111TH CONGRESS 

1ST SESSION H. R. 1728 

AN ACT 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Mortgage Reform and Anti-Predatory Lending Act’’. 

4 (b) TABLE OF CONTENTS.—The table of contents for 

5 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. 

Sec. 107. Study of shared appreciation mortgages. 

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. 
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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. Default and foreclosure database. 

Sec. 408. Definitions for counseling-related programs. 

Sec. 409. Accountability and transparency for grant recipients. 

Sec. 410. Updating and simplification of mortgage information booklet. 

Sec. 411. Home inspection counseling. 

Sec. 412. Warnings to homeowners of foreclosure rescue scams. 

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 Monitoring, Approved Appraiser Education, Appraisal Management Companies, Appraiser Complaint Hotline, 

Automated Valuation Models, and Broker Price Opinions. 

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 VIII—REPORTS 

Sec. 801. GAO study report on government efforts to combat mortgage foreclosure rescue scams and loan modification fraud. 

TITLE IX—MULTIFAMILY MORTGAGE RESOLUTION 

Sec. 901. Multifamily mortgage resolution program. 

TITLE X—STUDY OF EFFECT OF DRYWALL PRESENCE ON 

FORECLOSURES 
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Sec. 1001. Study of effect of drywall presence on foreclosures. 

TITLE XI—FANNIE MAE GUIDELINES FOR PURCHASE OF 

CONDOMINIUM AND COOPERATIVE HOUSING MORTGAGES 

Sec. 1101. Guidelines for purchase of condominium and cooperative housing 

mortgages. 

1 TITLE I—RESIDENTIAL MORT2 GAGE LOAN ORIGINATION 

3 STANDARDS 

4 SEC. 101. DEFINITIONS. 

5 Section 103 of the Truth in Lending Act (15 U.S.C. 

6 1602) is amended by adding at the end the following new 

7 subsection: 

8 ‘‘(cc) DEFINITIONS RELATING TO MORTGAGE ORIGI9 NATION AND RESIDENTIAL MORTGAGE LOANS.— 

10 ‘‘(1) COMMISSION.—Unless otherwise specified, 

11 the term ‘Commission’ means the Federal Trade 

12 Commission. 

13 ‘‘(2) FEDERAL BANKING AGENCIES.—The term 

14 ‘Federal banking agencies’ means the Board of Gov15 ernors of the Federal Reserve System, the Comp16 troller of the Currency, the Director of the Office of 

17 Thrift Supervision, the Federal Deposit Insurance 

18 Corporation, and the National Credit Union Admin19 istration Board. All rule writing by the ‘Federal 

20 banking agencies’ as designated by the Mortgage 

21 Reform and Anti-Predatory Lending Act will be co22 ordinated through the Financial Institutions Exam-
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1 ination Council in consultation with the Chairman of 

2 the State Liaison Committee. 

3 ‘‘(3) MORTGAGE ORIGINATOR.—The term 

4 ‘mortgage originator’— 

5 ‘‘(A) means any person who, for direct or 

6 indirect compensation or gain, or in the expec7 tation of direct or indirect compensation or 

8 gain— 

9 ‘‘(i) takes a residential mortgage loan 

10 application; 

11 ‘‘(ii) assists a consumer in obtaining 

12 or applying to obtain a residential mort13 gage loan; or 

14 ‘‘(iii) offers or negotiates terms of a 

15 residential mortgage loan; 

16 ‘‘(B) includes any person who represents 

17 to the public, through advertising or other 

18 means of communicating or providing informa19 tion (including the use of business cards, sta20 tionery, brochures, signs, rate lists, or other 

21 promotional items), that such person can or will 

22 provide any of the services or perform any of 

23 the activities described in subparagraph (A); 

24 ‘‘(C) does not include any person who is (i) 

25 not otherwise described in subparagraph (A) or 
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1 (B) and who performs purely administrative or 

2 clerical tasks on behalf of a person who is de3 scribed in any such subparagraph, or (ii) an 

4 employee of a retailer of manufactured homes 

5 who is not described in clause (i) or (iii) of sub6 paragraph (A) and who does not advise a con7 sumer on loan terms (including rates, fees, and 

8 other costs); 

9 ‘‘(D) does not include a person or entity 

10 that only performs real estate brokerage activi11 ties and is licensed or registered in accordance 

