancy associated with home foreclosure.
  (b) Competitive Allocation.--The Secretary shall allocate amounts 
made available for grants under this section to State and local legal 
organizations on the basis of a competitive process. For purposes of 
this subsection ``State and local legal organizations'' are those State 
and local organizations whose primary business or mission is to provide 
legal assistance.
  (c) Priority to Certain Areas.--In allocating amounts in accordance 
with subsection (b), the Secretary shall give priority consideration to 
State and local legal organizations that are operating in the 100 
metropolitan statistical areas (as that term is defined by the Director 
of the Office of Management and Budget) with the highest home 
foreclosure rates.
  (d) Legal Assistance.--
          (1) In general.--Any State or local legal organization that 
        receives financial assistance pursuant to this section may use 
        such amounts only to assist--
                  (A) homeowners of owner-occupied homes with mortgages 
                in default, in danger of default, or subject to or at 
                risk of foreclosure; and
                  (B) tenants at risk of or subject to eviction as a 
                result of foreclosure of the property in which such 
                tenant resides.
          (2) Commence use within 90 days.--Any State or local legal 
        organization that receives financial assistance pursuant to 
        this section shall begin using any financial assistance 
        received under this section within 90 days after receipt of the 
        assistance.
          (3) Prohibition on class actions.--No funds provided to a 
        State or local legal organization under this section may be 
        used to support any class action litigation.
          (4) Limitation on legal assistance.--Legal assistance funded 
        with amounts provided under this section shall be limited to 
        mortgage-related default, eviction, or foreclosure proceedings, 
        without regard to whether such foreclosure is judicial or 
        nonjudicial.
          (5) Effective date.--Notwithstanding section 217, this 
        subsection shall take effect on the date of the enactment of 
        this Act.
  (e) Limitation on Distribution of Assistance.--
          (1) In general.--None of the amounts made available under 
        this section shall be distributed to--
                  (A) any organization which has been indicted for a 
                violation under Federal law relating to an election for 
                Federal office; or
                  (B) any organization which employs applicable 
                individuals.
          (2) Definition of applicable individual.--In this 
        subparagraph, the term ``applicable individual''' means an 
        individual who--
                  (A) is--
                          (i) employed by the organization in a 
                        permanent or temporary capacity;
                          (ii) contracted or retained by the 
                        organization; or
                          (iii) acting on behalf of, or with the 
                        express or apparent authority of, the 
                        organization; and
                  (B) has been indicted for a violation under Federal 
                law relating to an election for Federal office.
  (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary $35,000,000 for each of fiscal years 2009 
through 2012 for grants under this section.

SEC. 217. EFFECTIVE DATE.

  The amendments made by this title shall apply to transactions 
consummated on or after the effective date of the regulations specified 
in section 209.

SEC. 218. REPORT BY THE GAO.

  (a) Report Required.--The Comptroller General shall conduct a study 
to determine the effects the enactment of this Act will have on the 
availability and affordability of credit for homebuyers and mortgage 
lending, including the effect--
          (1) on the mortgage market for mortgages that are not within 
        the safe harbor provided in the amendments made by this title;
          (2) on the ability of prospective homebuyers to obtain 
        financing;
          (3) on the ability of homeowners facing resets or adjustments 
        to refinance--for example, do they have fewer refinancing 
        options due to the unavailability of certain loan products that 
        were available before the enactment of this Act;
          (4) on minorities' ability to access affordable credit 
        compared with other prospective borrowers;
          (5) on home sales and construction;
          (6) of extending the rescission right, if any, on adjustable 
        rate loans and its impact on litigation;
          (7) of State foreclosure laws and, if any, an investor's 
        ability to transfer a property after foreclosure;
          (8) of expanding the existing provisions of the Home 
        Ownership and Equity Protection Act of 1994;
          (9) of prohibiting prepayment penalties on high-cost 
        mortgages; and
          (10) of establishing counseling services under the Department 
        of Housing and Urban Development and offered through the Office 
        of Housing Counseling.
  (b) Report.--Before the end of the 1-year period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report to the Congress containing the findings and conclusions of the 
Comptroller General with respect to the study conducted pursuant to 
subsection (a).
  (c) Examination Related to Certain Credit Risk Retention 
Provisions.--The report required by subsection (b) shall also include 
an analysis by the Comptroller General of the effect on the capital 
reserves and funding of lenders of credit risk retention provisions for 
non-qualified mortgages.

SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

  Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 
amended by striking ``section 129 may also'' and inserting ``section 
129, 129B, or 129C of this Act, section 219 of the Mortgage Reform and 
Anti-Predatory Lending Act, or any amendment made by section 219 of the 
Mortgage Reform and Anti-Predatory Lending Act may also''.

SEC. 220. TENANT PROTECTION.

  (a) Tenant Protection Generally.--
          (1) In general.--In the case of any foreclosure on any 
        dwelling or residential real property, after the date of the 
        enactment of the Mortgage Reform and Anti-Predatory Lending 
        Act, the immediate successor in interest in such property 
        pursuant to the foreclosure shall assume such interest subject 
        to--
                  (A) except as provided in paragraph (2), the rights 
                of any bona fide tenant, as of the date of foreclosure 
                under any bona fide lease entered into before the date 
                of foreclosure, to occupy the premises until the end of 
                the remaining term of the lease; and
                  (B) the rights of any bona fide tenant, as of the 
                date of foreclosure, without a lease or with a lease 
                terminable at will under State law, subject to the 
                provision by the immediate successor in interest and 
                the receipt by the tenant in the unit, of a notice to 
                vacate at least 90 days before the effective date of 
                such notice.
          (2) Exception for subsequent owner-occupant.--Notwithstanding 
        paragraph (1), if the immediate successor in interest of any 
        dwelling or residential real property that is otherwise subject 
        to paragraph (1) is a purchaser who will occupy a unit of the 
        dwelling or residential real property as a primary residence, 
        or such successor in interest sells the dwelling or residential 
        real property to a purchaser who will occupy a unit of the 
        dwelling or residential real property, as a primary residence--
                  (A) such purchaser may terminate a lease relating to 
                such unit on the effective date of a notice to vacate; 
                and
                  (B) such notice to vacate shall be provided by the 
                purchaser to the tenant in such unit at least 90 days 
                before the effective date of such notice.
          (3) Bona fide lease or tenancy.--For purposes of this 
        subsection, a lease or tenancy shall be considered bona fide 
        only if--
                  (A) the mortgagor under the contract is not the 
                tenant;
                  (B) the lease or tenancy was the result of an arms-
                length transaction; and
                  (C) the lease or tenancy requires the receipt of rent 
                that is not substantially less than fair market rent 
                for the property or the unit's rent is reduced or 
                subsidized due to a Federal, State, or local subsidy.
          (4) Rule of construction.--Except for the specific provisions 
        of this subsection, no provision of this subsection shall be 
        construed as affecting the requirements for termination of any 
        Federal- or State-subsidized tenancy. The provisions of this 
        subsection shall not be construed to limit any State or local 
        law that provides longer time periods or other additional 
        protections for tenants.
  (b) Corresponding Provision Relating to Effect of Foreclosures on 
Section 8 Tenancies.--Paragraph (7) of section 8(o) of the United 
States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended--
          (1) in subparagraph (C), by inserting before the semicolon at 
        the end the following: ``, and in the case of an owner who is 
        an immediate successor in interest pursuant to foreclosure--
                          ``(i) during the initial term of the tenant's 
                        lease, having the property vacant prior to sale 
                        shall not constitute good cause; and
                          ``(ii) in subsequent lease terms of the 
                        tenant's lease, who will occupy the unit as a 
                        primary residence, who sells the property to a 
                        purchaser who will occupy a unit of the 
                        property as a primary residence, or if the unit 
                        is unmarketable while occupied, such owner may 
                        terminate a lease relating to such unit for 
                        good cause on the effective date of the notice 
                        to vacate, where such notice is provided by the 
                        owner to the tenant in such unit at least 90 
                        days before the effective date of such 
                        notice;''.
          (2) in subparagraph (E), by striking ``and'' at the end;
          (3) by redesignating subparagraph (F) as subparagraph (G); 
        and
          (4) by inserting after subparagraph (E) the following:
                  ``(F) shall provide that in the case of any 
                foreclosure on any residential real property in which a 
                recipient of assistance under this subsection resides, 
                the immediate successor in interest in such property 
                pursuant to the foreclosure shall assume such interest 
                subject to the lease between the prior owner and the 
                tenant and to the housing assistance payments contract 
                between the prior owner and the public housing agency 
                for the occupied unit; if a public housing agency is 
                unable to make payments under the contract to the 
                immediate successor in interest after foreclosure, due 
                to action or inaction by the successor in interest, 
                including the rejection of payments or the failure of 
                the successor to maintain the unit in compliance with 
                paragraph (8) or an inability to identify the 
                successor, the agency may use funds that would have 
                been used to pay the rental amount on behalf of the 
                family--
                          ``(i) to pay for utilities that are the 
                        responsibility of the owner under the lease or 
                        applicable law, after taking reasonable steps 
                        to notify the owner that it intends to make 
                        payments to a utility provider in lieu of 
                        payments to the owner, except prior 
                        notification shall not be required in any case 
                        in which the unit will be or has been rendered 
                        uninhabitable due to the termination or threat 
                        of termination of service, in which case the 
                        public housing agency shall notify the owner 
                        within a reasonable time after making such 
                        payment; or
                          ``(ii) for the family's reasonable moving 
                        costs, including security deposit costs;
                except that this subparagraph and the provisions 
                related to foreclosure in subparagraph (C) shall not 
                affect any State or local law that provides longer time 
                periods or other additional protections for tenants.''.
  (c) Effective Date.--Notwithstanding section 217, this section and 
the amendments made by this section shall take effect on the date of 
the enactment of this Act.

                     TITLE III--HIGH-COST MORTGAGES

SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

  (a) High-Cost Mortgage Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that 
precedes paragraph (2) and inserting the following:
  ``(aa) High-Cost Mortgage.--
          ``(1) Definition.--
                  ``(A) In general.--The term `high-cost mortgage', and 
                a mortgage referred to in this subsection, means a 
                consumer credit transaction that is secured by the 
                consumer's principal dwelling, other than a reverse 
                mortgage transaction, if--
                          ``(i) in the case of a credit transaction 
                        secured--
                                  ``(I) by a first mortgage on the 
                                consumer's principal dwelling, the 
                                annual percentage rate at consummation 
                                of the transaction will exceed by more 
                                than 6.5 percentage points (8.5 
                                percentage points, if the dwelling is 
                                personal property and the transaction 
                                is for less than $50,000) the average 
                                prime offer rate, as defined in section 
                                129C(c)(2)(B), for a comparable 
                                transaction; or
                                  ``(II) by a subordinate or junior 
                                mortgage on the consumer's principal 
                                dwelling, the annual percentage rate at 
                                consummation of the transaction will 
                                exceed by more than 8.5 percentage 
                                points the average prime offer rate, as 
                                defined in section 129C(c)(2)(B), for a 
                                comparable transaction;
                          ``(ii) the total points and fees payable in 
                        connection with the transaction exceed--
                                  ``(I) in the case of a transaction 
                                for $20,000 or more, 5 percent of the 
                                total transaction amount; or
                                  ``(II) in the case of a transaction 
                                for less than $20,000, the lesser of 8 
                                percent of the total transaction amount 
                                or $1,000 (or such other dollar amount 
                                as the Board shall prescribe by 
                                regulation); or
                          ``(iii) the credit transaction documents 
                        permit the creditor to charge or collect 
                        prepayment fees or penalties more than 36 
                        months after the transaction closing or such 
                        fees or penalties exceed, in the aggregate, 
                        more than 2 percent of the amount prepaid.
                  ``(B) Introductory rates taken into account.--For 
                purposes of subparagraph (A)(i), the annual percentage 
                rate of interest shall be determined based on the 
                following interest rate:
                          ``(i) In the case of a fixed-rate transaction 
                        in which the annual percentage rate will not 
                        vary during the term of the loan, the interest 
                        rate in effect on the date of consummation of 
                        the transaction.
                          ``(ii) In the case of a transaction in which 
                        the rate of interest varies solely in 
                        accordance with an index, the interest rate 
                        determined by adding the index rate in effect 
                        on the date of consummation of the transaction 
                        to the maximum margin permitted at any time 
                        during the transaction agreement.
                          ``(iii) In the case of any other transaction 
                        in which the rate may vary at any time during 
                        the term of the loan for any reason, the 
                        interest charged on the transaction at the 
                        maximum rate that may be charged during the 
                        term of the transaction.''.
  (b) Adjustment of Percentage Points.--Section 103(aa)(2) of the Truth 
in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking 
subparagraph (B) and inserting the following new subparagraph:
                  ``(B) An increase or decrease under subparagraph 
                (A)--
                          ``(i) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(I) being less than 6 percentage 
                        points or greater than 10 percentage points; 
                        and
                          ``(ii) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(II) being less than 8 percentage 
                        points or greater than 12 percentage points.''.
  (c) Points and Fees Defined.--
          (1) In general.--Section 103(aa)(4) of the Truth in Lending 
        Act (15 U.S.C. 1602(aa)(4)) is amended--
                  (A) by striking subparagraph (B) and inserting the 
                following:
                  ``(B) all compensation paid directly or indirectly by 
                a consumer or creditor to a mortgage broker from any 
                source, including a mortgage originator that originates 
                a loan in the name of the originator in a table-funded 
                transaction;'';
                  (B) in subparagraph (C)(ii), by inserting ``except 
                where applied to the charges set forth in section 
                106(e)(1) where a creditor may receive indirect 
                compensation solely as a result of obtaining 
                distributions of profits from an affiliated entity 
                based on its ownership interest in compliance with 
                section 8(c)(4) of the Real Estate Settlement 
                Procedures Act of 1974'' before the semicolon at the 
                end;
                  (C) in subparagraph (C)(iii), by striking ``; and'' 
                and inserting ``, except as provided for in clause 
                (ii);'';
                  (D) by redesignating subparagraph (D) as subparagraph 
                (G); and
                  (E) by inserting after subparagraph (C) the following 
                new subparagraphs:
                  ``(D) premiums or other charges payable at or before 
                closing for any credit life, credit disability, credit 
                unemployment, or credit property insurance, or any 
                other accident, loss-of-income, life or health 
                insurance, or any payments directly or indirectly for 
                any debt cancellation or suspension agreement or 
                contract, except that insurance premiums or debt 
                cancellation or suspension fees calculated and paid in 
                full on a monthly basis shall not be considered 
                financed by the creditor;
                  ``(E) except as provided in subsection (cc), the 
                maximum prepayment fees and penalties which may be 
                charged or collected under the terms of the credit 
                transaction;
                  ``(F) all prepayment fees or penalties that are 
                incurred by the consumer if the loan refinances a 
                previous loan made or currently held by the same 
                creditor or an affiliate of the creditor; and''.
          (2) Calculation of points and fees for open-end consumer 
        credit plans.--Section 103(aa) of the Truth in Lending Act (15 
        U.S.C. 1602(aa)) is amended--
                  (A) by redesignating paragraph (5) as paragraph (6); 
                and
                  (B) by inserting after paragraph (4) the following 
                new paragraph:
          ``(5) Calculation of points and fees for open-end consumer 
        credit plans.--In the case of open-end consumer credit plans, 
        points and fees shall be calculated, for purposes of this 
        section and section 129, by adding the total points and fees 
        known at or before closing, including the maximum prepayment 
        penalties which may be charged or collected under the terms of 
        the credit transaction, plus the minimum additional fees the 
        consumer would be required to pay to draw down an amount equal 
        to the total credit line.''.
  (d) Bona Fide Discount Loan Discount Points and Prepayment 
Penalties.--Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 
amended by inserting after subsection (cc) (as added by section 101) 
the following new subsection:
  ``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the 
purposes of determining the amount of points and fees for purposes of 
subsection (aa), either the amounts described in paragraph (1) or (4) 
of the following paragraphs, but not both, may be excluded:
          ``(1) Exclusion of bona fide discount points.--The discount 
        points described in 1 of the following subparagraphs shall be 
        excluded from determining the amounts of points and fees with 
        respect to a high-cost mortgage for purposes of subsection 
        (aa):
                  ``(A) Up to and including 2 bona fide discount points 
                payable by the consumer in connection with the 
                mortgage, but only if the interest rate from which the 
                mortgage's interest rate will be discounted does not 
                exceed by more than 1 percentage point (i) the required 
                net yield for a 90-day standard mandatory delivery 
                commitment for a reasonably comparable loan from either 
                the Federal National Mortgage Association or the 
                Federal Home Loan Mortgage Corporation, whichever is 
                greater, or (ii) if secured by a personal property 
                loan, the average rate on a loan in connection with 
                which insurance is provided under title I of the 
                National Housing Act (12 U.S.C. 1702 et seq.).
                  ``(B) Unless 2 bona fide discount points have been 
                excluded under subparagraph (A), up to and including 1 
                bona fide discount point payable by the consumer in 
                connection with the mortgage, but only if the interest 
                rate from which the mortgage's interest rate will be 
                discounted does not exceed by more than 2 percentage 
                points (i) the required net yield for a 90-day standard 
                mandatory delivery commitment for a reasonably 
                comparable loan from either the Federal National 
                Mortgage Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater, or (ii) if secured 
                by a personal property loan, the average rate on a loan 
                in connection with which insurance is provided under 
                title I of the National Housing Act (12 U.S.C. 1702 et 
                seq.).
          ``(2) Definition.--For purposes of paragraph (1), the term 
        `bona fide discount points' means loan discount points which 
        are knowingly paid by the consumer for the purpose of reducing, 
        and which in fact result in a bona fide reduction of, the 
        interest rate or time-price differential applicable to the 
        mortgage.
          ``(3) Exception for interest rate reductions inconsistent 
        with industry norms.--Paragraph (1) shall not apply to discount 
        points used to purchase an interest rate reduction unless the 
        amount of the interest rate reduction purchased is reasonably 
        consistent with established industry norms and practices for 
        secondary mortgage market transactions.''.

SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.

  (a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth in 
Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
  (b) No Balloon Payments.--Section 129(e) of the Truth in Lending Act 
(15 U.S.C. 1639(e)) is amended to read as follows:
  ``(e) No Balloon Payments.--No high-cost mortgage may contain a 
scheduled payment that is more than twice as large as the average of 
earlier scheduled payments. This subsection shall not apply when the 
payment schedule is adjusted to the seasonal or irregular income of the 
consumer.''.

SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

  (a) Additional Requirements for Certain Mortgages.--Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended--
          (1) by redesignating subsections (j), (k) and (l) as 
        subsections (n), (o) and (p) respectively; and
          (2) by inserting after subsection (i) the following new 
        subsections:
  ``(j) Recommended Default.--No creditor shall recommend or encourage 
default on an existing loan or other debt prior to and in connection 
with the closing or planned closing of a high-cost mortgage that 
refinances all or any portion of such existing loan or debt.
  ``(k) Late Fees.--
          ``(1) In general.--No creditor may impose a late payment 
        charge or fee in connection with a high-cost mortgage--
                  ``(A) in an amount in excess of 4 percent of the 
                amount of the payment past due;
                  ``(B) unless the loan documents specifically 
                authorize the charge or fee;
                  ``(C) before the end of the 15-day period beginning 
                on the date the payment is due, or in the case of a 
                loan on which interest on each installment is paid in 
                advance, before the end of the 30-day period beginning 
                on the date the payment is due; or
                  ``(D) more than once with respect to a single late 
                payment.
          ``(2) Coordination with subsequent late fees.--If a payment 
        is otherwise a full payment for the applicable period and is 
        paid on its due date or within an applicable grace period, and 
        the only delinquency or insufficiency of payment is 
        attributable to any late fee or delinquency charge assessed on 
        any earlier payment, no late fee or delinquency charge may be 
        imposed on such payment.
          ``(3) Failure to make installment payment.--If, in the case 
        of a loan agreement the terms of which provide that any payment 
        shall first be applied to any past due principal balance, the 
        consumer fails to make an installment payment and the consumer 
        subsequently resumes making installment payments but has not 
        paid all past due installments, the creditor may impose a 
        separate late payment charge or fee for any principal due 
        (without deduction due to late fees or related fees) until the 
        default is cured.
  ``(l) Acceleration of Debt.--No high-cost mortgage may contain a 
provision which permits the creditor, in its sole discretion, to 
accelerate the indebtedness. This provision shall not apply when 
repayment of the loan has been accelerated by default, pursuant to a 
due-on-sale provision, or pursuant to a material violation of some 
other provision of the loan documents unrelated to the payment 
schedule.
  ``(m) Restriction on Financing Points and Fees.--No creditor may 
directly or indirectly finance, in connection with any high-cost 
mortgage, any of the following:
          ``(1) Any prepayment fee or penalty payable by the consumer 
        in a refinancing transaction if the creditor or an affiliate of 
        the creditor is the noteholder of the note being refinanced.
          ``(2) Any points or fees.''.
  (b) Prohibitions on Evasions.--Section 129 of the Truth in Lending 
Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as 
so redesignated by subsection (a)(1)) the following new subsection:
  ``(q) Prohibitions on Evasions, Structuring of Transactions, and 
Reciprocal Arrangements.--A creditor may not take any action in 
connection with a high-cost mortgage--
          ``(1) to structure a loan transaction as an open-end credit 
        plan or another form of loan for the purpose and with the 
        intent of evading the provisions of this title; or
          ``(2) to divide any loan transaction into separate parts for 
        the purpose and with the intent of evading provisions of this 
        title.''.
  (c) Modification or Deferral Fees.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(q) (as added by subsection (b) of this section) the following new 
subsection:
  ``(r) Modification and Deferral Fees Prohibited.--A creditor may not 
charge a consumer any fee to modify, renew, extend, or amend a high-
cost mortgage, or to defer any payment due under the terms of such 
mortgage, unless the modification, renewal, extension or amendment 
results in a lower annual percentage rate on the mortgage for the 
consumer and then only if the amount of the fee is comparable to fees 
imposed for similar transactions in connection with consumer credit 
transactions that are secured by a consumer's principal dwelling and 
are not high-cost mortgages.''.
  (d) Payoff Statement.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (r) (as added by 
subsection (c) of this section) the following new subsection:
  ``(s) Payoff Statement.--
          ``(1) Fees.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B), no creditor or servicer may charge a fee for 
                informing or transmitting to any person the balance due 
                to pay off the outstanding balance on a high-cost 
                mortgage.
                  ``(B) Transaction fee.--When payoff information 
                referred to in subparagraph (A) is provided by 
                facsimile transmission or by a courier service, a 
                creditor or servicer may charge a processing fee to 
                cover the cost of such transmission or service in an 
                amount not to exceed an amount that is comparable to 
                fees imposed for similar services provided in 
                connection with consumer credit transactions that are 
                secured by the consumer's principal dwelling and are 
                not high-cost mortgages.
                  ``(C) Fee disclosure.--Prior to charging a 
                transaction fee as provided in subparagraph (B), a 
                creditor or servicer shall disclose that payoff 
                balances are available for free pursuant to 
                subparagraph (A).
                  ``(D) Multiple requests.--If a creditor or servicer 
                has provided payoff information referred to in 
                subparagraph (A) without charge, other than the 
                transaction fee allowed by subparagraph (B), on 4 
                occasions during a calendar year, the creditor or 
                servicer may thereafter charge a reasonable fee for 
                providing such information during the remainder of the 
                calendar year.
          ``(2) Prompt delivery.--Payoff balances shall be provided 
        within 5 business days after receiving a request by a consumer 
        or a person authorized by the consumer to obtain such 
        information.
          ``(3) Services considered assignee.--For the purposes of this 
        subsection, a servicer shall be considered an assignee under 
        the Truth in Lending Act.''.
  (e) Pre-Loan Counseling Required.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(s) (as added by subsection (d) of this section) the following new 
subsection:
  ``(t) Pre-Loan Counseling.--
          ``(1) In general.--A creditor may not extend credit to a 
        consumer under a high-cost mortgage without first receiving 
        certification from a counselor that is approved by the 
        Secretary of Housing and Urban Development, or at the 
        discretion of the Secretary, a State housing finance authority, 
        that the consumer has received counseling on the advisability 
        of the mortgage. Such counselor shall not be employed by the 
        creditor or an affiliate of the creditor or be affiliated with 
        the creditor.
          ``(2) Disclosures required prior to counseling.--No counselor 
        may certify that a consumer has received counseling on the 
        advisability of the high-cost mortgage unless the counselor can 
        verify that the consumer has received each statement required 
        (in connection with such loan) by this section or the Real 
        Estate Settlement Procedures Act of 1974 with respect to the 
        transaction.
          ``(3) Regulations.--The Board may prescribe such regulations 
        as the Board determines to be appropriate to carry out the 
        requirements of paragraph (1).''.
  (f) Flipping Prohibited.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (t) (as added by 
subsection (e)) the following new subsection:
  ``(u) Flipping.--
          ``(1) In general.--No creditor may knowingly or intentionally 
        engage in the unfair act or practice of flipping in connection 
        with a high-cost mortgage.
          ``(2) Flipping defined.--For purposes of this subsection, the 
        term `flipping' means the making of a loan or extension of 
        credit in the form a high-cost mortgage to a consumer which 
        refinances an existing mortgage when the new loan or extension 
        of credit does not have reasonable, net tangible benefit (as 
        determined in accordance with regulations prescribed under 
        section 129C(b)) to the consumer considering all of the 
        circumstances, including the terms of both the new and the 
        refinanced loans or credit, the cost of the new loan or credit, 
        and the consumer's circumstances.
  ``(v) Corrections and Unintentional Violations.--A creditor or 
assignee in a high cost loan who, when acting in good faith, fails to 
comply with any requirement under this section will not be deemed to 
have violated such requirement if the creditor or assignee establishes 
that either--
          ``(1) within 30 days of the loan closing and prior to the 
        institution of any action, the consumer is notified of or 
        discovers the violation, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                  ``(A) make the loan satisfy the requirements of this 
                chapter; or
                  ``(B) in the case of a high-cost mortgage, change the 
                terms of the loan in a manner beneficial to the 
                consumer so that the loan will no longer be a high-cost 
                mortgage; or
          ``(2) within 60 days of the creditor's discovery or receipt 
        of notification of an unintentional violation or bona fide 
        error as described in subsection (c) and prior to the 
        institution of any action, the consumer is notified of the 
        compliance failure, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                  ``(A) make the loan satisfy the requirements of this 
                chapter; or
                  ``(B) in the case of a high-cost mortgage, change the 
                terms of the loan in a manner beneficial so that the 
                loan will no longer be a high-cost mortgage.''.

SEC. 304. REGULATIONS.

  (a) In General.--The Board of Governors of the Federal Reserve System 
shall publish regulations implementing this title and the amendments 
made by this title in final form before the end of the 6-month period 
beginning on the date of the enactment of this Act.
  (b) Consumer Mortgage Education.--
          (1) Regulations.--The Board of Governors of the Federal 
        Reserve System may prescribe regulations requiring or 
        encouraging creditors to provide consumer mortgage education to 
        prospective customers or direct such customers to qualified 
        consumer mortgage education or counseling programs in the 
        vicinity of the residence of the consumer.
          (2) Coordination with state law.--No requirement established 
        by the Board of Governors of the Federal Reserve System 
        pursuant to paragraph (1) shall be construed as affecting or 
        superseding any requirement under the law of any State with 
        respect to consumer mortgage counseling or education.

SEC. 305. EFFECTIVE DATE.

  The amendments made by this title shall take effect at the end of the 
6-month period beginning on the date of the enactment of this Act and 
shall apply to mortgages referred to in section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) for which an application is received 
by the creditor after the end of such period.

                 TITLE IV--OFFICE OF HOUSING COUNSELING

SEC. 401. SHORT TITLE.

  This title may be cited as the ``Expand and Preserve Home Ownership 
Through Counseling Act''.

SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

  Section 4 of the Department of Housing and Urban Development Act (42 
U.S.C. 3533) is amended by adding at the end the following new 
subsection:
  ``(g) Office of Housing Counseling.--
          ``(1) Establishment.--There is established, in the 
        Department, the Office of Housing Counseling.
          ``(2) Director.--There is established the position of 
        Director of Housing Counseling. The Director shall be the head 
        of the Office of Housing Counseling and shall be appointed by, 
        and shall report to, the Secretary. Such position shall be a 
        career-reserved position in the Senior Executive Service.
          ``(3) Functions.--
                  ``(A) In general.--The Director shall have primary 
                responsibility within the Department for all activities 
                and matters relating to homeownership counseling and 
                rental housing counseling, including--
                          ``(i) research, grant administration, public 
                        outreach, and policy development relating to 
                        such counseling; and
                          ``(ii) establishment, coordination, and 
                        administration of all regulations, 
                        requirements, standards, and performance 
                        measures under programs and laws administered 
                        by the Department that relate to housing 
                        counseling, homeownership counseling (including 
                        maintenance of homes), mortgage-related 
                        counseling (including home equity conversion 
                        mortgages and credit protection options to 
                        avoid foreclosure), and rental housing 
                        counseling, including the requirements, 
                        standards, and performance measures relating to 
                        housing counseling.
                  ``(B) Specific functions.--The Director shall carry 
                out the functions assigned to the Director and the 
                Office under this section and any other provisions of 
                law. Such functions shall include establishing rules 
                necessary for--
                          ``(i) the counseling procedures under section 
                        106(g)(1) of the Housing and Urban Development 
                        Act of 1968 (12 U.S.C. 1701x(h)(1));
                          ``(ii) carrying out all other functions of 
                        the Secretary under section 106(g) of the 
                        Housing and Urban Development Act of 1968, 
                        including the establishment, operation, and 
                        publication of the availability of the toll-
                        free telephone number under paragraph (2) of 
                        such section;
                          ``(iii) contributing to the preparation and 
                        distribution of home buying information 
                        booklets pursuant to section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604);
                          ``(iv) carrying out the certification program 
                        under section 106(e) of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x(e));
                          ``(v) carrying out the assistance program 
                        under section 106(a)(4) of the Housing and 
                        Urban Development Act of 1968, including 
                        criteria for selection of applications to 
                        receive assistance;
                          ``(vi) carrying out any functions regarding 
                        abusive, deceptive, or unscrupulous lending 
                        practices relating to residential mortgage 
                        loans that the Secretary considers appropriate, 
                        which shall include conducting the study under 
                        section 6 of the Expand and Preserve Home 
                        Ownership Through Counseling Act;
                          ``(vii) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection;
                          ``(viii) collaborating with community-based 
                        organizations with expertise in the field of 
                        housing counseling; and
                          ``(ix) providing for the building of capacity 
                        to provide housing counseling services in areas 
                        that lack sufficient services.
          ``(4) Advisory committee.--
                  ``(A) In general.--The Secretary shall appoint an 
                advisory committee to provide advice regarding the 
                carrying out of the functions of the Director.
                  ``(B) Members.--Such advisory committee shall consist 
                of not more than 12 individuals, and the membership of 
                the committee shall equally represent the mortgage and 
                real estate industry, including consumers and housing 
                counseling agencies certified by the Secretary.
                  ``(C) Terms.--Except as provided in subparagraph (D), 
                each member of the advisory committee shall be 
                appointed for a term of 3 years. Members may be 
                reappointed at the discretion of the Secretary.
                  ``(D) Terms of initial appointees.--As designated by 
                the Secretary at the time of appointment, of the 
                members first appointed to the advisory committee, 4 
                shall be appointed for a term of 1 year and 4 shall be 
                appointed for a term of 2 years.
                  ``(E) Prohibition of pay; travel expenses.--Members 
                of the advisory committee shall serve without pay, but 
                shall receive travel expenses, including per diem in 
                lieu of subsistence, in accordance with applicable 
                provisions under subchapter I of chapter 57 of title 5, 
                United States Code.
                  ``(F) Advisory role only.--The advisory committee 
                shall have no role in reviewing or awarding housing 
                counseling grants.
          ``(5) Scope of homeownership counseling.--In carrying out the 
        responsibilities of the Director, the Director shall ensure 
        that homeownership counseling provided by, in connection with, 
        or pursuant to any function, activity, or program of the 
        Department addresses the entire process of homeownership, 
        including the decision to purchase a home, the selection and 
        purchase of a home, issues arising during or affecting the 
        period of ownership of a home (including refinancing, default 
        and foreclosure, and other financial decisions), and the sale 
        or other disposition of a home.''.

SEC. 403. COUNSELING PROCEDURES.

  (a) In General.--Section 106 of the Housing and Urban Development Act 
of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following 
new subsection:
  ``(g) Procedures and Activities.--
          ``(1) Counseling procedures.--
                  ``(A) In general.--The Secretary shall establish, 
                coordinate, and monitor the administration by the 
                Department of Housing and Urban Development of the 
                counseling procedures for homeownership counseling and 
                rental housing counseling provided in connection with 
                any program of the Department, including all 
                requirements, standards, and performance measures that 
                relate to homeownership and rental housing counseling.
                  ``(B) Homeownership counseling.--For purposes of this 
                subsection and as used in the provisions referred to in 
                this subparagraph, the term `homeownership counseling' 
                means counseling related to homeownership and 
                residential mortgage loans. Such term includes 
                counseling related to homeownership and residential 
                mortgage loans that is provided pursuant to--
                          ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                          ``(ii) in the United States Housing Act of 
                        1937--
                                  ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                  ``(II) section 8(y)(1)(D) (42 U.S.C. 
                                1437f(y)(1)(D));
                                  ``(III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                  ``(IV) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                  ``(V) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                  ``(VI) section 33(d)(2)(B) (42 U.S.C. 
                                1437z-5(d)(2)(B));
                                  ``(VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                  ``(VIII) section 304(c)(4) (42 U.S.C. 
                                1437aaa-3(c)(4));
                          ``(iii) section 302(a)(4) of the American 
                        Homeownership and Economic Opportunity Act of 
                        2000 (42 U.S.C. 1437f note);
                          ``(iv) sections 233(b)(2) and 258(b) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12773(b)(2), 12808(b));
                          ``(v) this section and section 101(e) of the 
                        Housing and Urban Development Act of 1968 (12 
                        U.S.C. 1701x, 1701w(e));
                          ``(vi) section 220(d)(2)(G) of the Low-Income 
                        Housing Preservation and Resident Homeownership 
                        Act of 1990 (12 U.S.C. 4110(d)(2)(G));
                          ``(vii) sections 422(b)(6), 423(b)(7), 
                        424(c)(4), 442(b)(6), and 443(b)(6) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 
                        12874(c)(4), 12892(b)(6), and 12893(b)(6));
                          ``(viii) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                          ``(ix) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A));
                          ``(x) in the National Housing Act--
                                  ``(I) in section 203 (12 U.S.C. 
                                1709), the penultimate undesignated 
                                paragraph of paragraph (2) of 
                                subsection (b), subsection (c)(2)(A), 
                                and subsection (r)(4);
                                  ``(II) subsections (a) and (c)(3) of 
                                section 237 (12 U.S.C. 1715z-2); and
                                  ``(III) subsections (d)(2)(B) and 
                                (m)(1) of section 255 (12 U.S.C. 1715z-
                                20);
                          ``(xi) section 502(h)(4)(B) of the Housing 
                        Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and
                          ``(xii) section 508 of the Housing and Urban 
                        Development Act of 1970 (12 U.S.C. 1701z-7).
                  ``(C) Rental housing counseling.--For purposes of 
                this subsection, the term `rental housing counseling' 
                means counseling related to rental of residential 
                property, which may include counseling regarding future 
                homeownership opportunities and providing referrals for 
                renters and prospective renters to entities providing 
                counseling and shall include counseling related to such 
                topics that is provided pursuant to--
                          ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                          ``(ii) in the United States Housing Act of 
                        1937--
                                  ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                  ``(II) section 18(a)(4)(D) (42 U.S.C. 
                                1437p(a)(4)(D));
                                  ``(III) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                  ``(IV) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                  ``(V) section 33(d)(2)(B) (42 U.S.C. 
                                1437z-5(d)(2)(B)); and
                                  ``(VI) section 302(b)(6) (42 U.S.C. 
                                1437aaa-1(b)(6));
                          ``(iii) section 233(b)(2) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12773(b)(2));
                          ``(iv) section 106 of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x);
                          ``(v) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(b)(6));
                          ``(vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                          ``(vii) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A)); and
                          ``(viii) the rental assistance program under 
                        section 8 of the United States Housing Act of 
                        1937 (42 U.S.C. 1437f).
          ``(2) Standards for materials.--The Secretary, in 
        consultation with the advisory committee established under 
        subsection (g)(4) of the Department of Housing and Urban 
        Development Act, shall establish standards for materials and 
        forms to be used, as appropriate, by organizations providing 
        homeownership counseling services, including any recipients of 
        assistance pursuant to subsection (a)(4).
          ``(3) Mortgage software systems.--
                  ``(A) Certification.--The Secretary shall provide for 
                the certification of various computer software programs 
                for consumers to use in evaluating different 
                residential mortgage loan proposals. The Secretary 
                shall require, for such certification, that the 
                mortgage software systems take into account--
                          ``(i) the consumer's financial situation and 
                        the cost of maintaining a home, including 
                        insurance, taxes, and utilities;
                          ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan;
                          ``(iii) such other factors as the Secretary 
                        considers appropriate to assist the consumer in 
                        evaluating whether to pay points, to lock in an 
                        interest rate, to select an adjustable or fixed 
                        rate loan, to select a conventional or 
                        government-insured or guaranteed loan and to 
                        make other choices during the loan application 
                        process.
                If the Secretary determines that available existing 
                software is inadequate to assist consumers during the 
                residential mortgage loan application process, the 
                Secretary shall arrange for the development by private 
                sector software companies of new mortgage software 
                systems that meet the Secretary's specifications.
                  ``(B) Use and initial availability.--Such certified 
                computer software programs shall be used to supplement, 
                not replace, housing counseling. The Secretary shall 
                provide that such programs are initially used only in 
                connection with the assistance of housing counselors 
                certified pursuant to subsection (e).
                  ``(C) Availability.--After a period of initial 
                availability under subparagraph (B) as the Secretary 
                considers appropriate, the Secretary shall take 
                reasonable steps to make mortgage software systems 
                certified pursuant to this paragraph widely available 
                through the Internet and at public locations, including 
                public libraries, senior-citizen centers, public 
                housing sites, offices of public housing agencies that 
                administer rental housing assistance vouchers, and 
                housing counseling centers.
                  ``(D) Budget compliance.--This paragraph shall be 
                effective only to the extent that amounts to carry out 
                this paragraph are made available in advance in 
                appropriations Acts.
          ``(4) National public service multimedia campaigns to promote 
        housing counseling.--
                  ``(A) In general.--The Director of Housing Counseling 
                shall develop, implement, and conduct national public 
                service multimedia campaigns designed to make persons 
                facing mortgage foreclosure, persons considering a 
                subprime mortgage loan to purchase a home, elderly 
                persons, persons who face language barriers, low-income 
                persons, minorities, and other potentially vulnerable 
                consumers aware that it is advisable, before seeking or 
                maintaining a residential mortgage loan, to obtain 
                homeownership counseling from an unbiased and reliable 
                sources and that such homeownership counseling is 
                available, including through programs sponsored by the 
                Secretary of Housing and Urban Development.
                  ``(B) Contact information.--Each segment of the 
                multimedia campaign under subparagraph (A) shall 
                publicize the toll-free telephone number and website of 
                the Department of Housing and Urban Development through 
                which persons seeking housing counseling can locate a 
                housing counseling agency in their State that is 
                certified by the Secretary of Housing and Urban 
                Development and can provide advice on buying a home, 
                renting, defaults, foreclosures, credit issues, and 
                reverse mortgages.
                  ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary, not to 
                exceed $3,000,000 for fiscal years 2009, 2010, and 
                2011, for the development, implementation, and conduct 
                of national public service multimedia campaigns under 
                this paragraph.
                  ``(D) Foreclosure rescue education programs.--
                          ``(i) In general.--Ten percent of any funds 
                        appropriated pursuant to the authorization 
                        under subparagraph (C) shall be used by the 
                        Director of Housing Counseling to conduct an 
                        education program in areas that have a high 
                        density of foreclosure. Such program shall 
                        involve direct mailings to persons living in 
                        such areas describing--
                                  ``(I) tips on avoiding foreclosure 
                                rescue scams;
                                  ``(II) tips on avoiding predatory 
                                lending mortgage agreements;
                                  ``(III) tips on avoiding for-profit 
                                foreclosure counseling services; and
                                  ``(IV) local counseling resources 
                                that are approved by the Department of 
                                Housing and Urban Development.
                          ``(ii) Program emphasis.--In conducting the 
                        education program described under clause (i), 
                        the Director of Housing Counseling shall also 
                        place an emphasis on serving communities that 
                        have a high percentage of retirement 
                        communities or a high percentage of low-income 
                        minority communities.
                          ``(iii) Terms defined.--For purposes of this 
                        subparagraph:
                                  ``(I) High density of foreclosures.--
                                An area has a `high density of 
                                foreclosures' if such area is one of 
                                the metropolitan statistical areas (as 
                                that term is defined by the Director of 
                                the Office of Management and Budget) 
                                with the highest home foreclosure 
                                rates.
                                  ``(II) High percentage of retirement 
                                communities.--An area has a `high 
                                percentage of retirement communities' 
                                if such area is one of the metropolitan 
                                statistical areas (as that term is 
                                defined by the Director of the Office 
                                of Management and Budget) with the 
                                highest percentage of residents aged 65 
                                or older.
                                  ``(III) High percentage of low-income 
                                minority communities.--An area has a 
                                `high percentage of low-income minority 
                                communities' if such area contains a 
                                higher-than-normal percentage of 
                                residents who are both minorities and 
                                low-income, as defined by the Director 
                                of Housing Counseling.
          ``(5) Education programs.--The Secretary shall provide advice 
        and technical assistance to States, units of general local 
        government, and nonprofit organizations regarding the 
        establishment and operation of, including assistance with the 
        development of content and materials for, educational programs 
        to inform and educate consumers, particularly those most 
        vulnerable with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-income 
        persons, minorities, and other potentially vulnerable 
        consumers), regarding home mortgages, mortgage refinancing, 
        home equity loans, and home repair loans.''.
  (b) Conforming Amendments to Grant Program for Homeownership 
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is 
amended--
          (1) in subclause (III), by striking ``and'' at the end;
          (2) in subclause (IV) by striking the period at the end and 
        inserting ``; and''; and
          (3) by inserting after subclause (IV) the following new 
        subclause:
                                  ``(V) notify the housing or mortgage 
                                applicant of the availability of 
                                mortgage software systems provided 
                                pursuant to subsection (g)(3).''.

SEC. 404. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

  Section 106(a) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new 
paragraph:
  ``(4) Homeownership and Rental Counseling Assistance.--
          ``(A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to HUD-approved 
        housing counseling agencies and State housing finance agencies.
          ``(B) Qualified entities.--The Secretary shall establish 
        standards and guidelines for eligibility of organizations 
        (including governmental and nonprofit organizations) to receive 
        assistance under this paragraph, in accordance with 
        subparagraph (D).
          ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
          ``(D) Limitation on distribution of assistance.--
                  ``(i) In general.--None of the assistance made 
                available under this paragraph shall be distributed 
                to--
                          ``(I) any organization which has been 
                        indicted for a violation under Federal law 
                        relating to an election for Federal office; or
                          ``(II) any organization which employs 
                        applicable individuals.
                  ``(ii) Definition of applicable individual.--In this 
                subparagraph, the term `applicable individual'' means 
                an individual who--
                          ``(I) is--
                                  ``(aa) employed by the organization 
                                in a permanent or temporary capacity;
                                  ``(bb) contracted or retained by the 
                                organization; or
                                  ``(cc) acting on behalf of, or with 
                                the express or apparent authority of, 
                                the organization; and
                          ``(II) has been indicted for a violation 
                        under Federal law relating to an election for 
                        Federal office.
          ``(E) Grantmaking process.--In making assistance available 
        under this paragraph, the Secretary shall consider appropriate 
        ways of streamlining and improving the processes for grant 
        application, review, approval, and award.
          ``(F) Authorization of appropriations.--There are authorized 
        to be appropriated $45,000,000 for each of fiscal years 2009 
        through 2012 for--
                  ``(i) the operations of the Office of Housing 
                Counseling of the Department of Housing and Urban 
                Development;
                  ``(ii) the responsibilities of the Director of 
                Housing Counseling under paragraphs (2) through (5) of 
                subsection (g); and
                  ``(iii) assistance pursuant to this paragraph for 
                entities providing homeownership and rental 
                counseling.''.

SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD 
                    PROGRAMS.

  Section 106(e) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(e)) is amended--
          (1) by striking paragraph (1) and inserting the following new 
        paragraph:
          ``(1) Requirement for assistance.--An organization may not 
        receive assistance for counseling activities under subsection 
        (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or 
        under section 101(e), unless the organization, or the 
        individuals through which the organization provides such 
        counseling, has been certified by the Secretary under this 
        subsection as competent to provide such counseling.'';
          (2) in paragraph (2)--
                  (A) by inserting ``and for certifying organizations'' 
                before the period at the end of the first sentence; and
                  (B) in the second sentence by striking ``for 
                certification'' and inserting ``, for certification of 
                an organization, that each individual through which the 
                organization provides counseling shall demonstrate, 
                and, for certification of an individual,'';
          (3) in paragraph (3), by inserting ``organizations and'' 
        before ``individuals'';
          (4) by redesignating paragraph (3) as paragraph (5); and
          (5) by inserting after paragraph (2) the following new 
        paragraphs:
          ``(3) Requirement under hud programs.--Any homeownership 
        counseling or rental housing counseling (as such terms are 
        defined in subsection (g)(1)) required under, or provided in 
        connection with, any program administered by the Department of 
        Housing and Urban Development shall be provided only by 
        organizations or counselors certified by the Secretary under 
        this subsection as competent to provide such counseling.
          ``(4) Outreach.--The Secretary shall take such actions as the 
        Secretary considers appropriate to ensure that individuals and 
        organizations providing homeownership or rental housing 
        counseling are aware of the certification requirements and 
        standards of this subsection and of the training and 
        certification programs under subsection (f).''.

SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES.

  The Secretary of Housing and Urban Development shall conduct an 
extensive study of the root causes of default and foreclosure of home 
loans, using as much empirical data as are available. The study shall 
also examine the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures. Not later than 12 months 
after the date of the enactment of this Act, the Secretary shall submit 
to the Congress a preliminary report regarding the study. Not later 
than 24 months after such date of enactment, the Secretary shall submit 
a final report regarding the results of the study, which shall include 
any recommended legislation relating to the study, and recommendations 
for best practices and for a process to identify populations that need 
counseling the most.

SEC. 407. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

  Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
  ``(h) Definitions.--For purposes of this section:
          ``(1) Nonprofit organization.--The term `nonprofit 
        organization' has the meaning given such term in section 104(5) 
        of the Cranston-Gonzalez National Affordable Housing Act (42 
        U.S.C. 12704(5)), except that subparagraph (D) of such section 
        shall not apply for purposes of this section.
          ``(2) State.--The term `State' means each of the several 
        States, the Commonwealth of Puerto Rico, the District of 
        Columbia, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, the Trust Territories 
        of the Pacific, or any other possession of the United States.
          ``(3) Unit of general local government.--The term `unit of 
        general local government' means any city, county, parish, town, 
        township, borough, village, or other general purpose political 
        subdivision of a State.
          ``(4) HUD-approved counseling agency.--The term `HUD-approved 
        counseling agency' means a private or public nonprofit 
        organization that is--
                  ``(A) exempt from taxation under section 501(c) of 
                the Internal Revenue Code of 1986; and
                  ``(B) certified by the Secretary to provide housing 
                counseling services.
          ``(5) State housing finance agency.--The term `State housing 
        finance agency' means any public body, agency, or 
        instrumentality specifically created under State statute that 
        is authorised to finance activities designed to provide housing 
        and related facilities throughout an entire State through land 
        acquisition, construction, or rehabilitation.''.