12 with applicable State law, unless such person or 

13 entity is compensated for performing such bro14 kerage activities by a lender, a mortgage 

15 broker, or other mortgage originator or by any 

16 agent of such lender, mortgage broker, or other 

17 mortgage originator; 

18 ‘‘(E) does not include, with respect to a 

19 residential mortgage loan, a person, estate, or 

20 trust that provides mortgage financing for the 

21 sale of 1 property in any 36-month period, pro22 vided that such loan— 

23 ‘‘(i) is fully amortizing; 

24 ‘‘(ii) is with respect to a sale for 

25 which the seller determines in good faith 
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1 and documents that the buyer has a rea2 sonable ability to repay the loan; 

3 ‘‘(iii) has a fixed rate or an adjustable 

4 rate that is adjustable after 5 or more 

5 years, subject to reasonable annual and 

6 lifetime limitations on interest rate in7 creases; and 

8 ‘‘(iv) meets any other criteria the 

9 Federal banking agencies may prescribe; 

10 and 

11 ‘‘(F) does not include a servicer or servicer 

12 employees, agents and contractors, including 

13 but not limited to those who offer or negotiate 

14 terms of a residential mortgage loan for pur15 poses of renegotiating, modifying, replacing and 

16 subordinating principal of existing mortgages 

17 where borrowers are behind in their payments, 

18 in default or have a reasonable likelihood of 

19 being in default or falling behind. 

20 ‘‘(4) NATIONWIDE MORTGAGE LICENSING SYS21 TEM AND REGISTRY.—The term ‘Nationwide Mort22 gage Licensing System and Registry’ has the same 

23 meaning as in the Secure and Fair Enforcement for 

24 Mortgage Licensing Act of 2008. 
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1 ‘‘(5) OTHER DEFINITIONS RELATING TO MORT2 GAGE ORIGINATOR.—For purposes of this sub3 section, a person ‘assists a consumer in obtaining or 

4 applying to obtain a residential mortgage loan’ by, 

5 among other things, advising on residential mort6 gage loan terms (including rates, fees, and other 

7 costs), preparing residential mortgage loan packages, 

8 or collecting information on behalf of the consumer 

9 with regard to a residential mortgage loan. 

10 ‘‘(6) RESIDENTIAL MORTGAGE LOAN.—The 

11 term ‘residential mortgage loan’ means any con12 sumer credit transaction that is secured by a mort13 gage, deed of trust, or other equivalent consensual 

14 security interest on a dwelling or on residential real 

15 property that includes a dwelling, other than a con16 sumer credit transaction under an open end credit 

17 plan or a reverse mortgage or, for purposes of sec18 tions 129B and 129C and section 128(a) (16), (17), 

19 and (18), and 128(f) and any regulations promul20 gated thereunder, an extension of credit relating to 

21 a plan described in section 101(53D) of title 11, 

22 United States Code. 

23 ‘‘(7) SECRETARY.—The term ‘Secretary’, when 

24 used in connection with any transaction or person 
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1 involved with a residential mortgage loan, means the 

2 Secretary of Housing and Urban Development. 

3 ‘‘(8) SECURITIZATION VEHICLE.—The term 

4 ‘securitization vehicle’ means a trust, corporation, 

5 partnership, limited liability entity, special purpose 

6 entity, or other structure that— 

7 ‘‘(A) is the issuer, or is created by the 

8 issuer, of mortgage pass-through certificates, 

9 participation certificates, mortgage-backed secu10 rities, or other similar securities backed by a 

11 pool of assets that includes residential mortgage 

12 loans; and 

13 ‘‘(B) holds such loans. 

14 ‘‘(9) SECURITIZER.—The term ‘securitizer’ 

15 means the person that transfers, conveys, or assigns, 

16 or causes the transfer, conveyance, or assignment of, 

17 residential mortgage loans, including through a spe18 cial purpose vehicle, to any securitization vehicle, ex19 cluding any trustee that holds such loans solely for 

20 the benefit of the securitization vehicle. 

21 ‘‘(10) SERVICER.—The term ‘servicer’ has the 

22 same meaning as in section 6(i)(2) of the Real Es23 tate Settlement Procedures Act of 1974.’’. 
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1 SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 

2 (a) IN GENERAL.—Chapter 2 of the Truth in Lend3 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

4 after section 129A the following new section: 

5 ‘‘§ 129B. Residential mortgage loan origination 

6 ‘‘(a) FINDING AND PURPOSE.— 

7 ‘‘(1) FINDING.—The Congress finds that eco8 nomic stabilization would be enhanced by the protec9 tion, limitation, and regulation of the terms of resi10 dential mortgage credit and the practices related to 

11 such credit, while ensuring that responsible, afford12 able mortgage credit remains available to consumers. 

13 ‘‘(2) PURPOSE.—It is the purpose of this sec14 tion and section 129C to assure that consumers are 

15 offered and receive residential mortgage loans on 

16 terms that reasonably reflect their ability to repay 

17 the loans and that are understandable and not un18 fair, deceptive or abusive. 

19 ‘‘(b) DUTY OF CARE.— 

20 ‘‘(1) STANDARD.—Subject to regulations pre21 scribed under this subsection, each mortgage origi22 nator shall, in addition to the duties imposed by oth23 erwise applicable provisions of State or Federal 

24 law— 

25 ‘‘(A) be qualified and, when required, reg26 istered and licensed as a mortgage originator in 
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1 accordance with applicable State or Federal 

2 law, including the Secure and Fair Enforcement 

3 for Mortgage Licensing Act of 2008; 

4 ‘‘(B) with respect to each consumer seek5 ing or inquiring about a residential mortgage 

6 loan, diligently work to present the consumer 

7 with a range of residential mortgage loan prod8 ucts for which the consumer likely qualifies and 

9 which are appropriate to the consumer’s exist10 ing circumstances, based on information known 

11 by, or obtained in good faith by, the originator; 

12 ‘‘(C) make full, complete, and timely dis13 closure to each such consumer in writing, the 

14 receipt and understanding of which shall be ac15 knowledged by the signature of the mortgage 

16 originator and the consumer, of— 

17 ‘‘(i) the comparative costs and bene18 fits of each residential mortgage loan prod19 uct offered, discussed, or referred to by the 

20 originator (and such comparative costs and 

21 benefits for each such product shall be pre22 sented side by side and the disclosures for 

23 each such product shall have equal promi24 nence); 
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1 ‘‘(ii) the nature of the originator’s re2 lationship to the consumer (including the 

3 cost of the services to be provided by the 

4 originator and a statement that the mort5 gage originator is or is not acting as an 

6 agent for the consumer, as the case may 

7 be); and 

8 ‘‘(iii) any relevant conflicts of interest 

9 between the originator and the consumer; 

10 ‘‘(D) certify to the creditor, with respect to 

11 any transaction involving a residential mortgage 

12 loan, that the mortgage originator has fulfilled 

13 all requirements applicable to the originator 

14 under this section with respect to the trans15 action; and 

16 ‘‘(E) include on all loan documents any 

17 unique identifier of the mortgage originator 

18 provided by the Nationwide Mortgage Licensing 

19 System and Registry. 

20 ‘‘(2) CLARIFICATION OF EXTENT OF DUTY TO

21 PRESENT RANGE OF PRODUCTS AND APPROPRIATE

22 PRODUCTS.— 

23 ‘‘(A) NO DUTY TO OFFER PRODUCTS FOR

24 WHICH ORIGINATOR IS NOT AUTHORIZED TO
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1 TAKE AN APPLICATION.—Paragraph (1)(B) 

2 shall not be construed as requiring— 

3 ‘‘(i) a mortgage originator to present 

4 to any consumer any specific residential 

5 mortgage loan product that is offered by a 

6 creditor which does not accept consumer 

7 referrals from, or consumer applications 

8 submitted by or through, such originator; 

9 or 

10 ‘‘(ii) a creditor to offer products that 

11 the creditor does not offer to the general 

12 public. 

13 ‘‘(B) APPROPRIATE LOAN PRODUCT.—For 

14 purposes of paragraph (1)(B), a residential 

15 mortgage loan shall be presumed to be appro16 priate for a consumer if— 

17 ‘‘(i) the mortgage originator deter18 mines in good faith, based on then existing 

19 information and without undergoing a full 

20 underwriting process, that the consumer 

21 has a reasonable ability to repay and, in 

22 the case of a refinancing of an existing res23 idential mortgage loan, receives a net tan24 gible benefit, as determined in accordance 
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1 with regulations prescribed under sub2 sections (a) and (b) of section 129C; and 

3 ‘‘(ii) the loan does not have predatory 

4 characteristics or effects (such as equity 

5 stripping and excessive fees and abusive 

6 terms) as determined in accordance with 

7 regulations prescribed under paragraph 

8 (4). 