SEC. 408. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

  Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2604) is amended--
          (1) in the section heading, by striking ``special'' and 
        inserting ``home buying'';
          (2) by striking subsections (a) and (b) and inserting the 
        following new subsections:
  ``(a) Preparation and Distribution.--The Secretary shall prepare, at 
least once every 5 years, a booklet to help consumers applying for 
federally related mortgage loans to understand the nature and costs of 
real estate settlement services. The Secretary shall prepare the 
booklet in various languages and cultural styles, as the Secretary 
determines to be appropriate, so that the booklet is understandable and 
accessible to homebuyers of different ethnic and cultural backgrounds. 
The Secretary shall distribute such booklets to all lenders that make 
federally related mortgage loans. The Secretary shall also distribute 
to such lenders lists, organized by location, of homeownership 
counselors certified under section 106(e) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying with 
the requirement under subsection (c) of this section.
  ``(b) Contents.--Each booklet shall be in such form and detail as the 
Secretary shall prescribe and, in addition to such other information as 
the Secretary may provide, shall include in plain and understandable 
language the following information:
          ``(1) A description and explanation of the nature and purpose 
        of the costs incident to a real estate settlement or a 
        federally related mortgage loan. The description and 
        explanation shall provide general information about the 
        mortgage process as well as specific information concerning, at 
        a minimum--
                  ``(A) balloon payments;
                  ``(B) prepayment penalties; and
                  ``(C) the trade-off between closing costs and the 
                interest rate over the life of the loan.
          ``(2) An explanation and sample of the uniform settlement 
        statement required by section 4.
          ``(3) A list and explanation of lending practices, including 
        those prohibited by the Truth in Lending Act or other 
        applicable Federal law, and of other unfair practices and 
        unreasonable or unnecessary charges to be avoided by the 
        prospective buyer with respect to a real estate settlement.
          ``(4) A list and explanation of questions a consumer 
        obtaining a federally related mortgage loan should ask 
        regarding the loan, including whether the consumer will have 
        the ability to repay the loan, whether the consumer 
        sufficiently shopped for the loan, whether the loan terms 
        include prepayment penalties or balloon payments, and whether 
        the loan will benefit the borrower.
          ``(5) An explanation of the right of rescission as to certain 
        transactions provided by sections 125 and 129 of the Truth in 
        Lending Act.
          ``(6) A brief explanation of the nature of a variable rate 
        mortgage and a reference to the booklet entitled `Consumer 
        Handbook on Adjustable Rate Mortgages', published by the Board 
        of Governors of the Federal Reserve System pursuant to section 
        226.19(b)(1) of title 12, Code of Federal Regulations, or to 
        any suitable substitute of such booklet that such Board of 
        Governors may subsequently adopt pursuant to such section.
          ``(7) A brief explanation of the nature of a home equity line 
        of credit and a reference to the pamphlet required to be 
        provided under section 127A of the Truth in Lending Act.
          ``(8) Information about homeownership counseling services 
        made available pursuant to section 106(a)(4) of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a 
        recommendation that the consumer use such services, and 
        notification that a list of certified providers of 
        homeownership counseling in the area, and their contact 
        information, is available.
          ``(9) An explanation of the nature and purpose of escrow 
        accounts when used in connection with loans secured by 
        residential real estate and the requirements under section 10 
        of this Act regarding such accounts.
          ``(10) An explanation of the choices available to buyers of 
        residential real estate in selecting persons to provide 
        necessary services incidental to a real estate settlement.
          ``(11) An explanation of a consumer's responsibilities, 
        liabilities, and obligations in a mortgage transaction.
          ``(12) An explanation of the nature and purpose of real 
        estate appraisals, including the difference between an 
        appraisal and a home inspection.
          ``(13) Notice that the Office of Housing of the Department of 
        Housing and Urban Development has made publicly available a 
        brochure regarding loan fraud and a World Wide Web address and 
        toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into 
consideration differences in real estate settlement procedures that may 
exist among the several States and territories of the United States and 
among separate political subdivisions within the same State and 
territory.'';
          (3) in subsection (c), by inserting at the end the following 
        new sentence: ``Each lender shall also include with the booklet 
        a reasonably complete or updated list of homeownership 
        counselors who are certified pursuant to section 106(e) of the 
        Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) 
        and located in the area of the lender.''; and
          (4) in subsection (d), by inserting after the period at the 
        end of the first sentence the following: ``The lender shall 
        provide the HUD-issued booklet in the version that is most 
        appropriate for the person receiving it.''.

SEC. 409. HOME INSPECTION COUNSELING.

  (a) Public Outreach.--
          (1) In general.--The Secretary of Housing and Urban 
        Development (in this section referred to as the ``Secretary'') 
        shall take such actions as may be necessary to inform potential 
        homebuyers of the availability and importance of obtaining an 
        independent home inspection. Such actions shall include--
                  (A) publication of the HUD/FHA form HUD 92564-CN 
                entitled ``For Your Protection: Get a Home 
                Inspection'', in both English and Spanish languages;
                  (B) publication of the HUD/FHA booklet entitled ``For 
                Your Protection: Get a Home Inspection'', in both 
                English and Spanish languages;
                  (C) development and publication of a HUD booklet 
                entitled ``For Your Protection--Get a Home Inspection'' 
                that does not reference FHA-insured homes, in both 
                English and Spanish languages; and
                  (D) publication of the HUD document entitled ``Ten 
                Important Questions To Ask Your Home Inspector'', in 
                both English and Spanish languages.
          (2) Availability.--The Secretary shall make the materials 
        specified in paragraph (1) available for electronic access and, 
        where appropriate, inform potential homebuyers of such 
        availability through home purchase counseling public service 
        announcements and toll-free telephone hotlines of the 
        Department of Housing and Urban Development. The Secretary 
        shall give special emphasis to reaching first-time and low-
        income homebuyers with these materials and efforts.
          (3) Updating.--The Secretary may periodically update and 
        revise such materials, as the Secretary determines to be 
        appropriate.
  (b) Requirement for FHA-Approved Lenders.--Each mortgagee approved 
for participation in the mortgage insurance programs under title II of 
the National Housing Act shall provide prospective homebuyers, at first 
contact, whether upon pre-qualification, pre-approval, or initial 
application, the materials specified in subparagraphs (A), (B), and (D) 
of subsection (a)(1).
  (c) Requirements for HUD-Approved Counseling Agencies.--Each 
counseling agency certified pursuant by the Secretary to provide 
housing counseling services shall provide each of their clients, as 
part of the home purchase counseling process, the materials specified 
in subparagraphs (C) and (D) of subsection (a)(1).
  (d) Training.--Training provided the Department of Housing and Urban 
Development for housing counseling agencies, whether such training is 
provided directly by the Department or otherwise, shall include--
          (1) providing information on counseling potential homebuyers 
        of the availability and importance of getting an independent 
        home inspection;
          (2) providing information about the home inspection process, 
        including the reasons for specific inspections such as radon 
        and lead-based paint testing;
          (3) providing information about advising potential homebuyers 
        on how to locate and select a qualified home inspector; and
          (4) review of home inspection public outreach materials of 
        the Department.

                      TITLE V--MORTGAGE SERVICING

SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
                    CREDIT TRANSACTIONS.

  (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129C (as added by 
section 201) the following new section:

``SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
                    CREDIT TRANSACTIONS.

  ``(a) In General.--Except as provided in subsection (b), (c), or (d) 
, a creditor, in connection with the formation or consummation of a 
consumer credit transaction secured by a first lien on the principal 
dwelling of the consumer, other than a consumer credit transaction 
under an open end credit plan or a reverse mortgage, shall establish, 
before the consummation of such transaction, an escrow or impound 
account for the payment of taxes and hazard insurance, and, if 
applicable, flood insurance, mortgage insurance, ground rents, and any 
other required periodic payments or premiums with respect to the 
property or the loan terms, as provided in, and in accordance with, 
this section.
  ``(b) When Required.--No impound, trust, or other type of account for 
the payment of property taxes, insurance premiums, or other purposes 
relating to the property may be required as a condition of a real 
property sale contract or a loan secured by a first deed of trust or 
mortgage on the principal dwelling of the consumer, other than a 
consumer credit transaction under an open end credit plan or a reverse 
mortgage, except when--
          ``(1) any such impound, trust, or other type of escrow or 
        impound account for such purposes is required by Federal or 
        State law;
          ``(2) a loan is made, guaranteed, or insured by a State or 
        Federal governmental lending or insuring agency;
          ``(3) the transaction is secured by a first mortgage or lien 
        on the consumer's principal dwelling and the annual percentage 
        rate on the credit, at the date the interest rate is set, will 
        exceed the average prime offer rate for a comparable 
        transaction by 1.5 percentage points or more; or
          ``(4) so required pursuant to regulation.
  ``(c) Duration of Mandatory Escrow or Impound Account.--An escrow or 
impound account established pursuant to subsection (b), shall remain in 
existence for a minimum period of 5 years, beginning with the date of 
the consummation of the loan, and until such borrower has sufficient 
equity in the dwelling securing the consumer credit transaction so as 
to no longer be required to maintain private mortgage insurance, or 
such other period as may be provided in regulations to address 
situations such as borrower delinquency, unless the underlying mortgage 
establishing the account is terminated.
  ``(d) Limited Exemptions for Loans Secured by Shares in a Cooperative 
and for Certain Condominium Units.--Escrow accounts need not be 
established for loans secured by shares in a cooperative. Insurance 
premiums need not be included in escrow accounts for loans secured by 
condominium units, where the condominium association has an obligation 
to the condominium unit owners to maintain a master policy insuring 
condominium units.
  ``(e) Clarification on Escrow Accounts for Loans Not Meeting 
Statutory Test.--For mortgages not covered by the requirements of 
subsection (b), no provision of this section shall be construed as 
precluding the establishment of an impound, trust, or other type of 
account for the payment of property taxes, insurance premiums, or other 
purposes relating to the property--
          ``(1) on terms mutually agreeable to the parties to the loan;
          ``(2) at the discretion of the lender or servicer, as 
        provided by the contract between the lender or servicer and the 
        borrower; or
          ``(3) pursuant to the requirements for the escrowing of flood 
        insurance payments for regulated lending institutions in 
        section 102(d) of the Flood Disaster Protection Act of 1973.
  ``(f) Administration of Mandatory Escrow or Impound Accounts.--
          ``(1) In general.--Except as may otherwise be provided for in 
        this title or in regulations prescribed by the Board, escrow or 
        impound accounts established pursuant to subsection (b) shall 
        be established in a federally insured depository institution.
          ``(2) Administration.--Except as provided in this section or 
        regulations prescribed under this section, an escrow or impound 
        account subject to this section shall be administered in 
        accordance with--
                  ``(A) the Real Estate Settlement Procedures Act of 
                1974 and regulations prescribed under such Act;
                  ``(B) the Flood Disaster Protection Act of 1973 and 
                regulations prescribed under such Act; and
                  ``(C) the law of the State, if applicable, where the 
                real property securing the consumer credit transaction 
                is located.
          ``(3) Applicability of payment of interest.--If prescribed by 
        applicable State or Federal law, each creditor shall pay 
        interest to the consumer on the amount held in any impound, 
        trust, or escrow account that is subject to this section in the 
        manner as prescribed by that applicable State or Federal law.
          ``(4) Penalty coordination with respa.--Any action or 
        omission on the part of any person which constitutes a 
        violation of the Real Estate Settlement Procedures Act of 1974 
        or any regulation prescribed under such Act for which the 
        person has paid any fine, civil money penalty, or other damages 
        shall not give rise to any additional fine, civil money 
        penalty, or other damages under this section, unless the action 
        or omission also constitutes a direct violation of this 
        section.
  ``(g) Disclosures Relating to Mandatory Escrow or Impound Account.--
In the case of any impound, trust, or escrow account that is subject to 
this section, the creditor shall disclose by written notice to the 
consumer at least 3 business days before the consummation of the 
consumer credit transaction giving rise to such account or in 
accordance with timeframes established in prescribed regulations the 
following information:
          ``(1) The fact that an escrow or impound account will be 
        established at consummation of the transaction.
          ``(2) The amount required at closing to initially fund the 
        escrow or impound account.
          ``(3) The amount, in the initial year after the consummation 
        of the transaction, of the estimated taxes and hazard 
        insurance, including flood insurance, if applicable, and any 
        other required periodic payments or premiums that reflects, as 
        appropriate, either the taxable assessed value of the real 
        property securing the transaction, including the value of any 
        improvements on the property or to be constructed on the 
        property (whether or not such construction will be financed 
        from the proceeds of the transaction) or the replacement costs 
        of the property.
          ``(4) The estimated monthly amount payable to be escrowed for 
        taxes, hazard insurance (including flood insurance, if 
        applicable) and any other required periodic payments or 
        premiums.
          ``(5) The fact that, if the consumer chooses to terminate the 
        account at the appropriate time in the future, the consumer 
        will become responsible for the payment of all taxes, hazard 
        insurance, and flood insurance, if applicable, as well as any 
        other required periodic payments or premiums on the property 
        unless a new escrow or impound account is established.
          ``(6) Such other information as the Federal banking agencies 
        jointly determine necessary for the protection of the consumer.
  ``(h) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Flood insurance.--The term `flood insurance' means 
        flood insurance coverage provided under the national flood 
        insurance program pursuant to the National Flood Insurance Act 
        of 1968.
          ``(2) Hazard insurance.--The term `hazard insurance' shall 
        have the same meaning as provided for `hazard insurance', 
        `casualty insurance', `homeowner's insurance', or other similar 
        term under the law of the State where the real property 
        securing the consumer credit transaction is located.''.
  (b) Implementation.--
          (1) Regulations.--The Board of Governors of the Federal 
        Reserve System, the Comptroller of the Currency, the Director 
        of the Office of Thrift Supervision, the Federal Deposit 
        Insurance Corporation, the National Credit Union Administration 
        Board, (hereafter in this Act referred to as the ``Federal 
        banking agencies'') and the Federal Trade Commission shall 
        prescribe, in final form, such regulations as determined to be 
        necessary to implement the amendments made by subsection (a) 
        before the end of the 180-day period beginning on the date of 
        the enactment of this Act.
          (2) Effective date.--The amendments made by subsection (a) 
        shall only apply to covered mortgage loans consummated after 
        the end of the 1-year period beginning on the date of the 
        publication of final regulations in the Federal Register.
  (c) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129C (as added by section 201) the following new item:

``129D. Escrow or impound accounts relating to certain consumer credit 
transactions.''.

SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW 
                    SERVICES.

  (a) In General.--Section 129D of the Truth in Lending Act (as added 
by section 501) is amended by adding at the end the following new 
subsection:
  ``(i) Disclosure Notice Required for Consumers Who Waive Escrow 
Services.--
          ``(1) In general.--If--
                  ``(A) an impound, trust, or other type of account for 
                the payment of property taxes, insurance premiums, or 
                other purposes relating to real property securing a 
                consumer credit transaction is not established in 
                connection with the transaction; or
                  ``(B) a consumer chooses, and provides written notice 
                to the creditor or servicer of such choice, at any time 
                after such an account is established in connection with 
                any such transaction and in accordance with any 
                statute, regulation, or contractual agreement, to close 
                such account,
        the creditor or servicer shall provide a timely and clearly 
        written disclosure to the consumer that advises the consumer of 
        the responsibilities of the consumer and implications for the 
        consumer in the absence of any such account.
          ``(2) Disclosure requirements.--Any disclosure provided to a 
        consumer under paragraph (1) shall include the following:
                  ``(A) Information concerning any applicable fees or 
                costs associated with either the non-establishment of 
                any such account at the time of the transaction, or any 
                subsequent closure of any such account.
                  ``(B) A clear and prominent notice that the consumer 
                is responsible for personally and directly paying the 
                non-escrowed items, in addition to paying the mortgage 
                loan payment, in the absence of any such account, and 
                the fact that the costs for taxes, insurance, and 
                related fees can be substantial.
                  ``(C) A clear explanation of the consequences of any 
                failure to pay non-escrowed items, including the 
                possible requirement for the forced placement of 
                insurance by the creditor or servicer and the 
                potentially higher cost (including any potential 
                commission payments to the servicer) or reduced 
                coverage for the consumer in the event of any such 
                creditor-placed insurance.
                  ``(D) Such other information as the Federal banking 
                agencies jointly determine necessary for the protection 
                of the consumer.''.
  (b) Implementation.--
          (1) Regulations.--The Federal banking agencies and the 
        Federal Trade Commission shall prescribe, in final form, such 
        regulations as such agencies determine to be necessary to 
        implement the amendments made by subsection (a) before the end 
        of the 180-day period beginning on the date of the enactment of 
        this Act.
          (2) Effective date.--The amendments made by subsection (a) 
        shall only apply in accordance with the regulations established 
        in paragraph (1) and beginning on the date occurring 180-days 
        after the date of the publication of final regulations in the 
        Federal Register.

SEC. 503. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.

  (a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end 
the following new subsections:
  ``(k) Servicer Prohibitions.--
          ``(1) In general.--A servicer of a federally related mortgage 
        shall not--
                  ``(A) obtain force-placed hazard insurance unless 
                there is a reasonable basis to believe the borrower has 
                failed to comply with the loan contract's requirements 
                to maintain property insurance;
                  ``(B) charge fees for responding to valid qualified 
                written requests (as defined in regulations which the 
                Secretary shall prescribe) under this section;
                  ``(C) fail to take timely action to respond to a 
                borrower's requests to correct errors relating to 
                allocation of payments, final balances for purposes of 
                paying off the loan, or avoiding foreclosure, or other 
                standard servicer's duties;
                  ``(D) fail to respond within 10 business days to a 
                request from a borrower to provide the identity, 
                address, and other relevant contact information about 
                the owner assignee of the loan; or
                  ``(E) fail to comply with any other obligation found 
                by the Secretary, by regulation, to be appropriate to 
                carry out the consumer protection purposes of this Act.
          ``(2) Force-placed insurance defined.--For purposes of this 
        subsection and subsections (l) and (m), the term `force-placed 
        insurance' means hazard insurance coverage obtained by a 
        servicer of a federally related mortgage when the borrower has 
        failed to maintain or renew hazard insurance on such property 
        as required of the borrower under the terms of the mortgage.
  ``(l) Requirements for Force-Placed Insurance.--A servicer of a 
federally related mortgage shall not be construed as having a 
reasonable basis for obtaining force-placed insurance unless the 
requirements of this subsection have been met.
          ``(1) Written notices to borrower.--A servicer may not impose 
        any charge on any borrower for force-placed insurance with 
        respect to any property securing a federally related mortgage 
        unless--
                  ``(A) the servicer has sent, by first-class mail, a 
                written notice to the borrower containing--
                          ``(i) a reminder of the borrower's obligation 
                        to maintain hazard insurance on the property 
                        securing the federally related mortgage;
                          ``(ii) a statement that the servicer does not 
                        have evidence of insurance coverage of such 
                        property;
                          ``(iii) a clear and conspicuous statement of 
                        the procedures by which the borrower may 
                        demonstrate that the borrower already has 
                        insurance coverage; and
                          ``(iv) a statement that the servicer may 
                        obtain such coverage at the borrower's expense 
                        if the borrower does not provide such 
                        demonstration of the borrower's existing 
                        coverage in a timely manner;
                  ``(B) the servicer has sent, by first-class mail, a 
                second written notice, at least 30 days after the 
                mailing of the notice under subparagraph (A) that 
                contains all the information described in each clauses 
                of such subparagraph; and
                  ``(C) the servicer has not received from the borrower 
                any demonstration of hazard insurance coverage for the 
                property securing the mortgage by the end of the 15-day 
                period beginning on the date the notice under 
                subparagraph (B) was sent by the servicer.
          ``(2) Sufficiency of demonstration.--A servicer of a 
        federally related mortgage shall accept any reasonable form of 
        written confirmation from a borrower of existing insurance 
        coverage, which shall include the existing insurance policy 
        number along with the identity of, and contact information for, 
        the insurance company or agent.
          ``(3) Termination of force-placed insurance.--Within 15 days 
        of the receipt by a servicer of confirmation of a borrower's 
        existing insurance coverage, the servicer shall--
                  ``(A) terminate the force-placed insurance; and
                  ``(B) refund to the consumer all force-placed 
                insurance premiums paid by the borrower during any 
                period during which the borrower's insurance coverage 
                and the force-placed insurance coverage were each in 
                effect, and any related fees charged to the consumer's 
                account with respect to the force-placed insurance 
                during such period.
          ``(4) Clarification with respect to flood disaster protection 
        act.--No provision of this section shall be construed as 
        prohibiting a servicer from providing simultaneous or 
        concurrent notice of a lack of flood insurance pursuant to 
        section 102(e) of the Flood Disaster Protection Act of 1973.
  ``(m) Limitations on Force-Placed Insurance Charges.--All charges for 
force-placed insurance premiums shall be bona fide and reasonable in 
amount.''.
  (b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
          (1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000'' 
        each place such term appears and inserting ``$2,000''; and
          (2) in paragraph (2)(B)(i), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
  (c) Decrease in Response Times.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
          (1) in paragraph (1)(A), by striking ``20 days'' and 
        inserting ``5 days'';
          (2) in paragraph (2), by striking ``60 days'' and inserting 
        ``30 days''; and
          (3) by adding at the end the following new paragraph:
          ``(4) Limited extension of response time.--The 30-day period 
        described in paragraph (2) may be extended for not more than 15 
        days if, before the end of such 30-day period, the servicer 
        notifies the borrower of the extension and the reasons for the 
        delay in responding.''.
  (d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g)) 
is amended by adding at the end the following new sentence: ``Any 
balance in any such account that is within the servicer's control at 
the time the loan is paid off shall be promptly returned to the 
borrower within 20 business days or credited to a similar account for a 
new mortgage loan to the borrower with the same lender.''.

SEC. 504. TRUTH IN LENDING ACT AMENDMENTS.

  (a) Requirements for Prompt Crediting of Home Loan Payments.--Chapter 
2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by 
inserting after section 129E (as added by section 602) the following 
new section (and by amending the table of contents accordingly):

``SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.

  ``(a) In General.--In connection with a consumer credit transaction 
secured by a consumer's principal dwelling, no servicer shall fail to 
credit a payment to the consumer's loan account as of the date of 
receipt, except when a delay in crediting does not result in any charge 
to the consumer or in the reporting of negative information to a 
consumer reporting agency, except as required in subsection (b).
  ``(b) Exception.--If a servicer specifies in writing requirements for 
the consumer to follow in making payments, but accepts a payment that 
does not conform to the requirements, the servicer shall credit the 
payment as of 5 days after receipt.''.
  (b) Requests for Payoff Amounts.--Chapter 2 of such Act is further 
amended by inserting after section 129F (as added by subsection (a)) 
the following new section (and by amending the table of contents 
accordingly):

``SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

  ``A creditor or servicer of a home loan shall send an accurate payoff 
balance within a reasonable time, but in no case more than 7 business 
days, after the receipt of a written request for such balance from or 
on behalf of the borrower.''.

SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

  (a) In General.--Section 128(b) of the Truth in Lending Act (15 
U.S.C. 1638(b)) is amended by adding at the end the following new 
paragraph:
          ``(5) Repayment analysis required to include escrow 
        payments.--
                  ``(A) In general.--In the case of any consumer credit 
                transaction secured by a first mortgage or lien on the 
                principal dwelling of the consumer, other than a 
                consumer credit transaction under an open end credit 
                plan or a reverse mortgage, for which an impound, 
                trust, or other type of account has been or will be 
                established in connection with the transaction for the 
                payment of property taxes, hazard and flood (if any) 
                insurance premiums, or other periodic payments or 
                premiums with respect to the property, the information 
                required to be provided under subsection (a) with 
                respect to the number, amount, and due dates or period 
                of payments scheduled to repay the total of payments 
                shall take into account the amount of any monthly 
                payment to such account for each such repayment in 
                accordance with section 10(a)(2) of the Real Estate 
                Settlement Procedures Act of 1974.
                  ``(B) Assessment value.--The amount taken into 
                account under subparagraph (A) for the payment of 
                property taxes, hazard and flood (if any) insurance 
                premiums, or other periodic payments or premiums with 
                respect to the property shall reflect the taxable 
                assessed value of the real property securing the 
                transaction after the consummation of the transaction, 
                including the value of any improvements on the property 
                or to be constructed on the property (whether or not 
                such construction will be financed from the proceeds of 
                the transaction), if known, and the replacement costs 
                of the property for hazard insurance, in the initial 
                year after the transaction.''.

                     TITLE VI--APPRAISAL ACTIVITIES

SEC. 601. PROPERTY APPRAISAL REQUIREMENTS.

  Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (v) (as added by section 303(f)) the 
following new subsection:
  ``(w) Property Appraisal Requirements.--
          ``(1) In general.--A creditor may not extend credit in the 
        form of a subprime mortgage to any consumer without first 
        obtaining a written appraisal of the property to be mortgaged 
        prepared in accordance with the requirements of this 
        subsection.
          ``(2) Appraisal requirements.--
                  ``(A) Physical property visit.--An appraisal of 
                property to be secured by a subprime mortgage does not 
                meet the requirement of this subsection unless it is 
                performed by a qualified appraiser who conducts a 
                physical property visit of the interior of the 
                mortgaged property.
                  ``(B) Second appraisal under certain circumstances.--
                          ``(i) In general.--If the purpose of a 
                        subprime mortgage is to finance the purchase or 
                        acquisition of the mortgaged property from a 
                        person within 180 days of the purchase or 
                        acquisition of such property by that person at 
                        a price that was lower than the current sale 
                        price of the property, the creditor shall 
                        obtain a second appraisal from a different 
                        qualified appraiser. The second appraisal shall 
                        include an analysis of the difference in sale 
                        prices, changes in market conditions, and any 
                        improvements made to the property between the 
                        date of the previous sale and the current sale.
                          ``(ii) No cost to applicant.--The cost of any 
                        second appraisal required under clause (i) may 
                        not be charged to the applicant.
                  ``(C) Qualified appraiser defined.--For purposes of 
                this subsection, the term `qualified appraiser' means a 
                person who--
                          ``(i) is, at a minimum, certified or licensed 
                        by the State in which the property to be 
                        appraised is located; and
                          ``(ii) performs each appraisal in conformity 
                        with the Uniform Standards of Professional 
                        Appraisal Practice and title XI of the 
                        Financial Institutions Reform, Recovery, and 
                        Enforcement Act of 1989, and the regulations 
                        prescribed under such title, as in effect on 
                        the date of the appraisal.
          ``(3) Free copy of appraisal.--A creditor shall provide 1 
        copy of each appraisal conducted in accordance with this 
        subsection in connection with a subprime mortgage to the 
        applicant without charge, and at least 3 days prior to the 
        transaction closing date.
          ``(4) Consumer notification.--At the time of the initial 
        mortgage application, the applicant shall be provided with a 
        statement by the creditor that any appraisal prepared for the 
        mortgage is for the sole use of the creditor, and that the 
        applicant may choose to have a separate appraisal conducted at 
        their own expense.
          ``(5) Violations.--In addition to any other liability to any 
        person under this title, a creditor found to have willfully 
        failed to obtain an appraisal as required in this subsection 
        shall be liable to the applicant or borrower for the sum of 
        $2,000.
          ``(6) Subprime mortgage defined.--For purposes of this 
        subsection, the term `subprime mortgage' means a residential 
        mortgage loan with an annual percentage rate that exceeds the 
        average prime offer rate for a comparable transaction, as of 
        the date the interest rate is set--
                  ``(A) by 1.5 or more percentage points for a first 
                lien residential mortgage loan; and
                  ``(B) by 3.5 or more percentage points for a 
                subordinate lien residential mortgage loan.''.

SEC. 602. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN 
                    CONSUMER CREDIT TRANSACTIONS.

  (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129D (as added by 
section 501(a)) the following new section:

``SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO 
                    CERTAIN CONSUMER CREDIT TRANSACTIONS.

  ``(a) In General.--It shall be unlawful, in extending credit or in 
providing any services for a consumer credit transaction secured by the 
principal dwelling of the consumer, to engage in any unfair or 
deceptive act or practice as described in or pursuant to regulations 
prescribed under this section.
  ``(b) Appraisal Independence.--For purposes of subsection (a), unfair 
and deceptive practices shall include--
          ``(1) any appraisal of a property offered as security for 
        repayment of the consumer credit transaction that is conducted 
        in connection with such transaction in which a person with an 
        interest in the underlying transaction compensates, coerces, 
        extorts, colludes, instructs, induces, bribes, or intimidates a 
        person conducting or involved in an appraisal, or attempts, to 
        compensate, coerce, extort, collude, instruct, induce, bribe, 
        or intimidate such a person, for the purpose of causing the 
        appraised value assigned, under the appraisal, to the property 
        to be based on any factor other than the independent judgment 
        of the appraiser;
          ``(2) mischaracterizing, or suborning any mischaracterization 
        of, the appraised value of the property securing the extension 
        of the credit;
          ``(3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the making or 
        pricing of the transaction; and
          ``(4) withholding or threatening to withhold timely payment 
        for an appraisal report or for appraisal services rendered.
  ``(c) Exceptions.--The requirements of subsection (b) shall not be 
construed as prohibiting a mortgage lender, mortgage broker, mortgage 
banker, real estate broker, appraisal management company, employee of 
an appraisal management company, consumer, or any other person with an 
interest in a real estate transaction from asking an appraiser to 
provide 1 or more of the following services:
          ``(1) Consider additional, appropriate property information, 
        including the consideration of additional comparable properties 
        to make or support an appraisal.
          ``(2) Provide further detail, substantiation, or explanation 
        for the appraiser's value conclusion.
          ``(3) Correct errors in the appraisal report.
  ``(d) Prohibitions on Conflicts of Interest.--No certified or 
licensed appraiser conducting, and no appraisal management company 
procuring or facilitating, an appraisal in connection with a consumer 
credit transaction secured by the principal dwelling of a consumer may 
have a direct or indirect interest, financial or otherwise, in the 
property or transaction involving the appraisal.
  ``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker, 
mortgage banker, real estate broker, appraisal management company, 
employee of an appraisal management company, or any other person 
involved in a real estate transaction involving an appraisal in 
connection with a consumer credit transaction secured by the principal 
dwelling of a consumer who has a reasonable basis to believe an 
appraiser is failing to comply with the Uniform Standards of 
Professional Appraisal Practice, is violating applicable laws, or is 
otherwise engaging in unethical or unprofessional conduct, shall refer 
the matter to the applicable State appraiser certifying and licensing 
agency.
  ``(f) No Extension of Credit.--In connection with a consumer credit 
transaction secured by a consumer's principal dwelling, a creditor who 
knows, at or before loan consummation, of a violation of the appraisal 
independence standards established in subsections (b) or (d) shall not 
extend credit based on such appraisal unless the creditor documents 
that the creditor has acted with reasonable diligence to determine that 
the appraisal does not materially misstate or misrepresent the value of 
such dwelling.
  ``(g) Rulemaking Proceedings.--The Board, the Comptroller of the 
Currency, the Director of the Office of Thrift Supervision, the Federal 
Deposit Insurance Corporation, the National Credit Union Administration 
Board, and the Federal Trade Commission--
          ``(1) shall, for purposes of this section, jointly prescribe 
        regulations no later than 180 days after the date of the 
        enactment of this section, and where such regulations have an 
        effective date of no later than 1 year after the date of the 
        enactment of this section, defining with specificity acts or 
        practices which are unfair or deceptive in the provision of 
        mortgage lending services for a consumer credit transaction 
        secured by the principal dwelling of the consumer or mortgage 
        brokerage services for such a transaction and defining any 
        terms in this section or such regulations; and
          ``(2) may jointly issue interpretive guidelines and general 
        statements of policy with respect to unfair or deceptive acts 
        or practices in the provision of mortgage lending services for 
        a consumer credit transaction secured by the principal dwelling 
        of the consumer and mortgage brokerage services for such a 
        transaction, within the meaning of subsections (a), (b), (c), 
        (d), (e), and (f).
  ``(h) Penalties.--
          ``(1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who violates 
        this section shall forfeit and pay a civil penalty of not more 
        than $10,000 for each day any such violation continues.
          ``(2) Subsequent violations.--In the case of any person on 
        whom a civil penalty has been imposed under paragraph (1), 
        paragraph (1) shall be applied by substituting `$20,000' for 
        `$10,000' with respect to all subsequent violations.
          ``(3) Assessment.--The agency referred to in subsection (a) 
        or (c) of section 108 with respect to any person described in 
        paragraph (1) shall assess any penalty under this subsection to 
        which such person is subject.''.
  (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129D (as added by section 501(c)) the following new item:

``129E. Unfair and deceptive practices and acts relating to certain 
consumer credit transactions.''.

SEC. 603. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC, 
                    APPRAISER INDEPENDENCE, AND APPROVED APPRAISER 
                    EDUCATION.

  (a) Consumer Protection Mission.--
          (1) Purposes.--Section 1101 of the Financial Institutions 
        Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331) 
        is amended by inserting ``and to provide the Appraisal 
        Subcommittee with a consumer protection mandate'' before the 
        period at the end.
          (2) Functions of appraisal subcommittee.--Section 1103(a) of 
        the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 (12 U.S.C. 3332(a)) is amended--
                  (A) by striking ``and'' at the end of paragraph (3);
                  (B) by striking the period at the end of paragraph 
                (4) and inserting ``;''; and
                  (C) by adding at the end the following new paragraph:
          ``(5) monitor the efforts of, and requirements established 
        by, States and the Federal financial institutions regulatory 
        agencies to protect consumers from improper appraisal practices 
        and the predations of unlicensed appraisers in consumer credit 
        transactions that are secured by a consumer's principal 
        dwelling; and''.
          (3) Threshold levels.--Section 1112(b) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3341(b)) is amended by inserting before the period the 
        following: ``, and that such threshold level provides 
        reasonable protection for consumers who purchase 1-4 unit 
        single-family residences. In determining whether a threshold 
        level provides reasonable protection for consumers, each 
        Federal financial institutions regulatory agency shall consult 
        with consumer groups and convene a public hearing''.
  (b) Annual Report of Appraisal Subcommittee.--
          (1) In general.--Section 1103(a) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3332(a)) is amended at the end by inserting the 
        following new paragraph:
          ``(6) transmit an annual report to the Congress not later 
        than January 31 of each year that describes the manner in which 
        each function assigned to the Appraisal Subcommittee has been 
        carried out during the preceding year. The report shall also 
        detail the activities of the Appraisal Subcommittee, including 
        the results of all audits of State appraiser regulatory 
        agencies, and provide an accounting of disapproved actions and 
        warnings taken in the previous year, including a description of 
        the conditions causing the disapproval and actions taken to 
        achieve compliance.''.
  (c) Open Meetings.--Section 1104(b) of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is 
amended by inserting ``in public session after notice in the Federal 
Register'' after ``shall meet''.
  (d) Regulations.--Section 1106 of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is amended--
          (1) by inserting ``prescribe regulations after notice and 
        opportunity for comment,'' after ``hold hearings''; and
          (2) at the end by inserting ``Any regulations prescribed by 
        the Appraisal Subcommittee shall (unless otherwise provided in 
        this title) be limited to the following functions: temporary 
        practice, national registry, information sharing, and 
        enforcement. For purposes of prescribing regulations, the 
        Appraisal Subcommittee shall establish an advisory committee of 
        industry participants, including appraisers, lenders, consumer 
        advocates, and government agencies, and hold meetings as 
        necessary to support the development of regulations.''.
  (e) Field Appraisals and Appraisal Reviews.--Section 1113 of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3342) is amended--
          (1) by striking ``In determining'' and inserting ``(a) In 
        General.--In determining'';
          (2) in subsection (a) (as designated by paragraph (1)), by 
        inserting before the period the following: ``, where a complex 
        1-to-4 unit single family residential appraisal means an 
        appraisal for which the property to be appraised, the form of 
        ownership, the property characteristics, or the market 
        conditions are atypical''; and
          (3) by adding at the end the following new subsection:
  ``(b) Appraisals and Appraisal Reviews.--All appraisals performed at 
a property within a State shall be prepared by appraisers licensed or 
certified in the State where the property is located. All appraisal 
reviews, including appraisal reviews by a lender, appraisal management 
company, or other third party organization, shall be performed by an 
appraiser who is duly licensed or certified by a State appraisal 
board.''.
  (f) Appraisal Management Services.--
          (1) Supervision of third party providers of appraisal 
        management services.--Section 1103(a) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3332(a)) (as previously amended by this section) is 
        further amended--
                  (A) by amending paragraph (1) to read as follows:
          ``(1) monitor the requirements established by States--
                  ``(A) for the certification and licensing of 
                individuals who are qualified to perform appraisals in 
                connection with federally related transactions, 
                including a code of professional responsibility; and
                  ``(B) for the registration and supervision of the 
                operations and activities of an appraisal management 
                company;''; and
                  (B) by adding at the end the following new paragraph:
          ``(7) maintain a national registry of appraisal management 
        companies that either are registered with and subject to 
        supervision of a State appraiser certifying and licensing 
        agency or are operating subsidiaries of a Federally regulated 
        financial institution.''.
          (2) Appraisal management company minimum qualifications.--
        Title XI of the Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by 
        adding at the end the following new section (and amending the 
        table of contents accordingly):

``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

  ``(a) In General.--The Appraiser Qualifications Board of the 
Appraisal Foundation shall establish minimum qualifications to be 
applied by a State in the registration of appraisal management 
companies. Such qualifications shall include a requirement that such 
companies--
          ``(1) register with and be subject to supervision by a State 
        appraiser certifying and licensing agency in each State in 
        which such company operates;
          ``(2) verify that only licensed or certified appraisers are 
        used for federally related transactions;
          ``(3) require that appraisals coordinated by an appraisal 
        management company comply with the Uniform Standards of 
        Professional Appraisal Practice; and
          ``(4) require that appraisals are conducted independently and 
        free from inappropriate influence and coercion pursuant to the 
        appraisal independence standards established under section 129E 
        of the Truth in Lending Act.
  ``(b) Exception for Federally Regulated Financial Institutions.--The 
requirements of subsection (a) shall not apply to an appraisal 
management company that is a subsidiary owned and controlled by a 
financial institution and regulated by a federal financial institution 
regulatory agency. In such case, the appropriate federal financial 
institutions regulatory agency shall, at a minimum, develop regulations 
affecting the operations of the appraisal management company to--
          ``(1) verify that only licensed or certified appraisers are 
        used for federally related transactions;
          ``(2) require that appraisals coordinated by an institution 
        or subsidiary providing appraisal management services comply 
        with the Uniform Standards of Professional Appraisal Practice; 
        and
          ``(3) require that appraisals are conducted independently and 
        free from inappropriate influence and coercion pursuant to the 
        appraisal independence standards established under section 129E 
        of the Truth in Lending Act.''
  ``(c) Registration Limitations.--An appraisal management company 
shall not be registered by a State if such company, in whole or in 
part, directly or indirectly, is owned by any person who has had an 
appraiser license or certificate refused, denied, cancelled, 
surrendered in lieu of revocation, or revoked in any State. 
Additionally, each person that owns more than 10 percent of an 
appraisal management company shall be of good moral character, as 
determined by the State appraiser certifying and licensing agency, and 
shall submit to a background investigation carried out by the State 
appraiser certifying and licensing agency.
  ``(d) Regulations.--The Appraisal Subcommittee shall promulgate 
regulations to implement the minimum qualifications developed by the 
Appraiser Qualifications Board under this section, as such 
qualifications relate to the State appraiser certifying and licensing 
agencies. The Appraisal Subcommittee shall also promulgate regulations 
for the reporting of the activities of appraisal management companies 
in determining the payment of the annual registry fee.
  ``(e) Effective Date.--
          ``(1) In general.--No appraisal management company may 
        perform services related to a federally related transaction in 
        a State after the date that is 36 months after the date of the 
        enactment of this section unless such company is registered 
        with such State or subject to oversight by a federal financial 
        institutions regulatory agency.
          ``(2) Extension of effective date.--Subject to the approval 
        of the Council, the Appraisal Subcommittee may extend by an 
        additional 12 months the requirements for the registration and 
        supervision of appraisal management companies if it makes a 
        written finding that a State has made substantial progress in 
        establishing a State appraisal management company registration 
        and supervision system that appears to conform with the 
        provisions of this title.''.
          (3) State appraiser certifying and licensing agency 
        authority.--Section 1117 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is 
        amended by adding at the end the following: ``The duties of 
        such agency may additionally include the registration and 
        supervision of appraisal management companies.''.
          (4) Appraisal management company definition.--Section 1121 of 
        the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 (12 U.S.C. 3350) is amended by adding at the end 
        the following:
          ``(11) Appraisal management company.--The term ``appraisal 
        management company'' means, in connection with valuing 
        properties collateralizing mortgage loans or mortgages 
        incorporated into a securitization, any external third party 
        authorized either by a creditor of a consumer credit 
        transaction secured by a consumer's principal dwelling or by an 
        underwriter of or other principal in the secondary mortgage 
        markets, that oversees a network or panel of more than 10 
        certified or licensed appraisers in a State or 25 or more 
        nationally within a given year--
                  ``(A) to recruit, select, and retain appraisers;
                  ``(B) to contract with licensed and certified 
                appraisers to perform appraisal assignments;
                  ``(C) to manage the process of having an appraisal 
                performed, including providing administrative duties 
                such as receiving appraisal orders and appraisal 
                reports, submitting completed appraisal reports to 
                creditors and underwriters, collecting fees from 
                creditors and underwriters for services provided, and 
                reimbursing appraisers for services performed; or
                  ``(D) to review and verify the work of appraisers.''.
  (g) State Agency Reporting Requirement.--Section 1109(a) of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3338(a)) is amended--
          (1) by striking ``and'' after the semicolon in paragraph (1);
          (2) by redesignating paragraph (2) as paragraph (4); and
          (3) by inserting after paragraph (1) the following new 
        paragraphs:
          ``(2) transmit reports on sanctions, disciplinary actions, 
        license and certification revocations, and license and 
        certification suspensions on a timely basis to the national 
        registry of the Appraisal Subcommittee;
          ``(3) transmit reports on a timely basis of supervisory 
        activities involving appraisal management companies or other 
        third-party providers of appraisals and appraisal management 
        services, including investigations initiated and disciplinary 
        actions taken; and''.
  (h) Registry Fees Modified.--
          (1) In general.--Section 1109(a) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3338(a)) is amended--
                  (A) by amending paragraph (4) (as modified by section 
                603(g) of this Act) to read as follows:
          ``(4) collect--
                  ``(A) from such individuals who perform or seek to 
                perform appraisals in federally related transactions, 
                an annual registry fee of not more than $40, such fees 
                to be transmitted by the State agencies to the Council 
                on an annual basis; and
                  ``(B) from an appraisal management company that 
                either has registered with a State appraiser certifying 
                and licensing agency in accordance with this title or 
                operates as a subsidiary of a federally regulated 
                financial institution, an annual registry fee of--
                          ``(i) in the case of such a company that has 
                        been in existence for more than a year, $25 
                        multiplied by the number of appraisers working 
                        for or contracting with such company in such 
                        State during the previous year, but where such 
                        $25 amount may be adjusted, up to a maximum of 
                        $50, at the discretion of the Appraisal 
                        Subcommittee, if necessary to carry out the 
                        Subcommittee's functions under this title; and
                          ``(ii) in the case of such a company that has 
                        not been in existence for more than a year, $25 
                        multiplied by an appropriate number to be 
                        determined by the Appraisal Subcommittee, and 
                        where such number will be used for determining 
                        the fee of all such companies that were not in 
                        existence for more than a year, but where such 
                        $25 amount may be adjusted, up to a maximum of 
                        $50, at the discretion of the Appraisal 
                        Subcommittee, if necessary to carry out the 
                        Subcommittee's functions under this title.''; 
                        and
                  (B) by amending the matter following paragraph (4), 
                as redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee 
may adjust the dollar amount of registry fees under paragraph (4)(A), 
up to a maximum of $80 per annum, as necessary to carry out its 
functions under this title. The Appraisal Subcommittee shall consider 
at least once every 5 years whether to adjust the dollar amount of the 
registry fees to account for inflation. In implementing any change in 
registry fees, the Appraisal Subcommittee shall provide flexibility to 
the States for multi-year certifications and licenses already in place, 
as well as a transition period to implement the changes in registry 
fees. In establishing the amount of the annual registry fee for an 
appraisal management company, the Appraisal Subcommittee shall have the 
discretion to impose a minimum annual registry fee for an appraisal 
management company to protect against the under reporting of the number 
of appraisers working for or contracted by the appraisal management 
company.''.
          (2) Incremental revenues.--Incremental revenues collected 
        pursuant to the increases required by this subsection shall be 
        placed in a separate account at the United States Treasury, 
        entitled the ``Appraisal Subcommittee Account''.
  (i) Grants and Reports.--Section 1109(b) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3348(b)) is amended--
          (1) by striking ``and'' after the semicolon in paragraph (3);
          (2) by striking the period at the end of paragraph (4) and 
        inserting a semicolon;
          (3) by adding at the end the following new paragraphs:
          ``(5) to make grants to State appraiser certifying and 
        licensing agencies to support the efforts of such agencies to 
        comply with this title, including--
                  ``(A) the complaint process, complaint 
                investigations, and appraiser enforcement activities of 
                such agencies; and
                  ``(B) the submission of data on State licensed and 
                certified appraisers and appraisal management companies 
                to the National appraisal registry, including 
                information affirming that the appraiser or appraisal 
                management company meets the required qualification 
                criteria and formal and informal disciplinary actions; 
                and
          ``(6) to report to all State appraiser certifying and 
        licensing agencies when a license or certification is 
        surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent 
of the fiscal year total of incremental increase in fees collected and 
deposited in the ``Appraisal Subcommittee Account'' pursuant to 
subsection (h).
  (j) Criteria.--Section 1116 of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
          (1) in subsection (c), by inserting ``whose criteria for the 
        licensing of a real estate appraiser currently meet or exceed 
        the minimum criteria issued by the Appraisal Qualifications 
        Board of The Appraisal Foundation for the licensing of real 
        estate appraisers'' before the period at the end; and
          (2) by striking subsection (e) and inserting the following 
        new subsection:
  ``(e) Minimum Qualification Requirements.--Any requirements 
established for individuals in the position of `Trainee Appraiser' and 
`Supervisory Appraiser' shall meet or exceed the minimum qualification 
requirements of the Appraiser Qualifications Board of The Appraisal 
Foundation. The Appraisal Subcommittee shall have the authority to 
enforce these requirements.''.
  (k) Monitoring of State Appraiser Certifying and Licensing 
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) In General.--The Appraisal Subcommittee shall monitor each 
State appraiser certifying and licensing agency for the purposes of 
determining whether such agency--
          ``(1) has policies, practices, funding, staffing, and 
        procedures that are consistent with this title;
          ``(2) processes complaints and completes investigations in a 
        reasonable time period;
          ``(3) appropriately disciplines sanctioned appraisers and 
        appraisal management companies;
          ``(4) maintains an effective regulatory program; and
          ``(5) reports complaints and disciplinary actions on a timely 
        basis to the national registries on appraisers and appraisal 
        management companies maintained by the Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State 
licensed or certified appraiser or a registered appraisal management 
company from a national registry on an interim basis pending State 
agency action on licensing, certification, registration, and 
disciplinary proceedings. The Appraisal Subcommittee and all agencies, 
instrumentalities, and Federally recognized entities under this title 
shall not recognize appraiser certifications and licenses from States 
whose appraisal policies, practices, funding, staffing, or procedures 
are found to be inconsistent with this title. The Appraisal 
Subcommittee shall have the authority to impose sanctions, as described 
in this section, against a State agency that fails to have an effective 
appraiser regulatory program. In determining whether such a program is 
effective, the Appraisal Subcommittee shall include an analyses of the 
licensing and certification of appraisers, the registration of 
appraisal management companies, the issuance of temporary licenses and 
certifications for appraisers, the receiving and tracking of submitted 
complaints against appraisers and appraisal management companies, the 
investigation of complaints, and enforcement actions against appraisers 
and appraisal management companies. The Appraisal Subcommittee shall 
have the authority to impose interim actions and suspensions against a 
State agency as an alternative to, or in advance of, the derecognition 
of a State agency.''.
          (2) in subsection (b)(2), by inserting after ``authority'' 
        the following: ``or sufficient funding''.
  (l) Reciprocity.--Subsection (b) of section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351(b)) is amended to read as follows:
  ``(b) Reciprocity.--A State appraiser certifying or licensing agency 
shall issue a reciprocal certification or license for an individual 
from another State when--
          ``(1) the appraiser licensing and certification program of 
        such other State is in compliance with the provisions of this 
        title; and
          ``(2) the appraiser holds a valid certification from a State 
        whose requirements for certification or licensing meet or 
        exceed the licensure standards established by the State where 
        an individual seeks appraisal licensure.''.
  (m) Consideration of Professional Appraisal Designations.--Section 
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not 
exclude'' and all that follows through the end of the subsection and 
inserting the following: ``may include education achieved, experience, 
sample appraisals, and references from prior clients. Membership in a 
nationally recognized professional appraisal organization may be a 
criteria considered, though lack of membership therein shall not be the 
sole bar against consideration for an assignment under these 
criteria.''.
  (n) Appraiser Independence.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351) is amended by adding at the end the following new subsection:
  ``(g) Appraiser Independence Monitoring.--The Appraisal Subcommittee 
shall monitor each State appraiser certifying and licensing agency for 
the purpose of determining whether such agency's policies, practices, 
and procedures are consistent with the purposes of maintaining 
appraiser independence and whether such State has adopted and maintains 
effective laws, regulations, and policies aimed at maintaining 
appraiser independence.''.
  (o) Appraiser Education.--Section 1122 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 
amended by inserting after subsection (g) (as added by subsection (l) 
of this section) the following new subsection:
  ``(h) Approved Education.--The Appraisal Subcommittee shall encourage 
the States to accept courses approved by the Appraiser Qualification 
Board's Course Approval Program.''.
  (p) Appraisal Complaint Hotline.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351), as amended by this section, is further amended by adding at the 
end the following new subsection:
  ``(i) Appraisal Complaint National Hotline.--If, 1 year after the 
date of the enactment of this subsection, the Appraisal Subcommittee 
determines that no national hotline exists to receive complaints of 
non-compliance with appraisal independence standards and Uniform 
Standards of Professional Appraisal Practice, including complaints from 
appraisers, individuals, or other entities concerning the improper 
influencing or attempted improper influencing of appraisers or the 
appraisal process, the Appraisal Subcommittee shall establish and 
operate such a national hotline, which shall include a toll-free 
telephone number and an email address. If the Appraisal Subcommittee 
operates such a national hotline, the Appraisal Subcommittee shall 
refer complaints for further action to appropriate governmental bodies, 
including a State appraiser certifying and licensing agency, a 
financial institution regulator, or other appropriate legal 
authorities. For complaints referred to State appraiser certifying and 
licensing agencies or to Federal regulators, the Appraisal Subcommittee 
shall have the authority to follow up such complaint referrals in order 
to determine the status of the resolution of the complaint.''.
  (q) Automated Valuation Models.--Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3331 et seq.), as amended by this section, is further amended by adding 
at the end the following new section (and amending the table of 
contents accordingly):

``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN 
                    MORTGAGES.