9 ‘‘(3) RULES OF CONSTRUCTION.—No provision 

10 of this subsection shall be construed as— 

11 ‘‘(A) creating an agency or fiduciary rela12 tionship between a mortgage originator and a 

13 consumer if the originator does not hold himself 

14 or herself out as such an agent or fiduciary; or 

15 ‘‘(B) restricting a mortgage originator 

16 from holding himself or herself out as an agent 

17 or fiduciary of a consumer subject to any addi18 tional duty, requirement, or limitation applica19 ble to agents or fiduciaries under any Federal 

20 or State law. 

21 ‘‘(4) REGULATIONS.— 

22 ‘‘(A) IN GENERAL.—The Federal banking 

23 agencies, in consultation with the Secretary, 

24 and the Commission, shall jointly prescribe reg25 ulations to— 
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1 ‘‘(i) further define the duty estab2 lished under paragraph (1); 

3 ‘‘(ii) implement the requirements of 

4 this subsection; 

5 ‘‘(iii) establish the time period within 

6 which any disclosure required under para7 graph (1) shall be made to the consumer; 

8 and 

9 ‘‘(iv) establish such other require10 ments for any mortgage originator as such 

11 regulatory agencies may determine to be 

12 appropriate to meet the purposes of this 

13 subsection. 

14 ‘‘(B) COMPLEMENTARY AND NONDUPLICA15 TIVE DISCLOSURES.—The agencies referred to 

16 in subparagraph (A) shall endeavor to make the 

17 required disclosures to consumers under this 

18 subsection complementary and nonduplicative 

19 with other disclosures for mortgage consumers 

20 to the extent such efforts— 

21 ‘‘(i) are practicable; and 

22 ‘‘(ii) do not reduce the value of any 

23 such disclosure to recipients of such disclo24 sures. 
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1 ‘‘(5) COMPLIANCE PROCEDURES REQUIRED.— 

2 The Federal banking agencies shall prescribe regula3 tions requiring depository institutions to establish 

4 and maintain procedures reasonably designed to as5 sure and monitor the compliance of such depository 

6 institutions, the subsidiaries of such institutions, 

7 and the employees of such institutions or subsidi8 aries with the requirements of this section and the 

9 registration procedures established under section 

10 1507 of the Secure and Fair Enforcement for Mort11 gage Licensing Act of 2008.’’. 

12 (b) CLERICAL AMENDMENT.—The table of sections 

13 for chapter 2 of the Truth in Lending Act is amended 

14 by inserting after the item relating to section 129 the fol15 lowing new items: 

‘‘129A. Fiduciary duty of servicers of pooled residential mortgages. 

‘‘129B. Residential mortgage loan origination.’’. 

16 SEC. 103. PROHIBITION ON STEERING INCENTIVES. 

17 Section 129B of the Truth in Lending Act (as added 

18 by section 102(a)) is amended by inserting after sub19 section (b) the following new subsection: 

20 ‘‘(c) PROHIBITION ON STEERING INCENTIVES.— 

21 ‘‘(1) IN GENERAL.—For any mortgage loan, the 

22 total amount of direct and indirect compensation 

23 from all sources permitted to a mortgage originator 
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1 may not vary based on the terms of the loan (other 

2 than the amount of the principal). 

3 ‘‘(2) RESTRUCTURING OF FINANCING ORIGINA4 TION FEE.— 

5 ‘‘(A) IN GENERAL.—For any mortgage 

6 loan, a mortgage originator may not arrange 

7 for a consumer to finance through rate any 

8 origination fee or cost except bona fide third 

9 party settlement charges not retained by the 

10 creditor or mortgage originator. 

11 ‘‘(B) EXCEPTION.—Notwithstanding para12 graph subparagraph (A), a mortgage originator 

13 may arrange for a consumer to finance through 

14 rate an origination fee or cost if— 

15 ‘‘(i) the mortgage originator does not 

16 receive any other compensation from the 

17 consumer except the compensation that is 

18 financed through rate; and 

19 ‘‘(ii) the mortgage is a qualified mort20 gage. 

21 ‘‘(3) REGULATIONS.—The Federal banking 

22 agencies, in consultation with the Secretary and the 

23 Commission, shall jointly prescribe regulations to 

24 prohibit— 
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1 ‘‘(A) mortgage originators from steering 

2 any consumer to a residential mortgage loan 

3 that— 

4 ‘‘(i) the consumer lacks a reasonable 

5 ability to repay (in accordance with regula6 tions prescribed under section 129C(a)); 

7 ‘‘(ii) in the case of a refinancing of a 

8 residential mortgage loan, does not provide 

9 the consumer with a net tangible benefit 

10 (in accordance with regulations prescribed 

11 under section 129C(b)); or 

12 ‘‘(iii) has predatory characteristics or 

13 effects (such as equity stripping, excessive 

14 fees, or abusive terms); 

15 ‘‘(B) mortgage originators from steering 

16 any consumer from a residential mortgage loan 

17 for which the consumer is qualified that is a 

18 qualified mortgage (as defined in section 

19 129C(c)(3)) to a residential mortgage loan that 

20 is not a qualified mortgage; 

21 ‘‘(C) abusive or unfair lending practices 

22 that promote disparities among consumers of 

23 equal credit worthiness but of different race, 

24 ethnicity, gender, or age; 
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1 ‘‘(D) mortgage originators from assessing 

2 excessive points and fees (as such term is de3 scribed under section 103(aa)(4) of the Truth 

4 in Lending Act (15 U.S.C. 1602(aa)(4))) to a 

5 consumer for the origination of a residential 

6 mortgage loan based on such consumer’s deci7 sion to finance all or part of the payment 

8 through the rate for such points and fees; and 

9 ‘‘(E) mortgage originators from— 

10 ‘‘(i) mischaracterizing the credit his11 tory of a consumer or the residential mort12 gage loans available to a consumer; 

13 ‘‘(ii) mischaracterizing or suborning 

14 the mischaracterization of the appraised 

15 value of the property securing the exten16 sion of credit; or 

17 ‘‘(iii) if unable to suggest, offer, or 

18 recommend to a consumer a loan that is 

19 not more expensive than a loan for which 

20 the consumer qualifies, discouraging a con21 sumer from seeking a home mortgage loan 

22 secured by a consumer’s principal dwelling 

23 from another mortgage originator. 

24 ‘‘(4) RULES OF CONSTRUCTION.—No provision 

25 of this subsection shall be construed as— 
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1 ‘‘(A) permitting yield spread premiums or 

2 other similar incentive compensation; 

3 ‘‘(B) affecting the mechanism for pro4 viding the total amount of direct and indirect 

5 compensation permitted to a mortgage origi6 nator; 

7 ‘‘(C) limiting or affecting the amount of 

8 compensation received by a creditor upon the 

9 sale of a consummated loan to a subsequent 

10 purchaser; 

11 ‘‘(D) restricting a consumer’s ability to fi12 nance, including through principal, any origina13 tion fees or costs permitted under this sub14 section, or the mortgage originator’s ability to 

15 receive such fees or costs (including compensa16 tion) from any person, so long as such fees or 

17 costs were fully and clearly disclosed to the con18 sumer earlier in the application process as re19 quired by 129B(b)(1)(C)(i) and do not vary 

20 based on the terms of the loan (other than the 

21 amount of the principal) or the consumer’s de22 cision about whether to finance such fees or 

23 costs; or 

24 ‘‘(E) prohibiting incentive payments to a 

25 mortgage originator based on the number of 
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1 residential mortgage loans originated within a 

2 specified period of time.’’. 

3 SEC. 104. LIABILITY. 

4 Section 129B of the Truth in Lending Act is amend5 ed by inserting after subsection (c) (as added by section 

6 103) the following new subsection: 

7 ‘‘(d) LIABILITY FOR VIOLATIONS.— 

8 ‘‘(1) IN GENERAL.—For purposes of providing 

9 a cause of action for any failure by a mortgage origi10 nator to comply with any requirement imposed 

11 under this section and any regulation prescribed 

12 under this section, subsections (a) and (b) of section 

13 130 shall be applied with respect to any such failure 

14 by substituting ‘mortgage originator’ for ‘creditor’ 

15 each place such term appears in each such sub16 section. 