  ``(a) In General.--Automated valuation models shall adhere to quality 
control standards designed to--
          ``(1) ensure a high level of confidence in the estimates 
        produced by automated valuation models;
          ``(2) protect against the manipulation of data;
          ``(3) seek to avoid conflicts of interest; and
          ``(4) require random sample testing and reviews, where such 
        testing and reviews are performed by an appraiser who is 
        licensed or certified in the State where the testing and 
        reviews take place.
  ``(b) Adoption of Regulations.--The Appraisal Subcommittee and its 
member agencies shall promulgate regulations to implement the quality 
control standards required under this section.
  ``(c) Enforcement.--Compliance with regulations issued under this 
subsection shall be enforced by--
          ``(1) with respect to a financial institution, or subsidiary 
        owned and controlled by a financial institution and regulated 
        by a federal financial institution or regulatory agency, the 
        federal financial institution regulatory agency that acts as 
        the primary federal supervisor of such financial institution or 
        subsidiary; and
          ``(2) with respect to other persons, the Appraisal 
        Subcommittee.
  ``(d) Automated Valuation Model Defined.--For purposes of this 
section, the term `automated valuation model' means any computerized 
model used by mortgage originators and secondary market issuers to 
determine the collateral worth of a mortgage secured by a consumer's 
principal dwelling.''.
  (r) Broker Price Opinions.--Title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.), 
as amended by this section, is further amended by adding at the end the 
following new section (and amending the table of contents accordingly):

``SEC. 1126. BROKER PRICE OPINIONS.

  ``(a) General Prohibition.--Broker price opinions may not be used as 
the sole basis to determine the value of a piece of property for the 
purpose of a loan origination of a residential mortgage loan secured by 
such piece of property.
  ``(b) Exceptions.--Subsection (a) shall not apply to--
          ``(1) those transaction as may be designated by the federal 
        financial institutions regulatory agencies or the Federal 
        Housing Finance Agency; or
          ``(2) real estate brokers who produce broker price opinions 
        or competitive market analyses solely for the purposes of the 
        real estate listing process.
  ``(c) Broker Price Opinion Defined.--For purposes of this section, 
the term `broker price opinion' means an estimate, done in lieu of a 
written appraisal, prepared by a real estate broker, agent, or sales 
person that details the probable selling price of a particular piece of 
real estate property and provides a varying level of detail about the 
property's condition, market, and neighborhood, and information on 
comparable sales, but does not include an automated valuation model, as 
defined in section 1125(c).''.
  (s) Amendments to Appraisal Subcommittee.--Section 1011 of the 
Federal Financial Institutions Examination Council Act of 1978 (12 
U.S.C. 3310) is amended--
          (1) in the first sentence, by adding before the period the 
        following: ``and the Federal Housing Finance Agency''; and
          (2) by inserting at the end the following: ``At all times at 
        least one member of the Appraisal Subcommittee shall have 
        demonstrated knowledge and competence through licensure, 
        certification, or professional designation within the appraisal 
        profession.''.
  (t) Technical Corrections.--
          (1) Section 1119(a)(2) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) is 
        amended by striking ``council,'' and inserting ``Council,''.
          (2) Section 1121(6) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is 
        amended by striking ``Corporations,'' and inserting 
        ``Corporation,''.
          (3) Section 1121(8) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is 
        amended by striking ``council'' and inserting ``Council''.
          (4) Section 1122 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 
        amended--
                  (A) in subsection (a)(1) by moving the left margin of 
                subparagraphs (A), (B), and (C) 2 ems to the right; and
                  (B) in subsection (c)--
                          (i) by striking ``Federal Financial 
                        Institutions Examination Council'' and 
                        inserting ``Financial Institutions Examination 
                        Council''; and
                          (ii) by striking ``the council's functions'' 
                        and inserting ``the Council's functions''.

SEC. 604. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND 
                    COMPLIANCE PROGRAMS.

  (a) Study.--The Comptroller General shall conduct a comprehensive 
study on possible improvements in the appraisal process generally, and 
specifically on the consistency in and the effectiveness of, and 
possible improvements in, State compliance efforts and programs in 
accordance with title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989. In addition, this study shall 
examine the existing exemptions to the use of certified appraisers 
issued by Federal financial institutions regulatory agencies. The study 
shall also review the threshold level established by Federal regulators 
for compliance under title XI and whether there is a need to revise 
them to reflect the addition of consumer protection to the purposes and 
functions of the Appraisal Subcommittee. The study shall additionally 
examine the quality of different types of mortgage collateral 
valuations produced by broker price opinions, automated valuation 
models, licensed appraisals, and certified appraisals, among others, 
and the quality of appraisals provided through different distribution 
channels, including appraisal management companies, independent 
appraisal operations within a mortgage originator, and fee-for-service 
appraisals. The study shall also include an analysis and statistical 
breakdown of enforcement actions taken during the last 10 years against 
different types of appraisers, including certified, licensed, 
supervisory, and trainee appraisers. Furthermore, the study shall 
examine the benefits and costs, as well as the advantages and 
disadvantages, of establishing a national repository to collect data 
related to real estate property collateral valuations performed in the 
United States.
  (b) Report.--Before the end of the 18-month period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report on the study under subsection (a) to the Committee on 
Financial Services of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate, together with such 
recommendations for administrative or legislative action, at the 
Federal or State level, as the Comptroller General may determine to be 
appropriate.

SEC. 605. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

  Subsection (e) of section 701 of the Equal Credit Opportunity Act ( 
U.S.C. 1691) is amended to read as follows:
  ``(e) Copies Furnished to Applicants.--
          ``(1) In general.--Each creditor shall furnish to an 
        applicant a copy of any and all written appraisals and 
        valuations developed in connection with the applicant's 
        application for a loan that is secured or would have been 
        secured by a first lien on a dwelling promptly upon completion, 
        but in no case later than 3 days prior to the closing of the 
        loan, whether the creditor grants or denies the applicant's 
        request for credit or the application is incomplete or 
        withdrawn.
          ``(2) Waiver.--The applicant may waive the 3 day requirement 
        provided for in paragraph (1), except where otherwise required 
        in law.
          ``(3) Reimbursement.--The applicant may be required to pay a 
        reasonable fee to reimburse the creditor for the cost of the 
        appraisal, except where otherwise required in law.
          ``(4) Free copy.--Notwithstanding paragraph (3), the creditor 
        shall provide a copy of each written appraisal or valuation at 
        no additional cost to the applicant.
          ``(5) Notification to applicants.--At the time of 
        application, the creditor shall notify an applicant in writing 
        of the right to receive a copy of each written appraisal and 
        valuation under this subsection.
          ``(6) Regulations.--The Board shall prescribe regulations to 
        implement this subsection within 1 year of the date of the 
        enactment of this subsection.
          ``(7) Valuation defined.--For purposes of this subsection, 
        the term `valuation' shall include any estimate of the value of 
        a dwelling developed in connection with a creditor's decision 
        to provide credit, including those values developed pursuant to 
        a policy of a government sponsored enterprise or by an 
        automated valuation model, a broker price opinion, or other 
        methodology or mechanism.''.

SEC. 606. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT 
                    RELATING TO CERTAIN APPRAISAL FEES.

  Section 4 of the Real Estate Settlement Procedures Act of 1974 is 
amended by adding at the end the following new subsection:
  ``(c) The standard form described in subsection (a) shall include, in 
the case of an appraisal coordinated by an appraisal management company 
(as such term is defined in section 1121(11) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3350(11))), a clear disclosure of--
          ``(1) the fee paid directly to the appraiser by such company; 
        and
          ``(2) the administration fee charged by such company.''.

  TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT 
                      SPONSORED ENTERPRISES REFORM

SEC. 701. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
                    SPONSORED ENTERPRISES REFORM TO ENHANCE THE 
                    PROTECTION, LIMITATION, AND REGULATION OF THE TERMS 
                    OF RESIDENTIAL MORTGAGE CREDIT.

  (a) Findings.--The Congress finds as follows:
          (1) The Government-sponsored enterprises, Federal National 
        Mortgage Association (Fannie Mae) and the Federal Home Loan 
        Mortgage Corporation (Freddie Mac), were chartered by Congress 
        to ensure a reliable and affordable supply of mortgage funding, 
        but enjoy a dual legal status as privately owned corporations 
        with Government mandated affordable housing goals.
          (2) In 1996, the Department of Housing and Urban Development 
        required that 42 percent of Fannie Mae's and Freddie Mac's 
        mortgage financing should go to borrowers with income levels 
        below the median for a given area.
          (3) In 2004, the Department of Housing and Urban Development 
        revised those goals, increasing them to 56 percent of their 
        overall mortgage purchases by 2008, and additionally mandated 
        that 12 percent of all mortgage purchases by Fannie Mae and 
        Freddie Mac be ``special affordable'' loans made to borrowers 
        with incomes less than 60 percent of an area's median income, a 
        target that ultimately increased to 28 percent for 2008.
          (4) To help fulfill those mandated affordable housing goals, 
        in 1995 the Department of Housing and Urban Development 
        authorized Fannie Mae and Freddie Mac to purchase subprime 
        securities that included loans made to low-income borrowers.
          (5) After this authorization to purchase subprime securities, 
        subprime and near-prime loans increased from 9 percent of 
        securitized mortgages in 2001 to 40 percent in 2006, while the 
        market share of conventional mortgages dropped from 78.8 
        percent in 2003 to 50.1 percent by 2007 with a corresponding 
        increase in subprime and Alt-A loans from 10.1 percent to 32.7 
        percent over the same period.
          (6) In 2004 alone, Fannie Mae and Freddie Mac purchased 
        $175,000,000,000 in subprime mortgage securities, which 
        accounted for 44 percent of the market that year, and from 2005 
        through 2007, Fannie Mae and Freddie Mac purchased 
        approximately $1,000,000,000,000 in subprime and Alt-A loans, 
        while Fannie Mae's acquisitions of mortgages with less than 10 
        percent down payments almost tripled.
          (7) According to data from the Federal Housing Finance Agency 
        (FHFA) for the fourth quarter of 2008, Fannie Mae and Freddie 
        Mac own or guarantee 75 percent of all newly originated 
        mortgages, and Fannie Mae and Freddie Mac currently own 13.3 
        percent of outstanding mortgage debt in the United States and 
        have issued mortgage-backed securities for 31.0 percent of the 
        residential debt market, a combined total of 44.3 percent of 
        outstanding mortgage debt in the United States.
          (8) On September 7, 2008, the FHFA placed Fannie Mae and 
        Freddie Mac into conservatorship, with the Treasury Department 
        subsequently agreeing to purchase at least $200,000,000,000 of 
        preferred stock from each enterprise in exchange for warrants 
        for the purchase of 79.9 percent of each enterprise's common 
        stock.
          (9) The conservatorship for Fannie Mae and Freddie Mac has 
        potentially exposed taxpayers to upwards of $5,300,000,000,000 
        worth of risk.
          (10) The hybrid public-private status of Fannie Mae and 
        Freddie Mac is untenable and must be resolved to assure that 
        consumers are offered and receive residential mortgage loans on 
        terms that reasonably reflect their ability to repay the loans 
        and that are understandable and not unfair, deceptive, or 
        abusive.
  (b) Sense of the Congress.--It is the sense of the Congress that 
efforts to enhance by the protection, limitation, and regulation of the 
terms of residential mortgage credit and the practices related to such 
credit would be incomplete without enactment of meaningful structural 
reforms of Fannie Mae and Freddie Mac.

                          Purpose and Summary

    H.R. 1728, the Mortgage Reform and Anti-Predatory Lending 
Act, is intended to reform mortgage lending practices to avert 
a recurrence of the current situation of unprecedented levels 
of defaults and foreclosures rates. The bill is fashioned after 
similar legislation that passed the House in November 2007 
(H.R. 3915), but has been updated and contains a number of new 
provisions.
    As reported, Titles I and II of H.R. 1728 set minimum 
standards for mortgages requiring that consumers must have a 
reasonable ability to repay at the time the mortgage is 
consummated and that mortgage refinancings must provide a net 
tangible benefit to the consumer. Under the bill, securitizers 
and other participants in the secondary mortgage market would 
for the first time under federal law be liable for supporting 
irresponsible lending. It provides that certain high-quality, 
low-cost loans (defined as Qualified Mortgages) will be 
presumed to meet these Federal standards. This is a limited 
safe harbor for these loans because the presumption can be 
rebutted.
    The bill also prohibits financial incentives (including 
payments known as ``yield spread premiums'') that encourage 
mortgage originators, including mortgage brokers and loan 
officers of lending institutions, to steer consumers to higher-
cost and more abusive mortgages. In addition, it prohibits 
prepayment penalties for any adjustable rate mortgage and other 
mortgages that do not meet the definition of Qualified 
Mortgage, limits prepayment penalties charged to borrowers who 
wish to close out their loans, typically to refinance on more 
affordable terms, bans single premium credit insurance and 
prohibits mandatory arbitration clauses; and includes 
protections for renters of foreclosed properties. Finally, 
there are provisions to provide legal assistance to homeowners 
and tenants facing foreclosure.
    H.R. 1728 requires creditors to retain an economic interest 
in a material portion of the credit risk for certain mortgages 
they originate. Another provision authorizes the Banking 
Agencies to address through rulemaking abusive mortgage terms 
and practices that may arise in the future. The bill permits 
consumers to obtain redress directly from firms involved in 
``securitizing'' mortgages, unless the securitizer has 
performed appropriate due diligence to comply with the ability 
to repay and net tangible benefit standards and effected a 
modification or refinancing that provides the borrower with a 
loan that satisfies these standards.
    Title III of H.R. 1728 expands the scope of and enhances 
consumer protections for high-cost loans under the Home 
Ownership and Equity Protection Act (HOEPA) and requires 
additional disclosures to consumers. This title revises the 
benchmark for determining these triggers from Treasuries 
securities to the ``average prime offer rate,'' which is 
determined by the Federal Reserve. In addition, it lowers the 
points and fee trigger from 8 percent to 5 percent for 
transactions of $20,000 or more and including additional costs 
and fees in the trigger; prohibits the financing of points and 
fees; prohibits excessive fees for payoff information, 
modifications, or late payments; prohibits practices that 
increase the risk of foreclosure, such as balloon payments, 
encouraging a borrower to default, and call provisions; and 
requires pre-loan counseling.
    Title IV of the bill establishes an Office of Housing 
Counseling at HUD that will carry out and coordinate 
homeownership and rental housing counseling programs; requires 
the launch of a national public service, multimedia campaign to 
promote housing counseling and the establishment of a website 
and toll-free hotline; authorizes the issuance of homeownership 
and rental housing counseling grants to HUD-approved housing 
counseling agencies and State housing finance agencies; and 
requires HUD to update the Mortgage Information Booklet to 
provide consumers with a greater understanding of the terms of 
the home buying process. Additionally, the bill requires 
increased information to consumers about the need for home 
inspections and ways to avoid foreclosure scams.
    Titles V and VI of H.R. 1728 offer a comprehensive, 
balanced, and progressive set of solutions aimed at stopping or 
mitigating a number of abusive and deceptive practices related 
to escrow accounts, mortgage servicing, and appraisal 
practices. The two titles also build on the provisions 
previously incorporated by an amendment on the House floor into 
H.R. 3915.
    Regarding the escrow provisions contained in Title V, H.R. 
1728 requires all subprime borrowers to have accounts 
established in conjunction with their mortgages to provide 
protection against tax liens and the forced placement of 
insurance, among other things. In addition, the bill requires 
lenders to provide written disclosures about the need to pay 
taxes and insurance premiums to all borrowers if they opt out 
of creating escrow accounts. To ensure that lenders alert 
borrowers to all costs involved in a transaction, the bill 
requires the inclusion of escrow payments for taxes and 
insurance in any repayment analysis provided to consumers at 
the time of a quote on a mortgage.
    With respect to mortgage servicing reforms, the Title V of 
H.R. 1728 also updates the Real Estate Settlement Procedures 
Act (RESPA) and the Truth in Lending Act (TILA) to create new 
consumer protections. These protections include detailing when 
the servicer can impose force-placed insurance, mandating 
swifter responses to consumer written inquiries, increasing 
penalties for violations of RESPA, requiring the prompt 
crediting of payments, and mandating that borrowers receive 
payoff statement quotes within a reasonable amount of time 
after a request.
    Concerning appraisal practices, Title VI of H.R. 1728 
prohibits the lender from making a subprime mortgage without 
first obtaining a written appraisal of the physical property. 
The bill also protects these loan applicants against loan 
flipping by requiring a second written appraisal, free of 
charge, if another loan on the property occurred in the past 
six months. Lenders must additionally provide mortgage 
applicants with copies of any and all written appraisal reports 
and valuations developed in connection with a mortgage 
transaction at least 3 days before the scheduled closing date 
on the property.
    H.R. 1728 further creates enforceable Federal appraisal 
independence standards with penalties within TILA and amends 
the Financial Institutions Reform, Recovery, and Enforcement 
Act (FIRREA) to require the Appraisal Subcommittee to monitor 
the effectiveness of State appraiser agencies in maintaining 
appraisal independence. These standards prohibit the parties 
involved in a real estate transaction from influencing the 
independent judgment of an appraiser through collusion, 
coercion, and bribery, among other activities. In addition to 
other stipulations, they require appraisers to have no direct 
or indirect interest in the property or transaction involving 
the appraisal.
    Moreover, the bill's changes will provide the Appraisal 
Subcommittee with a consumer protection mandate and more 
authority to monitor the performance of State appraiser 
agencies. The Appraisal Subcommittee is also required to 
describe its activities in greater detail in an annual report 
to the Congress. Many of the additional appraisal changes are 
designed to strengthen licensing and education standards, as 
well as to establish a Federal grant program to the States.
    The modifications to appraisal regulation found in H.R. 
1728 also create a system for registering and supervising 
appraisal management companies, ensure the establishment of a 
national hotline for collecting appraisal complaints, provide 
for the production of reliable results by automated valuation 
models, and bar the use of broker price opinions as the sole 
basis for determining the value of a property for purchase 
mortgage loans. Finally, Title VI amends RESPA to require the 
separate disclosure of fees paid to appraisal management 
companies and appraisers.

                  Background and Need for Legislation

Mortgage crisis

    It is now well documented that the explosive growth in 
subprime and Alt-A mortgage lending in the early part of this 
decade led many Americans to obtain mortgage credit that they 
could not afford. As a result, the country is facing an 
unprecedented foreclosure crisis and foreclosure rates are 
expected to increase.
    This crisis can be traced in part to the movement of 
lenders and mortgage originators away from traditional 
commonsense underwriting practices during the real estate boom, 
giving rise to risky, exotic mortgages and practices such as 
``no doc'' lending and allowing loans with ``negative 
amortization'' features, and to the proliferation of subprime 
mortgages, especially in refinancing. Many observers comment 
that the growth of mortgage securitization and the market in 
mortgage-backed securities--investment instruments backed by 
pools of loans purchased by investment firms--increased the 
number of lenders and propelled the sale of subprime products. 
Investors' demand for high-yield mortgage bonds in turn may 
have driven brokers and lenders to push borrowers to high-risk 
loans, loosening underwriting standards. Government data and 
academic studies have suggested that a disproportionate amount 
of higher priced subprime lending was concentrated in the 
minority population and in minority neighborhoods.
    In general, subprime mortgages are loans that have more 
costly terms and conditions than ``prime'' mortgages (e.g., 
they may have higher interest rates, additional fees, 
prepayment penalties, or other features). Many subprime loans 
were made to borrowers who, due to weakened credit histories, 
pose higher credit risks. These borrowers may have lower credit 
scores than prime borrowers or higher debt to income ratios on 
their properties. In other cases, subprime borrowers may 
actually have qualified for prime loans, but did not receive 
them, for various reasons ranging from the benign (such as an 
inability to produce full income documentation) to predatory 
practices such as loan steering.
    Subprime lenders included banks, bank affiliates, and non-
bank mortgage companies. According to Mortgage Bankers 
Association (MBA), more than half of subprime mortgages were 
made by mortgage brokers and lenders with no Federal 
supervision; a quarter were made by finance companies that are 
affiliates of bank holding companies and indirectly regulated 
by the Federal Reserve Board; and the rest were made by 
institutions directly regulated by Federal financial regulators 
such as banks, thrifts, and credit unions.
    Additional controversy surrounded so-called subprime 
payment option adjustable rate mortgages (ARMs) in which the 
interest rate starts at a low ``teaser'' level and then 
ratchets upward after a set period, often two or three years. 
The term ``hybrid'' refers to the blend of fixed-rate and 
adjustable-rate characteristics found in such ARMs. Like other 
adjustable-rate products, hybrid ARMs transfer some interest 
rate risk from the lender to the consumer, thus allowing the 
lender to offer a lower initial rate.
    Hybrid ARMs are referred to by their initial fixed period 
and adjustment periods, for example 3/1 for an ARM with a 3-
year fixed period and subsequent 1-year rate adjustment 
periods. Two products that have drawn particular attention are 
2/28s and 3/27s. For these loans, the rate resets every six 
months after the initial teaser rate period for the remaining 
28 or 27 years of the loan at a margin over a particular 
designated short-term interest rate, such as the London 
Interbank Offered Rate (LIBOR). Interest-only, no-principal 
balloon loans often result in even steeper increases as a 
result of deferred unpaid principal.
    Many of these loans also had prepayment penalties that may 
extend beyond the low initial payment period. When these loans 
reset, consumers may face penalties for refinancing or have a 
very short time in which to refinance. Prepayment penalties 
can, however, sometimes provide consumers with lower interest 
rates because they provide a more stable revenue stream and 
thus increase the value of the loan on the secondary market.
    The number of hybrid ARMs and other subprime loans--and 
their share of the mortgage market--has significantly increased 
in the past few years. According to press reports, in 1998, the 
percentage of hybrids relative to 30-year fixed-rate mortgages 
was less than 2 percent. By 2004, this percentage had risen to 
27.5 percent. Origination volumes of subprime mortgages grew 
from $100 billion in 2001 to $800 billion in 2005. Many 
homeowners took out these loans because they couldn't afford 
the monthly payments that came with a 30-year fixed-rate loan. 
They were counting on having the value of their homes 
appreciate and then refinancing. Instead, home prices 
throughout the country have plummeted. In a period of declining 
home values, the principal amounts of many loans became greater 
than the value of the underlying assets, making refinancing 
difficult.
    Many of these loans began to ``reset'' in 2007 from their 
two- and three-year teaser rates to significantly higher 
monthly payments for homeowners, pushing many borrowers into 
foreclosure. Foreclosures not only harm homeowners, who can 
lose their homes and the equity in them and suffer from 
tarnished credit records, but also can have negative effects on 
the broader community and the economy. Foreclosures can trigger 
domino effects that result in housing abandonment, declining 
property values in surrounding neighborhoods, and loss of 
property tax revenue to states and localities. Many observers 
also have cited the widespread apprehension over exposure to 
subprime mortgage-backed bonds as the root cause of the ongoing 
credit crisis.
    Congress has enacted a number of consumer protection laws 
in the financial sector over the last few decades. These 
statutes include TILA, the Fair Credit Reporting Act (FCRA), 
the Fair Debt Collection Practices Act (FDCPA), and the Equal 
Credit Opportunity Act (ECOA). Most of these statutes have 
sought to address particular consumer problems in particular 
sub-sectors. TILA, for example, requires that consumers receive 
critical disclosures in a uniform manner before entering into 
credit transactions. In response to reports of predatory 
lending practices in home equity lending in the early 1990s, 
Congress enacted HOEPA in 1994, which covers home equity loans 
but not purchase-money mortgages. Loans classified as `high-
cost home loans' under HOEPA because of their high annual 
percentage rates (APRs) or points and fees trigger certain 
prohibitions or disclosures or both.
    In July 2008, the Federal Reserve adopted final rules to 
address unfair, abusive or deceptive home mortgage lending 
practices and to restrict certain other mortgage practices. The 
rules also establish advertising standards and require certain 
mortgage disclosures to be given to consumers earlier in a 
transaction. The Federal Reserve's action adds four key 
protections to a newly defined category of ``higher-priced 
mortgage loans'' secured by a consumer's principal dwelling.
    The four protections adopted for the newly defined category 
of higher-priced mortgage loans will:
           Prohibit a lender from making a loan without 
        regard to borrowers' ability to repay the loan from 
        income and assets other than the home's value. A lender 
        complies, in part, by assessing repayment ability based 
        on the highest scheduled payment in the first seven 
        years of the loan. To show that a lender violated this 
        prohibition, a borrower does not need to demonstrate 
        that it is part of a ``pattern or practice;''
           Require creditors to verify the income and 
        assets they rely upon to determine repayment ability;
           Ban any prepayment penalty if the payment 
        can change in the initial four years. For other higher-
        priced loans, a prepayment penalty period cannot last 
        for more than two years; and
           Require creditors to establish escrow 
        accounts for property taxes and homeowner's insurance 
        for all first-lien mortgage loans.
    While the Federal Reserve's rules addressed some of the 
practices that led to the current crisis, H.R. 1728 will 
compliment the Federal Reserve's rule and provide additional 
protections to mortgage borrowers.
    Many States have enacted statutes modeled after HOEPA. 
Currently, at least thirty States, the District of Columbia, 
and roughly a dozen municipalities have enacted either 
comprehensive statutes or other limited statutory protections 
aimed at predatory lending practices, some addressing a 
specific practice, some generally tracking HOEPA, and others 
going far beyond it.
    As more families face foreclosure, the need for affordable 
legal assistance for homeowners and tenants increases. 
Throughout the country, legal assistance organizations report a 
dramatic increase in unmet need for foreclosure-related legal 
services. Given this urgent need, the bill provides for grants 
to state and local legal organizations to provide legal 
assistance to low and moderate income homeowners and tenants 
with foreclosure-related issues.
    Affordable housing advocates report that at least 20 
percent of properties in foreclosure were rental properties and 
roughly 40 percent of families facing eviction due to 
foreclosure are tenants. To address this unintended impact of 
the foreclosure crisis, the bill allows bona fide tenants to 
remain in their residence, pursuant to their lease, following 
foreclosure on the property, except in certain limited 
circumstance.

Escrows

    An escrow is a trust account set up in a borrower's name to 
ensure the timely payment of specified obligations affiliated 
with a property. Current Federal law permits all consumers to 
voluntarily establish escrow accounts with their lender or 
mortgage servicer to cover property taxes, hazard insurance, 
and certain other periodic expenses related to the property or 
the contract. The administration of these accounts is covered 
by RESPA and, if applicable, State law.
    Borrowers with escrows pay an additional amount on their 
mortgage each month to fund the account. In addition to any 
principal and interest payments, lenders collect a pro-rata 
assessment of the total expected annual outlays for taxes and 
insurance using RESPA's established guidelines. Lenders then 
use these collected sums to guarantee the timely payment of 
property tax bills and insurance premiums. In a way, an escrow 
serves as a safety net to protect the lender and the borrower 
from tax liens and property losses.
    In analyzing the recent problems related to the fallout in 
the subprime lending industry, some experts have noted that 
subprime borrowers, even though they are more likely to need 
budgeting assistance given their weaker credit histories, are 
less likely than prime borrowers to have escrows. In its 2006 
benchmarking studies, for example, the Mortgage Bankers 
Association found that approximately 50 percent of all first 
lien subprime mortgages had escrows, compared to 71 percent of 
prime loans. Other experts have suggested that the number of 
subprime borrowers with escrows is significantly lower.
    In 2004, Fannie Mae updated its policies on escrows in its 
Selling and Servicing Guides. While it continued to allow the 
waiver of an escrow account requirement in certain instances, 
the updated policy recommends against waiving escrows for a 
borrower with a blemished credit record. In doing so, the 
enterprise noted that the borrower may find it difficult to 
maintain homeownership if he or she faces the need to make 
large lump-sum payments for taxes and/or insurance and any 
other periodic payment items.
    In early 2007, the Federal banking regulators also issued 
guidance on disclosure notices for consumers who opt out of 
escrow services. The guidance laid out fundamental consumer 
protection principles for underwriting, including that 
consumers should be informed of their responsibilities to pay 
taxes and insurance, in addition to their loan payments, if not 
escrowed, and the fact that the costs for taxes and insurance 
costs can be substantial. Fannie Mae has adopted similar escrow 
opt-out disclosure policies, too.
    Issues related to escrows have also arisen as part of the 
homebuying and refinancing process. Some mortgage originators, 
at the time of a payment quote, provide consumers only with 
details on principal and interest amounts. As a result, 
borrowers may underestimate the monthly payment actually needed 
to own a home. Moreover, because some quotes contain 
information regarding additional fees associated with a 
property like taxes and insurance premiums and some do not, 
borrowers sometimes lack the information needed to make 
accurate comparisons between different mortgage offers.
    In its commentary in a rule promulgated last summer under 
the Home Ownership and Equity Protection Act (HOEPA), the 
Federal Reserve Board noted that ``[c]onsumers in the subprime 
market tend to shop based on monthly payment amounts, rather 
than on interest rates. So creditors who are active in the 
subprime market, and who can quote low monthly payments to a 
prospective borrower, have a competitive advantage over 
creditors who quote higher monthly payments.'' Both apples-to-
apples comparisons of payments and more realistic expectations 
of monthly obligations are better accomplished by mortgage 
offers containing four payment obligations: principal, 
interest, taxes, and insurance, otherwise known as PITI.
    As a result of its findings, the Federal Reserve Board's 
recent HOEPA regulations require a creditor to establish an 
escrow account for taxes and insurance for subprime borrowers. 
These escrow accounts must remain in place for at least 12 
months before a consumer can cancel them. The final rule also 
adopted changes to advertising practices to require the 
prominent disclosure that taxes and insurance are not included 
in promotional quotes.

Mortgage servicing

    While much of the recent attention related to mitigating 
predatory lending practices has focused on the mortgage 
origination and underwriting process, the problems of abusive 
and deceptive lending also extends into mortgage servicing, 
which occurs after the consummation of a home loan. The 
problems that homeowners have encountered with loan servicing 
have received media attention.\1\
---------------------------------------------------------------------------
    \1\See Gretchen Morgenson, ``Can These Mortgages Be Saved,'' New 
York Times, September 30, 2007, and Jack Guttentag, ``Loan Servicers, 
the Lesser-Known Predators,'' Washington Post, November 3, 2007.
---------------------------------------------------------------------------
    Under RESPA, servicers are the entities responsible for 
servicing a loan. Typically, servicers are large corporations 
servicing millions of mortgage loans at any one time. Servicers 
generally have no legal relationship with the owners or 
assignees of the loan and make their income from a small 
percentage earned on each payment made on the loan. Servicers 
may also earn income from the float from escrow accounts they 
maintain for borrowers to cover the required payments for 
property insurance on the loan.
    Unfortunately, in recent years, some servicers have 
discovered that greater profits can be obtained by squeezing 
borrowers in a variety of ways. One problematic method used to 
increase revenue by servicers is the forced placement of 
insurance without a reasonable basis for doing so. The 2004 
agreement between Ocwen Federal Bank and the Office of Thrift 
Supervision and the 2003 settlement between Fairbanks Capital 
Holding Corporation and the Federal Trade Commission and the 
Department of Housing and Urban Development (HUD) both resulted 
in internal servicing reforms to improve the process for the 
forced placement of insurance.
    Force-placed insurance is a product obtained by lenders to 
protect their interest in the property in the event the 
borrower fails to maintain or renew hazard and flood insurance 
as required under the terms of the mortgage contract. Force-
placed insurance generally costs at least twice the amount of 
standard homeowners insurance, even though it generally only 
covers the replacement value of the underlying collateral. By 
comparison, homeowners insurance would cover not only the costs 
of repairing or replacing the home, but also the contents of 
the home itself.
    Another practice that raises the concerns of consumer 
advocates relates to the prompt crediting of payments. A 
servicer may sometimes hold a payment past the due date in 
order to impose a late charge. Servicers may also profit from 
the float that occurs when the borrower makes less than a full 
payment. In such instances, the servicer will deposit the 
partial payment into a suspense account rather than crediting 
the consumer's account for the amount paid.
    There are still many other concerns related to mortgage 
servicing. A lender may refuse to provide a pay-off amount on a 
loan, thus limiting a borrower's ability to satisfy the 
obligation (and potentially to refinance into a cheaper loan). 
Servicers may also postpone refunding balances in escrow 
accounts or charge excessive fees, including when responding to 
borrower requests to correct errors. RESPA establishes 
affirmative obligations on servicers to answer questions and 
address concerns consumers have about the status of their loans 
and their escrow accounts after the consumer has sent a 
``qualified written request.'' Some servicers, however, will 
game the system by failing to respond adequately to each such 
request, forcing the consumer to make repeated inquiries, yet 
charging amounts for each response.
    Finally, servicers currently have no enforceable obligation 
to provide consumers with information about the true owner of 
the mortgage. A recent court case held that a consumer's 
attempt to rescind a loan under the Truth in Lending Act was 
ineffective when the rescission notice was served on the 
servicer, because the servicer was not an agent for the holder 
(even though the servicer is clearly an agent for purposes of 
receiving payments on the loan).
    In its July 2008 HOEPA rulemaking, the Federal Reserve 
addressed several of the most problematic mortgage servicing 
issues, including those related to the prompt crediting of 
mortgage payments and the timely provision of pay-off 
statements. In response to the growing need to expeditiously 
help troubled borrowers to modify their loans, the HOPE Now 
coalition has also adopted best practices aimed at shortening 
the response times for processing requests. More, however, 
could be done to help protect consumer interests in the area of 
mortgage servicing.

Appraisals

    Obtaining an appraisal is a key step in the mortgage 
underwriting process. It helps to verify a property's value for 
the buyer, seller, lender, investor, and others. For the 
process to work as intended, appraisers must act as unbiased 
arbiters. In other words, they ought to have independence in 
making their determinations of a property's worth.
    In recent years, however, the appraisal process has 
experienced increased stress. According to the Appraisal 
Institute, appraiser-related mortgage fraud continues largely 
because:
           Unscrupulous third parties pressure 
        appraisers to meet predetermined values;
           Appraiser regulators provide inadequate 
        oversight over licensed appraisers;
           Too little attention is paid to improving 
        appraisal quality; and
           Appraisals, in some areas of lending, have 
        been reduced from an important safeguard role to merely 
        a ``speed bump'' in the process of closing a loan.
    Moreover, the October Research Corporation released a study 
in December 2006 finding that 90 percent of appraisers were 
pressured to raise property valuations to enable the completion 
of a transaction.\2\ Such pressure can come from mortgage 
brokers, real estate agents/brokers, consumers, lenders, and 
appraisal management companies. The survey also found that 75 
percent of appraisers reported ``negative ramifications'' if 
they did not cooperate by altering their appraisals.
---------------------------------------------------------------------------
    \2\National Appraisal Survey, October Research Corporation, 
December 2006. www.octoberresearch.com
---------------------------------------------------------------------------
    Faulty appraisals can have real consequences: Individuals 
who obtained an overvalued appraisal may later encounter 
difficulty in refinancing or selling a home because the true 
value of the property used as collateral is less than the 
original mortgage.
    The problems of inflated appraisals have also increasingly 
attracted the attention of enforcement officials. In January 
2006, for example, State attorneys general announced a 
settlement with Ameriquest Mortgage Company. Among other 
things, the company agreed to take reasonable steps to ensure 
the accuracy of appraisals and enhance the independence of the 
appraisal process. The Ohio Attorney General additionally has 
filed and settled several cases against mortgage originators 
since the start of 2007 regarding violations of the State's new 
appraisal independence law.
    Furthermore, New York Attorney General Andrew Cuomo filed a 
lawsuit on November 1, 2007 against one of the nation's largest 
real estate appraisal management companies (eAppraiseIT) and 
its parent corporation for colluding with a lender to inflate 
the appraised values of homes.\3\ As part of his examinations 
of the appraisal industry, the New York Attorney General also 
identified problems with the loan purchased by Fannie Mae and 
Freddie Mac. As a result, he finalized an agreement known as 
the Home Valuation Code of Conduct to promote appraiser 
independence. The agreement became effective on May 1, 2009.
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    \3\http://www.oag.state.ny.us/press/2007/nov/nov1a_07.html
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    Interest in enacting laws aimed at protecting the 
independence of appraisers has blossomed in recent years. Since 
the start of the decade, 25 States have passed such laws. Many 
of these laws aim to protect appraiser independence by ensuring 
that no one with an interest in a transaction involving an 
appraisal can influence or attempt to influence an appraiser 
through coercion, extortion, compensation, instruction, 
inducement, intimidation, bribery, or non-payment for services 
rendered. Many State legislatures around the nation also have 
similar bills under consideration.
    Currently, no Federal statute specifically requires 
appraisal independence in the private mortgage markets, but the 
members of the Appraisal Subcommittee (ASC) have issued 
regulations and guidance to address this issue. These 
requirements, however, only apply to federally regulated banks, 
thrifts, and credit unions, as well as the parties affiliated 
with these federally regulated depositories.
    In its 2008 HOEPA rulemaking, the Federal Reserve Board 
took further steps to address this issue. In its final rule, 
the Board determined that ``[e]ncouraging an appraiser to 
overstate or understate the value of a consumer's dwelling 
causes consumers substantial injury.'' As a result, the Board 
adopted a standard ``to prohibit creditors and mortgage brokers 
and their affiliates from coercing, influencing, or otherwise 
encouraging appraisers to misstate or misrepresent the value of 
a consumer's principal dwelling.''
    While this rule established a national standard for 
appraisal independence, to date Congress has not adopted a 
national law in this area to cover the vast majority of 
mortgage transactions. Moreover, the Federal Reserve rulemaking 
incorporated only some of the independence terms found in the 
growing field of State appraisal laws.
    In the wake of the savings and loan crisis, the Congress 
established the ASC and housed it within the Financial 
Institutions Examination Council (FIEC) as part of the 
Financial Institutions Reform, Recovery, and Enforcement Act 
(FIRREA). Members of the ASC presently include the Federal 
Reserve Board, the Office of the Comptroller of the Currency, 
the Office of Thrift Supervision, the Federal Deposit Insurance 
Corporation, the National Credit Union Association, and the 
Department of Housing and Urban Development (HUD). Although it 
worked with New York Attorney General Cuomo to modify the Home 
Valuation Code of Conduct for Fannie Mae and Freddie Mac and 
this agreement has significant implications for the entities 
currently regulated by the members of the ASC, the Federal 
Housing Finance Agency currently does not belong to the ASC. A 
formal membership on the ASC by this agency might have 
facilitated the agreement's adoption.
    The ASC presently works to ensure that real estate 
appraisers, who perform appraisals in real estate transactions 
that could expose the United States government to financial 
loss, are sufficiently trained and tested to assure competency, 
independence, and high ethical judgment according to the 
Uniform Standards of Professional Appraisal Practice, or USPAP. 
The ASC also monitors the work of the Appraisal Foundation, a 
nonprofit educational corporation established by the U.S. 
appraisal industry.
    The ASC additionally monitors appraisers using State-based 
laws and enforcement agencies. A survey of State appraisal 
regulators by the Government Accountability Office in 2003 
reported resource limitations as the primary impediment in 
carrying out their oversight responsibilities.\4\ One of the 
critiques about the current oversight system often made by the 
Appraisal Institute and other professional appraisal 
organizations is that the ASC's 2006 annual report found that 
more than 60 percent of the State appraisal agencies failed to 
uphold their responsibilities in conducting enforcement 
activities. The ASC's 2007 report also found 18 instances in 
which a State failed to investigate and resolve complaints in a 
timely manner.
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    \4\http://www.gao.gov/htext/d04580t.html
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    Moreover, the Associated Press reached similar conclusions 
in August 2008 about the effectiveness of current system to 
oversee appraisers and appraisals. After its 6-month 
investigation, which included the review of thousands of State 
and Federal documents and interviews with more than 35 real 
estate appraisers across the country, the Associated Press 
concluded that ``the system is crippled by both the bumbling of 
its policemen and their inability to effectively punish those 
caught committing fraud.'' The study also found more than two 
dozen States and U.S. territories unable to investigate and 
resolve appraisal complaints within the one-year Federal 
deadline. The study additionally observed that both State 
appraisal boards and the ASC are chronically understaffed, many 
with only one full-time investigator to handle the hundreds of 
complaints that arrive each year.
    The Congress has not taken any significant legislative 
action since establishing the ASC in 1989 to address newly 
identified shortcomings related to appraisal regulation. For 
example, the ASC presently lacks the authority to issue rules 
and enforce its own standards, and relies instead on policy 
statements. It additionally does not have a consumer protection 
mandate and provides very limited information in its annual 
report to the Congress. Short of decertifying a State's 
appraisal enforcement program for non-conformance with FIRREA, 
the ASC also lacks the power to pursue incremental improvements 
in State regulatory performance, like the prompt corrective 
action regime used by Federal banking regulators for monitoring 
depository institutions. The ASC also cannot make grants to the 
State appraisal regulators to improve their functioning.
    Another problem with appraisals relates to consumer access. 
Under current Federal law, creditors must promptly furnish a 
borrower with a copy of the appraisal report used in connection 
with the application for a mortgage. Under regulations, a 
creditor may either routinely provide a copy of the appraisal 
report used in connection with a loan or send it within 30 days 
of receiving a written request. The receipt of the property 
appraisal typically comes at or after closing on the home loan. 
As a result, the consumer often cannot examine this document 
related to a purchase before the completion of the transaction.
    In addition, sometimes the appraisal used to close the loan 
may not be the only appraisal performed in connection with the 
transaction. If an earlier appraisal comes in that is below the 
one needed to make the mortgage, then an originator may order 
another appraisal in order to ``hit'' the sales price and close 
the transaction. Borrowers affected by such a situation would 
only have access to the second appraisal report with the higher 
value instead of both appraisal reports.
    Appraisal reforms could also help to address problems 
related to property flipping, which occurs when a recently 
acquired home is resold shortly thereafter for a profit, 
typically after undergoing some renovations and sometimes with 
an artificially inflated value. While the practice has been 
around for a long time, it has become increasingly popular and 
profitable during the last decade because of low interest rates 
and surging home prices. A number of reality television shows 
have even surfaced on the topic, such as Bravo's ``Flipping 
Out'', A&E's ``Flip This House'', and TLC's ``Flip That 
House''.
    Many industry observers have further expressed concern that 
an individual flipping a property can often find an appraiser 
to inflate the home's value. Concern about property flipping 
scams has caused entities like the Federal Housing 
Administration to protect consumers by adopting regulatory 
reforms that involve appraisal reforms.
    In response to the implementation of the Home Valuation 
Code of Conduct, concerns about the oversight of the operations 
of appraisal management companies (AMCs) have also grown. 
Generally, AMCs are external third-party entities that manage 
the appraisal process for a mortgage originator. According to 
some estimates, AMCs are now involved in more than 60 percent 
of appraisals, and their market share is expected to grow as 
the Home Valuation Code of Conduct is implemented and mortgage 
originators seek outside parties to comply with the agreement's 
appraisal independence stipulations.
    AMCs, however, are subject to little direct oversight. Only 
in recent months have three States--Utah, Arkansas, and New 
Mexico--adopted laws requiring their registration and 
supervision. The ASC also currently has no explicit statutory 
authority with respect to AMCs. Moreover, there have been 
instances in places like Florida and New Hampshire where 
individuals who have lost their appraisal licenses or 
certifications have turned around and opened AMCs to manage the 
work of other appraisers.
    Critics have also warned that that the growth of AMCs may 
lead to a decline in appraisal quality. In testimony before the 
Financial Services Committee in March, Mr. Jim Amorin on behalf 
of the Appraisal Institute observed: ``With many AMCs taking as 
much as 60 percent of the fee as their `management' cost, many 
highly qualified appraisers are reluctant to perform mortgage 
appraisals for such entities.'' Because all appraisal fees are 
disclosed in a single line on closing documents, consumers and 
regulators currently lack the information needed to determine 
whether the growth of AMCs has led to low-cost, lower-quality 
appraisals.
    Finally, in testimony before the Financial Services 
Committee during the 111th Congress, entities like the National 
Community Reinvestment Coalition and the Appraisal Institute 
have raised additional concerns about other methods for home 
valuation. For example, witnesses questioned the reliability of 
and confidence in the automated valuation models often used to 
develop estimates of home values. They also raised 
apprehensions about the quality of home value estimates 
developed by real estate brokers that are used for collateral 
purposes, particularly for purchase mortgages.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on March 11, 2009 entitled ``Mortgage 
Lending Reform: A Comprehensive Review of the American Mortgage 
System.'' The following witnesses testified: Panel One: Ms. 
Sandra F. Braunstein, Director, Division of Consumer and 
Community Affairs, Board of Governors of the Federal Reserve 
System, Mr. Steven L. Antonakes, Commissioner, Massachusetts 
Division of Banks, on behalf of Conference of State Bank 
Supervisors; Panel Two: Mr. David Berenbaum, Executive Vice 
President, National Community Reinvestment Coalition, Ms. Julia 
Gordon, Senior Policy Counsel, Center for Responsible Lending, 
Ms. Margot Saunders, Counsel, National Consumer Law Center, Ms. 
Stephanie Jones, Executive Director, National Urban League 
Policy Institute, Ms. Graciela Aponte, Analyst, National 
Council of La Raza, Mr. Donald C. Lampe, Partner, Womble 
Carlyle Sandridge & Rice, PLLC; Panel Three: Mr. Michael 
Middleton, President and CEO, Community Bank of Tri-County, on 
behalf of the American Bankers Association, Mr. David G. 
Kittle, Chairman, Mortgage Bankers Association, Mr. Marc S. 
Savitt, President, National Association of Mortgage Brokers, 
Mr. Charles McMillan, President, National Association of 
Realtors, Mr. Jim Amorin, President, Appraisal Institute, Mr. 
Joe J. Robson, Chairman of the Board, National Association of 
Home Builders, Mr. Laurence E. Platt, Partner, K&L Gates, on 
behalf of the Securities Industry and Financial Markets 
Association.
    The Committee on Financial Services held a hearing on April 
23, 2009 entitled ``H.R. 1728: Mortgage Reform and Anti-
Predatory Lending Act''. The following witnesses testified: 
Panel One: Ms. Sandra Braunstein, Director of the Division of 
Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, Mr. Steven L. Antonakes, Commissioner 
of Banks for the Commonwealth of Massachusetts on behalf of the 
Conference of State Bank Supervisors; Panel Two: Mr. John 
Taylor, President and Chief Executive Officer, National 
Community Reinvestment Coalition, Mr. Michael D. Calhoun, 
President, Center for Responsible Lending, Ms. Margot Saunders, 
Counsel, National Consumer Law Center, Mr. Eric Rodriguez, Vice 
President of Public Policy, National Council of La Raza, Mr. 
Hilary O. Shelton, Vice President for Advocacy and Director, 
Washington Bureau, NAACP; Panel Three: Mr. G. Gary Berner, 
Executive Vice President, Commercial Real Estate, First Niagara 
Bank on behalf of American Bankers Association, The Honorable 
John H. Dalton, President, Housing Policy Council, The 
Financial Services Roundtable, Mr. David G. Kittle, Chairman, 
Mortgage Bankers Association, Mr. Michael S. Menzies, Sr., 
President and Chief Executive Officer, Easton Bank and Trust 
Company on behalf of Independent Community Bankers Association, 
The Honorable T. Timothy Ryan, Jr., President and Chief 
Executive Officer, Securities Industry and Financial Markets 
Association, Ms. Denise M. Leonard, Vice President, Government 
Affairs, National Association of Mortgage Brokers, Mr. Charles 
McMillan, President, National Association of Realtors, Mr. Jim 
Amorin, President, Appraisal Institute, Mr. Jim Arbury, Senior 
Vice President, Government Affairs, on behalf of the National 
Multi Housing Council and the National Apartment Association.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
April 28, 2009, and on April 29, 2009, ordered H.R. 1728, the 
Mortgage Reform and Anti-Predatory Lending Act, as amended, 
favorably reported to the House by a record vote of 49 yeas and 
21 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill to the House with a 
favorable recommendation was agreed to by a record vote of 49 
yeas and 21 nays (Record vote no. FC-28). The names of Members 
voting for and against follow:

                                              RECORD VOTE NO. FC-28
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....  ........        X   .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........  ........        X   .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Hinojosa...................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................        X   ........  .........  Mr. Barrett (SC).  ........        X   .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....  ........        X   .........
Ms. Moore (WI).................        X   ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........        X   ........  .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................        X   ........  .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Mr. Speier.....................        X   ........  .........
Mr. Childers...................        X   ........  .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    During the consideration of the bill, the following 
amendments were disposed of by record votes. The names of 
Members voting for and against follow:
    An amendment by Mr. Frank (and Mr. Minnick), No. 9, 
relating to risk retention exceptions and adjustments, was 
agreed to by a record vote of 67 yeas and 1 nay (Record vote 
no. FC-17):

                                              RECORD VOTE NO. FC-17
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................        X   ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................        X   ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................        X   ........  .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........  ........  .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........  ........  .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........  ........  .........
Mr. Donnelly...................        X   ........  .........  Mr.Lance.........        X   ........  .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Mr. Speier.....................        X   ........  .........
Mr. Childers...................        X   ........  .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Garrett (NJ) (and Mr. McHenry), No. 15, 
relating to a credit risk retention study, was not agreed to by 
a record vote of 27 yeas and 43 nays (Record vote no. FC-18):

                                              RECORD VOTE NO. FC-18
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....  ........  ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. McHenry, No. 17, striking title III 
(High-Cost Mortgages), was not agreed to by a record vote of 29 
yeas and 41 nays (Record vote no. FC-19):

                                              RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........  ........  .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Hensarling, No. 24, relating to legal 
costs, was not agreed to by a record vote of 29 yeas and 42 
nays (Record vote no. FC-20):

                                              RECORD VOTE NO. FC-20
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Neugebauer, No. 25, striking tenant 
protection, was not agreed to by a record vote of 27 yeas and 
43 nays (Record vote no. FC-21):

                                              RECORD VOTE NO. FC-21
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price, No. 26, regarding arbitration, 
was not agreed to by a record vote of 30 yeas and 40 nays 
(Record vote no. FC-22):

                                              RECORD VOTE NO. FC-22
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price, No. 27, relating to the 
effective date, was not agreed to by a record vote of 29 yeas 
and 41 nays (Record vote no. FC-23):

                                              RECORD VOTE NO. FC-23
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Hensarling, No. 29, relating to 
ineligibility of non-qualified mortgages for taxpayer-funded 
assistance under the Hope for Homeowners program, was not 
agreed to by a record vote of 29 yeas and 41 nays (Record vote 
no. FC-24):

                                              Record Vote No. FC-24
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Prize (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Miller (CA) (and Mr. Childers and Mrs. 
Bachmann), No. 34, regarding a moratorium on implementation of 
the Home Valuation Code of Conduct, was not agreed to by a 
record vote of 31 yeas and 39 nays (Record vote no. FC-25):

                                              Record Vote No. FC-25
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........        X   .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........   Mr. McHenry.....        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................        X   ........  .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Hensarling, No. 39, striking legal 
assistance for foreclosure-related issues and inserting 
enhanced fraud investigation and prevention efforts, was not 
agreed to by a record vote of 29 yeas and 41 nays (Record vote 
no. FC-26):

                                              RECORD VOTE NO. FC-26
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mrs. Bachmann, No. 36, relating to assignee 
or securitization conditions, was not agreed to by a record 
vote of 29 yeas and 41 nays (Record vote no. FC-27):

                                              RECORD VOTE NO. FC-27
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Mr. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered by the 
Committee:
    An amendment by Mr. Sherman (and Mr. Green), No. 1, 
relating to the definition of mortgage originator-real estate 
brokerage activities, was agreed to by a voice vote.
    An amendment by Mr. Sherman, No. 2, relating to the 
definition of mortgage originator--five or fewer properties, 
was offered and withdrawn.
    An amendment by Mr. Grayson, No. 3, relating to time 
shares, was agreed to by a voice vote.
    An amendment by Mr. Donnelly, No. 4, relating to the 
definition of mortgage originator and exclusion of bona fide 
discount points, was agreed to by a voice vote.
    An amendment by Mr. Carson, No. 5, relating to foreclosure 
rescue education programs, was agreed to, as modified, by a 
voice vote.
    An amendment by Mrs. Biggert, No. 6, making technical 
corrections to housing counseling, was agreed to by a voice 
vote.
    An amendment by Mr. Kanjorski (and Mrs. Biggert), No. 7, 
regarding appraisals, was agreed to by a voice vote.
    An amendment by Ms. Waters, No. 8, regarding housing 
counseling-minorities, was agreed to by a voice vote.
    An amendment by Ms. Velazquez, No. 10, regarding home 
inspection counseling, was agreed to, as modified, by a voice 
vote.
    An amendment by Mr. Paulson, No. 11, relating to examining 
certain credit risk retention provisions, was agreed to by a 
voice vote.
    An amendment by Ms. Bean, No. 12, regarding closing 
document inspection by borrowers, was offered and withdrawn.
    An amendment by Mr. Ellison, No. 13, regarding fiduciary 
duties of mortgage brokers, was offered and withdrawn.
    An amendment by Mr. Moore (KS), No. 14, regarding 
residential mortgage loan origination purposes, was agreed to, 
reconsidered, and withdrawn.
    An amendment by Mr. Hodes, No. 16, regarding State attorney 
general enforcement authority, was agreed to by a voice vote.
    An amendment by Ms. Waters (and Mr. Meeks), No. 18, 
prohibiting prepayment penalties, was not agreed to by a voice 
vote.
    An amendment by Mr. Neugebauer, No. 19, requiring full 
recourse mortgage loans for civil actions, was not agreed to by 
a voice vote.
    An amendment by Mr. Sherman, No. 20, regarding the 
definition of mortgage originator, was agreed to by a voice 
vote.
    An amendment by Ms. Bean (and Mr. Castle), No. 21, 
regarding safe harbor and rebuttable presumption, as amended by 
an amendment by Mr. Lance (and Mr. Miller (CA)), No. 21a, was 
agreed to by a voice vote.
    An amendment by Mrs. Biggert (and Mr. Hinojosa and Mr. 
Neugebauer), No. 22, regarding RESPA and TILA disclosure 
improvement, as amended by an amendment by Mr. Neugebauer, No. 
22a, (as modified) was agreed to by a voice vote.
    An amendment by Mr. Moore (KS), No. 23, regarding 
residential mortgage loan origination findings, was agreed to 
by a voice vote.
    An amendment by Mr. Frank, No. 28, the first manager's 
amendment was agreed to by a voice vote. An amendment offered 
by Mr. Miller (CA), No. 28a, to the amendment was offered and 
withdrawn.
    An amendment by Ms. Waters, No. 30, regarding excessive 
points and fees, was agreed to by a voice vote.
    An amendment by Mr. Royce, No. 31, striking assignee and 
securitizer liability, was not agreed to by a voice vote.
    An amendment by Mr. Ellison, No. 32, regarding tenant 
protection, was offered and withdrawn.
    An amendment by Mr. Ellison, No. 33, regarding tenant 
protection, was agreed to by a voice vote.
    An amendment by Mr. Hensarling, No. 38, expressing the 
Sense of the Congress regarding the importance of government 
sponsored enterprises reform, as modified, was agreed to by a 
voice vote.
    An amendment by Mrs. Bachmann, No. 40, regarding a 
limitation on assistance, was agreed to by a voice vote.
    An amendment by Ms. Moore (WI), No. 41, regarding 
foreclosure rescue fraud, was offered and withdrawn.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals And Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 1728 is intended to reform mortgage lending practices 
to avert a recurrence of the current situation of unprecedented 
levels of defaults and foreclosures rates.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                                       May 4, 2009.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1728, the Mortgage 
Reform and Anti-Predatory Lending Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1728--Mortgage Reform and Anti-Predatory Lending Act

    Summary: H.R. 1728 would amend the Truth in Lending Act to 
reform consumer mortgage practices, establish minimum standards 
for consumer mortgage loans, and provide other protections to 
borrowers and investors. The bill also would broaden the 
oversight of professional appraisers and require the Government 
Accountability Office to conduct a study on the effects of H.R. 
1728 on the availability of credit for homebuyers. The bill 
would require the Board of Governors of the Federal Reserve 
(Federal Reserve), in consultation with other agencies that 
regulate the financial industry, to prescribe regulations and 
forms to implement the new requirements.
    H.R. 1728 would authorize the appropriation of $323 million 
over the 2009-2014 period for the Department of Housing and 
Urban Development (HUD) to support efforts to provide 
homeownership counseling and legal assistance to certain 
homeowners and tenants. In addition, CBO estimates that $80 
million would be required over the 2009-2014 period for HUD to 
establish an Office of Housing Counseling. In total, CBO 
estimates that implementing H.R. 1728 would cost $403 million 
over the 2009-2014 period, subject to appropriation of the 
necessary amounts.
    CBO estimates that enacting H.R. 1728 would increase 
revenues by $13 million over the 2009-2014 period and by $28 
million over the 2009-2019 period. We estimate that direct 
spending would increase by corresponding amounts over the same 
time periods.
    H.R. 1728 would impose intergovernmental and private-sector 
mandates, as defined in the Unfunded Mandates Reform Act 
(UMRA), on participants in the mortgage industry. While the 
costs of some of the mandates are likely to be small, the costs 
to comply with other mandates are uncertain. Consequently, CBO 
cannot determine whether the aggregate costs to comply with the 
mandates in the bill would exceed the annual thresholds 
established in UMRA for intergovernmental or private-sector 
mandates ($69 million and $139 million in 2009, respectively, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1728 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
                                                                By fiscal year, in millions of dollars--
                                                      ----------------------------------------------------------
                                                        2009    2010    2011    2012    2013    2014   2009-2014
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Public Service Campaign:
    Authorization Level..............................       3       0       0       0       0       0         3
    Estimated Outlays................................       *       2       1       0       0       0         3
Housing Counseling Grants:
    Authorization Level..............................      45      45      45      45       0       0       180
    Estimated Outlays................................       1      38      49      45      40       7       180
Administrative Support for Office of Counseling:
    Estimated Authorization Level....................      16      16      16      16      16      16        96
    Estimated Outlays................................       *      16      16      16      16      16        80
Legal Assistance:
    Authorization Level..............................      35      35      35      35       0       0       140
    Estimated Outlays................................       1      30      38      35      31       5       140
Total Changes:
    Estimated Authorization Level....................      99      96      96      96      16      16       419
    Estimated Outlays................................       2      86     104      96      87      28       403

                                               CHANGES IN REVENUES

Estimated Revenues...................................       *       2       2       3       3       3        13

                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority...........................       *       2       2       3       3       3        13
Estimated Outlays....................................       *       2       2       3       3       3       13
----------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

    Basis of Estimate: For this estimate, CBO assumes that H.R. 
1728 will be enacted around July 2009 and that the necessary 
amounts will be appropriated for each year.
    Spending Subject to Appropriation: CBO estimates that 
implementing H.R. 1728 would cost $403 million over the 2009-
2014 period, subject to appropriation of the necessary amounts.
    Public Service Campaign, Grants for Housing Counseling, and 
Administrative Support for the Office of Counseling. Title IV 
would establish the Office of Housing Counseling within HUD to 
support various activities related to providing counseling on 
homeownership and renting. Section 403 would authorize the 
appropriation of $3 million over the 2009-2011 period to 
support a national campaign to publicize the existence of 
counseling for home buyers, homeowners, and renters. In 
addition, section 404 would authorize the appropriation of $45 
million annually over the 2009-2012 period to provide grants to 
states, local governments, and nonprofit organizations to 
support counseling services. In total, CBO estimates that 
implementing those provisions would cost $183 million over the 
2009-2014 period.
    In addition, based on information from HUD, CBO expects 
that funds for additional personnel, contractors, and 
information technology would be necessary to run the Office of 
Housing Counseling. We estimate that support would cost $80 
million over the 2009-2014 period.
    Legal Assistance for Foreclosure-Related Issues. Section 
216 would authorize the appropriation of $35 million annually 
for fiscal years 2009 through 2012 for grants to provide legal 
assistance to low- and moderate-income homeowners and tenants 
related to home foreclosure prevention. Assuming appropriation 
of the authorize amounts, CBO estimates that implementing this 
section would cost $140 million over the 2009-2014 period.
    Revenues and Direct Spending: CBO estimates that enacting 
H.R. 1728 would increase both revenues and direct spending by 
$28 million over the 2009-2019 period, as shown in the 
following table.
    Appraisal Monitoring. Section 603 would expand the 
monitoring and oversight responsibilities of the Appraisal 
Subcommittee (ASC) of the Federal Financial Institutions 
Examination Council. The ASC is responsible for ensuring that 
real estate appraisals used in certain transactions are 
performed according to uniform standards by appraisers that are 
certified and licensed by states. To do this, the ASC monitors 
the activities of the state agencies that are responsible for 
licensing real estate appraisers. The ASC is authorized to 
collect fees from licensed and certified appraisers to offset 
the costs of its operations.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By Fiscal year, in millions of dollars--
                                                     ---------------------------------------------------------------------------------------------------
                                                       2009    2010   2011   2012   2013   2014   2015   2016   2017   2018   2019  2009-2014  2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Net Revenues........................................       *      2      2      3      3      3      3      3      3      3      3       13          28

                                                               CHANGES IN DIRECT SPENDING
aaa
Estimated Budget Authority..........................       *      2      2      3      3      3      3      3      3      3      3       13          28
Estimated Outlays...................................       *      2      2      3      3      3      3      3      3      3      3       13          28
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

    H.R. 1728 would authorize the ASC to monitor companies that 
retain or contract with appraisers and manage the process of 
having an appraisal performed (appraisal management companies). 
The bill would require those companies to be registered with a 
state (or be subject to oversight by a financial regulatory 
agency) in order to provide appraisal services on transactions 
undertaken through federally regulated financial institutions. 
As a result, the ASC would be required to develop regulations 
that states must follow in licensing appraisal management 
companies. Further, the ASC would be required to maintain a 
registry of appraisal management companies that are registered 
with a state licensing agency. The bill would authorize the ASC 
to collect fees from this new group of licensed entities.
    Other provisions of the bill would authorize the ASC to 
make grants to states to improve their compliance with ASC 
regulations and would require the ASC to establish a complaint 
hotline.
    Licensed and certified appraisers pay a fee, capped at $25 
annually, to the ASC to support its operations. H.R. 1728 would 
raise the upper limit for the fee to $40, and would authorize 
the ASC to charge fees to appraisal management companies that 
are registered with a state licensing agency. Based on 
information from the ASC, CBO estimates that enacting the new 
fees would increase federal revenues by $13 million over the 
2009-2014 period, and by $28 million over the 2009-2019 period, 
net of income and payroll tax effects.
    Based on information from the ASC, CBO estimates that 
enacting H.R. 1728 would increase direct spending by $13 
million over the 2009-2014 period and by $28 million over the 
2009-2019 period to provide grants to states to improve their 
ability to comply with the requirements of the bill.
    Spending by Federal Bank Regulators. According to Federal 
Reserve and other federal financial regulatory agencies, 
implementing H.R. 1728 would not have a significant effect on 
their workload or budgets. Any additional direct spending by 
the Office of the Comptroller of the Currency, the Office of 
Thrift Supervision, and the National Credit Union 
Administration would be offset by income from annual fees 
covering their administrative expenses. Similarly, the Federal 
Deposit Insurance Corporation would recover any added costs 
when it adjusts the premiums paid by insured depository 
institutions. Budgetary effects of spending by the Federal 
Reserve are recorded as changes in revenues, but current law 
requires the Federal Reserve to recover direct and indirect 
costs incurred in providing such services. Thus, CBO estimates 
that the additional activities of the agencies that regulate 
banks would have no significant net effect on direct spending 
or revenues.
    Penalties. Under this legislation, certain civil penalties 
(which are recorded as revenues) currently applicable under the 
Truth in Lending Act would be increased and new civil penalties 
would be created for violations under this bill. CBO estimates 
that any increase in revenues resulting from those civil 
penalties would not be significant.
    Intergovernmental and private-sector impact: H.R. 1728 
contains several intergovernmental and private-sector mandates, 
as defined in UMRA, by placing new restrictions on entities 
that securitize mortgages, and on entities that purchase 
foreclosed properties. The bill also would impose 
intergovernmental mandates by preempting certain state property 
and securities laws. In addition, the bill would impose 
private-sector mandates by establishing new requirements for 
creditors, loan originators, mortgage servicers, real estate 
appraisers, and other entities that participate in the mortgage 
industry.
    While the costs of some of the mandates are likely to be 
small (for example, the preemptions of state law), the costs to 
comply with other mandates are uncertain for several reasons. 
Many industry participants, including public entities, already 
comply with some of the bill's requirements. In addition, the 
cost of some of the requirements would depend on federal 
regulations to be issued under the bill, and the scope of those 
regulations is uncertain. Lastly, CBO does not have sufficient 
information about current business practices or how the 
requirements in the bill would affect industry income. 
Consequently, CBO cannot determine whether the aggregate costs 
to comply with the mandates in the bill would exceed the annual 
thresholds established in UMRA for intergovernmental or 
private-sector mandates ($69 million and $139 million in 2009, 
respectively, adjusted annually for inflation).
    The bill also would authorize grants to support state 
agencies that license and certify appraisers, which would 
benefit state, local, and tribal governments.
    Estimate prepared by: Federal Spending: Chad Chirico and 
Susan Willie; Federal Revenues: Barbara Edwards; Impact on 
State, Local, and Tribal Governments: Elizabeth Cove Delise; 
Impact on the Private Sector: Marin Randall.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis; Frank J. Sammartino, Acting 
Assistant Director for Tax Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 1728 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation

Section 1. Short Title; Table of Contents

    This section establishes the short title of the bill as the 
`Mortgage Reform and Anti-Predatory Lending Act' (the Act).

        TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Section 101. Definitions

    This section establishes definitions for various terms, 
including: `Federal banking agencies,' `mortgage originator,' 
`nationwide mortgage licensing system,' `residential mortgage 
loan,' `securitization vehicle,' `securitizer,' and `servicer.'

Section 102. Residential mortgage loan origination

    Subsection (a) of this section is a Findings and Purpose 
provision in which Congress finds that economic stabilization 
would be enhanced by the protection, limitation, and regulation 
of the terms of residential mortgage credit and the practices 
related to such credit, while ensuring that responsible, 
affordable mortgage credit remains available to consumers. It 
is the purpose of the new sections 129B and 129C of the Truth 
in Lending Act to assure that consumers are offered and receive 
residential mortgage loans on terms that reasonably reflect 
their ability to repay the loans and that are understandable 
and not unfair, deceptive or abusive.
    Subsection (b) of this section provides that all mortgage 
originators (including mortgage brokers and depository 
institutions that originate mortgages, and their loan officers) 
will be subject to a Federal duty of care that requires (1) 
licensing and registration under State or Federal law 
(including subtitle A of title I of this Act), (2) diligently 
working to present the consumer with a range of residential 
mortgage loan products for which the consumer likely qualifies 
and are appropriate to the consumer's existing circumstances 
(i.e., consumer has reasonable ability to repay and, in the 
case of refinancings, receives net tangible benefit and loan 
does not have predatory characteristics), (3) making full, 
complete, and timely disclosures to consumers, (4) certifying 
to creditors compliance with mortgage origination requirements 
under this section, and (5) including in all loan documents any 
unique identifier of the mortgage originator. Mortgage 
originators are not required, however, to present residential 
mortgage loan products of creditors that do not accept consumer 
referrals or applications from the mortgage originator, and 
creditors are not required to offer products that the creditor 
does not offer to the general public. The Act expressly does 
not create an agency or fiduciary relationship, but mortgage 
originators are free to become an agent or a fiduciary if they 
so desire. The Federal banking agencies, in consultation with 
the Secretary and the Federal Trade Commission (Commission), 
will jointly prescribe regulations to further define the 
Federal duty of care. The Federal banking agencies will 
prescribe regulations requiring depository institutions to 
establish procedures for monitoring compliance with the 
requirements of this section and the registration procedures of 
section 106 of the Act.

Section 103. Prohibition on steering incentives

    This section provides that for any mortgage loan, the total 
amount of direct and indirect compensation from all sources 
permitted to a mortgage originator may not vary based on the 
terms of the loan (other than amount of principal). In 
addition, the Federal banking agencies, in consultation with 
the Secretary and the Commission, will jointly prescribe 
regulations to prohibit (1) mortgage originators from steering 
any consumer to a residential mortgage loan that the consumer 
lacks a reasonable ability to repay, that does not provide net 
tangible benefit, or that has predatory characteristics, (2) 
mortgage originators from steering any consumer from a 
qualified mortgage (prime loan) to a loan that is not a 
qualified mortgage, (3) abusive or unfair lending practices 
that promote disparities among consumers of equal 
creditworthiness but of different race, ethnicity, gender, or 
age, and (4) mortgage originators from assessing excessive 
points and fees to a consumer for the origination of a 
residential mortgage loan based on such consumer's decision to 
finance all or part of the payment through the rate for such 
points and fees. However, nothing in the Act should be 
construed as permitting yield spread premiums or other similar 
incentive compensation, affecting the mechanism for providing 
the total amount of direct and indirect compensation permitted 
to a mortgage originator, restricting a consumer's ability to 
finance origination fees if they were disclosed to the consumer 
and do not vary with the consumer's decision to finance such 
fees, or prohibiting incentive payments to a mortgage 
originator based on the number of loans originated.

Section 104. Liability

    This section provides that a cause of action will exist 
under section 130(a) and 130(b) of the Truth in Lending Act 
(TILA) for a mortgage originator's failure to comply with this 
section. The maximum liability of a mortgage originator for 
violation of this section will not exceed the greater of actual 
damages or an amount equal to three times the total amount of 
direct and indirect mortgage originator fees, plus the 
consumer's costs including reasonable attorney's fees.

Section 105. Regulations

    This section provides the Federal banking agencies 
discretionary regulatory authority to issue joint regulations 
to prohibit or condition terms, acts or practices relating to 
residential mortgage loans that the agencies find to be 
abusive, unfair, deceptive, predatory, inconsistent with 
reasonable underwriting standards, necessary or proper to 
effectuate the purposes of this section and section 129C, to 
prevent circumvention or evasion thereof, or to facilitate 
compliance with such sections, or are not in the interest of 
the borrower. The section makes clear that this new authority 
will not prevent regulations adopted by the Federal Reserve 
concerning mortgage lending (73 Fed. Reg. 44522 (July 30, 
2008)) will take effect as decided by the Federal Reserve with 
such exceptions or revisions as the Federal Reserve determines 
necessary.
    This section also provides that regulations under this 
title will be promulgated within 12 months of the enactment of 
the Act and take effect no later than 18 months after the 
enactment of the Act.

Section 106. RESPA and TILA Disclosure Improvement

    This section requires HUD and the Federal Reserve, not 
later than six months after the date of enactment, to jointly 
issue for public comment proposed regulations providing for 
compatible disclosures for borrowers to receive at the time of 
mortgage application and at the time of closing. The statute 
requires the disclosures to meet both the requirements of the 
TILA and RESPA. The section also suspends the rulemaking HUD 
issued relating to RESPA (73 Fed. Reg. 26204 (Nov. 17, 2008)) 
until the joint regulations are issued by the Federal Reserve 
and HUD.

               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Section 201. Ability to Repay

    This section provides that no creditor may make a 
residential mortgage loan unless the creditor makes a 
reasonable and good faith determination based on verified and 
documented information that, at the time the loan is 
consummated, the consumer has a reasonable ability to repay the 
loan (including all applicable taxes, insurance, and 
assessments). The Federal banking agencies, in consultation 
with the Commission, will jointly prescribe regulations 
regarding this provision. A determination of reasonable ability 
to repay will include consideration of a consumer's credit 
history, current income, expected income the consumer is 
reasonably assured of receiving, current obligations, debt-to-
income ratio, employment status, and other financial resources 
other than the consumer's equity in the real property securing 
the loan.

Section 202. Net Tangible Benefit for Refinancing of Residential 
        Mortgage Loans

    This section provides that no creditor may extend credit 
for refinancing unless the creditor reasonably and in good 
faith determines, at the time the loan is consummated and on 
the basis of information known by or obtained in good faith by 
the creditor, that the refinanced loan will provide a net 
tangible benefit to the consumer. The refinanced loan will not 
be considered to provide net tangible benefit if the costs of 
the loan, including points, fees, and other charges, exceed the 
amount of newly advanced principal without any corresponding 
changes in the terms of the refinanced loan that are 
advantageous to the consumer. The Federal banking agencies will 
jointly prescribe regulations further defining the term `net 
tangible benefit.'

Section 203. Safe harbor and rebuttable presumption

    This section provides that any creditor, assignee or 
securitizer may presume that a mortgage loan meets the minimum 
standards (reasonable ability to repay and net tangible 
benefit) if it is a `qualified mortgage.' Qualified mortgages 
are loans--
         that do not allow a consumer to defer 
        repayment of principal or interest, or is not otherwise 
        deemed a ``non-traditional mortgage'' under guidance, 
        advisories, or regulations prescribed by the Federal 
        Banking Agencies;
         that do not provide for a repayment schedule 
        that results in negative amortization at any time;
         for which the terms are fully amortizing and 
        which does not result in a balloon payment (where a 
        balloon payment is a scheduled payment that is more 
        than twice as large as the average of earlier scheduled 
        payments);
         which have an annual percentage rate that does 
        not exceed the average prime offer rate for a 
        comparable transaction (set by the Federal Reserve), as 
        of the date the interest rate is set--
         by 1.5 or more percentage points for 
        residential mortgage loans with principal amounts that 
        do not exceed the conforming loan limits in section 
        305(a)(2) of the Federal Home Loan Mortgage Corporation 
        Act (Freddie Mac); and
         by 2.5 or more percentage points for 
        residential mortgage loans with principal amounts that 
        exceed the Freddie Mac conforming loan limit.
         for which the income and financial resources 
        relied upon to qualify the obligors on the loan are 
        verified and documented;
         in the case of a fixed rate loan, for which 
        the underwriting process is based on a payment schedule 
        that fully amortizes the loan over the loan term and 
        takes into account all applicable taxes, insurance and 
        assessments;
         in the case of an adjustable rate loan, for 
        which the underwriting is based on the maximum rate 
        permitted under the loan during the first seven years, 
        and a payment schedule that fully amortizes the loan 
        over the loan term and takes into account all 
        applicable taxes, insurance and assessments;
         that do not cause the consumer's total monthly 
        debts, including amounts under the loan, to exceed a 
        debt-to-income ratio or ratios prescribed by the 
        Banking Agencies;
         for which the total points and fees payable in 
        connection with the loan do not exceed two percent of 
        the total loan amount, where ``points and fees'' means 
        points and fees as defined by Section 103(aa)(4) of the 
        Truth in Lending Act (15 U.S.C. 1602(aa)(4)), as 
        amended by this legislation; and
         for which the term of the loan does not exceed 
        30 years.
    The Federal banking agencies may jointly prescribe 
regulations to revise, add to, or subtract from these safe 
harbor provisions to the extent necessary and appropriate to 
effectuate the purposes of section 129B and 129C, to prevent 
circumvention or evasion thereof, or to facilitate compliance 
with such section. In addition, HUD, the Secretary of Veterans 
Affairs, Secretary of Agriculture, the Federal Housing Finance 
Agency and the Rural Housing Service each are authorized to 
prescribe rules defining the types of loans they guarantee, 
insure, or administer, as the case may be, that are Qualified 
Mortgages.

Section 204. Liability

    This section provides that a consumer has a cause of action 
against a creditor for rescission of the loan and the 
consumer's costs for a loan that violates the minimum standards 
for reasonable ability to repay or net tangible benefits as set 
forth by regulation. A creditor will not be liable for such 
rescission if the creditor provides a cure to make the loan 
conform to the minimum standards within 90 days of receiving 
notice from the consumer. In addition, for a loan that violates 
the minimum standards, a consumer has an individual cause of 
action against any assignee or securitizer for rescission of 
the loan and the consumer's costs. An assignee or securitizer 
that has exercised reasonable due diligence in complying with 
the ability to repay and net tangible benefit standards is not 
liable for violations of these standards if it provides a cure 
to make the loan conform to the minimum standards within 90 
days of receiving notice from the consumer.
    If any creditor, assignee or securitizer and a consumer 
fail to agree on a cure, or if the consumer fails to accept a 
cure, the creditor, assignee, or securitizer may provide the 
cure and the consumer may challenge the adequacy of the cure 
within six months of the cure. If a creditor, assignee, or 
securitizer cannot provide rescission, they can provide the 
financial equivalent of a rescission. Liability of a creditor, 
assignee, or securitizer will apply for three years after 
consummation of the loan or, for a variable rate loan or a 
negative amortization loan, the earlier of one year after the 
loan resets or six years after consummation of the loan. 
Liability will not apply to pools of loans, including the 
securitization vehicle, or investors in pools of loans. It is 
not intended that liability will apply to trustees or 
titleholders who in their capacity hold loans solely for the 
benefit of the securitization vehicle.
    Securitizers are responsible for providing in any agreement 
providing for the transfer, conveyance, or the establishment of 
a securitization vehicle that they have the right and ability 
to (i) identify and obtain access to the loans, (ii) acquire 
the loans in the event of a violation of an ability to repay or 
net tangible benefit standard, and (iii) provide to the 
consumer any and all remedies provided for under the statute. 
Securitizers subject to a remedy under this section will be 
subject to additional exemplary or punitive damages not to 
exceed the original principal balance of the loan.
    Servicers are required to provide a written notice to a 
consumer about the creditor, assignee and securitizers relating 
to that loan upon request, whenever there is a change in 
ownership of the loan and on a regular basis (not less than 
annually). In addition, the Federal Reserve will promulgate 
rules to govern the rescission process established for 
violations of the ability to repay and net tangible benefit 
standards.

Section 205. Defense to foreclosure

    This section provides that, when the holder (including the 
securitization vehicle) of a residential mortgage loan or 
anyone acting on such holder's behalf initiates a judicial or 
non-judicial foreclosure, (1) a consumer who has a rescission 
right under this section may assert such right as a defense or 
counterclaim to foreclosure against the holder to forestall 
such foreclosure, or (2) if the foreclosure proceeding begins 
after the rescission right expires, the consumer may seek 
actual damages plus costs against the creditor or any assignee 
or securitizer. Such holder, anyone acting on behalf of such 
holder, or any other applicable third party may sell or assign 
a residential mortgage loan to a creditor, any assignee, or any 
securitizer, or their designee, to effect a rescission or a 
cure.

Section 206. Additional standards and requirements

    This section prohibits prepayment penalties on loans that 
are not qualified mortgages as defined in section 203 of the 
Act and adjustable rate mortgages that are qualified mortgages. 
For qualified mortgages that are not ARMs, phased out penalties 
are permitted provided that all remaining prepayment penalties 
expire three months before a loan resets.
    Single-premium credit insurance and mandatory arbitration 
on mortgage loans are prohibited. Securitizers must reserve the 
right in any document or contract establishing pools of loans 
to obtain access to such loans and to provide for and obtain a 
remedy under this title. Negative amortization loans to a 
first-time borrower are prohibited unless the creditor makes 
certain disclosures to the consumer and the consumer has 
received homeownership counseling from a HUD-certified 
organization or counselor.

Section 207. Rule of construction

    This section provides that, except as otherwise expressly 
provided, no provisions of new TILA sections 129A and 129B 
added by the Act will be construed as superseding, repealing, 
or affecting any duty, right, obligation, privilege, or remedy 
of any person under any other provision of TILA or any other 
provision of Federal or State law.

Section 208. Effect on State laws

    This section provides that the provisions of section 204 of 
the Act will supersede any State law to the extent that it 
provides additional remedies against any assignee, securitizer, 
or securitization vehicle for a violation of section 201 or 202 
of the Act or any other State law other than a provision of 
such law the terms of which address the specific subject matter 
of sections 201 and 202 of the Act, and the remedies in section 
204 of the Act will constitute the sole remedies against any 
assignee, securitizer, or securitization vehicle for those 
violations. No provision of this section will be construed as 
limiting the application of any state law or the availability 
of remedies, including equitable remedies such as injunctive 
relief, against creditors, even if they also act as assignees 
or securitizers or against assignees, securitizers or 
securitization vehicles for their own participation in or 
direction of the credit or underwriting decisions of the 
creditor in making mortgages. It also shall not be construed as 
limiting the application of state laws or the availability of 
remedies under State law against an assignee, securitizer or 
securitization vehicle other than laws the terms of which 
address the specific subject matter of sections 201 and 202 of 
the Act.

Section 209. Regulations

    This section provides that regulations under this title 
will be promulgated within 12 months of the enactment of the 
Act, and take effect no later than 18 months after the 
enactment of the Act.

Section 210. Amendments to civil liability provisions

    This section doubles the amount of certain statutory civil 
liability penalties currently applicable under TILA and extends 
the statute of limitations from one year to three years.

Section 211. Lender rights in the context of borrower deception

    This provision provides that no creditor, assignee, or 
securitizer shall be liable to an obligor under section 129B 
and 129C if the obligor or co-obligor knowingly or willfully 
and with actual knowledge furnished material information known 
to be false for the purpose of obtaining such residential 
mortgage loan.

Section 212. Six-month notice required before reset of hybrid 
        adjustable rate mortgages

    This section requires a notice to consumers in connection 
with adjustable rate mortgage loans at least six months before 
the expiration of a fixed introductory rate that explains the 
rate adjustment process and the consumer's alternatives.

Section 213. Credit risk retention

    This section requires the Federal banking agencies to 
prescribe regulations to require creditors that make 
residential mortgage loans that are not qualified mortgages, as 
defined by section 203, to retain an economic interest in a 
material portion of the credit risk for any loans they 
transfer, sell or convey. The regulations must prohibit 
creditors from hedging or otherwise transferring the credit 
risk, require creditors to retain at least 5 percent of the 
credit risk on any particular loan, specify the permissible 
forms of the risk to be held (e.g., first loss position or pro 
rata vertical slice) and the minimum duration of the required 
risk retention. The Federal banking agencies have the 
discretion to apply the risk retention requirements to 
securitizers in addition to or in place of creditors if the 
agencies determine such change would help ensure high quality 
underwriting standards for mortgage lenders and facilitate 
appropriate risk management practices by mortgage lenders or 
improve access of consumers to mortgage credit on reasonable 
terms.

Section 214. Required disclosures

    This section provides additional required disclosures under 
TILA. A creditor must disclose the maximum amount of regular 
payment a consumer has to make on a variable rate or otherwise 
variable payment mortgage. For a residential mortgage loan with 
an escrow or impound account for the payment of taxes, 
insurance, and assessments, a creditor must disclose that 
mortgage payments will be increased to cover taxes and 
insurance and the monthly dollar amount a consumer will pay to 
cover taxes and insurance in the first year of the mortgage. 
For a variable rate residential mortgage with an escrow or 
impound account, a creditor is required to disclose (1) the 
amount of initial monthly payment for principal and interest; 
(2) the amount of initial monthly payment including the amount 
deposited in an escrow or impound to pay for taxes, insurance, 
and assessments; (3) the amount of the fully indexed monthly 
payment for principal and interest; and (4) the amount of fully 
indexed monthly payment deposited in an escrow or impound to 
pay for taxes, insurance, and assessments. For all residential 
mortgages, a creditor must disclose the aggregate amount of 
settlement charges, the amount of charges included in a 
mortgage, the amount of charges a consumer must pay at closing, 
the approximate amount of the wholesale rate of funds, the 
aggregate amount of other fees or required payments, the 
aggregate amount of fees paid to a mortgage originator, the 
amount of fees paid directly by a consumer, and any additional 
amounts received by a mortgage originator from a creditor based 
on the interest rate of the loan. For all residential mortgage 
loans, the aggregate amount of fees paid to the mortgage 
originator in connection with the loan.

Section 215. Disclosures required in monthly statements for residential 
        mortgage loans

    This section requires the new disclosures for monthly 
statements for all residential mortgage loans that require 
information about the remaining balance, interest and fees 
incurred on the account. The Federal banking agencies shall 
jointly prescribe a standard form for this disclosure.

Section 216. Legal assistance for foreclosure-related issues

    This section authorizes funds for foreclosure-related legal 
assistance. The funds will be administered by HUD and 
distributed through a competitive grant process to state and 
local legal organizations to provide legal assistance to low- 
and moderate-income homeowners and tenants with foreclosure 
related issues, including civil litigation. In allocating these 
funds, HUD shall give priority consideration to state and local 
legal organizations that are operating in the 100 metropolitan 
statistical areas with the highest home foreclosure rates. No 
funds authorized by this section may be used for class action 
lawsuits. Organizations eligible for the funding are state and 
local organizations whose primary business or mission is to 
provide legal assistance. No funds under this subsection may be 
distributed to any organization which has been or which employs 
an individual who has been indicted for a violation under 
Federal law relating to an election for Federal office.

Section 217. Effective date

    This section provides that the amendments made by this 
title shall apply to transactions consummated on or after the 
effective date of the regulations specified in section 209.

Section 218. Report by the GAO

    This section directs the Government Accountability Office 
to conduct a study to determine the effects of the bill on the 
availability and affordability of credit for homebuyers and 
mortgage lending, and submit a report to Congress within one 
year of enactment. The report will also include an analysis of 
the effect on the capital reserves and funding of lenders of 
credit risk retention provisions for non-qualified mortgages.

Section 219. State Attorney General enforcement authority

    This section extends the current authority of State 
attorneys general to enforce HOEPA violations to authorize 
State attorneys general to enforce violations of section 129B 
and 129C of TILA (the sections creating the new standards under 
this Act) and section 219 of this Act.

Section 220. Tenant protections

    This section allows bona fide tenants to remain in their 
residence, pursuant to their lease, following a foreclosure on 
the property except when the successor in interest or 
subsequent purchaser will occupy the unit as a primary 
residence. If the lease is to be terminated for subsequent 
occupancy by the successor in interest or purchaser, the tenant 
must receive notice to vacate at least 90 days before the 
effective date of such notice. A lease or tenancy is bona fide 
if it is the result of arms-length transaction and if the rent 
is not substantially less than fair market rent or is reduced 
or subsidized due to a Federal, state, or local subsidy.
    The section also provides similar protections for section 8 
tenants. In addition, for section 8 tenancies, during the 
initial term of the lease, the foreclosure cannot constitute 
good cause for termination of the lease. In subsequent lease 
terms, the lease may be terminated for good cause if the 
successor in interest or subsequent purchaser will occupy the 
unit as a primary residence or if the unit is unmarketable 
while occupied. If the lease is to be terminated, the tenant 
must receive notice to vacate at least 90 days before the 
effective date of such notice.
    Also, the immediate successor in interest shall assume such 
interest subject to the lease between the prior owner and the 
housing assistance payment contract between the prior owner and 
the public housing agency for the occupied unit. If a public 
housing agency is unable to make payments under the contract to 
the immediate successor in interest after foreclosure, due to 
action or inaction by the successor in interest, including 
rejection of payments or failure to maintain the unit, then 
after reasonable steps to notify the owner, the agency may use 
the funds that would have been used to pay rent to pay for 
utilities that perhaps: were the responsibility of the owner or 
for the family's reasonable moving costs.

                     TITLE III--HIGH-COST MORTGAGES

Section 301. Definitions relating to high-cost mortgages

    This section expands the scope of the Home Ownership and 
Equity Protection Act (HOEPA) by revising the high-cost 
mortgage definition in 15 USC 1602(aa) in several respects. The 
new definition would cover purchase money loans, construction 
loans, and open-end loans, all of which specifically are 
excluded by the existing definition, that meet certain 
definitional triggers.
    The new definition also would change the existing triggers 
for determining whether a loan is a high-cost mortgage. HOEPA 
currently has two triggers--one based on the amount by which 
the APR exceeds a benchmark rate, and another based on the 
level of the total points and fees payable in connection with 
the loan transaction. This section changes the benchmark 
against which to determine the APR trigger from the yield on 
Treasury securities to the ``average prime offer rate,'' which 
is determined, and updated at least weekly, by the Federal 
Reserve. This section also lowers the number of percentage 
points by which the APR at consummation must exceed the 
benchmark in order to be a high-cost mortgage, includes 
separate APR triggers for first lien and subordinate lien 
loans, and specifies how to determine the APR for variable rate 
loans. This section also lowers the points-and-fees trigger 
from 8 percent to 5 percent of the total transaction amount 
(or, for mortgages less than $20,000, the lesser of 8 percent 
of the total transaction or $1,000). This section adds a third 
trigger by providing that a mortgage is a high-cost mortgage if 
the creditor may charge or collect prepayment penalties more 
than 36 months after the transaction closing or may charge 
prepayments penalties that exceed, in the aggregate, 2 percent 
of the amount prepaid.
    This section revises the definition of points and fees to 
include all compensation paid directly or indirectly by a 
consumer or creditor to a mortgage originator from any source 
(including a mortgage originator that originates a loan in the 
name of the creditor in a table-funded transaction), certain 
insurance premiums, prepayment penalty charges under the loan, 
and prepayment penalties actually charged in a refinance by the 
original creditor or the original creditor's affiliate.
    Finally, this section excludes certain bona fide discount 
points (up to two points for near-market interest rate loans) 
from the determination of the amount of points and fees that 
trigger HOEPA protections.

Section 302. Amendments to existing requirements for certain mortgages

    Section 206 bans prepayment penalties for any mortgage that 
is not a Qualified Mortgage. Because all high-cost mortgages 
subject to HOEPA (HOEPA loans) will, by definition, not be 
Qualified Mortgages, this section conforms HOEPA to section 206 
by banning prepayment penalties on HOEPA loans. This section 
also revises the balloon payment prohibition in HOEPA to 
provide that no high-cost mortgage may contain a scheduled 
payment that is more than twice as large as the average of 
earlier scheduled payments, unless the payment schedule is 
adjusted to the seasonal or irregular income of the consumer.

Section 303. Additional Requirements for Certain Mortgages

    This section prohibits creditors from encouraging that 
borrowers default on an existing loan or other debt in 
connection with the planned refinancing of all or any portion 
of such existing loan or debt with a high-cost mortgage. This 
section also places amount, timing, frequency, and other 
restrictions on late fees for high-cost mortgages, including by 
prohibiting a creditor from charging more than one fee on the 
same delinquent payment and by capping a late fee at 4 percent 
of the amount of the past-due payment. This section also 
prohibits a creditor from unilaterally accelerating a high-cost 
mortgage, except in cases of default, pursuant to a due-on-sale 
provision, or pursuant to material violation of provisions of 
the loan document not related to the payment schedule. Finally, 
this section prohibits a creditor from directly or indirectly 
financing points and fees for high-cost mortgages if the 
creditor or its affiliate is the noteholder of the note being 
refinanced.
    This section prohibits a creditor from structuring a 
mortgage transaction to evade the HOEPA protections that apply 
to high-cost mortgages, such as by structuring the loan in 
another form or dividing the loan transaction into separate 
parts with intent to evade HOEPA.
    This section prohibits a creditor from charging a consumer 
any fee to modify, renew, extend, or amend a high-cost 
mortgage, or to defer any payment due under the mortgage terms, 
unless such adjustment results in a lower APR on the mortgage 
and the fee amount is comparable to fees imposed for similar 
transactions.
    This section generally prohibits a creditor or servicer 
from charging a fee to any person for informing or transmitting 
to them the payoff amount for a high-cost mortgage and requires 
that payoff balance information be provided within 5 business 
days of the consumer's request. This section includes limited 
exceptions that allow the creditor to charge service fees for 
providing a payoff statement by facsimile or courier service 
(provided that the creditor meets specified requirements) or 
for providing payoff statements to the same consumer more than 
4 times during a calendar year.
    This section prohibits flipping, which is defined as making 
a high-cost mortgage that refinances an existing mortgage when 
the new, high-cost mortgage does not have a net tangible 
benefit, as defined in rules promulgated under Title II, to the 
consumer consider all the circumstances.
    Finally, this section permits a creditor or assignee, prior 
to the institution of any legal action, (1) to correct 
violations and non-bona fide errors within 30 days of the loan 
closing and (2) to correct bona fide errors within 60 days of 
the creditor's discovery or receipt of notification of the 
error. To avoid liability, a creditor must make appropriate 
restitution and make whatever adjustments are necessary to 
either, at the choice of the consumer, make the loan satisfy 
the applicable requirements of TILA (including requirements of 
the Act), or, for a high-cost mortgage, change the terms of the 
loan so that the loan will no longer be a high-cost mortgage.

Section 304. Regulations

    This Federal Reserve Board must publish final regulations 
to implement this title by the effective date of the Act may 
prescribe regulations encouraging or requiring creditors to 
provide consumer mortgage education to prospective customers or 
direct such customers to qualified consumer mortgage education 
or counseling program.

Section 305. Effective date

    The amendments made by this title will take effect at the 
end of the 6-month period beginning on the date of enactment 
and will apply to HOEPA loans for which an application is 
received by a creditor after the end of such period.

                 TITLE IV--OFFICE OF HOUSING COUNSELING

Section 401. Short title

    This section provides that this title may be cited as the 
`Expand and Preserve Home Ownership Through Counseling Act.'

Section 402. Establishment of Office of Housing Counseling

    This section establishes the Office of Housing Counseling, 
headed by a Director of Housing Counseling (Director) appointed 
by the Secretary. The Director will be responsible for all 
homeownership and rental housing counseling programs for HUD, 
and will establish, coordinate and administer all regulations, 
requirements, standards, and performance measures under the 
programs that relate to housing counseling, homeownership 
counseling, mortgage-related counseling, and rental housing 
counseling. The Director shall establish rules for (1) 
counseling procedures, (2) carrying out all other related 
functions, including establishing a toll-free number, (3) 
information booklets, (4) carrying out the certification of 
counseling service providers, (5) providing assistance in the 
provision of counseling services, (6) carrying out functions 
the Secretary deems appropriate with regard to unscrupulous 
lending practices in the home mortgage business, (7) support 
the advisory committee created under this act, (8) collaborate 
with community-based organizations, and (9) provide for 
building capacity to provide housing counseling services in 
areas that lack sufficient services. The Secretary shall 
appoint an advisory committee composed of no more than 12 
individuals representing the mortgage and real estate industry, 
including consumers and housing counseling agencies. Advisory 
committee members appointed by the Secretary will serve 3-year 
terms, except that initially, four will be appointed for 1-year 
terms and four will be appointed for 2-year terms. The 
Secretary may reappoint members at his discretion. Members will 
not be paid, but may receive travel expenses. The advisory 
committee has no role in reviewing or awarding housing 
counseling grants. Counseling services will cover the entire 
process of homeownership, including refinancing and 
foreclosure.
    This section directs the Secretary to establish, 
coordinate, and monitor all HUD counseling procedures, 
including requirements, standards, and performance measures 
that relate to homeownership and rental housing. `Homeownership 
counseling' is defined as counseling related to homeownership 
and residential mortgage loans. `Rental housing counseling' is 
defined as counseling related to rental of residential 
property, which may include counseling regarding future 
homeownership opportunities and providing referral for renters 
and prospective renters to entities providing counseling. The 
Secretary shall establish standards for materials and forms 
used by counseling service providers, and provide for the 
certification of various computer software programs for 
consumers to use in evaluating different residential mortgage 
loan proposals. The mortgage software system shall take into 
account (1) the consumer's financial situation and the cost of 
maintaining a home, including insurance, taxes, and utilities, 
(2) the amount of time the consumer expects to remain in the 
home or expected time to maturity of the loan, and (3) any 
other factors to assist the consumer in making choices during 
the loan application process. The certified software programs 
shall be used to supplement, not replace, housing counseling, 
and the software programs initially will be used only in 
connection with the assistance of certified housing counselors. 
Additionally, the certification program for mortgage software 
systems will be implemented only to the extent that funds are 
made available in advance in appropriations Acts. The Secretary 
shall develop, implement, and conduct national public service 
multimedia campaigns to make potentially vulnerable consumers 
aware of the existence of homeownership counseling. 10 percent 
of the multimedia campaign funds shall be used to distribute 
literature on ways to avoid foreclosure rescue scams, predatory 
lending agreements, for-profit foreclosure counseling services, 
and to provide a list of local HUD-approved counseling 
resources. Appropriations not to exceed $3 million are 
authorized for national public service multimedia campaigns for 
fiscal years 2009, 2010, and 2011. The Secretary shall provide 
advice and technical assistance to States, units of local 
government, and non-profit organizations regarding provisions 
of counseling services.

Section 404. Grants for housing counseling assistance

    This section directs the Secretary to make financial 
assistance available for homeownership or rental counseling to 
HUD-approved counseling agencies and State housing finance 
agencies. The Secretary shall establish standards and 
guidelines for assistance eligibility. Appropriations of $45 
million are authorized for each of fiscal years 2009 through 
2012 for the operations of the Office of Housing Counseling; 
homeownership and rental counseling assistance grants; and the 
establishment of materials and forms standards, computer 
software certification, and the national public service 
multimedia campaigns created in section 403 of the Act. This 
amount is meant to be in addition to the amounts currently 
authorized and appropriated for housing counseling activities. 
In making funds available, the Secretary will consider ways to 
streamline and improve the process for grant application, 
review, approval, and award. No funds under this section may be 
distributed to any organization which has been or which employs 
an individual who has been indicted for a violation under 
Federal law relating to an election for Federal office.

Section 405. Requirements to use HUD-certified counselors under HUD 
        programs

    This section requires any homeownership counseling or 
rental housing counseling administered by HUD to be provided 
solely by organizations or counselors certified by the 
Secretary.

Section 406. Study of defaults and foreclosures

    This section directs the Secretary to submit to Congress 
not later than 12 months after the enactment of the Act a 
preliminary report on the root causes of default and 
foreclosure of home loans and the role of escrow accounts in 
helping prime and nonprime borrowers to avoid defaults and 
foreclosures. No later than 24 months after the enactment of 
the Act, the Secretary will submit a final report regarding the 
results of the study, which will include any recommended 
legislation relating to the study and recommendations for best 
practices and for a process to identify populations that need 
counseling the most.

Section 407. Definitions for counseling-related programs

    This section provides definitions of ``nonprofit 
organization,'' ``State,'' ``unit of general local 
government,'' ``HUD-approved counseling agency,'' and ``State 
housing finance agency.''

Section 408. Updating and simplification of mortgage information 
        booklet

    This section directs the Secretary to prepare a booklet at 
least once every 5 years to help consumers applying for 
federally related mortgage loans to understand the nature and 
costs of real estate settlement services. The Secretary must 
include specific topics in the information booklet in plain and 
understandable language, including explanation of (1) costs 
incident to real estate settlement or Federally related 
mortgage loan (including at a minimum balloon payments, 
prepayment penalties, and trade-off between closing costs and 
the interest rate over the life of the loan); (2) the uniform 
settlement statement; (3) unfair lending practices and 
unreasonable or unnecessary charges to be avoided by the 
prospective buyer with respect to a real estate settlement; (4) 
questions that the consumer should ask about a loan; (5) the 
right of rescission; (6) variable rate mortgages; (7) home 
equity line of credit; (8) the availability and the value of 
homeownership counseling services; (9) escrow accounts; (10) 
available choices for providers of incidental services; (11) 
the buyer's responsibilities, liabilities, and obligations; 
(12) appraisals; and (13) HUD brochure regarding loan fraud.

Section 409. Home inspection counseling.

    This section requires HUD to publish outreach materials in 
both English and Spanish entitled ``For Your Protection: Get a 
Home Inspection'' and ``Ten Important Questions To Ask Your 
Home Inspector''. HUD must make these materials available for 
electronic access and through toll free telephone hotlines and 
public service announcements, and include the materials as part 
of any home purchase counseling.
    HUD is required to make special efforts to reach first-time 
and low-income homebuyers, to require FHA approved mortgagees 
to provide these materials to prospective homebuyers at first 
contact, and to require HUD-approved housing counseling 
agencies to provide this information to clients as part of the 
home purchase counseling process.
    HUD training of HUD-approved housing counseling agencies 
must include information about the home inspection process, 
including the reasons for specific inspections such as radon 
and lead based paint testing.

                      TITLE V--MORTGAGE SERVICING

Section 501. Escrow and impound accounts relating to certain consumer 
        credit transactions

    This section establishes a new section in the Truth in 
Lending Act (TILA) to require that specified first-lien 
mortgages have an escrow account established at the time of 
consummation of the transaction to cover taxes and hazard 
insurance, and, if applicable, mortgage insurance, ground 
rents, and any other required periodic payments or premiums 
with respect to the property or loan terms.
    The instances in which an escrow account must be 
established include (1) when required by Federal or State law; 
(2) when a loan is made, guaranteed, or insured by a State or 
Federal lending or insuring agency; (3) when the rate on the 
first lien on the consumer's principal dwelling, as of the date 
the interest rate is set, exceeds the average prime offer rate 
for a comparable transaction by 1.5 percentage points; or (4) 
when required pursuant to regulation.
    Escrow accounts established pursuant to this section, 
unless the underlying mortgage is terminated, must remain in 
existence for a minimum of 5 years and until the borrower has 
enough equity to no longer meet the requirements of maintaining 
private mortgage insurance, or such other period provided in 
regulations to address situations such as a borrower's 
delinquency. These standards exceed the 12-month period 
provided for in the Federal Reserve Board's 2008 rulemaking 
under the Home Ownership and Equity Protection Act (HOEPA).
    Consistent with the HOEPA rulemaking, a limited exemption 
of the escrow account requirement is provided for loans secured 
by shares in a cooperative and for certain condominium units. 
For mortgages not meeting the specified tests established under 
the law, clarifications are further provided that nothing 
precludes the establishment of an escrow account on terms 
mutually agreeable to the parties to the loan, at the 
discretion of the servicer or lender pursuant to the contract, 
or pursuant to the Flood Disaster Protection Act (FDPA).
    Servicers must administer such accounts in accordance with 
the Real Estate Settlement Procedures Act (RESPA), FDPA, and, 
if applicable, the law of the State where the real property 
securing the transaction is located, including making interest 
payments on the escrow account if required under such laws. The 
account must also be maintained in a federally insured 
depository institution, and the amounts escrowed must reflect 
the actual property value (land and improvements thereto). 
Clarification is also provided that any violation of RESPA for 
a mandated escrow established under TILA does not also result 
in additional penalties under TILA unless the action or 
omission also constitutes a direct violation of TILA.
    Consumers with mortgages covered by this section must also 
receive specific written disclosures about the establishment of 
an escrow account at least 3 business days before loan 
consummation or in accordance with timeframes established in 
prescribed regulations.
    The Federal banking regulators and the Federal Trade 
Commission (FTC) have 180 days to adopt final regulations to 
implement the section. These regulations become effective and 
apply to all covered mortgages beginning one year after the 
publication of final rules.

Section 502. Disclosure notice required for consumers who opt out of 
        escrow services

    This section amends the new section of TILA established by 
section 501 to require all consumers, regardless of whether 
they must have an escrow account established at the time the 
loan is consummated, to receive specified written disclosures 
advising them of the responsibilities of the consumer and 
implications for the consumer in the absence of any such 
account. The Federal banking regulators and the FTC have 180 
days to adopt final regulations to implement these new 
disclosure requirements. These regulations become effective 180 
days after the publication of final rules.

Section 503. Real Estate Settlement Procedures Act of 1974 amendments

    This section updates section 6 of RESPA and establishes new 
consumer protections related to servicer prohibitions, the 
administration of force-placed insurance, increased penalty 
amounts, servicer response times, and escrow account refunds.
            Servicer prohibitions
    The section prohibits mortgage servicers from obtaining 
force-placed hazard insurance unless they have a reasonable 
basis to believe that the borrower has failed to comply with 
the requirement to maintain property insurance. It also bars 
servicers from charging fees for responding to valid qualified 
written requests placed by the borrower, with regulations 
promulgated to determine the interpretation of what constitutes 
a valid qualified written request. The section further 
prohibits mortgage servicers from failing to take timely action 
to respond to a borrower's requests to correct errors relating 
to the allocation of payments, obtain final balances for 
purposes of paying off the loan, or avoid foreclosure.
    The section additionally requires a servicer to respond 
within 10 business days to a request from a borrower to provide 
the identity of and contact information for the owner/assignee 
of the loan. Finally, the section requires servicers to comply 
with any other obligation to protect consumers established by 
the Secretary of the Department of Housing and Urban 
Development (HUD) via rulemaking.
            Force-placed insurance
    The section further establishes a definition for force-
placed insurance.
    The procedures for the forced placement of hazard insurance 
require the servicer initially to send, by first-class mail, a 
written notice with certain disclosures about the need to 
obtain hazard insurance. After at least 30 days, the servicer 
must send a second notice by first-class mail containing the 
same disclosures. The servicer may then force place insurance 
if it has not received demonstration from the borrower in 
writing of any insurance coverage 15 days after sending the 
second notice. The borrower's response must include the 
existing insurance policy number along with the identity of and 
contact information for the insurance company or agent.
    The section requires the servicer to terminate force-placed 
insurance within 15 days of the receipt of confirmation of a 
borrower's existing hazard insurance coverage. The section also 
requires lenders to refund amounts to the consumer for force-
placed insurance that overlap in time with the hazard insurance 
obtained directly by the homeowner. It additionally allows for 
the concurrent administration of notices required by FDPA for 
the forced placement of flood insurance.
    The section additionally requires that all charges for 
force-placed insurance to be bona fide and reasonable in 
amount.
            Increase in penalties
    The section doubles the maximum statutory RESPA penalties 
in individual cases from $1,000 to $2,000, and in class action 
cases from $500,000 to $1,000,000. The changes apply to all 
RESPA violations.
            Response times
    The section mandates decreases in response times to 
qualified written requests made pursuant to RESPA. 
Specifically, these changes require a servicer to acknowledge 
receipt of a qualified written request within 5 days (down from 
20 days) and complete action on the inquiry within 30 days 
(down from 60 days) except that this 30-day period may be 
extended for not more than 15 days if the servicer notifies the 
borrower of the extension within the initial 30-day period and 
details the reasons for the delay in responding.
            Prompt refund of escrow accounts
    The section finally requires the prompt refund of escrow 
accounts that are within the servicer's control within 20 
business days of a loan's payoff. Alternatively, borrowers may 
roll over existing escrowed amounts for a similar account 
established by a new mortgage with the same lender.

Section 504. Truth in Lending Act amendments

    This section amends TILA to require the prompt crediting of 
mortgage payments and the timely provision to consumers of 
mortgage payoff amounts.
            Requirements for prompt crediting of home loan payments
    Consistent with the final HOEPA regulations adopted by the 
Federal Reserve Board in 2008, the section amends TILA to 
require servicers to credit payments made in connection with a 
credit transaction secured by a consumer's principal dwelling 
as of the date of receipt, except when a delay in crediting 
does not result in any charge to the consumer or in the 
reporting of negative information to a consumer reporting 
agency. For consumers who do not follow specified written 
requirements when making payments, an exception is provided to 
require the servicer to credit the payment as of 5 days after 
receipt.
            Requests for payoff amounts
    The section amends TILA to require a creditor or servicer 
of a home loan to send an accurate payoff balance within a 
reasonable time, but in no case more than 7 business days after 
the receipt of a written request for such balance from or on 
behalf of the borrower.

Section 505. Escrows required in repayment analysis

    The section amends TILA to require the inclusion of escrow 
payments for taxes and insurance in any monthly repayment 
analysis provided to consumers. The change will allow all 
consumers to make apples-to-apples comparisons in the mortgage 
quotes they receive and improve consumer understanding of the 
total costs of homeownership.

                     TITLE VI--APPRAISAL ACTIVITIES

Section 601. Property appraisal requirements

    This section modifies TILA to require lenders to obtain a 
written appraisal, resulting from an interior assessment of a 
physical property visit made by a qualified appraiser, of the 
covered property before extending credit in the form of a 
subprime mortgage. If the purpose of the covered mortgage is to 
finance the purchase or acquisition of the mortgaged property 
within 180 days of the purchase or acquisition of such property 
at a price that was lower than the current sale price of the 
property, this section also directs lenders to obtain a second 
appraisal at no cost to the applicant.
    Also, this section entitles covered applicants to 1 free 
copy of each such appraisal provided at least 3 days prior to 
the transaction closing date and requires certain notifications 
about the limits of appraisals. Creditors found to have 
willfully failed to obtain an appraisal for a subprime mortgage 
are liable to the applicant or borrower for the sum of $2,000. 
The section defines a subprime mortgage consistent with metrics 
established by the Federal Reserve Board in its 2008 HOEPA 
rulemaking for first- and subordinate-liens on a residential 
mortgage loan.

Section 602. Unfair and deceptive practices and acts relating to 
        certain consumer transactions

    The section creates a Federal unfair and deceptive 
practices standard for appraisals within TILA, with rules 
written and interpretative guidelines issued by the Federal 
banking regulators and the FTC. Specifically, this section 
prohibits the compensation, coercion, extortion, collusion, 
instruction, inducement, bribing, or intimidation or attempting 
any of the aforementioned activities for the purpose of causing 
the appraised value assigned to the property to be based on any 
fact other than the independent judgment of the appraiser.
    This section further prohibits the mischaracterization of 
an appraised value, efforts to influence an appraiser to hit a 
targeted value, and withholding timely payment for an appraisal 
report. The bar against such withholding, however, is not 
intended to apply when an appraiser has breached the terms of a 
contract in the performance of duties. Exceptions are provided 
to permit valid communications about the property itself, to 
correct errors, and to obtain further detail about the 
appraiser's value conclusion.
    The section additionally creates a statutory requirement 
that certified and licensed appraisers and appraisal management 
companies (AMCs) have no direct or indirect interest, financial 
or otherwise, in either the property or in the transaction 
involving the appraisal. The interest-in-property prohibition 
shall apply equally to both fee-for-service and staff 
appraisers. The interest-in-the-transaction bar, however, 
should not be construed as to prohibit work by staff appraisers 
within a financial institution or other organization, if such 
an entity has established firewalls, consistent with those 
outlined in the Home Valuation Code of Conduct, between the 
origination group and the appraisal unit designed to ensure the 
independence of appraisal results and reviews.
    Moreover, the section establishes a requirement for those 
parties who have a reasonable basis to believe an appraiser is 
violating applicable laws or otherwise engaging in unethical or 
unprofessional conduct to report such matters to the applicable 
State appraisal agency. In addition, the section prohibits a 
creditor from extending credit in connection with a consumer 
credit transaction secured by a consumer's principal dwelling 
if the creditor knows of a violation of appraisal independence 
standards, unless the creditor documents that the creditor has 
acted with reasonable diligence to determine that the appraisal 
does not materially misstate or misrepresent the value of such 
dwelling.
    This section establishes sanctions in addition to those 
already provided under TILA. These penalties are up to $10,000 
for first violations and $20,000 for subsequent violations.

Section 603. Amendments relating to Appraisal Subcommittee of the 
        Financial Institutions Examination Council, appraiser 
        independence, and approved appraiser education

    This section generally supplements, strengthens, and 
modifies the existing appraisal requirements contained in Title 
XI of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (FIRREA).
            Appraisal Subcommittee reforms
    Subsection (a) adds consumer protection to the mission and 
functions of the Appraisal Subcommittee (ASC). The section also 
requires the ASC to monitor the efforts of States and Federal 
banking regulators to protect consumers from improper appraisal 
practices and the predations of unlicensed appraisers in 
mortgage transactions. In order to reconcile this new consumer 
protection mandate with the existing safety-and-soundness 
mission of the ASC, the section amends the criteria and 
procedures by which Federal banking regulators establish the 
threshold below which a written appraisal by a certified or 
licensed appraiser is not required.
    The Federal Reports Elimination and Sunset Act of 1995 
(P.L. 104-66) effectively ended the ASC's annual reporting 
requirement as of May 15, 2000, although the ASC has continued 
in since then to produce such a document for Congress. 
Subsection (b) definitively reinstates the requirement that the 
ASC submit an annual report to Congress. This subsection 
additionally requires the ASC in its annual report to describe 
in greater detail its activities and the work of State 
appraisal agencies. The subsection further requires the ASC to 
provide information about the results of all audits of State 
appraisal agencies and details about disapprovals and warnings 
issued to State appraisal agencies.
    Subsection (c) codifies the decision of the ASC to open its 
meetings to the general public.
    Subsection (d) authorizes the panel to issue binding rules 
and regulations after public notice and opportunity for comment 
in several new areas: temporary practice, national registry, 
information sharing, and enforcement. The term ``enforcement'' 
covers the actions the ASC may take in evaluating State 
appraisal agencies and the gamut of sanctions that the ASC may 
impose against such agencies.
    Subsection (e) statutorily defines what constitutes a 
complex transaction requiring the use of a certified appraiser 
in lieu of a licensed appraiser, consistent with Uniform 
Standards of Professional Appraisal Practice. The subsection 
also requires all appraisals performed at a property within a 
State to be prepared by appraisers licensed or certified in the 
State where the property is located. The subsection 
additionally requires all appraisal reviews by a lender, AMC, 
or other third-party organization to be performed by an 
appraiser who is duly licensed or certified by a State 
appraisal board.
    Subsection (g) requires State appraisal agencies to 
transmit reports on sanctions, disciplinary actions, 
revocations, and suspensions to the ASC on a timely basis. 
These reports apply to both individuals and AMCs.
    To account for inflation since the enactment of FIRREA in 
1989, subsection (h) updates registry fee amounts annually paid 
by licensed and certified appraisers to support the activities 
of the ASC. The subsection additionally establishes a program 
for collecting fees from AMCs to support the additional work of 
the ASC. The subsection further requires the ASC to consider at 
least once every 5 years whether to adjust the dollar amounts 
for inflation and provides administrative flexibility to allow 
for the implementation of such adjustments in fee amounts. The 
incremental revenues raised by the fee increases are placed in 
the Appraisal Subcommittee Account within the U.S. Treasury.
    Subsection (i) allows the ASC to use the amounts placed in 
the Appraisal Subcommittee Account to make grants to State 
appraisal agencies to help defray costs related to the 
complaint process, complaint investigations, and appraiser 
enforcement activities. The ASC may also use this funding to 
provide grants to States for the submission of data. It also 
requires the national registry to report to State appraisal 
agencies when a license or certification is surrendered, 
revoked, or suspended.
    Subsection (k) improves the ability of the ASC to oversee 
State appraisal agencies in a number of ways. First, it adds 
funding and staffing to the list of criteria against which the 
ASC must evaluate a State appraisal agency. It also requires 
the ASC to evaluate whether a State appraisal agency processes 
complaints and completes its examinations in a reasonable time 
period, whether a state appropriately disciplines sanctioned 
appraisers and AMCs, whether a state maintains an effective 
regulatory program, and whether a State appraisal agency 
reports claims and disciplinary actions to the national 
registry on a timely basis. The subsection further permits the 
ASC to impose interim sanctions and suspensions.
    Subsection (n) requires the ASC to monitor each State 
appraisal agency for the purpose of determining whether such 
agency's policies, practices, and procedures are consistent 
with the purpose of maintaining appraiser independence and 
whether such State has adopted and maintains effective laws, 
regulations, and policies aimed at maintaining appraiser 
independence.
    Finally, Subsection (s) expands the membership of the ASC 
to include the Federal Housing Finance Agency. The subsection 
also requires that at all times at least one member of the 
Appraisal Subcommittee shall be a certified or licensed 
appraiser.
            Appraisal management company registration and supervision
    In response to the growth of and concerns about AMCs, 
subsection (f) creates a State-by-State system for registering 
and supervising AMCs, with oversight of the States conducted by 
the ASC, and it generally requires the system to be in place 
within 3 years of enactment. The subsection provides for the 
establishment of minimum standards to be applied in the 
registration of AMCs. The subsection also ensures that those 
who complete appraisal fraud or those who lose their appraisal 
licenses or certifications cannot turn around and establish an 
AMC. The amendment additionally puts in place a parallel 
Federal system of oversight for an AMC that operates as a 
subsidiary of a financial institution overseen by a Federal 
banking regulator. The section also incorporates a definition 
for appraisal management company.
            Appraiser education and licensing
    Subsections (j), (l), (m) and (o) generally make a variety 
of changes to appraiser licensing and educational standards. 
Subsection (j) expands the ability of the ASC to set minimum 
licensing standards for appraisers in addition to its existing 
authority to establish minimum certification standards. The 
subsection also permits the establishment of minimum 
requirements for trainee appraisers and supervisory appraisers.
    Subsection (l) provides for reciprocity in State appraiser 
licenses and certifications. To promote greater professionalism 
and advanced training within the appraisal industry, subsection 
(m) codifies language now found in the selling guides for 
government-sponsored enterprises to allow for special 
consideration of appraisers who have obtained special 
designations or training from professional appraisal 
organizations. Finally, subsection (o) requires the ASC to 
encourage State appraisal agencies to accept courses and 
seminars approved by the Appraiser Qualification Board's Course 
Approval Program for educational training requirements.
            Appraisal complaint national hotline
    If no national hotline exists to receive complaints about 
non-compliance with appraisal independence standards within one 
year of enactment, subsection (p) requires the ASC to put in 
place a national hotline, which shall consist of a toll-free 
phone number and an e-mail address. The ASC must refer 
complaints received by the national hotline to the appropriate 
State or Federal regulator, or other appropriate legal 
authorities. In order to determine the status of the resolution 
of the complaint, the subsection also provides the ASC with the 
authority to follow up on referrals made to State appraisal 
agencies and Federal banking regulators.
    The Committee intends that the ASC will not need to 
establish a national hotline if the national hotline provided 
for in the Home Valuation Code of Conduct becomes operative 
within the 1 year after enactment timeframe established under 
the Act. If, however, such a national hotline ceases to exist, 
then the ASC will establish and maintain a national hotline at 
that point in time.
            Automated valuation model quality control standards
    To enhance confidence in the results produced by automated 
valuation models used to develop estimates of home values, 
subsection (q) establishes minimum standards and requires the 
development and enforcement of rules by Federal banking 
regulators and the Appraisal Subcommittee.
            Broker price opinion limitations
    To address concerns about the quality of home value 
estimates developed by real estate brokers that are used for 
collateral purposes, subsection (r) codifies a policy recently 
adopted by Freddie Mac to prohibit the use of broker price 
opinions as a sole method for determining the value of a 
purchase mortgage loan.
            Technical corrections
    Subsection (t) makes several technical corrections to title 
XI of FIRREA to fix drafting errors.

Section 604. Study required on improvements in appraisal process and 
        compliance programs

    This section requires the Comptroller General to conduct a 
comprehensive study within 18 months of enactment of this Act 
on possible improvements in the appraisal process generally, 
and on the consistency in, the effectiveness of, and possible 
improvements to State compliance efforts and programs in 
accordance with FIRREA specifically. The study by the 
Government Accountability Office will also examine current 
exemptions to the use of certified appraisers issued by the 
Federal banking regulators and, in light of the new consumer 
protection mission of the ASC, explore the existing threshold 
levels below which Federal banking regulators do not require a 
written appraisal.
    The section also requires a review of the quality of 
appraisals produced through different mechanisms and different 
distribution channels. It additionally mandates an analysis and 
statistical breakdown of the enforcement actions taken during 
the last decade against different types of appraisers. Finally, 
the study must examine the need to create a national repository 
to collect data related to real estate property collateral 
valuations performed in the United States.

Section 605. Equal Credit Opportunity Act amendment

    This section amends the Equal Credit Opportunity Act to 
provide mortgage applicants with access to a written appraisal 
report no later than 3 days before closing. This set of changes 
is generally consistent with the requirements of the Home 
Valuation Code of Conduct. The section also requires creditors 
to provide applicants with access to any other valuation report 
developed in conjunction with a mortgage transaction.

Section 606. Real Estate Settlement Procedures Act of 1974 amendment 
        relating to certain appraisal fees

    This section modifies RESPA to require the disclosure to 
consumers of the fees paid to licensed and certified 
appraisers, as well the fees paid to AMCs. These disclosures 
will help interested parties, including Federal and State 
regulators and other appropriate authorities, to make better 
determinations about the quality of appraisals facilitated by 
an AMC.

  TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT 
                      SPONSORED ENTERPRISES REFORM

Section 701. Sense of Congress regarding the importance of Government-
        sponsored enterprises reform to enhance the protection, 
        limitation and regulation of the terms of residential mortgage 
        credit

    This section provides findings and a sense of Congress that 
efforts to enhance by the protection, limitation, and 
regulation of the terms of residential mortgage credit and the 
practices related to such credit would be incomplete without 
enactment of meaningful structural reforms of Fannie Mae and 
Freddie Mac.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TRUTH IN LENDING ACT

           *       *       *       *       *       *       *

TITLE I--CONSUMER CREDIT COST DISCLOSURE

           *       *       *       *       *       *       *

CHAPTER 1--GENERAL PROVISIONS

           *       *       *       *       *       *       *

Sec. 103. Definitions and rules of construction

  (a) * * *

           *       *       *       *       *       *       *

  [(aa)(1) A mortgage referred to in this subsection means a 
consumer credit transaction that is secured by the consumer's 
principal dwelling, other than a residential mortgage 
transaction, a reverse mortgage transaction, or a transaction 
under an open end credit plan, if--
          [(A) the annual percentage rate at consummation of 
        the transaction will exceed by more than 10 percentage 
        points the yield on Treasury securities having 
        comparable periods of maturity on the fifteenth day of 
        the month immediately preceding the month in which the 
        application for the extension of credit is received by 
        the creditor; or
          [(B) the total points and fees payable by the 
        consumer at or before closing will exceed the greater 
        of--
                  [(i) 8 percent of the total loan amount; or
                  [(ii) $400.]
  (aa) High-Cost Mortgage.--
          (1) Definition.--
                  (A) In general.--The term ``high-cost 
                mortgage'', and a mortgage referred to in this 
                subsection, means a consumer credit transaction 
                that is secured by the consumer's principal 
                dwelling, other than a reverse mortgage 
                transaction, if--
                          (i) in the case of a credit 
                        transaction secured--
                                  (I) by a first mortgage on 
                                the consumer's principal 
                                dwelling, the annual percentage 
                                rate at consummation of the 
                                transaction will exceed by more 
                                than 6.5 percentage points (8.5 
                                percentage points, if the 
                                dwelling is personal property 
                                and the transaction is for less 
                                than $50,000) the average prime 
                                offer rate, as defined in 
                                section 129C(c)(2)(B), for a 
                                comparable transaction; or
                                  (II) by a subordinate or 
                                junior mortgage on the 
                                consumer's principal dwelling, 
                                the annual percentage rate at 
                                consummation of the transaction 
                                will exceed by more than 8.5 
                                percentage points the average 
                                prime offer rate, as defined in 
                                section 129C(c)(2)(B), for a 
                                comparable transaction;
                          (ii) the total points and fees 
                        payable in connection with the 
                        transaction exceed--
                                  (I) in the case of a 
                                transaction for $20,000 or 
                                more, 5 percent of the total 
                                transaction amount; or
                                  (II) in the case of a 
                                transaction for less than 
                                $20,000, the lesser of 8 
                                percent of the total 
                                transaction amount or $1,000 
                                (or such other dollar amount as 
                                the Board shall prescribe by 
                                regulation); or
                          (iii) the credit transaction 
                        documents permit the creditor to charge 
                        or collect prepayment fees or penalties 
                        more than 36 months after the 
                        transaction closing or such fees or 
                        penalties exceed, in the aggregate, 
                        more than 2 percent of the amount 
                        prepaid.
                  (B) Introductory rates taken into account.--
                For purposes of subparagraph (A)(i), the annual 
                percentage rate of interest shall be determined 
                based on the following interest rate:
                          (i) In the case of a fixed-rate 
                        transaction in which the annual 
                        percentage rate will not vary during 
                        the term of the loan, the interest rate 
                        in effect on the date of consummation 
                        of the transaction.
                          (ii) In the case of a transaction in 
                        which the rate of interest varies 
                        solely in accordance with an index, the 
                        interest rate determined by adding the 
                        index rate in effect on the date of 
                        consummation of the transaction to the 
                        maximum margin permitted at any time 
                        during the transaction agreement.
                          (iii) In the case of any other 
                        transaction in which the rate may vary 
                        at any time during the term of the loan 
                        for any reason, the interest charged on 
                        the transaction at the maximum rate 
                        that may be charged during the term of 
                        the transaction.
  (2)(A) * * *
  [(B) An increase or decrease under subparagraph (A) may not 
result in the number of percentage points referred to in 
subparagraph (A) being--
          [(i) less that 8 percentage points; or
          [(ii) greater than 12 percentage points.]
          (B) An increase or decrease under subparagraph (A)--
                  (i) may not result in the number of 
                percentage points referred to in paragraph 
                (1)(A)(i)(I) being less than 6 percentage 
                points or greater than 10 percentage points; 
                and
                  (ii) may not result in the number of 
                percentage points referred to in paragraph 
                (1)(A)(i)(II) being less than 8 percentage 
                points or greater than 12 percentage points.

           *       *       *       *       *       *       *

  (4) For purposes of paragraph (1)(B), points and fees shall 
include--
          (A) * * *
          [(B) all compensation paid to mortgage brokers;]
          (B) all compensation paid directly or indirectly by a 
        consumer or creditor to a mortgage broker from any 
        source, including a mortgage originator that originates 
        a loan in the name of the originator in a table-funded 
        transaction;
          (C) each of the charges listed in section 106(e) 
        (except an escrow for future payment of taxes), 
        unless--
                  (i) * * *
                  (ii) the creditor receives no direct or 
                indirect compensation except where applied to 
                the charges set forth in section 106(e)(1) 
                where a creditor may receive indirect 
                compensation solely as a result of obtaining 
                distributions of profits from an affiliated 
                entity based on its ownership interest in 
                compliance with section 8(c)(4) of the Real 
                Estate Settlement Procedures Act of 1974; and
                  (iii) the charge is paid to a third party 
                unaffiliated with the creditor[; and], except 
                as provided for in clause (ii);
          (D) premiums or other charges payable at or before 
        closing for any credit life, credit disability, credit 
        unemployment, or credit property insurance, or any 
        other accident, loss-of-income, life or health 
        insurance, or any payments directly or indirectly for 
        any debt cancellation or suspension agreement or 
        contract, except that insurance premiums or debt 
        cancellation or suspension fees calculated and paid in 
        full on a monthly basis shall not be considered 
        financed by the creditor;
          (E) except as provided in subsection (cc), the 
        maximum prepayment fees and penalties which may be 
        charged or collected under the terms of the credit 
        transaction;
          (F) all prepayment fees or penalties that are 
        incurred by the consumer if the loan refinances a 
        previous loan made or currently held by the same 
        creditor or an affiliate of the creditor; and
          [(D)] (G) such other charges as the Board determines 
        to be appropriate.
          (5) Calculation of points and fees for open-end 
        consumer credit plans.--In the case of open-end 
        consumer credit plans, points and fees shall be 
        calculated, for purposes of this section and section 
        129, by adding the total points and fees known at or 
        before closing, including the maximum prepayment 
        penalties which may be charged or collected under the 
        terms of the credit transaction, plus the minimum 
        additional fees the consumer would be required to pay 
        to draw down an amount equal to the total credit line.
  [(5)] (6) This subsection shall not be construed to limit the 
rate of interest or the finance charge that a person may charge 
a consumer for any extension of credit.

           *       *       *       *       *       *       *

  (cc) Definitions Relating to Mortgage Origination and 
Residential Mortgage Loans.--
          (1) Commission.--Unless otherwise specified, the term 
        ``Commission'' means the Federal Trade Commission.
          (2) Federal banking agencies.--The term ``Federal 
        banking agencies'' means the Board of Governors of the 
        Federal Reserve System, the Comptroller of the 
        Currency, the Director of the Office of Thrift 
        Supervision, the Federal Deposit Insurance Corporation, 
        and the National Credit Union Administration Board.
          (3) Mortgage originator.--The term ``mortgage 
        originator''--
                  (A) means any person who, for direct or 
                indirect compensation or gain, or in the 
                expectation of direct or indirect compensation 
                or gain--
                          (i) takes a residential mortgage loan 
                        application;
                          (ii) assists a consumer in obtaining 
                        or applying to obtain a residential 
                        mortgage loan; or
                          (iii) offers or negotiates terms of a 
                        residential mortgage loan;
                  (B) includes any person who represents to the 
                public, through advertising or other means of 
                communicating or providing information 
                (including the use of business cards, 
                stationery, brochures, signs, rate lists, or 
                other promotional items), that such person can 
                or will provide any of the services or perform 
                any of the activities described in subparagraph 
                (A);
                  (C) does not include any person who is (i) 
                not otherwise described in subparagraph (A) or 
                (B) and who performs purely administrative or 
                clerical tasks on behalf of a person who is 
                described in any such subparagraph, or (ii) an 
                employee of a retailer of manufactured homes 
                who is not described in clause (i) or (iii) of 
                subparagraph (A);
                  (D) does not include a person or entity that 
                only performs real estate brokerage activities 
                and is licensed or registered in accordance 
                with applicable State law, unless such person 
                or entity is compensated for performing such 
                brokerage activities by a lender, a mortgage 
                broker, or other mortgage originator or by any 
                agent of such lender, mortgage broker, or other 
                mortgage originator; and
                  (E) does not include, with respect to a 
                residential mortgage loan, a person, estate, or 
                trust that provides mortgage financing for the 
                sale of 1 property in any 36 month period, 
                provided that such loan--
                          (i) is fully amortizing;
                          (ii) is with respect to a sale for 
                        which the seller determines in good 
                        faith and documents that the buyer has 
                        a reasonable ability to repay the loan;
                          (iii) has a fixed rate or an 
                        adjustable rate that is adjustable 
                        after 5 or more years, subject to 
                        reasonable annual and lifetime 
                        limitations on interest rate increases; 
                        and
                          (iv) meets any other criteria the 
                        Federal banking agencies may prescribe.
          (4) Nationwide mortgage licensing system and 
        registry.--The term ``Nationwide Mortgage Licensing 
        System and Registry'' has the same meaning as in the 
        Secure and Fair Enforcement for Mortgage Licensing Act 
        of 2008.
          (5) Other definitions relating to mortgage 
        originator.--For purposes of this subsection, a person 
        ``assists a consumer in obtaining or applying to obtain 
        a residential mortgage loan'' by, among other things, 
        advising on residential mortgage loan terms (including 
        rates, fees, and other costs), preparing residential 
        mortgage loan packages, or collecting information on 
        behalf of the consumer with regard to a residential 
        mortgage loan.
          (6) Residential mortgage loan.--The term 
        ``residential mortgage loan'' means any consumer credit 
        transaction that is secured by a mortgage, deed of 
        trust, or other equivalent consensual security interest 
        on a dwelling or on residential real property that 
        includes a dwelling, other than a consumer credit 
        transaction under an open end credit plan or a reverse 
        mortgage or, for purposes of sections 129B and 129C and 
        section 128(a)(16), (17), and (18), 128(a)(f) and 
        128(b)(4) and any regulations promulgated thereunder, 
        an extension of credit relating to a plan described in 
        section 101(53D) of title 11, United States Code.
          (7) Secretary.--The term ``Secretary'', when used in 
        connection with any transaction or person involved with 
        a residential mortgage loan, means the Secretary of 
        Housing and Urban Development.
          (8) Securitization vehicle.--The term 
        ``securitization vehicle'' means a trust, corporation, 
        partnership, limited liability entity, special purpose 
        entity, or other structure that--
                  (A) is the issuer, or is created by the 
                issuer, of mortgage pass-through certificates, 
                participation certificates, mortgage-backed 
                securities, or other similar securities backed 
                by a pool of assets that includes residential 
                mortgage loans; and
                  (B) holds such loans.
          (9) Securitizer.--The term ``securitizer'' means the 
        person that transfers, conveys, or assigns, or causes 
        the transfer, conveyance, or assignment of, residential 
        mortgage loans, including through a special purpose 
        vehicle, to any securitization vehicle, excluding any 
        trustee that holds such loans solely for the benefit of 
        the securitization vehicle.
          (10) Servicer.--The term ``servicer'' has the same 
        meaning as in section 6(i)(2) of the Real Estate 
        Settlement Procedures Act of 1974.
  (dd) Bona Fide Discount Points and Prepayment Penalties.--For 
the purposes of determining the amount of points and fees for 
purposes of subsection (aa), either the amounts described in 
paragraph (1) or (4) of the following paragraphs, but not both, 
may be excluded:
          (1) Exclusion of bona fide discount points.--The 
        discount points described in 1 of the following 
        subparagraphs shall be excluded from determining the 
        amounts of points and fees with respect to a high-cost 
        mortgage for purposes of subsection (aa):
                  (A) Up to and including 2 bona fide discount 
                points payable by the consumer in connection 
                with the mortgage, but only if the interest 
                rate from which the mortgage's interest rate 
                will be discounted does not exceed by more than 
                1 percentage point (i) the required net yield 
                for a 90-day standard mandatory delivery 
                commitment for a reasonably comparable loan 
                from either the Federal National Mortgage 
                Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater, or (ii) if 
                secured by a personal property loan, the 
                average rate on a loan in connection with which 
                insurance is provided under title I of the 
                National Housing Act (12 U.S.C. 1702 et seq.).
                  (B) Unless 2 bona fide discount points have 
                been excluded under subparagraph (A), up to and 
                including 1 bona fide discount point payable by 
                the consumer in connection with the mortgage, 
                but only if the interest rate from which the 
                mortgage's interest rate will be discounted 
                does not exceed by more than 2 percentage 
                points (i) the required net yield for a 90-day 
                standard mandatory delivery commitment for a 
                reasonably comparable loan from either the 
                Federal National Mortgage Association or the 
                Federal Home Loan Mortgage Corporation, 
                whichever is greater, or (ii) if secured by a 
                personal property loan, the average rate on a 
                loan in connection with which insurance is 
                provided under title I of the National Housing 
                Act (12 U.S.C. 1702 et seq.).
          (2) Definition.--For purposes of paragraph (1), the 
        term ``bona fide discount points'' means loan discount 
        points which are knowingly paid by the consumer for the 
        purpose of reducing, and which in fact result in a bona 
        fide reduction of, the interest rate or time-price 
        differential applicable to the mortgage.
          (3) Exception for interest rate reductions 
        inconsistent with industry norms.--Paragraph (1) shall 
        not apply to discount points used to purchase an 
        interest rate reduction unless the amount of the 
        interest rate reduction purchased is reasonably 
        consistent with established industry norms and 
        practices for secondary mortgage market transactions.

           *       *       *       *       *       *       *

Sec. 108. Administrative enforcement

  (a) Compliance with the requirements imposed under this title 
shall be enforced under
          (1) * * *

           *       *       *       *       *       *       *

          (7) sections 21B and 21C of the Securities Exchange 
        Act of 1934, in the case of a broker or dealer, other 
        than a depository institution, by the Securities and 
        Exchange Commission.

           *       *       *       *       *       *       *

                     CHAPTER 2--CREDIT TRANSACTIONS

Sec.
121. General requirement of disclosure.
     * * * * * * *
128A. Reset of hybrid adjustable rate mortgages.
     * * * * * * *
129A. Fiduciary duty of servicers of pooled residential mortgages.
129B. Residential mortgage loan origination.
129C. Minimum standards for residential mortgage loans.
129D. Escrow or impound accounts relating to certain consumer credit 
          transactions.
129E. Unfair and deceptive practices and acts relating to certain 
          consumer credit transactions.
129F. Requirements for prompt crediting of home loan payments.
129G. Requests for payoff amounts of home loan.

           *       *       *       *       *       *       *

Sec. 128. Consumer credit not under open end credit plans

  (a) For each consumer credit transaction other than under an 
open end credit plan, the creditor shall disclose each of the 
following items, to the extent applicable:
          (1) * * *

           *       *       *       *       *       *       *

          (16) In the case of a variable rate residential 
        mortgage loan for which an escrow or impound account 
        will be established for the payment of all applicable 
        taxes, insurance, and assessments--
                  (A) the amount of initial monthly payment due 
                under the loan for the payment of principal and 
                interest, and the amount of such initial 
                monthly payment including the monthly payment 
                deposited in the account for the payment of all 
                applicable taxes, insurance, and assessments; 
                and
                  (B) the amount of the fully indexed monthly 
                payment due under the loan for the payment of 
                principal and interest, and the amount of such 
                fully indexed monthly payment including the 
                monthly payment deposited in the account for 
                the payment of all applicable taxes, insurance, 
                and assessments.
          (17) In the case of a residential mortgage loan, the 
        aggregate amount of settlement charges for all 
        settlement services provided in connection with the 
        loan, the amount of charges that are included in the 
        loan and the amount of such charges the borrower must 
        pay at closing, the approximate amount of the wholesale 
        rate of funds in connection with the loan, and the 
        aggregate amount of other fees or required payments in 
        connection with the loan.
          (18) In the case of a residential mortgage loan, the 
        aggregate amount of fees paid to the mortgage 
        originator in connection with the loan, the amount of 
        such fees paid directly by the consumer, and any 
        additional amount received by the originator from the 
        creditor.
  (b)(1) * * *

           *       *       *       *       *       *       *

          (4) Residential mortgage loan disclosures.--In the 
        case of a residential mortgage loan, the information 
        required to be disclosed under subsection (a) with 
        respect to such loan shall be disclosed before the 
        earlier of--
                  (A) the time required under the first 
                sentence of paragraph (1); or
                  (B) the end of the 3-business-day period 
                beginning on the date the application for the 
                loan from a consumer is received by the 
                creditor.
          (5) Repayment analysis required to include escrow 
        payments.--
                  (A) In general.--In the case of any consumer 
                credit transaction secured by a first mortgage 
                or lien on the principal dwelling of the 
                consumer, other than a consumer credit 
                transaction under an open end credit plan or a 
                reverse mortgage, for which an impound, trust, 
                or other type of account has been or will be 
                established in connection with the transaction 
                for the payment of property taxes, hazard and 
                flood (if any) insurance premiums, or other 
                periodic payments or premiums with respect to 
                the property, the information required to be 
                provided under subsection (a) with respect to 
                the number, amount, and due dates or period of 
                payments scheduled to repay the total of 
                payments shall take into account the amount of 
                any monthly payment to such account for each 
                such repayment in accordance with section 
                10(a)(2) of the Real Estate Settlement 
                Procedures Act of 1974.
                  (B) Assessment value.--The amount taken into 
                account under subparagraph (A) for the payment 
                of property taxes, hazard and flood (if any) 
                insurance premiums, or other periodic payments 
                or premiums with respect to the property shall 
                reflect the taxable assessed value of the real 
                property securing the transaction after the 
                consummation of the transaction, including the 
                value of any improvements on the property or to 
                be constructed on the property (whether or not 
                such construction will be financed from the 
                proceeds of the transaction), if known, and the 
                replacement costs of the property for hazard 
                insurance, in the initial year after the 
                transaction.

           *       *       *       *       *       *       *

  (f) Periodic Statements for Residential Mortgage Loans.--
          (1) In general.--The creditor, assignee, or servicer 
        with respect to any residential mortgage loan shall 
        transmit to the obligor, for each billing cycle, a 
        statement setting forth each of the following items, to 
        the extent applicable, in a conspicuous and prominent 
        manner:
                  (A) The amount of the principal obligation 
                under the mortgage.
                  (B) The current interest rate in effect for 
                the loan.
                  (C) The date on which the interest rate may 
                next reset or adjust.
                  (D) The amount of any prepayment fee to be 
                charged, if any.
                  (E) A description of any late payment fees.
                  (F) A telephone number and electronic mail 
                address that may be used by the obligor to 
                obtain information regarding the mortgage.
                  (G) Such other information as the Board may 
                prescribe in regulations.
          (2) Development and use of standard form.--The 
        Federal banking agencies shall jointly develop and 
        prescribe a standard form for the disclosure required 
        under this subsection, taking into account that the 
        statements required may be transmitted in writing or 
        electronically.

Sec. 128A. Reset of hybrid adjustable rate mortgages

  (a) Hybrid Adjustable Rate Mortgages Defined.--For purposes 
of this section, the term ``hybrid adjustable rate mortgage'' 
means a consumer credit transaction secured by the consumer's 
principal residence with a fixed interest rate for an 
introductory period that adjusts or resets to a variable 
interest rate after such period.
  (b) Notice of Reset and Alternatives.--During the 1-month 
period that ends 6 months before the date on which the interest 
rate in effect during the introductory period of a hybrid 
adjustable rate mortgage adjusts or resets to a variable 
interest rate or, in the case of such an adjustment or 
resetting that occurs within the first 6 months after 
consummation of such loan, at consummation, the creditor or 
servicer of such loan shall provide a written notice, separate 
and distinct from all other correspondence to the consumer, 
that includes the following:
          (1) Any index or formula used in making adjustments 
        to or resetting the interest rate and a source of 
        information about the index or formula.
          (2) An explanation of how the new interest rate and 
        payment would be determined, including an explanation 
        of how the index was adjusted, such as by the addition 
        of a margin.
          (3) A good faith estimate, based on accepted industry 
        standards, of the creditor or servicer of the amount of 
        the monthly payment that will apply after the date of 
        the adjustment or reset, and the assumptions on which 
        this estimate is based.
          (4) A list of alternatives consumers may pursue 
        before the date of adjustment or reset, and 
        descriptions of the actions consumers must take to 
        pursue these alternatives, including--
                  (A) refinancing;
                  (B) renegotiation of loan terms;
                  (C) payment forbearances; and
                  (D) pre-foreclosure sales.
          (5) The names, addresses, telephone numbers, and 
        Internet addresses of counseling agencies or programs 
        reasonably available to the consumer that have been 
        certified or approved and made publicly available by 
        the Secretary of Housing and Urban Development or a 
        State housing finance authority (as defined in section 
        1301 of the Financial Institutions Reform, Recovery, 
        and Enforcement Act of 1989).
          (6) The address, telephone number, and Internet 
        address for the State housing finance authority (as so 
        defined) for the State in which the consumer resides.

SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.

  (a) * * *

           *       *       *       *       *       *       *

  (c) No Prepayment Penalty.--
          (1) * * *
          [(2) Exception.--Notwithstanding paragraph (1), a 
        mortgage referred to in section 103(aa) may contain a 
        prepayment penalty (including terms calculating a 
        refund by a method that is not prohibited under section 
        933(b) of the Housing and Community Development Act of 
        1992 for the transaction in question) if--
                  [(A) at the time the mortgage is 
                consummated--
                          [(i) the consumer is not liable for 
                        an amount of monthly indebtedness 
                        payments (including the amount of 
                        credit extended or to be extended under 
                        the transaction) that is greater than 
                        50 percent of the monthly gross income 
                        of the consumer; and
                          [(ii) the income and expenses of the 
                        consumer are verified by a financial 
                        statement signed by the consumer, by a 
                        credit report, and in the case of 
                        employment income, by payment records 
                        or by verification from the employer of 
                        the consumer (which verification may be 
                        in the form of a copy of a pay stub or 
                        other payment record supplied by the 
                        consumer);
                  [(B) the penalty applies only to a prepayment 
                made with amounts obtained by the consumer by 
                means other than a refinancing by the creditor 
                under the mortgage, or an affiliate of that 
                creditor;
                  [(C) the penalty does not apply after the end 
                of the 5-year period beginning on the date on 
                which the mortgage is consummated; and
                  [(D) the penalty is not prohibited under 
                other applicable law.]

           *       *       *       *       *       *       *

  [(e) No Balloon Payments.--A mortgage referred to in section 
103(aa) having a term of less than 5 years may not include 
terms under which the aggregate amount of the regular periodic 
payments would not fully amortize the outstanding principal 
balance.]
  (e) No Balloon Payments.--No high-cost mortgage may contain a 
scheduled payment that is more than twice as large as the 
average of earlier scheduled payments. This subsection shall 
not apply when the payment schedule is adjusted to the seasonal 
or irregular income of the consumer.

           *       *       *       *       *       *       *

  (j) Recommended Default.--No creditor shall recommend or 
encourage default on an existing loan or other debt prior to 
and in connection with the closing or planned closing of a 
high-cost mortgage that refinances all or any portion of such 
existing loan or debt.
  (k) Late Fees.--
          (1) In general.--No creditor may impose a late 
        payment charge or fee in connection with a high-cost 
        mortgage--
                  (A) in an amount in excess of 4 percent of 
                the amount of the payment past due;
                  (B) unless the loan documents specifically 
                authorize the charge or fee;
                  (C) before the end of the 15-day period 
                beginning on the date the payment is due, or in 
                the case of a loan on which interest on each 
                installment is paid in advance, before the end 
                of the 30-day period beginning on the date the 
                payment is due; or
                  (D) more than once with respect to a single 
                late payment.
          (2) Coordination with subsequent late fees.--If a 
        payment is otherwise a full payment for the applicable 
        period and is paid on its due date or within an 
        applicable grace period, and the only delinquency or 
        insufficiency of payment is attributable to any late 
        fee or delinquency charge assessed on any earlier 
        payment, no late fee or delinquency charge may be 
        imposed on such payment.
          (3) Failure to make installment payment.--If, in the 
        case of a loan agreement the terms of which provide 
        that any payment shall first be applied to any past due 
        principal balance, the consumer fails to make an 
        installment payment and the consumer subsequently 
        resumes making installment payments but has not paid 
        all past due installments, the creditor may impose a 
        separate late payment charge or fee for any principal 
        due (without deduction due to late fees or related 
        fees) until the default is cured.
  (l) Acceleration of Debt.--No high-cost mortgage may contain 
a provision which permits the creditor, in its sole discretion, 
to accelerate the indebtedness. This provision shall not apply 
when repayment of the loan has been accelerated by default, 
pursuant to a due-on-sale provision, or pursuant to a material 
violation of some other provision of the loan documents 
unrelated to the payment schedule.
  (m) Restriction on Financing Points and Fees.--No creditor 
may directly or indirectly finance, in connection with any 
high-cost mortgage, any of the following:
          (1) Any prepayment fee or penalty payable by the 
        consumer in a refinancing transaction if the creditor 
        or an affiliate of the creditor is the noteholder of 
        the note being refinanced.
          (2) Any points or fees.
  [(j)] (n) Consequence of Failure To Comply.--Any mortgage 
that contains a provision prohibited by this section shall be 
deemed a failure to deliver the material disclosures required 
under this title, for the purpose of section 125.
  [(k)] (o) Definition.--For purposes of this section, the term 
``affiliate'' has the same meaning as in section 2(k) of the 
Bank Holding Company Act of 1956.
  [(l)] (p) Discretionary Regulatory Authority of Board.--
          (1) * * *
          (2) Prohibitions.--The Board, by regulation or order, 
        shall prohibit acts or practices in connection with--
                  (A) mortgage loans referred to in section 
                103(aa) that the Board finds to be unfair, 
                deceptive, or designed to evade the provisions 
                of this section; and
                  (B) refinancing of mortgage loans referred to 
                in section 103(aa) that the Board finds to be 
                associated with abusive lending practices, or 
                that are otherwise not in the interest of the 
                borrower.
  (q) Prohibitions on Evasions, Structuring of Transactions, 
and Reciprocal Arrangements.--A creditor may not take any 
action in connection with a high-cost mortgage--
          (1) to structure a loan transaction as an open-end 
        credit plan or another form of loan for the purpose and 
        with the intent of evading the provisions of this 
        title; or
          (2) to divide any loan transaction into separate 
        parts for the purpose and with the intent of evading 
        provisions of this title.
  (r) Modification and Deferral Fees Prohibited.--A creditor 
may not charge a consumer any fee to modify, renew, extend, or 
amend a high-cost mortgage, or to defer any payment due under 
the terms of such mortgage, unless the modification, renewal, 
extension or amendment results in a lower annual percentage 
rate on the mortgage for the consumer and then only if the 
amount of the fee is comparable to fees imposed for similar 
transactions in connection with consumer credit transactions 
that are secured by a consumer's principal dwelling and are not 
high-cost mortgages.
  (s) Payoff Statement.--
          (1) Fees.--
                  (A) In general.--Except as provided in 
                subparagraph (B), no creditor or servicer may 
                charge a fee for informing or transmitting to 
                any person the balance due to pay off the 
                outstanding balance on a high-cost mortgage.
                  (B) Transaction fee.--When payoff information 
                referred to in subparagraph (A) is provided by 
                facsimile transmission or by a courier service, 
                a creditor or servicer may charge a processing 
                fee to cover the cost of such transmission or 
                service in an amount not to exceed an amount 
                that is comparable to fees imposed for similar 
                services provided in connection with consumer 
                credit transactions that are secured by the 
                consumer's principal dwelling and are not high-
                cost mortgages.
                  (C) Fee disclosure.--Prior to charging a 
                transaction fee as provided in subparagraph 
                (B), a creditor or servicer shall disclose that 
                payoff balances are available for free pursuant 
                to subparagraph (A).
                  (D) Multiple requests.--If a creditor or 
                servicer has provided payoff information 
                referred to in subparagraph (A) without charge, 
                other than the transaction fee allowed by 
                subparagraph (B), on 4 occasions during a 
                calendar year, the creditor or servicer may 
                thereafter charge a reasonable fee for 
                providing such information during the remainder 
                of the calendar year.
          (2) Prompt delivery.--Payoff balances shall be 
        provided within 5 business days after receiving a 
        request by a consumer or a person authorized by the 
        consumer to obtain such information.
          (3) Services considered assignee.--For the purposes 
        of this subsection, a servicer shall be considered an 
        assignee under the Truth in Lending Act.
  (t) Pre-Loan Counseling.--
          (1) In general.--A creditor may not extend credit to 
        a consumer under a high-cost mortgage without first 
        receiving certification from a counselor that is 
        approved by the Secretary of Housing and Urban 
        Development, or at the discretion of the Secretary, a 
        State housing finance authority, that the consumer has 
        received counseling on the advisability of the 
        mortgage. Such counselor shall not be employed by the 
        creditor or an affiliate of the creditor or be 
        affiliated with the creditor.
          (2) Disclosures required prior to counseling.--No 
        counselor may certify that a consumer has received 
        counseling on the advisability of the high-cost 
        mortgage unless the counselor can verify that the 
        consumer has received each statement required (in 
        connection with such loan) by this section or the Real 
        Estate Settlement Procedures Act of 1974 with respect 
        to the transaction.
          (3) Regulations.--The Board may prescribe such 
        regulations as the Board determines to be appropriate 
        to carry out the requirements of paragraph (1).
  (u) Flipping.--
          (1) In general.--No creditor may knowingly or 
        intentionally engage in the unfair act or practice of 
        flipping in connection with a high-cost mortgage.
          (2) Flipping defined.--For purposes of this 
        subsection, the term ``flipping'' means the making of a 
        loan or extension of credit in the form a high-cost 
        mortgage to a consumer which refinances an existing 
        mortgage when the new loan or extension of credit does 
        not have reasonable, net tangible benefit (as 
        determined in accordance with regulations prescribed 
        under section 129C(b)) to the consumer considering all 
        of the circumstances, including the terms of both the 
        new and the refinanced loans or credit, the cost of the 
        new loan or credit, and the consumer's circumstances.
  (v) Corrections and Unintentional Violations.--A creditor or 
assignee in a high cost loan who, when acting in good faith, 
fails to comply with any requirement under this section will 
not be deemed to have violated such requirement if the creditor 
or assignee establishes that either--
          (1) within 30 days of the loan closing and prior to 
        the institution of any action, the consumer is notified 
        of or discovers the violation, appropriate restitution 
        is made, and whatever adjustments are necessary are 
        made to the loan to either, at the choice of the 
        consumer--
                  (A) make the loan satisfy the requirements of 
                this chapter; or
                  (B) in the case of a high-cost mortgage, 
                change the terms of the loan in a manner 
                beneficial to the consumer so that the loan 
                will no longer be a high-cost mortgage; or
          (2) within 60 days of the creditor's discovery or 
        receipt of notification of an unintentional violation 
        or bona fide error as described in subsection (c) and 
        prior to the institution of any action, the consumer is 
        notified of the compliance failure, appropriate 
        restitution is made, and whatever adjustments are 
        necessary are made to the loan to either, at the choice 
        of the consumer--
                  (A) make the loan satisfy the requirements of 
                this chapter; or
                  (B) in the case of a high-cost mortgage, 
                change the terms of the loan in a manner 
                beneficial so that the loan will no longer be a 
                high-cost mortgage.
  (w) Property Appraisal Requirements.--
          (1) In general.--A creditor may not extend credit in 
        the form of a subprime mortgage to any consumer without 
        first obtaining a written appraisal of the property to 
        be mortgaged prepared in accordance with the 
        requirements of this subsection.
          (2) Appraisal requirements.--
                  (A) Physical property visit.--An appraisal of 
                property to be secured by a subprime mortgage 
                does not meet the requirement of this 
                subsection unless it is performed by a 
                qualified appraiser who conducts a physical 
                property visit of the interior of the mortgaged 
                property.
                  (B) Second appraisal under certain 
                circumstances.--
                          (i) In general.--If the purpose of a 
                        subprime mortgage is to finance the 
                        purchase or acquisition of the 
                        mortgaged property from a person within 
                        180 days of the purchase or acquisition 
                        of such property by that person at a 
                        price that was lower than the current 
                        sale price of the property, the 
                        creditor shall obtain a second 
                        appraisal from a different qualified 
                        appraiser. The second appraisal shall 
                        include an analysis of the difference 
                        in sale prices, changes in market 
                        conditions, and any improvements made 
                        to the property between the date of the 
                        previous sale and the current sale.
                          (ii) No cost to applicant.--The cost 
                        of any second appraisal required under 
                        clause (i) may not be charged to the 
                        applicant.
                  (C) Qualified appraiser defined.--For 
                purposes of this subsection, the term 
                ``qualified appraiser'' means a person who--
                          (i) is, at a minimum, certified or 
                        licensed by the State in which the 
                        property to be appraised is located; 
                        and
                          (ii) performs each appraisal in 
                        conformity with the Uniform Standards 
                        of Professional Appraisal Practice and 
                        title XI of the Financial Institutions 
                        Reform, Recovery, and Enforcement Act 
                        of 1989, and the regulations prescribed 
                        under such title, as in effect on the 
                        date of the appraisal.
          (3) Free copy of appraisal.--A creditor shall provide 
        1 copy of each appraisal conducted in accordance with 
        this subsection in connection with a subprime mortgage 
        to the applicant without charge, and at least 3 days 
        prior to the transaction closing date.
          (4) Consumer notification.--At the time of the 
        initial mortgage application, the applicant shall be 
        provided with a statement by the creditor that any 
        appraisal prepared for the mortgage is for the sole use 
        of the creditor, and that the applicant may choose to 
        have a separate appraisal conducted at their own 
        expense.
          (5) Violations.--In addition to any other liability 
        to any person under this title, a creditor found to 
        have willfully failed to obtain an appraisal as 
        required in this subsection shall be liable to the 
        applicant or borrower for the sum of $2,000.
          (6) Subprime mortgage defined.--For purposes of this 
        subsection, the term ``subprime mortgage'' means a 
        residential mortgage loan with an annual percentage 
        rate that exceeds the average prime offer rate for a 
        comparable transaction, as of the date the interest 
        rate is set--
                  (A) by 1.5 or more percentage points for a 
                first lien residential mortgage loan; and
                  (B) by 3.5 or more percentage points for a 
                subordinate lien residential mortgage loan.

           *       *       *       *       *       *       *

Sec. 129B. Residential mortgage loan origination

  (a) Finding and Purpose.--
          (1) Finding.--The Congress finds that economic 
        stabilization would be enhanced by the protection, 
        limitation, and regulation of the terms of residential 
        mortgage credit and the practices related to such 
        credit, while ensuring that responsible, affordable 
        mortgage credit remains available to consumers.
          (2) Purpose.--It is the purpose of this section and 
        section 129C to assure that consumers are offered and 
        receive residential mortgage loans on terms that 
        reasonably reflect their ability to repay the loans and 
        that are understandable and not unfair, deceptive or 
        abusive.
  (b) Duty of Care.--
          (1) Standard.--Subject to regulations prescribed 
        under this subsection, each mortgage originator shall, 
        in addition to the duties imposed by otherwise 
        applicable provisions of State or Federal law--
                  (A) be qualified and, when required, 
                registered and licensed as a mortgage 
                originator in accordance with applicable State 
                or Federal law, including the Secure and Fair 
                Enforcement for Mortgage Licensing Act of 2008;
                  (B) with respect to each consumer seeking or 
                inquiring about a residential mortgage loan, 
                diligently work to present the consumer with a 
                range of residential mortgage loan products for 
                which the consumer likely qualifies and which 
                are appropriate to the consumer's existing 
                circumstances, based on information known by, 
                or obtained in good faith by, the originator;
                  (C) make full, complete, and timely 
                disclosure to each such consumer of--
                          (i) the comparative costs and 
                        benefits of each residential mortgage 
                        loan product offered, discussed, or 
                        referred to by the originator;
                          (ii) the nature of the originator's 
                        relationship to the consumer (including 
                        the cost of the services to be provided 
                        by the originator and a statement that 
                        the mortgage originator is or is not 
                        acting as an agent for the consumer, as 
                        the case may be); and
                          (iii) any relevant conflicts of 
                        interest between the originator and the 
                        consumer;
                  (D) certify to the creditor, with respect to 
                any transaction involving a residential 
                mortgage loan, that the mortgage originator has 
                fulfilled all requirements applicable to the 
                originator under this section with respect to 
                the transaction; and
                  (E) include on all loan documents any unique 
                identifier of the mortgage originator provided 
                by the Nationwide Mortgage Licensing System and 
                Registry.
          (2) Clarification of extent of duty to present range 
        of products and appropriate products.--
                  (A) No duty to offer products for which 
                originator is not authorized to take an 
                application.--Paragraph (1)(B) shall not be 
                construed as requiring--
                          (i) a mortgage originator to present 
                        to any consumer any specific 
                        residential mortgage loan product that 
                        is offered by a creditor which does not 
                        accept consumer referrals from, or 
                        consumer applications submitted by or 
                        through, such originator; or
                          (ii) a creditor to offer products 
                        that the creditor does not offer to the 
                        general public.
                  (B) Appropriate loan product.--For purposes 
                of paragraph (1)(B), a residential mortgage 
                loan shall be presumed to be appropriate for a 
                consumer if--
                          (i) the mortgage originator 
                        determines in good faith, based on then 
                        existing information and without 
                        undergoing a full underwriting process, 
                        that the consumer has a reasonable 
                        ability to repay and, in the case of a 
                        refinancing of an existing residential 
                        mortgage loan, receives a net tangible 
                        benefit, as determined in accordance 
                        with regulations prescribed under 
                        subsections (a) and (b) of section 
                        129C; and
                          (ii) the loan does not have predatory 
                        characteristics or effects (such as 
                        equity stripping and excessive fees and 
                        abusive terms) as determined in 
                        accordance with regulations prescribed 
                        under paragraph (4).
          (3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                  (A) creating an agency or fiduciary 
                relationship between a mortgage originator and 
                a consumer if the originator does not hold 
                himself or herself out as such an agent or 
                fiduciary; or
                  (B) restricting a mortgage originator from 
                holding himself or herself out as an agent or 
                fiduciary of a consumer subject to any 
                additional duty, requirement, or limitation 
                applicable to agents or fiduciaries under any 
                Federal or State law.
          (4) Regulations.--
                  (A) In general.--The Federal banking 
                agencies, in consultation with the Secretary, 
                the Chairman of the State Liaison Committee to 
                the Financial Institutions Examination Council, 
                and the Commission, shall jointly prescribe 
                regulations to--
                          (i) further define the duty 
                        established under paragraph (1);
                          (ii) implement the requirements of 
                        this subsection;
                          (iii) establish the time period 
                        within which any disclosure required 
                        under paragraph (1) shall be made to 
                        the consumer; and
                          (iv) establish such other 
                        requirements for any mortgage 
                        originator as such regulatory agencies 
                        may determine to be appropriate to meet 
                        the purposes of this subsection.
                  (B) Complementary and nonduplicative 
                disclosures.--The agencies referred to in 
                subparagraph (A) shall endeavor to make the 
                required disclosures to consumers under this 
                subsection complementary and nonduplicative 
                with other disclosures for mortgage consumers 
                to the extent such efforts--
                          (i) are practicable; and
                          (ii) do not reduce the value of any 
                        such disclosure to recipients of such 
                        disclosures.
          (5) Compliance procedures required.--The Federal 
        banking agencies shall prescribe regulations requiring 
        depository institutions to establish and maintain 
        procedures reasonably designed to assure and monitor 
        the compliance of such depository institutions, the 
        subsidiaries of such institutions, and the employees of 
        such institutions or subsidiaries with the requirements 
        of this section and the registration procedures 
        established under section 1507 of the Secure and Fair 
        Enforcement for Mortgage Licensing Act of 2008.
  (c) Prohibition on Steering Incentives.--
          (1) In general.--For any mortgage loan, the total 
        amount of direct and indirect compensation from all 
        sources permitted to a mortgage originator may not vary 
        based on the terms of the loan (other than the amount 
        of the principal).
          (2) Regulations.--The Federal banking agencies, in 
        consultation with the Secretary and the Commission, 
        shall jointly prescribe regulations to prohibit--
                  (A) mortgage originators from steering any 
                consumer to a residential mortgage loan that--
                          (i) the consumer lacks a reasonable 
                        ability to repay (in accordance with 
                        regulations prescribed under section 
                        129C(a));
                          (ii) in the case of a refinancing of 
                        a residential mortgage loan, does not 
                        provide the consumer with a net 
                        tangible benefit (in accordance with 
                        regulations prescribed under section 
                        129C(b)); or
                          (iii) has predatory characteristics 
                        or effects (such as equity stripping, 
                        excessive fees, or abusive terms);
                  (B) mortgage originators from steering any 
                consumer from a residential mortgage loan for 
                which the consumer is qualified that is a 
                qualified mortgage (as defined in section 
                129C(c)(3)) to a residential mortgage loan that 
                is not a qualified mortgage;
                  (C) abusive or unfair lending practices that 
                promote disparities among consumers of equal 
                credit worthiness but of different race, 
                ethnicity, gender, or age; and
                  (D) mortgage originators from assessing 
                excessive points and fees (as such term is 
                described under section 103(aa)(4) of the Truth 
                in Lending Act (15 U.S.C. 1602(aa)(4))) to a 
                consumer for the origination of a residential 
                mortgage loan based on such consumer's decision 
                to finance all or part of the payment through 
                the rate for such points and fees.
          (3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                  (A) permitting yield spread premiums or other 
                similar incentive compensation;
                  (B) affecting the mechanism for providing the 
                total amount of direct and indirect 
                compensation permitted to a mortgage 
                originator;
                  (C) limiting or affecting the amount of 
                compensation received by a creditor upon the 
                sale of a consummated loan to a subsequent 
                purchaser;
                  (D) restricting a consumer's ability to 
                finance, including through rate or principal, 
                any origination fees or costs permitted under 
                this subsection, or the mortgage originator's 
                ability to receive such fees or costs 
                (including compensation) from any person, so 
                long as such fees or costs were fully and 
                clearly disclosed to the consumer earlier in 
                the application process as required by 
                129B(b)(1)(C)(i) and do not vary based on the 
                terms of the loan (other than the amount of the 
                principal) or the consumer's decision about 
                whether to finance such fees or costs; or
                  (E) prohibiting incentive payments to a 
                mortgage originator based on the number of 
                residential mortgage loans originated within a 
                specified period of time.
  (d) Liability for Violations.--
          (1) In general.--For purposes of providing a cause of 
        action for any failure by a mortgage originator to 
        comply with any requirement imposed under this section 
        and any regulation prescribed under this section, 
        subsections (a) and (b) of section 130 shall be applied 
        with respect to any such failure by substituting 
        ``mortgage originator'' for ``creditor'' each place 
        such term appears in each such subsection.
          (2) Maximum.--The maximum amount of any liability of 
        a mortgage originator under paragraph (1) to a consumer 
        for any violation of this section shall not exceed the 
        greater of actual damages or an amount equal to 3 times 
        the total amount of direct and indirect compensation or 
        gain accruing to the mortgage originator in connection 
        with the residential mortgage loan involved in the 
        violation, plus the costs to the consumer of the 
        action, including a reasonable attorney's fee.
  (e) Discretionary Regulatory Authority.--
          (1) In general.--The Federal banking agencies shall, 
        by regulations issued jointly, prohibit or condition 
        terms, acts or practices relating to residential 
        mortgage loans that the agencies find to be abusive, 
        unfair, deceptive, predatory, inconsistent with 
        reasonable underwriting standards, necessary or proper 
        to effectuate the purposes of this section and section 
        129C, to prevent circumvention or evasion thereof, or 
        to facilitate compliance with such sections, or are not 
        in the interest of the borrower.
          (2) Application.--The regulations prescribed under 
        paragraph (1) shall be applicable to all residential 
        mortgage loans and shall be applied in the same manner 
        as regulations prescribed under section 105.
  (f) Section 129B and any regulations promulgated thereunder 
do not apply to an extension of credit relating to a plan 
described in section 101(53D) of title 11, United States Code.

Sec. 129C. Minimum standards for residential mortgage loans

  (a) Ability To Repay.--
          (1) In general.--In accordance with regulations 
        prescribed jointly by the Federal banking agencies, in 
        consultation with the Commission, no creditor may make 
        a residential mortgage loan unless the creditor makes a 
        reasonable and good faith determination based on 
        verified and documented information that, at the time 
        the loan is consummated, the consumer has a reasonable 
        ability to repay the loan, according to its terms, and 
        all applicable taxes, insurance, and assessments.
          (2) Multiple loans.--If the creditor knows, or has 
        reason to know, that 1 or more residential mortgage 
        loans secured by the same dwelling will be made to the 
        same consumer, the creditor shall make a reasonable and 
        good faith determination, based on verified and 
        documented information, that the consumer has a 
        reasonable ability to repay the combined payments of 
        all loans on the same dwelling according to the terms 
        of those loans and all applicable taxes, insurance, and 
        assessments.
          (3) Basis for determination.--A determination under 
        this subsection of a consumer's ability to repay a 
        residential mortgage loan shall include consideration 
        of the consumer's credit history, current income, 
        expected income the consumer is reasonably assured of 
        receiving, current obligations, debt-to-income ratio, 
        employment status, and other financial resources other 
        than the consumer's equity in the dwelling or real 
        property that secures repayment of the loan.
          (4) Nonstandard loans.--
                  (A) Variable rate loans that defer repayment 
                of any principal or interest.--For purposes of 
                determining, under this subsection, a 
                consumer's ability to repay a variable rate 
                residential mortgage loan that allows or 
                requires the consumer to defer the repayment of 
                any principal or interest, the creditor shall 
                use a fully amortizing repayment schedule.
                  (B) Interest-only loans.--For purposes of 
                determining, under this subsection, a 
                consumer's ability to repay a residential 
                mortgage loan that permits or requires the 
                payment of interest only, the creditor shall 
                use the payment amount required to amortize the 
                loan by its final maturity.
                  (C) Calculation for negative amortization.--
                In making any determination under this 
                subsection, a creditor shall also take into 
                consideration any balance increase that may 
                accrue from any negative amortization 
                provision.
                  (D) Calculation process.--For purposes of 
                making any determination under this subsection, 
                a creditor shall calculate the monthly payment 
                amount for principal and interest on any 
                residential mortgage loan by assuming--
                          (i) the loan proceeds are fully 
                        disbursed on the date of the 
                        consummation of the loan;
                          (ii) the loan is to be repaid in 
                        substantially equal monthly amortizing 
                        payments for principal and interest 
                        over the entire term of the loan with 
                        no balloon payment, unless the loan 
                        contract requires more rapid repayment 
                        (including balloon payment), in which 
                        case the contract's repayment schedule 
                        shall be used in this calculation; and
                          (iii) the interest rate over the 
                        entire term of the loan is a fixed rate 
                        equal to the fully indexed rate at the 
                        time of the loan closing, without 
                        considering the introductory rate.
          (5) Fully-indexed rate defined.--For purposes of this 
        subsection, the term ``fully indexed rate'' means the 
        index rate prevailing on a residential mortgage loan at 
        the time the loan is made plus the margin that will 
        apply after the expiration of any introductory interest 
        rates.
  (b) Net Tangible Benefit for Refinancing of Residential 
Mortgage Loans.--
          (1) In general.--In accordance with regulations 
        prescribed under paragraph (3), no creditor may extend 
        credit in connection with any residential mortgage loan 
        that involves a refinancing of a prior existing 
        residential mortgage loan unless the creditor 
        reasonably and in good faith determines, at the time 
        the loan is consummated and on the basis of information 
        known by or obtained in good faith by the creditor, 
        that the refinanced loan will provide a net tangible 
        benefit to the consumer.
          (2) Certain loans providing no net tangible 
        benefit.--A residential mortgage loan that involves a 
        refinancing of a prior existing residential mortgage 
        loan shall not be considered to provide a net tangible 
        benefit to the consumer if the costs of the refinanced 
        loan, including points, fees and other charges, exceed 
        the amount of any newly advanced principal without any 
        corresponding changes in the terms of the refinanced 
        loan that are advantageous to the consumer.
          (3) Net tangible benefit.--The Federal banking 
        agencies shall jointly prescribe regulations defining 
        the term ``net tangible benefit'' for purposes of this 
        subsection.
  (c) Presumption of Ability To Repay and Net Tangible 
Benefit.--
          (1) In general.--Any creditor with respect to any 
        residential mortgage loan, and any assignee or 
        securitizer of such loan, may presume that the loan has 
        met the requirements of subsections (a) and (b), if the 
        loan is a qualified mortgage.
          (2) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Qualified mortgage.--The term ``qualified 
                mortgage'' means any residential mortgage 
                loan--
                          (i) that does not allow a consumer to 
                        defer repayment of principal or 
                        interest, or is not otherwise deemed a 
                        ``non-traditional mortgage'' under 
                        guidance, advisories, or regulations 
                        prescribed by the Federal Banking 
                        Agencies;
                          (ii) that does not provide for a 
                        repayment schedule that results in 
                        negative amortization at any time;
                          (iii) for which the terms are fully 
                        amortizing and which does not result in 
                        a balloon payment, where a ``balloon 
                        payment'' is a scheduled payment that 
                        is more than twice as large as the 
                        average of earlier scheduled payments;
                          (iv) which has an annual percentage 
                        rate that does not exceed the average 
                        prime offer rate for a comparable 
                        transaction, as of the date the 
                        interest rate is set--
                                  (I) by 1.5 or more percentage 
                                points, in the case of a first 
                                lien residential mortgage loan 
                                having a original principal 
                                obligation amount that does not 
                                exceed the amount of the 
                                maximum limitation on the 
                                original principal obligation 
                                of mortgage in effect for a 
                                residence of the applicable 
                                size, as of the date of such 
                                interest rate set, pursuant to 
                                the sixth sentence of section 
                                305(a)(2) the Federal Home Loan 
                                Mortgage Corporation Act (12 
                                U.S.C. 1454(a)(2)); and
                                  (II) by 2.5 or more 
                                percentage points, in the case 
                                of a first lien residential 
                                mortgage loan having a original 
                                principal obligation amount 
                                that exceeds the amount of the 
                                maximum limitation on the 
                                original principal obligation 
                                of mortgage in effect for a 
                                residence of the applicable 
                                size, as of the date of such 
                                interest rate set, pursuant to 
                                the sixth sentence of section 
                                305(a)(2) the Federal Home Loan 
                                Mortgage Corporation Act (12 
                                U.S.C. 1454(a)(2));
                          (v) for which the income and 
                        financial resources relied upon to 
                        qualify the obligors on the loan are 
                        verified and documented;
                          (vi) in the case of a fixed rate 
                        loan, for which the underwriting 
                        process is based on a payment schedule 
                        that fully amortizes the loan over the 
                        loan term and takes into account all 
                        applicable taxes, insurance, and 
                        assessments;
                          (vii) in the case of an adjustable 
                        rate loan, for which the underwriting 
                        is based on the maximum rate permitted 
                        under the loan during the first seven 
                        years, and a payment schedule that 
                        fully amortizes the loan over the loan 
                        term and takes into account all 
                        applicable taxes, insurance, and 
                        assessments;
                          (viii) that does not cause the 
                        consumer's total monthly debts, 
                        including amounts under the loan, to 
                        exceed a percentage established by 
                        regulation of the consumer's monthly 
                        gross income or such other maximum 
                        percentage of such income as may be 
                        prescribed by regulation under 
                        paragraph (4), and such rules shall 
                        also take into consideration the 
                        consumer's income available to pay 
                        regular expenses after payment of all 
                        installment and revolving debt;
                          (ix) for which the total points and 
                        fees payable in connection with the 
                        loan do not exceed 2 percent of the 
                        total loan amount, where ``points and 
                        fees'' means points and fees as defined 
                        by Section 103(aa)(4) of the Truth in 
                        Lending Act (15 U.S.C. 1602(aa)(4)); 
                        and
                          (x) for which the term of the loan 
                        does not exceed 30 years, except as 
                        such term may be extended under 
                        paragraph (4).
                  (B) Average prime offer rate.--The term 
                ``average prime offer rate'' means an annual 
                percentage rate that is derived from average 
                interest rates, points, and other loan pricing 
                terms currently offered to consumers by a 
                representative sample of creditors for mortgage 
                transactions that have low risk pricing 
                characteristics.
          (3) Publication of average prime offer rate.--The 
        Board--
                  (A) shall publish, and update at least 
                weekly, average prime offer rates; and
                  (B) may publish multiple rates based on 
                varying types of mortgage transactions.
          (4) Regulations.--
                  (A) In general.--The Federal banking agencies 
                shall jointly prescribe regulations to carry 
                out the purposes of this subsection.
                  (B) Revision of safe harbor criteria.--
                          (i) In general.--The Federal banking 
                        agencies may jointly prescribe 
                        regulations that revise, add to, or 
                        subtract from the criteria that define 
                        a qualified mortgage upon a finding 
                        that such regulations are necessary and 
                        appropriate to effectuate the purposes 
                        of this section and section 129B, to 
                        prevent circumvention or evasion 
                        thereof, or to facilitate compliance 
                        with such sections.
                          (ii) Loan definition.--The following 
                        agencies shall prescribe rules defining 
                        the types of loans they insure, 
                        guarantee or administer, as the case 
                        may be, that are Qualified Mortgages 
                        for purposes of subsection (c)(1)(A) 
                        upon a finding that such rules are 
                        consistent with the purposes of this 
                        section and section 129B, to prevent 
                        circumvention or evasion thereof, or to 
                        facilitate compliance with such 
                        sections--
                                  (I) The Department of Housing 
                                and Urban Development, with 
                                regard to mortgages insured 
                                under title II of the National 
                                Housing Act (12 U.S.C. 1707 et 
                                seq.);
                                  (II) The Secretary of 
                                Veterans Affairs, with regard 
                                to a loan made or guaranteed by 
                                the Secretary of Veterans 
                                Affairs;
                                  (III) The Secretary of 
                                Agriculture, with regard loans 
                                guaranteed by the Secretary of 
                                Agriculture pursuant to 42 
                                U.S.C. 1472(h);
                                  (IV) The Federal Housing 
                                Finance Agency, with regard to 
                                loans meeting the conforming 
                                loan standards of the Federal 
                                National Mortgage Corporation 
                                or the Federal Home Loan 
                                Mortgage Corporation; and
                                  (V) The Rural Housing 
                                Service, with regard to loans 
                                insured by the Rural Housing 
                                Service.
  (d) Liability for Violations.--
          (1) In general.--
                  (A) Rescission.--In addition to any other 
                liability under this title for a violation by a 
                creditor of subsection (a) or (b) (for example 
                under section 130) and subject to the statute 
                of limitations in paragraph (9), a civil action 
                may be maintained against a creditor for a 
                violation of subsection (a) or (b) with respect 
                to a residential mortgage loan for the 
                rescission of the loan, and such additional 
                costs as the obligor may have incurred as a 
                result of the violation and in connection with 
                obtaining a rescission of the loan, including a 
                reasonable attorney's fee.
                  (B) Cure.--A creditor shall not be liable for 
                rescission under subparagraph (A) with respect 
                to a residential mortgage loan if, no later 
                than 90 days after the receipt of notification 
                from the consumer that the loan violates 
                subsection (a) or (b), the creditor provides a 
                cure.
          (2) Limited assignee and securitizer liability.--
        Notwithstanding sections 125(e) and 131 and except as 
        provided in paragraph (3), a civil action which may be 
        maintained against a creditor with respect to a 
        residential mortgage loan for a violation of subsection 
        (a) or (b) may be maintained against any assignee or 
        securitizer of such residential mortgage loan, who has 
        acted in good faith, for the following liabilities 
        only:
                  (A) Rescission of the loan.
                  (B) Such additional costs as the obligor may 
                have incurred as a result of the violation and 
                in connection with obtaining a rescission of 
                the loan, including a reasonable attorney's 
                fee.
          (3) Assignee and securitizer exemption.--No assignee 
        or securitizer of a residential mortgage loan that has 
        exercised reasonable due diligence in complying with 
        the requirements of subsections (a) and (b) shall be 
        liable under paragraph (2) with respect to such loan 
        if, no later than 90 days after the receipt of 
        notification from the consumer that the loan violates 
        subsection (a) or (b), the assignee or securitizer 
        provides a cure so that the loan satisfies the 
        requirements of subsections (a) and (b).
          (4) Absent parties.--
                  (A) Absent creditor.--Notwithstanding the 
                exemption provided in paragraph (3), if the 
                creditor with respect to a residential mortgage 
                loan made in violation of subsection (a) or (b) 
                has ceased to exist as a matter of law or has 
                filed for bankruptcy protection under title 11, 
                United States Code, or has had a receiver, 
                conservator, or liquidating agent appointed, a 
                consumer may maintain a civil action against an 
                assignee to cure the residential mortgage loan, 
                plus the costs and reasonable attorney's fees 
                incurred in obtaining such remedy.
                  (B) Absent creditor and assignee.--
                Notwithstanding the exemption provided in 
                paragraph (3), if the creditor with respect to 
                a residential mortgage loan made in violation 
                of subsection (a) or (b) and each assignee of 
                such loan have ceased to exist as a matter of 
                law or have filed for bankruptcy protection 
                under title 11, United States Code, or have had 
                receivers, conservators, or liquidating agents 
                appointed, the consumer may maintain the civil 
                action referred to in subparagraph (A) against 
                the securitizer.
          (5) Cure defined.--For purposes of this subsection, 
        the term ``cure'' means, with respect to a residential 
        mortgage loan that violates subsection (a) or (b), the 
        modification or refinancing, at no cost to the 
        consumer, of the loan to provide terms that satisfy the 
        requirements of subsections (a) and (b) and the payment 
        of such additional costs as the obligor may have 
        incurred in connection with obtaining a cure of the 
        loan, including a reasonable attorney's fee.
          (6) Disagreement over cure.--If any creditor, 
        assignee, or securitizer and a consumer fail to reach 
        agreement on a cure with respect to a residential 
        mortgage loan that violates subsection (a) or (b), or 
        the consumer fails to accept a cure proffered by a 
        creditor, assignee, or securitizer--
                  (A) the creditor, assignee, or securitizer 
                may provide the cure; and
                  (B) the consumer may challenge the adequacy 
                of the cure during the 6-month period beginning 
                when the cure is provided.
        If the consumer's challenge, under this paragraph, of a 
        cure is successful, the creditor, assignee, or 
        securitizer shall be liable to the consumer for 
        rescission of the loan and such additional costs under 
        paragraph (2).
          (7) Inability to provide or obtain rescission.--If a 
        creditor, assignee, or securitizer cannot provide, or a 
        consumer cannot obtain, rescission under paragraph (1) 
        or (2), the liability of such creditor, assignee, or 
        securitizer shall be met by providing the financial 
        equivalent of a rescission, together with such 
        additional costs as the obligor may have incurred as a 
        result of the violation and in connection with 
        obtaining a rescission of the loan, including a 
        reasonable attorney's fee.
          (8) No class actions against assignee or securitizer 
        under paragraph (2).--Only individual actions may be 
        brought against an assignee or securitizer of a 
        residential mortgage loan for a violation of subsection 
        (a) or (b).
          (9) Statute of limitations.--The liability of a 
        creditor, assignee, or securitizer under this 
        subsection shall apply in any original action against a 
        creditor under paragraph (1) or an assignee or 
        securitizer under paragraph (2) which is brought 
        before--
                  (A) in the case of any residential mortgage 
                loan other than a loan to which subparagraph 
                (B) applies, the end of the 3-year period 
                beginning on the date the loan is consummated; 
                or
                  (B) in the case of a residential mortgage 
                loan that provides for a fixed interest rate 
                for an introductory period and then resets or 
                adjusts to a variable rate or that provides for 
                a nonamortizing payment schedule and then 
                converts to an amortizing payment schedule, the 
                earlier of--
                          (i) the end of the 1-year period 
                        beginning on the date of such reset, 
                        adjustment, or conversion; or
                          (ii) the end of the 6-year period 
                        beginning on the date the loan is 
                        consummated.
          (10) Pools and investors in pools excluded.--In the 
        case of residential mortgage loans acquired or 
        aggregated for the purpose of including such loans in a 
        pool of assets held for the purpose of issuing or 
        selling instruments representing interests in such 
        pools including through a securitization vehicle, the 
        terms ``assignee'' and ``securitizer'', as used in this 
        section, do not include the securitization vehicle, the 
        pools of such loans or any original or subsequent 
        purchaser of any interest in the securitization vehicle 
        or any instrument representing a direct or indirect 
        interest in such pool.
  (e) Obligation of Securitizers, and Preservation of Borrower 
Remedies.--
          (1) Obligation to retain access.--Any securitizer of 
        a residential mortgage loan sold or to be sold as part 
        of a securitization vehicle shall, in any document or 
        contract providing for the transfer, conveyance, or the 
        establishment of such securitization vehicle, reserve 
        the right and preserve the ability--
                  (A) to identify and obtain access to any such 
                loan;
                  (B) to acquire any such loan in the event of 
                a violation of subsections (a) or (b) of this 
                section; and
                  (C) to provide to the consumer any and all 
                remedies provided for under this title for any 
                violation of this title.
          (2) Additional damages.--Any creditor, assignee, or 
        securitizer of a residential mortgage loan that is 
        subject to a remedy under subsection (d) and has failed 
        to comply with paragraph (1) shall be subject to 
        additional exemplary or punitive damages not to exceed 
        the original principal balance of such loan.
          (3) Contact information notice.--The servicer with 
        respect to a residential mortgage loan shall provide a 
        written notice to a consumer identifying the name and 
        contact information of the creditor or any assignee or 
        securitizer who should be contacted by the consumer for 
        any reason concerning the consumer's rights with 
        respect to the loan. Such notice shall be provided--
                  (A) upon request of the consumer;
                  (B) whenever there is a change in ownership 
                of a residential mortgage loan; or
                  (C) on a regular basis, not less than 
                annually.
  (f) Rules to Establish Process.--The Board shall promulgate 
rules to govern the rescission process established for 
violations of subsections (a) and (b) of this section. Such 
rules shall provide that notice given to a servicer or holder 
is sufficient notice regardless of the identity of the party or 
the parties liable under this title.
  (g) Defense to Foreclosure.--Notwithstanding any other 
provision of law--
          (1) when the holder of a residential mortgage loan or 
        anyone acting for such holder initiates a judicial or 
        nonjudicial foreclosure--
                  (A) a consumer who has the right to rescind 
                under this section with respect to such loan 
                against the creditor or any assignee or 
                securitizer may assert such right as a defense 
                to foreclosure or counterclaim to such 
                foreclosure against the holder, or
                  (B) if the foreclosure proceeding begins 
                after the end of the period during which a 
                consumer may bring an action for rescission 
                under subsection (d) and the consumer would 
                have had a valid basis for such an action if it 
                had been brought before the end of such period, 
                the consumer may seek actual damages incurred 
                by reason of the violation which gave rise to 
                the right of rescission, together with costs of 
                the action, including a reasonable attorney's 
                fee against the creditor or any assignee or 
                securitizer; and
          (2) such holder or anyone acting for such holder or 
        any other applicable third party may sell, transfer, 
        convey, or assign a residential mortgage loan to a 
        creditor, any assignee, or any securitizer, or their 
        designees, to effect a rescission or cure.
  (h) Prohibition on Certain Prepayment Penalties.--
          (1) Prohibited on certain loans.--A residential 
        mortgage loan that is not a ``qualified mortgage'' may 
        not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the 
        principal after the loan is consummated. For purposes 
        of this subsection, a ``qualified mortgage'' may not 
        include a residential mortgage loan that has an 
        adjustable rate.
          (2) Phased-out penalties on qualified mortgages.--A 
        qualified mortgage (as defined in subsection (c)) may 
        not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the 
        principal after the loan is consummated in excess of 
        the following limitations:
                  (A) During the 1-year period beginning on the 
                date the loan is consummated, the prepayment 
                penalty shall not exceed an amount equal to 3 
                percent of the outstanding balance on the loan.
                  (B) During the 1-year period beginning after 
                the period described in subparagraph (A), the 
                prepayment penalty shall not exceed an amount 
                equal to 2 percent of the outstanding balance 
                on the loan.
                  (C) During the 1-year period beginning after 
                the 1-year period described in subparagraph 
                (B), the prepayment penalty shall not exceed an 
                amount equal to 1 percent of the outstanding 
                balance on the loan.
                  (D) After the end of the 3-year period 
                beginning on the date the loan is consummated, 
                no prepayment penalty may be imposed on a 
                qualified mortgage.
          (3) Prohibited after initial period on loans with a 
        reset.--A qualified mortgage with a fixed interest rate 
        for an introductory period that adjusts or resets after 
        such period may not contain terms under which a 
        consumer must pay a prepayment penalty for paying all 
        or part of the principal after the beginning of the 3-
        month period ending on the date of the adjustment or 
        reset.
          (4) Option for no prepayment penalty required.--A 
        creditor may not offer a consumer a residential 
        mortgage loan product that has a prepayment penalty for 
        paying all or part of the principal after the loan is 
        consummated as a term of the loan without offering the 
        consumer a residential mortgage loan product that does 
        not have a prepayment penalty as a term of the loan.
  (i) Single Premium Credit Insurance Prohibited.--No creditor 
may finance, directly or indirectly, in connection with any 
residential mortgage loan or with any extension of credit under 
an open end consumer credit plan secured by the principal 
dwelling of the consumer (other than a reverse mortgage), any 
credit life, credit disability, credit unemployment or credit 
property insurance, or any other accident, loss-of-income, life 
or health insurance, or any payments directly or indirectly for 
any debt cancellation or suspension agreement or contract, 
except that--
          (1) insurance premiums or debt cancellation or 
        suspension fees calculated and paid in full on a 
        monthly basis shall not be considered financed by the 
        creditor; and
          (2) this subsection shall not apply to credit 
        unemployment insurance for which the unemployment 
        insurance premiums are reasonable, the creditor 
        receives no direct or indirect compensation in 
        connection with the unemployment insurance premiums, 
        and the unemployment insurance premiums are paid 
        pursuant to another insurance contract and not paid to 
        an affiliate of the creditor.
  (j) Arbitration.--
          (1) In general.--No residential mortgage loan and no 
        extension of credit under an open end consumer credit 
        plan secured by the principal dwelling of the consumer, 
        other than a reverse mortgage, may include terms which 
        require arbitration or any other nonjudicial procedure 
        as the method for resolving any controversy or settling 
        any claims arising out of the transaction.
          (2) Post-controversy agreements.--Subject to 
        paragraph (3), paragraph (1) shall not be construed as 
        limiting the right of the consumer and the creditor, 
        any assignee, or any securitizer to agree to 
        arbitration or any other nonjudicial procedure as the 
        method for resolving any controversy at any time after 
        a dispute or claim under the transaction arises.
          (3) No waiver of statutory cause of action.--No 
        provision of any residential mortgage loan or of any 
        extension of credit under an open end consumer credit 
        plan secured by the principal dwelling of the consumer 
        (other than a reverse mortgage), and no other agreement 
        between the consumer and the creditor relating to the 
        residential mortgage loan or extension of credit 
        referred to in paragraph (1), shall be applied or 
        interpreted so as to bar a consumer from bringing an 
        action in an appropriate district court of the United 
        States, or any other court of competent jurisdiction, 
        pursuant to section 130 or any other provision of law, 
        for damages or other relief in connection with any 
        alleged violation of this section, any other provision 
        of this title, or any other Federal law.
  (k) Mortgages With Negative Amortization.--No creditor may 
extend credit to a borrower in connection with a consumer 
credit transaction under an open or closed end consumer credit 
plan secured by a dwelling or residential real property that 
includes a dwelling, other than a reverse mortgage, that 
provides or permits a payment plan that may, at any time over 
the term of the extension of credit, result in negative 
amortization unless, before such transaction is consummated--
          (1) the creditor provides the consumer with a 
        statement that--
                  (A) the pending transaction will or may, as 
                the case may be, result in negative 
                amortization;
                  (B) describes negative amortization in such 
                manner as the Federal banking agencies shall 
                prescribe;
                  (C) negative amortization increases the 
                outstanding principal balance of the account; 
                and
                  (D) negative amortization reduces the 
                consumer's equity in the dwelling or real 
                property; and
          (2) in the case of a first-time borrower with respect 
        to a residential mortgage loan that is not a qualified 
        mortgage, the first-time borrower provides the creditor 
        with sufficient documentation to demonstrate that the 
        consumer received homeownership counseling from 
        organizations or counselors certified by the Secretary 
        of Housing and Urban Development as competent to 
        provide such counseling.
  (l) Credit Risk Retention.--
          (1) In general.--The Federal banking agencies shall 
        prescribe regulations jointly to require any creditor 
        that makes a residential mortgage loan that is not a 
        qualified mortgage (as defined in section 
        129C(c)(2)(A)), to retain an economic interest in a 
        material portion of the credit risk for any such loan 
        that the creditor transfers, sells or conveys to a 
        third party.
          (2) Standards for regulations.--Regulations 
        prescribed under paragraph (1) shall--
                  (A) apply only to residential mortgage loans 
                that are not qualified mortgages (as so 
                defined);
                  (B) prohibit creditors from directly or 
                indirectly hedging or otherwise transferring 
                the credit risk creditors are required to 
                retain under the regulations with respect to 
                any residential mortgage loan;
                  (C) require creditors to retain at least 5 
                percent of the credit risk on any non-qualified 
                mortgage that is transferred, sold or conveyed; 
                and
                  (D) specify the permissible forms of the 
                required risk retention (for example, first 
                loss position or pro rata vertical slice) and 
                the minimum duration of the required risk 
                retention.
          (3) Exceptions and adjustments.--
                  (A) In general.--The Federal banking agencies 
                shall have authority to provide exceptions or 
                adjustments to the requirements of this 
                subsection, including exceptions or adjustments 
                relating to the 5 percent risk retention 
                threshold and the hedging prohibition.
                  (B) Applicable standards.--Any exceptions or 
                adjustments granted by the Federal banking 
                agencies shall--
                          (i) be consistent with the purpose of 
                        this subsection to help ensure high 
                        quality underwriting standards for 
                        mortgage lenders; and
                          (ii) facilitate appropriate risk 
                        management practices by mortgage 
                        lenders, improve access of consumers to 
                        mortgage credit on reasonable terms, or 
                        otherwise serve the public interest.
          (4) Alternative risk retention for securitization 
        sponsors.--The Federal banking agencies shall have 
        discretion to apply the risk retention requirements of 
        this subsection to securitizers of non-qualified 
        mortgages in addition to or in place of creditors that 
        make non-qualified mortgages if the agencies determine 
        that applying the requirements to securitization 
        sponsors rather than originators would--
                  (A) be consistent with the purpose of this 
                subsection to help ensure high quality 
                underwriting standards for mortgage lenders; 
                and
                  (B) facilitate appropriate risk management 
                practices by mortgage lenders, or improve 
                access of consumers to mortgage credit on 
                reasonable terms.
  (m) Section 129C and any regulations promulgated thereunder 
do not apply to an extension of credit relating to a plan 
described in section 101(53D) of title 11, United States Code.

SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
                    CREDIT TRANSACTIONS.

  (a) In General.--Except as provided in subsection (b), (c), 
or (d), a creditor, in connection with the formation or 
consummation of a consumer credit transaction secured by a 
first lien on the principal dwelling of the consumer, other 
than a consumer credit transaction under an open end credit 
plan or a reverse mortgage, shall establish, before the 
consummation of such transaction, an escrow or impound account 
for the payment of taxes and hazard insurance, and, if 
applicable, flood insurance, mortgage insurance, ground rents, 
and any other required periodic payments or premiums with 
respect to the property or the loan terms, as provided in, and 
in accordance with, this section.
  (b) When Required.--No impound, trust, or other type of 
account for the payment of property taxes, insurance premiums, 
or other purposes relating to the property may be required as a 
condition of a real property sale contract or a loan secured by 
a first deed of trust or mortgage on the principal dwelling of 
the consumer, other than a consumer credit transaction under an 
open end credit plan or a reverse mortgage, except when--
          (1) any such impound, trust, or other type of escrow 
        or impound account for such purposes is required by 
        Federal or State law;
          (2) a loan is made, guaranteed, or insured by a State 
        or Federal governmental lending or insuring agency;
          (3) the transaction is secured by a first mortgage or 
        lien on the consumer's principal dwelling and the 
        annual percentage rate on the credit, at the date the 
        interest rate is set, will exceed the average prime 
        offer rate for a comparable transaction by 1.5 
        percentage points or more; or
          (4) so required pursuant to regulation.
  (c) Duration of Mandatory Escrow or Impound Account.--An 
escrow or impound account established pursuant to subsection 
(b), shall remain in existence for a minimum period of 5 years, 
beginning with the date of the consummation of the loan, and 
until such borrower has sufficient equity in the dwelling 
securing the consumer credit transaction so as to no longer be 
required to maintain private mortgage insurance, or such other 
period as may be provided in regulations to address situations 
such as borrower delinquency, unless the underlying mortgage 
establishing the account is terminated.
  (d) Limited Exemptions for Loans Secured by Shares in a 
Cooperative and for Certain Condominium Units.--Escrow accounts 
need not be established for loans secured by shares in a 
cooperative. Insurance premiums need not be included in escrow 
accounts for loans secured by condominium units, where the 
condominium association has an obligation to the condominium 
unit owners to maintain a master policy insuring condominium 
units.
  (e) Clarification on Escrow Accounts for Loans Not Meeting 
Statutory Test.--For mortgages not covered by the requirements 
of subsection (b), no provision of this section shall be 
construed as precluding the establishment of an impound, trust, 
or other type of account for the payment of property taxes, 
insurance premiums, or other purposes relating to the 
property--
          (1) on terms mutually agreeable to the parties to the 
        loan;
          (2) at the discretion of the lender or servicer, as 
        provided by the contract between the lender or servicer 
        and the borrower; or
          (3) pursuant to the requirements for the escrowing of 
        flood insurance payments for regulated lending 
        institutions in section 102(d) of the Flood Disaster 
        Protection Act of 1973.
  (f) Administration of Mandatory Escrow or Impound Accounts.--
          (1) In general.--Except as may otherwise be provided 
        for in this title or in regulations prescribed by the 
        Board, escrow or impound accounts established pursuant 
        to subsection (b) shall be established in a federally 
        insured depository institution.
          (2) Administration.--Except as provided in this 
        section or regulations prescribed under this section, 
        an escrow or impound account subject to this section 
        shall be administered in accordance with--
                  (A) the Real Estate Settlement Procedures Act 
                of 1974 and regulations prescribed under such 
                Act;
                  (B) the Flood Disaster Protection Act of 1973 
                and regulations prescribed under such Act; and
                  (C) the law of the State, if applicable, 
                where the real property securing the consumer 
                credit transaction is located.
          (3) Applicability of payment of interest.--If 
        prescribed by applicable State or Federal law, each 
        creditor shall pay interest to the consumer on the 
        amount held in any impound, trust, or escrow account 
        that is subject to this section in the manner as 
        prescribed by that applicable State or Federal law.
          (4) Penalty coordination with respa.--Any action or 
        omission on the part of any person which constitutes a 
        violation of the Real Estate Settlement Procedures Act 
        of 1974 or any regulation prescribed under such Act for 
        which the person has paid any fine, civil money 
        penalty, or other damages shall not give rise to any 
        additional fine, civil money penalty, or other damages 
        under this section, unless the action or omission also 
        constitutes a direct violation of this section.
  (g) Disclosures Relating to Mandatory Escrow or Impound 
Account.--In the case of any impound, trust, or escrow account 
that is subject to this section, the creditor shall disclose by 
written notice to the consumer at least 3 business days before 
the consummation of the consumer credit transaction giving rise 
to such account or in accordance with timeframes established in 
prescribed regulations the following information:
          (1) The fact that an escrow or impound account will 
        be established at consummation of the transaction.
          (2) The amount required at closing to initially fund 
        the escrow or impound account.
          (3) The amount, in the initial year after the 
        consummation of the transaction, of the estimated taxes 
        and hazard insurance, including flood insurance, if 
        applicable, and any other required periodic payments or 
        premiums that reflects, as appropriate, either the 
        taxable assessed value of the real property securing 
        the transaction, including the value of any 
        improvements on the property or to be constructed on 
        the property (whether or not such construction will be 
        financed from the proceeds of the transaction) or the 
        replacement costs of the property.
          (4) The estimated monthly amount payable to be 
        escrowed for taxes, hazard insurance (including flood 
        insurance, if applicable) and any other required 
        periodic payments or premiums.
          (5) The fact that, if the consumer chooses to 
        terminate the account at the appropriate time in the 
        future, the consumer will become responsible for the 
        payment of all taxes, hazard insurance, and flood 
        insurance, if applicable, as well as any other required 
        periodic payments or premiums on the property unless a 
        new escrow or impound account is established.
          (6) Such other information as the Federal banking 
        agencies jointly determine necessary for the protection 
        of the consumer.
  (h) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Flood insurance.--The term ``flood insurance'' 
        means flood insurance coverage provided under the 
        national flood insurance program pursuant to the 
        National Flood Insurance Act of 1968.
          (2) Hazard insurance.--The term ``hazard insurance'' 
        shall have the same meaning as provided for ``hazard 
        insurance'', ``casualty insurance'', ``homeowner's 
        insurance'', or other similar term under the law of the 
        State where the real property securing the consumer 
        credit transaction is located.
  (i) Disclosure Notice Required for Consumers Who Waive Escrow 
Services.--
          (1) In general.--If--
                  (A) an impound, trust, or other type of 
                account for the payment of property taxes, 
                insurance premiums, or other purposes relating 
                to real property securing a consumer credit 
                transaction is not established in connection 
                with the transaction; or
                  (B) a consumer chooses, and provides written 
                notice to the creditor or servicer of such 
                choice, at any time after such an account is 
                established in connection with any such 
                transaction and in accordance with any statute, 
                regulation, or contractual agreement, to close 
                such account,
        the creditor or servicer shall provide a timely and 
        clearly written disclosure to the consumer that advises 
        the consumer of the responsibilities of the consumer 
        and implications for the consumer in the absence of any 
        such account.
          (2) Disclosure requirements.--Any disclosure provided 
        to a consumer under paragraph (1) shall include the 
        following:
                  (A) Information concerning any applicable 
                fees or costs associated with either the non-
                establishment of any such account at the time 
                of the transaction, or any subsequent closure 
                of any such account.
                  (B) A clear and prominent notice that the 
                consumer is responsible for personally and 
                directly paying the non-escrowed items, in 
                addition to paying the mortgage loan payment, 
                in the absence of any such account, and the 
                fact that the costs for taxes, insurance, and 
                related fees can be substantial.
                  (C) A clear explanation of the consequences 
                of any failure to pay non-escrowed items, 
                including the possible requirement for the 
                forced placement of insurance by the creditor 
                or servicer and the potentially higher cost 
                (including any potential commission payments to 
                the servicer) or reduced coverage for the 
                consumer in the event of any such creditor-
                placed insurance.
                  (D) Such other information as the Federal 
                banking agencies jointly determine necessary 
                for the protection of the consumer.

SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN 
                    CONSUMER CREDIT TRANSACTIONS.

  (a) In General.--It shall be unlawful, in extending credit or 
in providing any services for a consumer credit transaction 
secured by the principal dwelling of the consumer, to engage in 
any unfair or deceptive act or practice as described in or 
pursuant to regulations prescribed under this section.
  (b) Appraisal Independence.--For purposes of subsection (a), 
unfair and deceptive practices shall include--
          (1) any appraisal of a property offered as security 
        for repayment of the consumer credit transaction that 
        is conducted in connection with such transaction in 
        which a person with an interest in the underlying 
        transaction compensates, coerces, extorts, colludes, 
        instructs, induces, bribes, or intimidates a person 
        conducting or involved in an appraisal, or attempts, to 
        compensate, coerce, extort, collude, instruct, induce, 
        bribe, or intimidate such a person, for the purpose of 
        causing the appraised value assigned, under the 
        appraisal, to the property to be based on any factor 
        other than the independent judgment of the appraiser;
          (2) mischaracterizing, or suborning any 
        mischaracterization of, the appraised value of the 
        property securing the extension of the credit;
          (3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the 
        making or pricing of the transaction; and
          (4) withholding or threatening to withhold timely 
        payment for an appraisal report or for appraisal 
        services rendered.
  (c) Exceptions.--The requirements of subsection (b) shall not 
be construed as prohibiting a mortgage lender, mortgage broker, 
mortgage banker, real estate broker, appraisal management 
company, employee of an appraisal management company, consumer, 
or any other person with an interest in a real estate 
transaction from asking an appraiser to provide 1 or more of 
the following services:
          (1) Consider additional, appropriate property 
        information, including the consideration of additional 
        comparable properties to make or support an appraisal.
          (2) Provide further detail, substantiation, or 
        explanation for the appraiser's value conclusion.
          (3) Correct errors in the appraisal report.
  (d) Prohibitions on Conflicts of Interest.--No certified or 
licensed appraiser conducting, and no appraisal management 
company procuring or facilitating, an appraisal in connection 
with a consumer credit transaction secured by the principal 
dwelling of a consumer may have a direct or indirect interest, 
financial or otherwise, in the property or transaction 
involving the appraisal.
  (e) Mandatory Reporting.--Any mortgage lender, mortgage 
broker, mortgage banker, real estate broker, appraisal 
management company, employee of an appraisal management 
company, or any other person involved in a real estate 
transaction involving an appraisal in connection with a 
consumer credit transaction secured by the principal dwelling 
of a consumer who has a reasonable basis to believe an 
appraiser is failing to comply with the Uniform Standards of 
Professional Appraisal Practice, is violating applicable laws, 
or is otherwise engaging in unethical or unprofessional 
conduct, shall refer the matter to the applicable State 
appraiser certifying and licensing agency.
  (f) No Extension of Credit.--In connection with a consumer 
credit transaction secured by a consumer's principal dwelling, 
a creditor who knows, at or before loan consummation, of a 
violation of the appraisal independence standards established 
in subsections (b) or (d) shall not extend credit based on such 
appraisal unless the creditor documents that the creditor has 
acted with reasonable diligence to determine that the appraisal 
does not materially misstate or misrepresent the value of such 
dwelling.
  (g) Rulemaking Proceedings.--The Board, the Comptroller of 
the Currency, the Director of the Office of Thrift Supervision, 
the Federal Deposit Insurance Corporation, the National Credit 
Union Administration Board, and the Federal Trade Commission--
          (1) shall, for purposes of this section, jointly 
        prescribe regulations no later than 180 days after the 
        date of the enactment of this section, and where such 
        regulations have an effective date of no later than 1 
        year after the date of the enactment of this section, 
        defining with specificity acts or practices which are 
        unfair or deceptive in the provision of mortgage 
        lending services for a consumer credit transaction 
        secured by the principal dwelling of the consumer or 
        mortgage brokerage services for such a transaction and 
        defining any terms in this section or such regulations; 
        and
          (2) may jointly issue interpretive guidelines and 
        general statements of policy with respect to unfair or 
        deceptive acts or practices in the provision of 
        mortgage lending services for a consumer credit 
        transaction secured by the principal dwelling of the 
        consumer and mortgage brokerage services for such a 
        transaction, within the meaning of subsections (a), 
        (b), (c), (d), (e), and (f).
  (h) Penalties.--
          (1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who 
        violates this section shall forfeit and pay a civil 
        penalty of not more than $10,000 for each day any such 
        violation continues.
          (2) Subsequent violations.--In the case of any person 
        on whom a civil penalty has been imposed under 
        paragraph (1), paragraph (1) shall be applied by 
        substituting ``$20,000'' for ``$10,000'' with respect 
        to all subsequent violations.
          (3) Assessment.--The agency referred to in subsection 
        (a) or (c) of section 108 with respect to any person 
        described in paragraph (1) shall assess any penalty 
        under this subsection to which such person is subject.

SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.

  (a) In General.--In connection with a consumer credit 
transaction secured by a consumer's principal dwelling, no 
servicer shall fail to credit a payment to the consumer's loan 
account as of the date of receipt, except when a delay in 
crediting does not result in any charge to the consumer or in 
the reporting of negative information to a consumer reporting 
agency, except as required in subsection (b).
  (b) Exception.--If a servicer specifies in writing 
requirements for the consumer to follow in making payments, but 
accepts a payment that does not conform to the requirements, 
the servicer shall credit the payment as of 5 days after 
receipt.

SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

  A creditor or servicer of a home loan shall send an accurate 
payoff balance within a reasonable time, but in no case more 
than 7 business days, after the receipt of a written request 
for such balance from or on behalf of the borrower.

Sec. 130. Civil liability

  (a) Except as otherwise provided in this section, any 
creditor who fails to comply with any requirement imposed under 
this chapter, including any requirement under section 125, or 
chapter 4 or 5 of this title with respect to any person is 
liable to such person in an amount equal to the sum of--
          (1) * * *
          (2)(A)(i) in the case of an individual action twice 
        the amount of any finance charge in connection with the 
        transaction, (ii) in the case of an individual action 
        relating to a consumer lease under chapter 5 of this 
        title, 25 per centum of the total amount of monthly 
        payments under the lease, except that the liability 
        under this subparagraph shall not be less than [$100] 
        $200 nor greater than [$1,000] $2,000, or (iii) in the 
        case of an individual action relating to a credit 
        transaction not under an open end credit plan that is 
        secured by real property or a dwelling, not less than 
        $400 or greater than $4,000; or
          (B) in the case of a class action, such amount as the 
        court may allow, except that as to each member of the 
        class no minimum recovery shall be applicable, and the 
        total recovery under this subparagraph in any class 
        action or series of class actions arising out of the 
        same failure to comply by the same creditor shall not 
        be more than the lesser of [$500,000] $1,000,000 or 1 
        per centum of the net worth of the creditor;

           *       *       *       *       *       *       *

  (e) [Any action] Except as provided in the subsequent 
sentence, any action under this section may be brought in any 
United States district court, or in any other court of 
competent juridisdiction, within one year from the date of the 
occurrence of the violation or, in the case of a violation 
involving a private education loan (as that term is defined in 
section 140(a)), 1 year from the date on which the first 
regular payment of principal is due under the loan. Any action 
under this section with respect to any violation of section 129 
may be brought in any United States district court, or in any 
other court of competent jurisdiction, before the end of the 3-
year period beginning on the date of the occurrence of the 
violation. This subsection does not bar a person from asserting 
a violation of this title in an action to collect the debt 
which was brought more than one year from the date of the 
occurrence of the violation as a matter of defense by 
recoupment or set-off in such action, except as otherwise 
provided by State law. An action to enforce a violation of 
[section 129 may also] section 129, 129B, or 129C of this Act, 
section 219 of the Mortgage Reform and Anti-Predatory Lending 
Act, or any amendment made by section 219 of the Mortgage 
Reform and Anti-Predatory Lending Act may also be brought by 
the appropriate State attorney general in any appropriate 
United States district court, or any other court of competent 
jurisdiction, not later than 3 years after the date on which 
the violation occurs. The State attorney general shall provide 
prior written notice of any such civil action to the Federal 
agency responsible for enforcement under section 108 and shall 
provide the agency with a copy of the complaint. If prior 
notice is not feasible, the State attorney general shall 
provide notice to such agency immediately upon instituting the 
action. The Federal agency may--
          (1) * * *

           *       *       *       *       *       *       *

  (k) Exemption From Liability and Rescission in Case of 
Borrower Fraud or Deception.--In addition to any other remedy 
available by law or contract, no creditor, assignee, or 
securitizer shall be liable to an obligor under this section, 
nor shall it be subject to the right of rescission of any 
obligor under 129B, if such obligor, or co-obligor, knowingly, 
or willfully and with actual knowledge furnished material 
information known to be false for the purpose of obtaining such 
residential mortgage loan.

           *       *       *       *       *       *       *

                              ----------                              

           SECTION 8 OF THE UNITED STATES HOUSING ACT OF 1937

                    lower income housing assistance

  Sec. 8. (a) * * *

           *       *       *       *       *       *       *

  (o) Voucher Program.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Leases and tenancy.--Each housing assistance 
        payment contract entered into by the public housing 
        agency and the owner of a dwelling unit--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) shall provide that during the term of the 
                lease, the owner shall not terminate the 
                tenancy except for serious or repeated 
                violation of the terms and conditions of the 
                lease, for violation of applicable Federal, 
                State, or local law, or for other good cause, 
                and that an incident or incidents of actual or 
                threatened domestic violence, dating violence, 
                or stalking shall not be construed as a serious 
                or repeated violation of the lease by the 
                victim or threatened victim of that violence 
                and shall not be good cause for terminating the 
                tenancy or occupancy rights of the victim of 
                such violence, and in the case of an owner who 
                is an immediate successor in interest pursuant 
                to foreclosure--
                          (i) during the initial term of the 
                        tenant's lease, having the property 
                        vacant prior to sale shall not 
                        constitute good cause; and
                          (ii) in subsequent lease terms of the 
                        tenant's lease, who will occupy the 
                        unit as a primary residence, who sells 
                        the property to a purchaser who will 
                        occupy a unit of the property as a 
                        primary residence, or if the unit is 
                        unmarketable while occupied, such owner 
                        may terminate a lease relating to such 
                        unit for good cause on the effective 
                        date of the notice to vacate, where 
                        such notice is provided by the owner to 
                        the tenant in such unit at least 90 
                        days before the effective date of such 
                        notice;

           *       *       *       *       *       *       *

                  (E) shall provide that any termination of 
                tenancy under this subsection shall be preceded 
                by the provision of written notice by the owner 
                to the tenant specifying the grounds for that 
                action, and any relief shall be consistent with 
                applicable State and local law; [and]
                  (F) shall provide that in the case of any 
                foreclosure on any residential real property in 
                which a recipient of assistance under this 
                subsection resides, the immediate successor in 
                interest in such property pursuant to the 
                foreclosure shall assume such interest subject 
                to the lease between the prior owner and the 
                tenant and to the housing assistance payments 
                contract between the prior owner and the public 
                housing agency for the occupied unit; if a 
                public housing agency is unable to make 
                payments under the contract to the immediate 
                successor in interest after foreclosure, due to 
                action or inaction by the successor in 
                interest, including the rejection of payments 
                or the failure of the successor to maintain the 
                unit in compliance with paragraph (8) or an 
                inability to identify the successor, the agency 
                may use funds that would have been used to pay 
                the rental amount on behalf of the family--
                          (i) to pay for utilities that are the 
                        responsibility of the owner under the 
                        lease or applicable law, after taking 
                        reasonable steps to notify the owner 
                        that it intends to make payments to a 
                        utility provider in lieu of payments to 
                        the owner, except prior notification 
                        shall not be required in any case in 
                        which the unit will be or has been 
                        rendered uninhabitable due to the 
                        termination or threat of termination of 
                        service, in which case the public 
                        housing agency shall notify the owner 
                        within a reasonable time after making 
                        such payment; or
                          (ii) for the family's reasonable 
                        moving costs, including security 
                        deposit costs;
                except that this subparagraph and the 
                provisions related to foreclosure in 
                subparagraph (C) shall not affect any State or 
                local law that provides longer time periods or 
                other additional protections for tenants.
                  [(F)] (G) may include any addenda required by 
                the Secretary to set forth the provisions of 
                this subsection.

           *       *       *       *       *       *       *

                              ----------                              

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ACT

           *       *       *       *       *       *       *

             UNDER SECRETARY AND OTHER OFFICERS AND OFFICES

  Sec. 4. (a) * * *

           *       *       *       *       *       *       *

  (g) Office of Housing Counseling.--
          (1) Establishment.--There is established, in the 
        Department, the Office of Housing Counseling.
          (2) Director.--There is established the position of 
        Director of Housing Counseling. The Director shall be 
        the head of the Office of Housing Counseling and shall 
        be appointed by, and shall report to, the Secretary. 
        Such position shall be a career-reserved position in 
        the Senior Executive Service.
          (3) Functions.--
                  (A) In general.--The Director shall have 
                primary responsibility within the Department 
                for all activities and matters relating to 
                homeownership counseling and rental housing 
                counseling, including--
                          (i) research, grant administration, 
                        public outreach, and policy development 
                        relating to such counseling; and
                          (ii) establishment, coordination, and 
                        administration of all regulations, 
                        requirements, standards, and 
                        performance measures under programs and 
                        laws administered by the Department 
                        that relate to housing counseling, 
                        homeownership counseling (including 
                        maintenance of homes), mortgage-related 
                        counseling (including home equity 
                        conversion mortgages and credit 
                        protection options to avoid 
                        foreclosure), and rental housing 
                        counseling, including the requirements, 
                        standards, and performance measures 
                        relating to housing counseling.
                  (B) Specific functions.--The Director shall 
                carry out the functions assigned to the 
                Director and the Office under this section and 
                any other provisions of law. Such functions 
                shall include establishing rules necessary 
                for--
                          (i) the counseling procedures under 
                        section 106(g)(1) of the Housing and 
                        Urban Development Act of 1968 (12 
                        U.S.C. 1701x(h)(1));
                          (ii) carrying out all other functions 
                        of the Secretary under section 106(g) 
                        of the Housing and Urban Development 
                        Act of 1968, including the 
                        establishment, operation, and 
                        publication of the availability of the 
                        toll-free telephone number under 
                        paragraph (2) of such section;
                          (iii) contributing to the preparation 
                        and distribution of home buying 
                        information booklets pursuant to 
                        section 5 of the Real Estate Settlement 
                        Procedures Act of 1974 (12 U.S.C. 
                        2604);
                          (iv) carrying out the certification 
                        program under section 106(e) of the 
                        Housing and Urban Development Act of 
                        1968 (12 U.S.C. 1701x(e));
                          (v) carrying out the assistance 
                        program under section 106(a)(4) of the 
                        Housing and Urban Development Act of 
                        1968, including criteria for selection 
                        of applications to receive assistance;
                          (vi) carrying out any functions 
                        regarding abusive, deceptive, or 
                        unscrupulous lending practices relating 
                        to residential mortgage loans that the 
                        Secretary considers appropriate, which 
                        shall include conducting the study 
                        under section 6 of the Expand and 
                        Preserve Home Ownership Through 
                        Counseling Act;
                          (vii) providing for operation of the 
                        advisory committee established under 
                        paragraph (4) of this subsection;
                          (viii) collaborating with community-
                        based organizations with expertise in 
                        the field of housing counseling; and
                          (ix) providing for the building of 
                        capacity to provide housing counseling 
                        services in areas that lack sufficient 
                        services.
          (4) Advisory committee.--
                  (A) In general.--The Secretary shall appoint 
                an advisory committee to provide advice 
                regarding the carrying out of the functions of 
                the Director.
                  (B) Members.--Such advisory committee shall 
                consist of not more than 12 individuals, and 
                the membership of the committee shall equally 
                represent the mortgage and real estate 
                industry, including consumers and housing 
                counseling agencies certified by the Secretary.
                  (C) Terms.--Except as provided in 
                subparagraph (D), each member of the advisory 
                committee shall be appointed for a term of 3 
                years. Members may be reappointed at the 
                discretion of the Secretary.
                  (D) Terms of initial appointees.--As 
                designated by the Secretary at the time of 
                appointment, of the members first appointed to 
                the advisory committee, 4 shall be appointed 
                for a term of 1 year and 4 shall be appointed 
                for a term of 2 years.
                  (E) Prohibition of pay; travel expenses.--
                Members of the advisory committee shall serve 
                without pay, but shall receive travel expenses, 
                including per diem in lieu of subsistence, in 
                accordance with applicable provisions under 
                subchapter I of chapter 57 of title 5, United 
                States Code.
                  (F) Advisory role only.--The advisory 
                committee shall have no role in reviewing or 
                awarding housing counseling grants.
          (5) Scope of homeownership counseling.--In carrying 
        out the responsibilities of the Director, the Director 
        shall ensure that homeownership counseling provided by, 
        in connection with, or pursuant to any function, 
        activity, or program of the Department addresses the 
        entire process of homeownership, including the decision 
        to purchase a home, the selection and purchase of a 
        home, issues arising during or affecting the period of 
        ownership of a home (including refinancing, default and 
        foreclosure, and other financial decisions), and the 
        sale or other disposition of a home.

           *       *       *       *       *       *       *

                              ----------                              

SECTION 106 OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1968

           *       *       *       *       *       *       *

 TECHNICAL ASSISTANCE, COUNSELING TO TENANTS AND HOMEOWNERS, AND LOANS 
            TO SPONSORS OF LOW- AND MODERATE-INCOME HOUSING

  Sec. 106. (a)(1) * * *

           *       *       *       *       *       *       *

  (4) Homeownership and rental counseling assistance.--
          (A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to HUD-
        approved housing counseling agencies and State housing 
        finance agencies.
          (B) Qualified entities.--The Secretary shall 
        establish standards and guidelines for eligibility of 
        organizations (including governmental and nonprofit 
        organizations) to receive assistance under this 
        paragraph, in accordance with subparagraph (D).
          (C) Distribution.--Assistance made available under 
        this paragraph shall be distributed in a manner that 
        encourages efficient and successful counseling 
        programs.
          (D) Limitation on distribution of assistance.--
                  (i) In general.--None of the assistance made 
                available under this paragraph shall be 
                distributed to--
                          (I) any organization which has been 
                        indicted for a violation under Federal 
                        law relating to an election for Federal 
                        office; or
                          (II) any organization which employs 
                        applicable individuals.
                  (ii) Definition of applicable individual.--In 
                this subparagraph, the term ``applicable 
                individual'' means an individual who--
                          (I) is--
                                  (aa) employed by the 
                                organization in a permanent or 
                                temporary capacity;
                                  (bb) contracted or retained 
                                by the organization; or
                                  (cc) acting on behalf of, or 
                                with the express or apparent 
                                authority of, the organization; 
                                and
                          (II) has been indicted for a 
                        violation under Federal law relating to 
                        an election for Federal office.
          (E) Grantmaking process.--In making assistance 
        available under this paragraph, the Secretary shall 
        consider appropriate ways of streamlining and improving 
        the processes for grant application, review, approval, 
        and award.
          (F) Authorization of appropriations.--There are 
        authorized to be appropriated $45,000,000 for each of 
        fiscal years 2009 through 2012 for--
                  (i) the operations of the Office of Housing 
                Counseling of the Department of Housing and 
                Urban Development;
                  (ii) the responsibilities of the Director of 
                Housing Counseling under paragraphs (2) through 
                (5) of subsection (g); and
                  (iii) assistance pursuant to this paragraph 
                for entities providing homeownership and rental 
                counseling.

           *       *       *       *       *       *       *

  (c) Grants for Homeownership Counseling Organizations.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Notification of availability of homeownership 
        counseling.--
                  (A) Notification of availability of 
                homeownership counseling.--
                          (i) * * *
                          (ii) Content.--Notification under 
                        this subparagraph shall--
                                  (I) * * *

           *       *       *       *       *       *       *

                                  (III) notify the homeowner or 
                                mortgage applicant of the 
                                availability of homeownership 
                                counseling provided by 
                                nonprofit organizations 
                                approved by the Secretary and 
                                experienced in the provision of 
                                homeownership counseling, or 
                                provide the toll-free telephone 
                                number described in 
                                subparagraph (D)(i); [and]
                                  (IV) notify the homeowner by 
                                a statement or notice, written 
                                in plain English by the 
                                Secretary of Housing and Urban 
                                Development, in consultation 
                                with the Secretary of Defense 
                                and the Secretary of the 
                                Treasury, explaining the 
                                mortgage and foreclosure rights 
                                of servicemembers, and the 
                                dependents of such 
                                servicemembers, under the 
                                Servicemembers Civil Relief Act 
                                (50 U.S.C. App. 501 et seq.), 
                                including the toll-free 
                                military one source number to 
                                call if servicemembers, or the 
                                dependents of such 
                                servicemembers, require further 
                                assistance[.]; and
                                  (V) notify the housing or 
                                mortgage applicant of the 
                                availability of mortgage 
                                software systems provided 
                                pursuant to subsection (g)(3).

           *       *       *       *       *       *       *

  (e) Certification.--
          [(1) Requirement for assistance.--An organization may 
        not receive assistance for counseling activities under 
        subsection (a)(1)(iii), (a)(2), (c), or (d), unless the 
        organization provides such counseling, to the extent 
        practicable, by individuals who have been certified by 
        the Secretary under this subsection as competent to 
        provide such counseling.]
          (1) Requirement for assistance.--An organization may 
        not receive assistance for counseling activities under 
        subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of 
        this section, or under section 101(e), unless the 
        organization, or the individuals through which the 
        organization provides such counseling, has been 
        certified by the Secretary under this subsection as 
        competent to provide such counseling.
          (2) Standards and examination.--The Secretary shall, 
        by regulation, establish standards and procedures for 
        testing and certifying counselors and for certifying 
        organizations. Such standards and procedures shall 
        require [for certification], for certification of an 
        organization, that each individual through which the 
        organization provides counseling shall demonstrate, 
        and, for certification of an individual, that the 
        individual shall demonstrate, by written examination 
        (as provided under subsection (f)(4)), competence to 
        provide counseling in each of the following areas:
                  (A) * * *

           *       *       *       *       *       *       *

          (3) Requirement under hud programs.--Any 
        homeownership counseling or rental housing counseling 
        (as such terms are defined in subsection (g)(1)) 
        required under, or provided in connection with, any 
        program administered by the Department of Housing and 
        Urban Development shall be provided only by 
        organizations or counselors certified by the Secretary 
        under this subsection as competent to provide such 
        counseling.
          (4) Outreach.--The Secretary shall take such actions 
        as the Secretary considers appropriate to ensure that 
        individuals and organizations providing homeownership 
        or rental housing counseling are aware of the 
        certification requirements and standards of this 
        subsection and of the training and certification 
        programs under subsection (f).
          [(3)] (5) Encouragement.--The Secretary shall 
        encourage organizations engaged in providing 
        homeownership and rental counseling that do not receive 
        assistance under this section to employ organizations 
        and individuals to provide such counseling who are 
        certified under this subsection or meet the 
        certification standards established under this 
        subsection.

           *       *       *       *       *       *       *

  (g) Procedures and Activities.--
          (1) Counseling procedures.--
                  (A) In general.--The Secretary shall 
                establish, coordinate, and monitor the 
                administration by the Department of Housing and 
                Urban Development of the counseling procedures 
                for homeownership counseling and rental housing 
                counseling provided in connection with any 
                program of the Department, including all 
                requirements, standards, and performance 
                measures that relate to homeownership and 
                rental housing counseling.
                  (B) Homeownership counseling.--For purposes 
                of this subsection and as used in the 
                provisions referred to in this subparagraph, 
                the term ``homeownership counseling'' means 
                counseling related to homeownership and 
                residential mortgage loans. Such term includes 
                counseling related to homeownership and 
                residential mortgage loans that is provided 
                pursuant to--
                          (i) section 105(a)(20) of the Housing 
                        and Community Development Act of 1974 
                        (42 U.S.C. 5305(a)(20));
                          (ii) in the United States Housing Act 
                        of 1937--
                                  (I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                  (II) section 8(y)(1)(D) (42 
                                U.S.C. 1437f(y)(1)(D));
                                  (III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                  (IV) section 23(c)(4) (42 
                                U.S.C. 1437u(c)(4));
                                  (V) section 32(e)(4) (42 
                                U.S.C. 1437z-4(e)(4));
                                  (VI) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B));
                                  (VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-
                                1(b)(6), 1437aaa-2(b)(7)); and
                                  (VIII) section 304(c)(4) (42 
                                U.S.C. 1437aaa-3(c)(4));
                          (iii) section 302(a)(4) of the 
                        American Homeownership and Economic 
                        Opportunity Act of 2000 (42 U.S.C. 
                        1437f note);
                          (iv) sections 233(b)(2) and 258(b) of 
                        the Cranston-Gonzalez National 
                        Affordable Housing Act (42 U.S.C. 
                        12773(b)(2), 12808(b));
                          (v) this section and section 101(e) 
                        of the Housing and Urban Development 
                        Act of 1968 (12 U.S.C. 1701x, 
                        1701w(e));
                          (vi) section 220(d)(2)(G) of the Low-
                        Income Housing Preservation and 
                        Resident Homeownership Act of 1990 (12 
                        U.S.C. 4110(d)(2)(G));
                          (vii) sections 422(b)(6), 423(b)(7), 
                        424(c)(4), 442(b)(6), and 443(b)(6) of 
                        the Cranston-Gonzalez National 
                        Affordable Housing Act (42 U.S.C. 
                        12872(b)(6), 12873(b)(7), 12874(c)(4), 
                        12892(b)(6), and 12893(b)(6));
                          (viii) section 491(b)(1)(F)(iii) of 
                        the McKinney-Vento Homeless Assistance 
                        Act (42 U.S.C. 11408(b)(1)(F)(iii));
                          (ix) sections 202(3) and 810(b)(2)(A) 
                        of the Native American Housing and 
                        Self-Determination Act of 1996 (25 
                        U.S.C. 4132(3), 4229(b)(2)(A));
                          (x) in the National Housing Act--
                                  (I) in section 203 (12 U.S.C. 
                                1709), the penultimate 
                                undesignated paragraph of 
                                paragraph (2) of subsection 
                                (b), subsection (c)(2)(A), and 
                                subsection (r)(4);
                                  (II) subsections (a) and 
                                (c)(3) of section 237 (12 
                                U.S.C. 1715z-2); and
                                  (III) subsections (d)(2)(B) 
                                and (m)(1) of section 255 (12 
                                U.S.C. 1715z-20);
                          (xi) section 502(h)(4)(B) of the 
                        Housing Act of 1949 (42 U.S.C. 
                        1472(h)(4)(B)); and
                          (xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 
                        U.S.C. 1701z-7).
                  (C) Rental housing counseling.--For purposes 
                of this subsection, the term ``rental housing 
                counseling'' means counseling related to rental 
                of residential property, which may include 
                counseling regarding future homeownership 
                opportunities and providing referrals for 
                renters and prospective renters to entities 
                providing counseling and shall include 
                counseling related to such topics that is 
                provided pursuant to--
                          (i) section 105(a)(20) of the Housing 
                        and Community Development Act of 1974 
                        (42 U.S.C. 5305(a)(20));
                          (ii) in the United States Housing Act 
                        of 1937--
                                  (I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                  (II) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                  (III) section 23(c)(4) (42 
                                U.S.C. 1437u(c)(4));
                                  (IV) section 32(e)(4) (42 
                                U.S.C. 1437z-4(e)(4));
                                  (V) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B)); and
                                  (VI) section 302(b)(6) (42 
                                U.S.C. 1437aaa-1(b)(6));
                          (iii) section 233(b)(2) of the 
                        Cranston-Gonzalez National Affordable 
                        Housing Act (42 U.S.C. 12773(b)(2));
                          (iv) section 106 of the Housing and 
                        Urban Development Act of 1968 (12 
                        U.S.C. 1701x);
                          (v) section 422(b)(6) of the 
                        Cranston-Gonzalez National Affordable 
                        Housing Act (42 U.S.C. 12872(b)(6));
                          (vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act 
                        (42 U.S.C. 11408(b)(1)(F)(iii));
                          (vii) sections 202(3) and 
                        810(b)(2)(A) of the Native American 
                        Housing and Self-Determination Act of 
                        1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A)); and
                          (viii) the rental assistance program 
                        under section 8 of the United States 
                        Housing Act of 1937 (42 U.S.C. 1437f).
          (2) Standards for materials.--The Secretary, in 
        consultation with the advisory committee established 
        under subsection (g)(4) of the Department of Housing 
        and Urban Development Act, shall establish standards 
        for materials and forms to be used, as appropriate, by 
        organizations providing homeownership counseling 
        services, including any recipients of assistance 
        pursuant to subsection (a)(4).
          (3) Mortgage software systems.--
                  (A) Certification.--The Secretary shall 
                provide for the certification of various 
                computer software programs for consumers to use 
                in evaluating different residential mortgage 
                loan proposals. The Secretary shall require, 
                for such certification, that the mortgage 
                software systems take into account--
                          (i) the consumer's financial 
                        situation and the cost of maintaining a 
                        home, including insurance, taxes, and 
                        utilities;
                          (ii) the amount of time the consumer 
                        expects to remain in the home or 
                        expected time to maturity of the loan;
                          (iii) such other factors as the 
                        Secretary considers appropriate to 
                        assist the consumer in evaluating 
                        whether to pay points, to lock in an 
                        interest rate, to select an adjustable 
                        or fixed rate loan, to select a 
                        conventional or government-insured or 
                        guaranteed loan and to make other 
                        choices during the loan application 
                        process.
                If the Secretary determines that available 
                existing software is inadequate to assist 
                consumers during the residential mortgage loan 
                application process, the Secretary shall 
                arrange for the development by private sector 
                software companies of new mortgage software 
                systems that meet the Secretary's 
                specifications.
                  (B) Use and initial availability.--Such 
                certified computer software programs shall be 
                used to supplement, not replace, housing 
                counseling. The Secretary shall provide that 
                such programs are initially used only in 
                connection with the assistance of housing 
                counselors certified pursuant to subsection 
                (e).
                  (C) Availability.--After a period of initial 
                availability under subparagraph (B) as the 
                Secretary considers appropriate, the Secretary 
                shall take reasonable steps to make mortgage 
                software systems certified pursuant to this 
                paragraph widely available through the Internet 
                and at public locations, including public 
                libraries, senior-citizen centers, public 
                housing sites, offices of public housing 
                agencies that administer rental housing 
                assistance vouchers, and housing counseling 
                centers.
                  (D) Budget compliance.--This paragraph shall 
                be effective only to the extent that amounts to 
                carry out this paragraph are made available in 
                advance in appropriations Acts.
          (4) National public service multimedia campaigns to 
        promote housing counseling.--
                  (A) In general.--The Director of Housing 
                Counseling shall develop, implement, and 
                conduct national public service multimedia 
                campaigns designed to make persons facing 
                mortgage foreclosure, persons considering a 
                subprime mortgage loan to purchase a home, 
                elderly persons, persons who face language 
                barriers, low-income persons, minorities, and 
                other potentially vulnerable consumers aware 
                that it is advisable, before seeking or 
                maintaining a residential mortgage loan, to 
                obtain homeownership counseling from an 
                unbiased and reliable sources and that such 
                homeownership counseling is available, 
                including through programs sponsored by the 
                Secretary of Housing and Urban Development.
                  (B) Contact information.--Each segment of the 
                multimedia campaign under subparagraph (A) 
                shall publicize the toll-free telephone number 
                and website of the Department of Housing and 
                Urban Development through which persons seeking 
                housing counseling can locate a housing 
                counseling agency in their State that is 
                certified by the Secretary of Housing and Urban 
                Development and can provide advice on buying a 
                home, renting, defaults, foreclosures, credit 
                issues, and reverse mortgages.
                  (C) Authorization of appropriations.--There 
                are authorized to be appropriated to the 
                Secretary, not to exceed $3,000,000 for fiscal 
                years 2009, 2010, and 2011, for the 
                development, implementation, and conduct of 
                national public service multimedia campaigns 
                under this paragraph.
                  (D) Foreclosure rescue education programs.--
                          (i) In general.--Ten percent of any 
                        funds appropriated pursuant to the 
                        authorization under subparagraph (C) 
                        shall be used by the Director of 
                        Housing Counseling to conduct an 
                        education program in areas that have a 
                        high density of foreclosure. Such 
                        program shall involve direct mailings 
                        to persons living in such areas 
                        describing--
                                  (I) tips on avoiding 
                                foreclosure rescue scams;
                                  (II) tips on avoiding 
                                predatory lending mortgage 
                                agreements;
                                  (III) tips on avoiding for-
                                profit foreclosure counseling 
                                services; and
                                  (IV) local counseling 
                                resources that are approved by 
                                the Department of Housing and 
                                Urban Development.
                          (ii) Program emphasis.--In conducting 
                        the education program described under 
                        clause (i), the Director of Housing 
                        Counseling shall also place an emphasis 
                        on serving communities that have a high 
                        percentage of retirement communities or 
                        a high percentage of low-income 
                        minority communities.
                          (iii) Terms defined.--For purposes of 
                        this subparagraph:
                                  (I) High density of 
                                foreclosures.--An area has a 
                                ``high density of 
                                foreclosures'' if such area is 
                                one of the metropolitan 
                                statistical areas (as that term 
                                is defined by the Director of 
                                the Office of Management and 
                                Budget) with the highest home 
                                foreclosure rates.
                                  (II) High percentage of 
                                retirement communities.--An 
                                area has a ``high percentage of 
                                retirement communities'' if 
                                such area is one of the 
                                metropolitan statistical areas 
                                (as that term is defined by the 
                                Director of the Office of 
                                Management and Budget) with the 
                                highest percentage of residents 
                                aged 65 or older.
                                  (III) High percentage of low-
                                income minority communities.--
                                An area has a ``high percentage 
                                of low-income minority 
                                communities'' if such area 
                                contains a higher-than-normal 
                                percentage of residents who are 
                                both minorities and low-income, 
                                as defined by the Director of 
                                Housing Counseling.
          (5) Education programs.--The Secretary shall provide 
        advice and technical assistance to States, units of 
        general local government, and nonprofit organizations 
        regarding the establishment and operation of, including 
        assistance with the development of content and 
        materials for, educational programs to inform and 
        educate consumers, particularly those most vulnerable 
        with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-
        income persons, minorities, and other potentially 
        vulnerable consumers), regarding home mortgages, 
        mortgage refinancing, home equity loans, and home 
        repair loans.
  (h) Definitions.--For purposes of this section:
          (1) Nonprofit organization.--The term ``nonprofit 
        organization'' has the meaning given such term in 
        section 104(5) of the Cranston-Gonzalez National 
        Affordable Housing Act (42 U.S.C. 12704(5)), except 
        that subparagraph (D) of such section shall not apply 
        for purposes of this section.
          (2) State.--The term ``State'' means each of the 
        several States, the Commonwealth of Puerto Rico, the 
        District of Columbia, the Commonwealth of the Northern 
        Mariana Islands, Guam, the Virgin Islands, American 
        Samoa, the Trust Territories of the Pacific, or any 
        other possession of the United States.
          (3) Unit of general local government.--The term 
        ``unit of general local government'' means any city, 
        county, parish, town, township, borough, village, or 
        other general purpose political subdivision of a State.
          (4) Hud-approved counseling agency.--The term ``HUD-
        approved counseling agency'' means a private or public 
        nonprofit organization that is--
                  (A) exempt from taxation under section 501(c) 
                of the Internal Revenue Code of 1986; and
                  (B) certified by the Secretary to provide 
                housing counseling services.
          (5) State housing finance agency.--The term ``State 
        housing finance agency'' means any public body, agency, 
        or instrumentality specifically created under State 
        statute that is authorised to finance activities 
        designed to provide housing and related facilities 
        throughout an entire State through land acquisition, 
        construction, or rehabilitation.
                              ----------                              

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

           *       *       *       *       *       *       *

                      UNIFORM SETTLEMENT STATEMENT

  Sec. 4. (a) * * *

           *       *       *       *       *       *       *

  (c) The standard form described in subsection (a) shall 
include, in the case of an appraisal coordinated by an 
appraisal management company (as such term is defined in 
section 1121(11) of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a 
clear disclosure of--
          (1) the fee paid directly to the appraiser by such 
        company; and
          (2) the administration fee charged by such company.

               [SPECIAL] HOME BUYING INFORMATION BOOKLETS

  Sec. 5. [(a) The Secretary shall prepare and distribute 
booklets to help persons borrowing money to finance the 
purchase of residential real estate better to understand the 
nature and costs of real estate settlement services. The 
Secretary shall distribute such booklets to all lenders which 
make federally related mortgage loans.
  [(b) Each booklet shall be in such form and detail as the 
Secretary shall prescribe and, in addition to such other 
information as the Secretary may provide, shall include in 
clear and concise language--
          [(1) a description and explanation of the nature and 
        purpose of each cost incident to a real estate 
        settlement;
          [(2) an explanation and sample of the standard real 
        estate settlement form developed and prescribed under 
        section 4;
          [(3) a description and explanation of the nature and 
        purpose of escrow accounts when used in connection with 
        loans secured by residential real estate;
          [(4) an explanation of the choices available to 
        buyers of residential real estate in selecting persons 
        to provide necessary services incident to a real estate 
        settlement; and
          [(5) an explanation of the unfair practices and 
        unreasonable or unnecessary charges to be avoided by 
        the prospective buyer with respect to a real estate 
        settlement.
Such booklets shall take into consideration differences in real 
estate settlement procedures which may exist among the several 
States and territories of the United States and among separate 
political subdivisions within the same State and territory.]
  (a) Preparation and Distribution.--The Secretary shall 
prepare, at least once every 5 years, a booklet to help 
consumers applying for federally related mortgage loans to 
understand the nature and costs of real estate settlement 
services. The Secretary shall prepare the booklet in various 
languages and cultural styles, as the Secretary determines to 
be appropriate, so that the booklet is understandable and 
accessible to homebuyers of different ethnic and cultural 
backgrounds. The Secretary shall distribute such booklets to 
all lenders that make federally related mortgage loans. The 
Secretary shall also distribute to such lenders lists, 
organized by location, of homeownership counselors certified 
under section 106(e) of the Housing and Urban Development Act 
of 1968 (12 U.S.C. 1701x(e)) for use in complying with the 
requirement under subsection (c) of this section.
  (b) Contents.--Each booklet shall be in such form and detail 
as the Secretary shall prescribe and, in addition to such other 
information as the Secretary may provide, shall include in 
plain and understandable language the following information:
          (1) A description and explanation of the nature and 
        purpose of the costs incident to a real estate 
        settlement or a federally related mortgage loan. The 
        description and explanation shall provide general 
        information about the mortgage process as well as 
        specific information concerning, at a minimum--
                  (A) balloon payments;
                  (B) prepayment penalties; and
                  (C) the trade-off between closing costs and 
                the interest rate over the life of the loan.
          (2) An explanation and sample of the uniform 
        settlement statement required by section 4.
          (3) A list and explanation of lending practices, 
        including those prohibited by the Truth in Lending Act 
        or other applicable Federal law, and of other unfair 
        practices and unreasonable or unnecessary charges to be 
        avoided by the prospective buyer with respect to a real 
        estate settlement.
          (4) A list and explanation of questions a consumer 
        obtaining a federally related mortgage loan should ask 
        regarding the loan, including whether the consumer will 
        have the ability to repay the loan, whether the 
        consumer sufficiently shopped for the loan, whether the 
        loan terms include prepayment penalties or balloon 
        payments, and whether the loan will benefit the 
        borrower.
          (5) An explanation of the right of rescission as to 
        certain transactions provided by sections 125 and 129 
        of the Truth in Lending Act.
          (6) A brief explanation of the nature of a variable 
        rate mortgage and a reference to the booklet entitled 
        ``Consumer Handbook on Adjustable Rate Mortgages'', 
        published by the Board of Governors of the Federal 
        Reserve System pursuant to section 226.19(b)(1) of 
        title 12, Code of Federal Regulations, or to any 
        suitable substitute of such booklet that such Board of 
        Governors may subsequently adopt pursuant to such 
        section.
          (7) A brief explanation of the nature of a home 
        equity line of credit and a reference to the pamphlet 
        required to be provided under section 127A of the Truth 
        in Lending Act.
          (8) Information about homeownership counseling 
        services made available pursuant to section 106(a)(4) 
        of the Housing and Urban Development Act of 1968 (12 
        U.S.C. 1701x(a)(4)), a recommendation that the consumer 
        use such services, and notification that a list of 
        certified providers of homeownership counseling in the 
        area, and their contact information, is available.
          (9) An explanation of the nature and purpose of 
        escrow accounts when used in connection with loans 
        secured by residential real estate and the requirements 
        under section 10 of this Act regarding such accounts.
          (10) An explanation of the choices available to 
        buyers of residential real estate in selecting persons 
        to provide necessary services incidental to a real 
        estate settlement.
          (11) An explanation of a consumer's responsibilities, 
        liabilities, and obligations in a mortgage transaction.
          (12) An explanation of the nature and purpose of real 
        estate appraisals, including the difference between an 
        appraisal and a home inspection.
          (13) Notice that the Office of Housing of the 
        Department of Housing and Urban Development has made 
        publicly available a brochure regarding loan fraud and 
        a World Wide Web address and toll-free telephone number 
        for obtaining the brochure.
The booklet prepared pursuant to this section shall take into 
consideration differences in real estate settlement procedures 
that may exist among the several States and territories of the 
United States and among separate political subdivisions within 
the same State and territory.
  (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. 
Each lender shall also include with the booklet a reasonably 
complete or updated list of homeownership counselors who are 
certified pursuant to section 106(e) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(e)) and located in the 
area of the lender.
  (d) Each lender referred to in subsection (a) shall provide 
the booklet described in such subsection to each person from 
whom it receives or for whom it prepares a written application 
to borrow money to finance the purchase of residential real 
estate. The lender shall provide the HUD-issued booklet in the 
version that is most appropriate for the person receiving it. 
Such booklet shall be provided by delivering it or placing it 
in the mail not later than 3 business days after the lender 
receives the application, but no booklet need be provided if 
the lender denies the application for credit before the end of 
the 3-day period.

           *       *       *       *       *       *       *

   SERVICING OF MORTGAGE LOANS AND ADMINISTRATION OF ESCROW ACCOUNTS

  Sec. 6. (a) * * *

           *       *       *       *       *       *       *

  (e) Duty of Loan Servicer To Respond to Borrower Inquiries.--
          (1) Notice of receipt of inquiry.--
                  (A) In general.--If any servicer of a 
                federally related mortgage loan receives a 
                qualified written request from the borrower (or 
                an agent of the borrower) for information 
                relating to the servicing of such loan, the 
                servicer shall provide a written response 
                acknowledging receipt of the correspondence 
                within [20 days] 5 days (excluding legal public 
                holidays, Saturdays, and Sundays) unless the 
                action requested is taken within such period.

           *       *       *       *       *       *       *

          (2) Action with respect to inquiry.--Not later than 
        [60 days] 30 days (excluding legal public holidays, 
        Saturdays, and Sundays) after the receipt from any 
        borrower of any qualified written request under 
        paragraph (1) and, if applicable, before taking any 
        action with respect to the inquiry of the borrower, the 
        servicer shall--
                  (A) * * *

           *       *       *       *       *       *       *

          (4) Limited extension of response time.--The 30-day 
        period described in paragraph (2) may be extended for 
        not more than 15 days if, before the end of such 30-day 
        period, the servicer notifies the borrower of the 
        extension and the reasons for the delay in responding.
  (f) Damages and Costs.--Whoever fails to comply with any 
provision of this section shall be liable to the borrower for 
each such failure in the following amounts:
          (1) Individuals.--In the case of any action by an 
        individual, an amount equal to the sum of--
                  (A) * * *
                  (B) any additional damages, as the court may 
                allow, in the case of a pattern or practice of 
                noncompliance with the requirements of this 
                section, in an amount not to exceed [$1,000] 
                $2,000.
          (2) Class actions.--In the case of a class action, an 
        amount equal to the sum of--
                  (A) * * *
                  (B) any additional damages, as the court may 
                allow, in the case of a pattern or practice of 
                noncompliance with the requirements of this 
                section, in an amount not greater than [$1,000] 
                $2,000 for each member of the class, except 
                that the total amount of damages under this 
                subparagraph in any class action may not exceed 
                the lesser of--
                          (i) [$500,000] $1,000,000; or

           *       *       *       *       *       *       *

  (g) Administration of Escrow Accounts.--If the terms of any 
federally related mortgage loan require the borrower to make 
payments to the servicer 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 make payments from the escrow account for such 
taxes, insurance premiums, and other charges in a timely manner 
as such payments become due. Any balance in any such account 
that is within the servicer's control at the time the loan is 
paid off shall be promptly returned to the borrower within 20 
business days or credited to a similar account for a new 
mortgage loan to the borrower with the same lender.

           *       *       *       *       *       *       *

  (k) Servicer Prohibitions.--
          (1) In general.--A servicer of a federally related 
        mortgage shall not--
                  (A) obtain force-placed hazard insurance 
                unless there is a reasonable basis to believe 
                the borrower has failed to comply with the loan 
                contract's requirements to maintain property 
                insurance;
                  (B) charge fees for responding to valid 
                qualified written requests (as defined in 
                regulations which the Secretary shall 
                prescribe) under this section;
                  (C) fail to take timely action to respond to 
                a borrower's requests to correct errors 
                relating to allocation of payments, final 
                balances for purposes of paying off the loan, 
                or avoiding foreclosure, or other standard 
                servicer's duties;
                  (D) fail to respond within 10 business days 
                to a request from a borrower to provide the 
                identity, address, and other relevant contact 
                information about the owner assignee of the 
                loan; or
                  (E) fail to comply with any other obligation 
                found by the Secretary, by regulation, to be 
                appropriate to carry out the consumer 
                protection purposes of this Act.
          (2) Force-placed insurance defined.--For purposes of 
        this subsection and subsections (l) and (m), the term 
        ``force-placed insurance'' means hazard insurance 
        coverage obtained by a servicer of a federally related 
        mortgage when the borrower has failed to maintain or 
        renew hazard insurance on such property as required of 
        the borrower under the terms of the mortgage.
  (l) Requirements for Force-Placed Insurance.--A servicer of a 
federally related mortgage shall not be construed as having a 
reasonable basis for obtaining force-placed insurance unless 
the requirements of this subsection have been met.
          (1) Written notices to borrower.--A servicer may not 
        impose any charge on any borrower for force-placed 
        insurance with respect to any property securing a 
        federally related mortgage unless--
                  (A) the servicer has sent, by first-class 
                mail, a written notice to the borrower 
                containing--
                          (i) a reminder of the borrower's 
                        obligation to maintain hazard insurance 
                        on the property securing the federally 
                        related mortgage;
                          (ii) a statement that the servicer 
                        does not have evidence of insurance 
                        coverage of such property;
                          (iii) a clear and conspicuous 
                        statement of the procedures by which 
                        the borrower may demonstrate that the 
                        borrower already has insurance 
                        coverage; and
                          (iv) a statement that the servicer 
                        may obtain such coverage at the 
                        borrower's expense if the borrower does 
                        not provide such demonstration of the 
                        borrower's existing coverage in a 
                        timely manner;
                  (B) the servicer has sent, by first-class 
                mail, a second written notice, at least 30 days 
                after the mailing of the notice under 
                subparagraph (A) that contains all the 
                information described in each clauses of such 
                subparagraph; and
                  (C) the servicer has not received from the 
                borrower any demonstration of hazard insurance 
                coverage for the property securing the mortgage 
                by the end of the 15-day period beginning on 
                the date the notice under subparagraph (B) was 
                sent by the servicer.
          (2) Sufficiency of demonstration.--A servicer of a 
        federally related mortgage shall accept any reasonable 
        form of written confirmation from a borrower of 
        existing insurance coverage, which shall include the 
        existing insurance policy number along with the 
        identity of, and contact information for, the insurance 
        company or agent.
          (3) Termination of force-placed insurance.--Within 15 
        days of the receipt by a servicer of confirmation of a 
        borrower's existing insurance coverage, the servicer 
        shall--
                  (A) terminate the force-placed insurance; and
                  (B) refund to the consumer all force-placed 
                insurance premiums paid by the borrower during 
                any period during which the borrower's 
                insurance coverage and the force-placed 
                insurance coverage were each in effect, and any 
                related fees charged to the consumer's account 
                with respect to the force-placed insurance 
                during such period.
          (4) Clarification with respect to flood disaster 
        protection act.--No provision of this section shall be 
        construed as prohibiting a servicer from providing 
        simultaneous or concurrent notice of a lack of flood 
        insurance pursuant to section 102(e) of the Flood 
        Disaster Protection Act of 1973.
  (m) Limitations on Force-Placed Insurance Charges.--All 
charges for force-placed insurance premiums shall be bona fide 
and reasonable in amount.

           *       *       *       *       *       *       *

                              ----------                              

FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989

           *       *       *       *       *       *       *

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a)  * * *
  (b) Table of Contents.--

           *       *       *       *       *       *       *

            TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

Sec. 1101. Purposes.
     * * * * * * *
Sec. 1124. Appraisal management company minimum qualifications.
Sec. 1125. Automated valuation models used to value certain mortgages.
Sec. 1126. Broker price opinions.
     * * * * * * *

           TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

SEC. 1101. PURPOSE.

  The purpose of this title is to provide that Federal 
financial and public policy interests in real estate related 
transactions will be protected by requiring that real estate 
appraisals utilized in connection with federally related 
transactions are performed in writing, in accordance with 
uniform standards, by individuals whose competency has been 
demonstrated and whose professional conduct will be subject to 
effective supervision and to provide the Appraisal Subcommittee 
with a consumer protection mandate.

SEC. 1103. FUNCTIONS OF APPRAISAL SUBCOMMITTEE.

  (a) In General.--The Appraisal Subcommittee shall--
          [(1) monitor the requirements established by States 
        for the certification and licensing of individuals who 
        are qualified to perform appraisals in connection with 
        federally related transactions, including a code of 
        professional responsibility;]
          (1) monitor the requirements established by States--
                  (A) for the certification and licensing of 
                individuals who are qualified to perform 
                appraisals in connection with federally related 
                transactions, including a code of professional 
                responsibility; and
                  (B) for the registration and supervision of 
                the operations and activities of an appraisal 
                management company;

           *       *       *       *       *       *       *

          (3) maintain a national registry of State certified 
        and licensed appraisers who are eligible to perform 
        appraisals in federally related transactions; [and]
          (4) transmit an annual report to the Congress not 
        later than January 31 of each year which describes the 
        manner in which each function assigned to the Appraisal 
        Subcommittee has been carried out during the preceding 
        year[.];
          (5) monitor the efforts of, and requirements 
        established by, States and the Federal financial 
        institutions regulatory agencies to protect consumers 
        from improper appraisal practices and the predations of 
        unlicensed appraisers in consumer credit transactions 
        that are secured by a consumer's principal dwelling; 
        and
          (6) transmit an annual report to the Congress not 
        later than January 31 of each year that describes the 
        manner in which each function assigned to the Appraisal 
        Subcommittee has been carried out during the preceding 
        year. The report shall also detail the activities of 
        the Appraisal Subcommittee, including the results of 
        all audits of State appraiser regulatory agencies, and 
        provide an accounting of disapproved actions and 
        warnings taken in the previous year, including a 
        description of the conditions causing the disapproval 
        and actions taken to achieve compliance.
          (7) maintain a national registry of appraisal 
        management companies that either are registered with 
        and subject to supervision of a State appraiser 
        certifying and licensing agency or are operating 
        subsidiaries of a Federally regulated financial 
        institution.

           *       *       *       *       *       *       *

SEC. 1104. CHAIRPERSON OF APPRAISAL SUBCOMMITTEE; TERM OF CHAIRPERSON; 
                    MEETINGS.

  (a) * * *
  (b) Meetings; Quorum; Voting.--The Appraisal Subcommittee 
shall meet in public session after notice in the Federal 
Register at the call of the Chairperson or a majority of its 
members when there is business to be conducted. A majority of 
members of the Appraisal Subcommittee shall constitute a quorum 
but 2 or more members may hold hearings. Decisions of the 
Appraisal Subcommittee shall be made by the vote of a majority 
of its members.

           *       *       *       *       *       *       *

SEC. 1106. POWERS OF APPRAISAL SUBCOMMITTEE.

  The Appraisal Subcommittee may, for the purpose of carrying 
out this title, establish advisory committees, hold hearings 
prescribe regulations after notice and opportunity for 
comment,, sit and act at times and places, take testimony, 
receive evidence, provide information, and perform research, as 
the Appraisal Subcommittee considers appropriate. Any 
regulations prescribed by the Appraisal Subcommittee shall 
(unless otherwise provided in this title) be limited to the 
following functions: temporary practice, national registry, 
information sharing, and enforcement. For purposes of 
prescribing regulations, the Appraisal Subcommittee shall 
establish an advisory committee of industry participants, 
including appraisers, lenders, consumer advocates, and 
government agencies, and hold meetings as necessary to support 
the development of regulations.

           *       *       *       *       *       *       *

SEC. 1109. ROSTER OF STATE CERTIFIED OR LICENSED APPRAISERS; AUTHORITY 
                    TO COLLECT AND TRANSMIT FEES.

  (a) In General.--Each State with an appraiser certifying and 
licensing agency whose certifications and licenses comply with 
this title, shall--
          (1) transmit to the Appraisal Subcommittee, no less 
        than annually, a roster listing individuals who have 
        received a State certification or license in accordance 
        with this title; [and]
          (2) transmit reports on sanctions, disciplinary 
        actions, license and certification revocations, and 
        license and certification suspensions on a timely basis 
        to the national registry of the Appraisal Subcommittee;
          (3) transmit reports on a timely basis of supervisory 
        activities involving appraisal management companies or 
        other third-party providers of appraisals and appraisal 
        management services, including investigations initiated 
        and disciplinary actions taken; and
          [(4) collect from such individuals who perform or 
        seek to perform appraisals in federally related 
        transactions, an annual registry fee of not more than 
        $25, such fees to be transmitted by the State agencies 
        to the Council on an annual basis.
Subject to the approval of the Council, the Appraisal 
Subcommittee may adjust the dollar amount of registry fees, up 
to a maximum of $50 per annum, as necessary to carry out its 
functions under this title.]
          (4) collect--
                  (A) from such individuals who perform or seek 
                to perform appraisals in federally related 
                transactions, an annual registry fee of not 
                more than $40, such fees to be transmitted by 
                the State agencies to the Council on an annual 
                basis; and
                  (B) from an appraisal management company that 
                either has registered with a State appraiser 
                certifying and licensing agency in accordance 
                with this title or operates as a subsidiary of 
                a federally regulated financial institution, an 
                annual registry fee of--
                          (i) in the case of such a company 
                        that has been in existence for more 
                        than a year, $25 multiplied by the 
                        number of appraisers working for or 
                        contracting with such company in such 
                        State during the previous year, but 
                        where such $25 amount may be adjusted, 
                        up to a maximum of $50, at the 
                        discretion of the Appraisal 
                        Subcommittee, if necessary to carry out 
                        the Subcommittee's functions under this 
                        title; and
                          (ii) in the case of such a company 
                        that has not been in existence for more 
                        than a year, $25 multiplied by an 
                        appropriate number to be determined by 
                        the Appraisal Subcommittee, and where 
                        such number will be used for 
                        determining the fee of all such 
                        companies that were not in existence 
                        for more than a year, but where such 
                        $25 amount may be adjusted, up to a 
                        maximum of $50, at the discretion of 
                        the Appraisal Subcommittee, if 
                        necessary to carry out the 
                        Subcommittee's functions under this 
                        title.
Subject to the approval of the Council, the Appraisal 
Subcommittee may adjust the dollar amount of registry fees 
under paragraph (4)(A), up to a maximum of $80 per annum, as 
necessary to carry out its functions under this title. The 
Appraisal Subcommittee shall consider at least once every 5 
years whether to adjust the dollar amount of the registry fees 
to account for inflation. In implementing any change in 
registry fees, the Appraisal Subcommittee shall provide 
flexibility to the States for multi-year certifications and 
licenses already in place, as well as a transition period to 
implement the changes in registry fees. In establishing the 
amount of the annual registry fee for an appraisal management 
company, the Appraisal Subcommittee shall have the discretion 
to impose a minimum annual registry fee for an appraisal 
management company to protect against the under reporting of 
the number of appraisers working for or contracted by the 
appraisal management company.
  (b) Use of Amounts Appropriated or Collected.--Amounts 
appropriated for or collected by the Appraisal Subcommittee 
under this section shall be used--
          (1) * * *

           *       *       *       *       *       *       *

          (3) to reimburse the general fund of the Treasury for 
        amounts appropriated to and expended by the Appraisal 
        Subcommittee during the 24-month startup period 
        following the date of the enactment of this title; 
        [and]
          (4) to make grants in such amounts as it deems 
        appropriate to the Appraisal Foundation, to help defray 
        those costs of the foundation relating to the 
        activities of its Appraisal Standards and Appraiser 
        Qualification Boards[.];
          (5) to make grants to State appraiser certifying and 
        licensing agencies to support the efforts of such 
        agencies to comply with this title, including--
                  (A) the complaint process, complaint 
                investigations, and appraiser enforcement 
                activities of such agencies; and
                  (B) the submission of data on State licensed 
                and certified appraisers and appraisal 
                management companies to the National appraisal 
                registry, including information affirming that 
                the appraiser or appraisal management company 
                meets the required qualification criteria and 
                formal and informal disciplinary actions; and
          (6) to report to all State appraiser certifying and 
        licensing agencies when a license or certification is 
        surrendered, revoked, or suspended.
Obligations authorized under this subsection may not exceed 75 
percent of the fiscal year total of incremental increase in 
fees collected and deposited in the ``Appraisal Subcommittee 
Account'' pursuant to subsection (h).

           *       *       *       *       *       *       *

SEC. 1112. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGULATORY 
                    AGENCIES RELATING TO APPRAISER QUALIFICATIONS.

  (a) * * *
  (b) Threshold Level.--Each Federal financial institutions 
regulatory agency and the Resolution Trust Corporation may 
establish a threshold level at or below which a certified or 
licensed appraiser is not required to perform appraisals in 
connection with federally related transactions, if such agency 
determines in writing that such threshold level does not 
represent a threat to the safety and soundness of financial 
institutions, and that such threshold level provides reasonable 
protection for consumers who purchase 1-4 unit single-family 
residences. In determining whether a threshold level provides 
reasonable protection for consumers, each Federal financial 
institutions regulatory agency shall consult with consumer 
groups and convene a public hearing.

           *       *       *       *       *       *       *

SEC. 1113. TRANSACTIONS REQUIRING THE SERVICES OF A STATE CERTIFIED 
                    APPRAISER.

  [In determining] (a) In General._In determining whether an 
appraisal in connection with a federally related transaction 
shall be performed by a State certified appraiser, an agency or 
instrumentality under this title shall consider whether 
transactions, either individually or collectively, are of 
sufficient financial or public policy importance to the United 
States that an individual who performs an appraisal in 
connection with such transactions should be a State certified 
appraiser, except that--
          (1)  * * *
          (2) 1-to-4 unit, single family residential appraisals 
        may be performed by State licensed appraisers unless 
        the size and complexity requires a State certified 
        appraiser, where a complex 1-to-4 unit single family 
        residential appraisal means an appraisal for which the 
        property to be appraised, the form of ownership, the 
        property characteristics, or the market conditions are 
        atypical.
  (b) Appraisals and Appraisal Reviews.--All appraisals 
performed at a property within a State shall be prepared by 
appraisers licensed or certified in the State where the 
property is located. All appraisal reviews, including appraisal 
reviews by a lender, appraisal management company, or other 
third party organization, shall be performed by an appraiser 
who is duly licensed or certified by a State appraisal board.

           *       *       *       *       *       *       *

SEC. 1116. CERTIFICATION AND LICENSING REQUIREMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Definition.--As used in this section, the term ``State 
licensed appraiser'' means an individual who has satisfied the 
requirements for State licensing in a State or territory whose 
criteria for the licensing of a real estate appraiser currently 
meet or exceed the minimum criteria issued by the Appraisal 
Qualifications Board of The Appraisal Foundation for the 
licensing of real estate appraisers.

           *       *       *       *       *       *       *

  [(e) Authority of the Appraisal Subcommittee.--The Appraisal 
Subcommittee shall not set qualifications or experience 
requirements for the States in licensing real estate 
appraisers, including a de minimus standard. Recommendations of 
the Subcommittee shall be nonbinding on the States.]
  (e) Minimum Qualification Requirements.--Any requirements 
established for individuals in the position of ``Trainee 
Appraiser'' and ``Supervisory Appraiser'' shall meet or exceed 
the minimum qualification requirements of the Appraiser 
Qualifications Board of The Appraisal Foundation. The Appraisal 
Subcommittee shall have the authority to enforce these 
requirements.

SEC. 1117. ESTABLISHMENT OF STATE APPRAISER CERTIFYING AND LICENSING 
                    AGENCIES.

  To assure the availability of State certified and licensed 
appraisers for the performance in a State of appraisals in 
federally related transactions and to assure effective 
supervision of the activities of certified and licensed 
appraisers, a State may establish a State appraiser certifying 
and licensing agency. The duties of such agency may 
additionally include the registration and supervision of 
appraisal management companies.

SEC. 1118. MONITORING OF STATE APPRAISER CERTIFYING AND LICENSING 
                    AGENCIES.

  [(a) In General.--The Appraisal Subcommittee shall monitor 
State appraiser certifying and licensing agencies for the 
purpose of determining whether a State agency's policies, 
practices, and procedures are consistent with this title. The 
Appraisal Subcommittee and all agencies, instrumentalities, and 
federally recognized entities under this title shall not 
recognize appraiser certifications and licenses from States 
whose appraisal policies, practices, or procedures are found to 
be inconsistent with this title.]
  (a) In General.--The Appraisal Subcommittee shall monitor 
each State appraiser certifying and licensing agency for the 
purposes of determining whether such agency--
          (1) has policies, practices, funding, staffing, and 
        procedures that are consistent with this title;
          (2) processes complaints and completes investigations 
        in a reasonable time period;
          (3) appropriately disciplines sanctioned appraisers 
        and appraisal management companies;
          (4) maintains an effective regulatory program; and
          (5) reports complaints and disciplinary actions on a 
        timely basis to the national registries on appraisers 
        and appraisal management companies maintained by the 
        Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a 
State licensed or certified appraiser or a registered appraisal 
management company from a national registry on an interim basis 
pending State agency action on licensing, certification, 
registration, and disciplinary proceedings. The Appraisal 
Subcommittee and all agencies, instrumentalities, and Federally 
recognized entities under this title shall not recognize 
appraiser certifications and licenses from States whose 
appraisal policies, practices, funding, staffing, or procedures 
are found to be inconsistent with this title. The Appraisal 
Subcommittee shall have the authority to impose sanctions, as 
described in this section, against a State agency that fails to 
have an effective appraiser regulatory program. In determining 
whether such a program is effective, the Appraisal Subcommittee 
shall include an analyses of the licensing and certification of 
appraisers, the registration of appraisal management companies, 
the issuance of temporary licenses and certifications for 
appraisers, the receiving and tracking of submitted complaints 
against appraisers and appraisal management companies, the 
investigation of complaints, and enforcement actions against 
appraisers and appraisal management companies. The Appraisal 
Subcommittee shall have the authority to impose interim actions 
and suspensions against a State agency as an alternative to, or 
in advance of, the derecognition of a State agency.
  (b) Disapproval by Appraisal Subcommittee.--The Federal 
financial institutions, regulatory agencies, the Federal 
National Mortgage Association, the Federal Home Loan Mortgage 
Corporation, and the Resolution Trust Corporation shall accept 
certifications and licenses awarded by a State appraiser 
certifying the licensing agency unless the Appraisal 
Subcommittee issues a written finding that--
          (1) * * *
          (2) the State agency is not granted authority or 
        sufficient funding by the State which is adequate to 
        permit the agency to carry out its functions under this 
        title; or

           *       *       *       *       *       *       *

SEC. 1119. RECOGNITION OF STATE CERTIFIED AND LICENSED APPRAISERS FOR 
                    PURPOSES OF THIS TITLE.

  (a) Effective Date for Use of Certified or Licensed 
Appraisers Only.--
          (1) * * *
          (2) Extension of effective date.--Subject to the 
        approval of the [council,] Council, the Appraisal 
        Subcommittee may extend, until December 31, 1991, the 
        effective date for the use of certified or licensed 
        appraisers if it makes a written finding that a State 
        has made substantial progress in establishing a State 
        certification and licensing system that appears to 
        conform to the provisions of this title.

           *       *       *       *       *       *       *

SEC. 1121. DEFINITIONS.

  For purposes of this title:
          (1) * * *

           *       *       *       *       *       *       *

          (6) Federal financial institutions regulatory 
        agencies.--The term ``Federal financial institutions 
        regulatory agencies'' means the Board of Governors of 
        the Federal Reserve System, the Federal Deposit 
        Insurance [Corporations,] Corporation, the Office of 
        the Comptroller of the Currency, the Office of Thrift 
        Supervision, and the National Credit Union 
        Administration.

           *       *       *       *       *       *       *

          (8) Chairperson.--The term ``Chairperson'' means the 
        Chairperson of the Appraisal Subcommittee selected by 
        the [council] Council.

           *       *       *       *       *       *       *

          (11) Appraisal management company.--The term 
        ``appraisal management company'' means, in connection 
        with valuing properties collateralizing mortgage loans 
        or mortgages incorporated into a securitization, any 
        external third party authorized either by a creditor of 
        a consumer credit transaction secured by a consumer's 
        principal dwelling or by an underwriter of or other 
        principal in the secondary mortgage markets, that 
        oversees a network or panel of more than 10 certified 
        or licensed appraisers in a State or 25 or more 
        nationally within a given year--
                  (A) to recruit, select, and retain 
                appraisers;
                  (B) to contract with licensed and certified 
                appraisers to perform appraisal assignments;
                  (C) to manage the process of having an 
                appraisal performed, including providing 
                administrative duties such as receiving 
                appraisal orders and appraisal reports, 
                submitting completed appraisal reports to 
                creditors and underwriters, collecting fees 
                from creditors and underwriters for services 
                provided, and reimbursing appraisers for 
                services performed; or
                  (D) to review and verify the work of 
                appraisers.

SEC. 1122. MISCELLANEOUS PROVISIONS.

  (a) Temporary Practice.--
          (1) In general.--A State appraiser certifying or 
        licensing agency shall recognize on a temporary basis 
        the certification or license of an appraiser issued by 
        another State if--
                  (A) the property to be appraised is part of a 
                federally related transaction,
                  (B) the appraiser's business is of a 
                temporary nature, and
                  (C) the appraiser registers with the 
                appraiser certifying or licensing agency in the 
                State of temporary practice.
  [(b) Reciprocity.--The Appraisal Subcommittee shall encourage 
the States to develop reciprocity agreements that readily 
authorize appraisers who are licensed or certified in one State 
(and who are in good standing with their State appraiser 
certifying or licensing agency) to perform appraisals in other 
States.]
  (b) Reciprocity.--A State appraiser certifying or licensing 
agency shall issue a reciprocal certification or license for an 
individual from another State when--
          (1) the appraiser licensing and certification program 
        of such other State is in compliance with the 
        provisions of this title; and
          (2) the appraiser holds a valid certification from a 
        State whose requirements for certification or licensing 
        meet or exceed the licensure standards established by 
        the State where an individual seeks appraisal 
        licensure.
  (c) Supplemental Funding.--Funds available to the Federal 
financial institutions regulatory agencies may be made 
available to the [Federal Financial Institutions Examination 
Council] Financial Institutions Examination Council to support 
[the council's functions] the Council's functions under this 
title.
  (d) Prohibition Against Discrimination.--Criteria established 
by the Federal financial institutions regulatory agencies, the 
Federal National Mortgage Association, the Federal Home Loan 
Mortgage Corporation, and the Resolution Trust Corporation for 
appraiser qualifications in addition to State certification or 
licensing [shall not exclude a certified or licensed appraiser 
for consideration for an assignment solely by virtue of 
membership or lack of membership in any particular appraisal 
organization.] may include education achieved, experience, 
sample appraisals, and references from prior clients. 
Membership in a nationally recognized professional appraisal 
organization may be a criteria considered, though lack of 
membership therein shall not be the sole bar against 
consideration for an assignment under these criteria.

           *       *       *       *       *       *       *

  (g) Appraiser Independence Monitoring.--The Appraisal 
Subcommittee shall monitor each State appraiser certifying and 
licensing agency for the purpose of determining whether such 
agency's policies, practices, and procedures are consistent 
with the purposes of maintaining appraiser independence and 
whether such State has adopted and maintains effective laws, 
regulations, and policies aimed at maintaining appraiser 
independence.
  (h) Approved Education.--The Appraisal Subcommittee shall 
encourage the States to accept courses approved by the 
Appraiser Qualification Board's Course Approval Program.
  (i) Appraisal Complaint National Hotline.--If, 1 year after 
the date of the enactment of this subsection, the Appraisal 
Subcommittee determines that no national hotline exists to 
receive complaints of non-compliance with appraisal 
independence standards and Uniform Standards of Professional 
Appraisal Practice, including complaints from appraisers, 
individuals, or other entities concerning the improper 
influencing or attempted improper influencing of appraisers or 
the appraisal process, the Appraisal Subcommittee shall 
establish and operate such a national hotline, which shall 
include a toll-free telephone number and an email address. If 
the Appraisal Subcommittee operates such a national hotline, 
the Appraisal Subcommittee shall refer complaints for further 
action to appropriate governmental bodies, including a State 
appraiser certifying and licensing agency, a financial 
institution regulator, or other appropriate legal authorities. 
For complaints referred to State appraiser certifying and 
licensing agencies or to Federal regulators, the Appraisal 
Subcommittee shall have the authority to follow up such 
complaint referrals in order to determine the status of the 
resolution of the complaint.

           *       *       *       *       *       *       *

SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

  (a) In General.--The Appraiser Qualifications Board of the 
Appraisal Foundation shall establish minimum qualifications to 
be applied by a State in the registration of appraisal 
management companies. Such qualifications shall include a 
requirement that such companies--
          (1) register with and be subject to supervision by a 
        State appraiser certifying and licensing agency in each 
        State in which such company operates;
          (2) verify that only licensed or certified appraisers 
        are used for federally related transactions;
          (3) require that appraisals coordinated by an 
        appraisal management company comply with the Uniform 
        Standards of Professional Appraisal Practice; and
          (4) require that appraisals are conducted 
        independently and free from inappropriate influence and 
        coercion pursuant to the appraisal independence 
        standards established under section 129E of the Truth 
        in Lending Act.
  (b) Exception for Federally Regulated Financial 
Institutions.--The requirements of subsection (a) shall not 
apply to an appraisal management company that is a subsidiary 
owned and controlled by a financial institution and regulated 
by a federal financial institution regulatory agency. In such 
case, the appropriate federal financial institutions regulatory 
agency shall, at a minimum, develop regulations affecting the 
operations of the appraisal management company to--
          (1) verify that only licensed or certified appraisers 
        are used for federally related transactions;
          (2) require that appraisals coordinated by an 
        institution or subsidiary providing appraisal 
        management services comply with the Uniform Standards 
        of Professional Appraisal Practice; and
          (3) require that appraisals are conducted 
        independently and free from inappropriate influence and 
        coercion pursuant to the appraisal independence 
        standards established under section 129E of the Truth 
        in Lending Act.
  (c) Registration Limitations.--An appraisal management 
company shall not be registered by a State if such company, in 
whole or in part, directly or indirectly, is owned by any 
person who has had an appraiser license or certificate refused, 
denied, cancelled, surrendered in lieu of revocation, or 
revoked in any State. Additionally, each person that owns more 
than 10 percent of an appraisal management company shall be of 
good moral character, as determined by the State appraiser 
certifying and licensing agency, and shall submit to a 
background investigation carried out by the State appraiser 
certifying and licensing agency.
  (d) Regulations.--The Appraisal Subcommittee shall promulgate 
regulations to implement the minimum qualifications developed 
by the Appraiser Qualifications Board under this section, as 
such qualifications relate to the State appraiser certifying 
and licensing agencies. The Appraisal Subcommittee shall also 
promulgate regulations for the reporting of the activities of 
appraisal management companies in determining the payment of 
the annual registry fee.
  (e) Effective Date.--
          (1) In general.--No appraisal management company may 
        perform services related to a federally related 
        transaction in a State after the date that is 36 months 
        after the date of the enactment of this section unless 
        such company is registered with such State or subject 
        to oversight by a federal financial institutions 
        regulatory agency.
          (2) Extension of effective date.--Subject to the 
        approval of the Council, the Appraisal Subcommittee may 
        extend by an additional 12 months the requirements for 
        the registration and supervision of appraisal 
        management companies if it makes a written finding that 
        a State has made substantial progress in establishing a 
        State appraisal management company registration and 
        supervision system that appears to conform with the 
        provisions of this title.

SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN MORTGAGES.

  (a) In General.--Automated valuation models shall adhere to 
quality control standards designed to--
          (1) ensure a high level of confidence in the 
        estimates produced by automated valuation models;
          (2) protect against the manipulation of data;
          (3) seek to avoid conflicts of interest; and
          (4) require random sample testing and reviews, where 
        such testing and reviews are performed by an appraiser 
        who is licensed or certified in the State where the 
        testing and reviews take place.
  (b) Adoption of Regulations.--The Appraisal Subcommittee and 
its member agencies shall promulgate regulations to implement 
the quality control standards required under this section.
  (c) Enforcement.--Compliance with regulations issued under 
this subsection shall be enforced by--
          (1) with respect to a financial institution, or 
        subsidiary owned and controlled by a financial 
        institution and regulated by a federal financial 
        institution or regulatory agency, the federal financial 
        institution regulatory agency that acts as the primary 
        federal supervisor of such financial institution or 
        subsidiary; and
          (2) with respect to other persons, the Appraisal 
        Subcommittee.
  (d) Automated Valuation Model Defined.--For purposes of this 
section, the term ``automated valuation model'' means any 
computerized model used by mortgage originators and secondary 
market issuers to determine the collateral worth of a mortgage 
secured by a consumer's principal dwelling.

SEC. 1126. BROKER PRICE OPINIONS.

  (a) General Prohibition.--Broker price opinions may not be 
used as the sole basis to determine the value of a piece of 
property for the purpose of a loan origination of a residential 
mortgage loan secured by such piece of property.
  (b) Exceptions.--Subsection (a) shall not apply to--
          (1) those transaction as may be designated by the 
        federal financial institutions regulatory agencies or 
        the Federal Housing Finance Agency; or
          (2) real estate brokers who produce broker price 
        opinions or competitive market analyses solely for the 
        purposes of the real estate listing process.
  (c) Broker Price Opinion Defined.--For purposes of this 
section, the term ``broker price opinion'' means an estimate, 
done in lieu of a written appraisal, prepared by a real estate 
broker, agent, or sales person that details the probable 
selling price of a particular piece of real estate property and 
provides a varying level of detail about the property's 
condition, market, and neighborhood, and information on 
comparable sales, but does not include an automated valuation 
model, as defined in section 1125(c).

           *       *       *       *       *       *       *

                              ----------                              

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978

           *       *       *       *       *       *       *

TITLE X--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

           *       *       *       *       *       *       *

SEC. 1011. ESTABLISHMENT OF APPRAISAL SUBCOMMITTEE.

  There shall be within the Council a subcommittee to be known 
as the ``Appraisal Subcommittee'', which shall consist of the 
designees of the heads of the Federal financial institutions 
regulatory agencies and the Federal Housing Finance Agency. 
Each such designee shall be a person who has demonstrated 
knowledge and competence concerning the appraisal profession. 
At all times at least one member of the Appraisal Subcommittee 
shall have demonstrated knowledge and competence through 
licensure, certification, or professional designation within 
the appraisal profession.
                              ----------                              

EQUAL CREDIT OPPORTUNITY ACT

           *       *       *       *       *       *       *

Sec. 701. Prohibited discrimination; reasons for adverse action

  (a)  * * *

           *       *       *       *       *       *       *

  [(e) Each creditor shall promptly furnish an applicant, upon 
written request by the applicant made within a reasonable 
period of time of the application, a copy of the appraisal 
report used in connection with the applicant's application for 
a loan that is or would have been secured by a lien on 
residential real property. The creditor may require the 
applicant to reimburse the creditor for the cost of the 
appraisal.]
  (e) Copies Furnished to Applicants.--
          (1) In general.--Each creditor shall furnish to an 
        applicant a copy of any and all written appraisals and 
        valuations developed in connection with the applicant's 
        application for a loan that is secured or would have 
        been secured by a first lien on a dwelling promptly 
        upon completion, but in no case later than 3 days prior 
        to the closing of the loan, whether the creditor grants 
        or denies the applicant's request for credit or the 
        application is incomplete or withdrawn.
          (2) Waiver.--The applicant may waive the 3 day 
        requirement provided for in paragraph (1), except where 
        otherwise required in law.
          (3) Reimbursement.--The applicant may be required to 
        pay a reasonable fee to reimburse the creditor for the 
        cost of the appraisal, except where otherwise required 
        in law.
          (4) Free copy.--Notwithstanding paragraph (3), the 
        creditor shall provide a copy of each written appraisal 
        or valuation at no additional cost to the applicant.
          (5) Notification to applicants.--At the time of 
        application, the creditor shall notify an applicant in 
        writing of the right to receive a copy of each written 
        appraisal and valuation under this subsection.
          (6) Regulations.--The Board shall prescribe 
        regulations to implement this subsection within 1 year 
        of the date of the enactment of this subsection.
          (7) Valuation defined.--For purposes of this 
        subsection, the term ``valuation'' shall include any 
        estimate of the value of a dwelling developed in 
        connection with a creditor's decision to provide 
        credit, including those values developed pursuant to a 
        policy of a government sponsored enterprise or by an 
        automated valuation model, a broker price opinion, or 
        other methodology or mechanism.

           *       *       *       *       *       *       *

                            DISSENTING VIEWS

    Economists agree that the roots of the current problems in 
the mortgage market can be traced to earlier this decade, when 
falling interest rates encouraged lenders to significantly 
relax--and in some cases abandon--sound underwriting criteria 
when qualifying borrowers for mortgages. Lenders pushed the 
envelope as they raised loan-to-value ratios to grow near term 
profits. As a result, borrowers who at one time might have been 
denied credit or granted limited credit found themselves able 
to borrow larger sums, and they took advantage of this 
opportunity to buy larger, more expensive houses than they 
otherwise would have been able to afford.
    As a consequence of low interest rates and weak 
underwriting standards, home ownership rates rose from the 64 
percent range in the 35 years prior to 1995 to an all-time high 
of 69 percent in 2004. The growing demand for houses caused 
home prices to skyrocket: according to the National Association 
of Realtors, the national median home price went from $110,500 
in 1995 to $190,000 ten years later. Economists have pointed 
out that compared to other economic fundamentals, such as 
rental prices or incomes, these soaring housing prices were 
simply unsustainable.
    Despite the higher risk associated with mortgages to 
borrowers with checkered credit histories, the opportunities to 
earn higher rates of return from subprime mortgages induced 
many lenders to further loosen their underwriting standards 
during the period 2005 to 2007, introducing even more risk into 
the system. Instead of protecting themselves against this 
increased risk by requiring borrowers to make higher down 
payments, lenders engineered new loans that permitted borrowers 
to buy with little or no money down, and compensated for this 
increased risk by charging these borrowers higher interest 
rates and fees. Lenders further eroded the integrity of the 
underwriting process by permitting borrowers to sign up for so-
called ``low documentation'' or ``no documentation'' loans, 
which became known in the mortgage industry as ``liar loans,'' 
so named because they often featured loan applications 
characterized by misstated or falsified income.
    As long as housing prices continued to rise, the risks 
inherent in such shoddy underwriting practices remained hidden. 
Borrowers who had stretched to purchase homes that they 
otherwise could not afford either refinanced their mortgages 
against home price appreciation or sold to other buyers and 
paid off their mortgages. Investors in securities 
collateralized by subprime residential mortgages believed their 
risk was limited: even if risky borrowers defaulted, home price 
appreciation all but guaranteed that the houses that secured 
the underlying mortgages could either be resold to other buyers 
through voluntary sales or, if necessary, foreclosed upon and 
resold at auction with only minimal impairment of the 
collateral securing the loan.
    H.R. 1728, the ``Mortgage Reform and Anti-Predatory Lending 
Act,'' attempts to correct past excesses in the mortgage market 
by establishing new standards for mortgage origination and 
imposing greater legal liability on the secondary mortgage 
market. This is not the first time the Committee has considered 
comprehensive mortgage reform legislation. In the 110th 
Congress, H.R. 3915 was reported favorably out of the Committee 
and passed the House by a vote of 291-127, although no action 
was taken in the Senate. Included in Title I of H.R. 3915 was 
the S.A.F.E. Act, which created a national licensing and 
registration regime for all mortgage loan originators. The 
S.A.F.E. Act later became law as part of the Housing and 
Economic Recovery Act of 2008 (Public Law 110-289), and has, 
according to testimony by state regulators at the Committee's 
legislative hearing on H.R. 1728, already begun to yield 
significant benefits in combating mortgage fraud and weeding 
bad actors out of the industry. Many Republicans supported H.R. 
3915 on the ground that it struck the right balance by 
protecting consumers from unscrupulous originators without 
constricting the ability of the secondary market to fund 
suitable loan products for credit-worthy borrowers or 
increasing the cost of mortgage credit.
    Unfortunately, while it carries over many of the useful 
reforms contained in H.R. 3915, H.R. 1728 strikes a far 
different balance than that earlier legislation, one that will 
undermine the mortgage market just as Americans are starting to 
see preliminary signs of a possible housing bottom. H.R. 1728 
lacks the clarity needed to provide meaningful protection to 
consumers. Rather than focusing on basic underwriting 
standards, as the Federal Reserve has done in promulgating 
comprehensive regulations to combat abusive lending practices 
under the Home Ownership and Equity Protection Act (HOEPA), 
H.R. 1728 imposes new and untested mandates and duties that 
regulators and industry participants do not know how to 
implement, if they can be implemented at all, and that may end 
up punishing the very consumers the Majority wants to protect.
    The Fed's HOEPA rules, which are set to go into effect in 
October 2009, will bring an end to the shoddy underwriting 
standards that plagued the subprime market. Indeed, Chairman 
Frank has previously acknowledged that ``the Federal Reserve . 
. . has adopted regulations . . . so that the predatory and 
deceptive lending practices that led to the subprime crisis 
will be prohibited.'' But rather than allow the Fed's carefully 
vetted regulations to take effect, the Majority has chosen to 
superimpose onto those rules its own set of policy 
prescriptions, which seem likely only to inject legal 
uncertainty into the lending process, thereby raising the costs 
and reducing the availability of mortgage credit to consumers.
    At the only legislative hearing that the Majority convened 
to consider H.R. 1728's complex and far-reaching provisions, 
representatives of the Federal Reserve, consumer advocacy 
groups, and affected industries expressed a number of concerns 
about various aspects of this bill. The director of the Federal 
Reserve's consumer affairs division, Sandra Braunstein, 
testified that the bill seemed ``intended to drive the market 
into 30-year fixed loans,'' which ``could have the consequence 
of very much limiting the kinds of products that become 
available when the markets reset.'' Even after the Committee 
adopted an amendment to expand the scope of the safe harbor and 
include certain prime ARMs within its coverage, the bill is 
still constructed in a way to expose to legal liability many 
safe and sustainable mortgage products, which will result in 
most lenders simply choosing not to offer those products. 
Interestingly, some of the most pointed criticism of H.R. 1728 
came from consumer groups. Margot Saunders of the National 
Consumer Law Center, testifying on behalf of a coalition of 
consumer advocacy and labor organizations from across the 
country, called the bill ``convoluted'' and ``virtually 
impossible as a mechanism to solve the current problem.''
    One of the changes to last Congress' legislation that has 
drawn the most concern is a new ``credit risk retention'' 
requirement that would force loan originators to hold 5 percent 
of any mortgage that does not fit the bill's narrow safe 
harbor. While there was general consensus at the legislative 
hearing on H.R. 1728 that requiring lenders to retain more 
``skin in the game'' was a worthy concept, there was general 
confusion as to how the execution of that concept in the bill 
language would work in practice, particularly for smaller non-
bank lenders that do not enjoy the same reliable sources of 
funding as depository institutions. The Majority attempted to 
address those concerns through an amendment offered at the 
mark-up giving the Federal banking regulators greater 
discretion in writing rules to implement the ``credit risk 
retention'' requirement, but serious questions remain as to 
whether the requirement is either workable or necessary in 
light of the bill's other reforms imposing more stringent 
mortgage underwriting criteria.
    Like H.R. 3915, H.R. 1728 contains provisions imposing 
liability on assignees and securitizers for loans that violate 
the ``ability to repay'' and ``net tangible benefit'' 
standards, giving consumers a cause of action for rescission of 
the loan and costs, unless the assignee or securitizer provides 
a cure to make the loan conform to the minimum standards within 
90 days of receiving notice from the consumer. These liability 
provisions are considerably more stringent than H.R. 3915's, 
and eliminate one of the protections that H.R. 3915 offered to 
assignees: under H.R. 3915, assignees and securitizers could 
avoid liability if they could show that they had policies 
against buying loans that were outside the safe harbor, had 
exercised ``reasonable due diligence'' to adhere to such 
policies, and had obtained representations and warranties from 
the seller of the loans that the loans did not violate these 
minimum standards. Moreover, the Committee adopted an amendment 
authorizing suits by state Attorneys General to enforce H.R. 
1728's provisions, magnifying the already substantial legal 
risks faced by participants in the mortgage market under the 
bill.
    As if creating new avenues for additional litigation were 
not enough, H.R. 1728 provides a taxpayer subsidy for such 
activity by authorizing a $140 million fund for state and local 
legal organizations to provide foreclosure-related legal 
assistance to homeowners in default or foreclosure or tenants 
facing eviction due to foreclosure. Fortunately, the Committee 
adopted--with Chairman Frank's support--an amendment offered by 
Mrs. Bachmann that would render groups like ACORN ineligible 
for these legal assistance funds. The Bachmann amendment is 
identical to language signed into law in the Housing and 
Economic Recovery Act of 2008 (HERA) which barred any group 
indicted for federal election fraud from receiving housing 
counseling funds. Republicans will strongly oppose any attempt 
to remove or modify the Bachmann amendment as H.R. 1728 moves 
through the legislative process.
    Finally, H.R. 1728 includes so-called ``tenant protection'' 
provisions creating new federal requirements that purchasers of 
foreclosed properties honor both private leases and Section 8 
vouchers. While well-intentioned, these provisions could have a 
chilling effect on efforts to promote purchases of foreclosed 
properties and on owner participation in the Section 8 program, 
by making such participation more onerous. Currently, 
foreclosure is grounds for termination of a lease in the 
majority of states. While we share the Majority's concern for 
tenants facing eviction, we are not convinced that the 
provisions in H.R. 1728 are the most prudent way to provide 
tenant protections. It is important to note that a Section 8 
tenant does not lose the government housing subsidy if his or 
her building goes into foreclosure. In fact, many new owners of 
these properties may well opt to renew existing Section 8 
tenants or voluntarily agree to allow them to stay for the 
remainder of their Housing Assistance Payment (HAP) contract, 
but mandating owner adherence to a contract to which they were 
not a party is a dangerous precedent to set. It could also have 
the unintended consequence of discouraging sales of foreclosed 
properties, thereby frustrating the effectiveness of government 
policies designed to reduce the inventory of such properties 
and potentially prolonging the housing downturn. Mr. Neugebauer 
offered an amendment to strike these misguided restrictions 
from the bill, but it was defeated on a largely party-line 
vote.
    Because we believe that the Majority's failure to remedy 
the many problems with H.R. 1728 identified during the 
Committee's consideration of the legislation will likely result 
in further damage to a fragile mortgage market in need of 
greater certainty--not untested and ill-defined mandates from 
Washington--we must reluctantly oppose it.
                                   Spencer Bachus.
                                   Jeb Hensarling.
                                   Randy Neugebauer.
                                   Erik Paulsen.
                                   Scott Garrett.

                                  
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