17 ‘‘(2) MAXIMUM.—The maximum amount of any 

18 liability of a mortgage originator under paragraph 

19 (1) to a consumer for any violation of this section 

20 shall not exceed the greater of actual damages or an 

21 amount equal to 3 times the total amount of direct 

22 and indirect compensation or gain accruing to the 

23 mortgage originator in connection with the residen24 tial mortgage loan involved in the violation, plus the 
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1 costs to the consumer of the action, including a rea2 sonable attorney’s fee.’’. 

3 SEC. 105. REGULATIONS. 

4 (a) DISCRETIONARY REGULATORY AUTHORITY.— 

5 Section 129B of the Truth in Lending Act is amended 

6 by inserting after subsection (d) (as added by section 104) 

7 the following new subsection: 

8 ‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.— 

9 ‘‘(1) IN GENERAL.—The Federal banking agen10 cies shall, by regulations issued jointly, prohibit or 

11 condition terms, acts or practices relating to residen12 tial mortgage loans that the agencies find to be abu13 sive, unfair, deceptive, predatory, inconsistent with 

14 reasonable underwriting standards, necessary or 

15 proper to ensure that responsible, affordable mort16 gage credit remains available to consumers in a 

17 manner consistent with the purposes of this section 

18 and section 129B, necessary or proper to effectuate 

19 the purposes of this section and section 129C, to 

20 prevent circumvention or evasion thereof, or to facili21 tate compliance with such sections, or are not in the 

22 interest of the borrower. 

23 ‘‘(2) APPLICATION.—The regulations prescribed 

24 under paragraph (1) shall be applicable to all resi25 dential mortgage loans and shall be applied in the 
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1 same manner as regulations prescribed under section 

2 105. 

3 ‘‘(f) Section 129B and any regulations promulgated 

4 thereunder do not apply to an extension of credit relating 

5 to a plan described in section 101(53D) of title 11, United 

6 States Code.’’. 

7 (b) EFFECTIVE DATE.—The regulations required or 

8 authorized to be prescribed under this title or the amend9 ments made by this title— 

10 (1) shall be prescribed in final form before the 

11 end of the 12-month period beginning on the date of 

12 the enactment of this Act; and 

13 (2) shall take effect not later than 18 months 

14 after the date of the enactment of this Act. 

15 (c) TRUTH IN LENDING FINAL RULE.—Notwith16 standing any other provision of this Act, the regulations 

17 adopted by the Board concerning Truth in Lending, 73 

18 Fed. Reg. 44522 (July 30, 2008), shall take effect as de19 cided by the Board with such exceptions or revisions as 

20 the Board determines necessary. 

21 (d) TECHNICAL AND CONFORMING AMENDMENTS.— 

22 Section 129(l)(2) of the Truth in Lending Act (15 U.S.C. 

23 1639(l)(2)) is amended by inserting ‘‘referred to in section 

24 103(aa)’’ after ‘‘loans’’ each place such term appears. 
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1 SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT. 

2 (a) COMPATIBLE DISCLOSURES.—The Secretary of 

3 Housing and Urban Development and the Board of Gov4 ernors of the Federal Reserve shall, not later than the ex5 piration of the 6-month period beginning upon the date 

6 of the enactment of this Act, jointly issue for public com7 ment proposed regulations providing for compatible disclo8 sures for borrowers to receive at the time of mortgage ap9 plication and at the time of closing. 

10 (b) REQUIREMENTS.—Such disclosures shall— 

11 (1) provide clear and concise information to 

12 borrowers on the terms and costs of residential 

13 mortgage transactions and mortgage transactions 

14 covered by the Truth in Lending Act (12 U.S.C. 

15 1601 et seq.) and the Real Estate Settlement Proce16 dures Act of 1974 (12 U.S.C. 2601 et seq.); 

17 (2) satisfy the requirements of section 128 of 

18 the Truth in Lending Act (12 U.S.C. 1638) and sec19 tion 4 and 5 of the Real Estate Settlement Proce20 dures Act of 1974; and 

21 (3) comprise early disclosures under the Truth 

22 in Lending Act and the good faith estimate disclo23 sures under the Real Estate Settlement Procedures 

24 Act of 1974 and final Truth in Lending Act disclo25 sures and the uniform settlement statement disclo26 sures under Real Estate Settlement Procedures Act 
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1 of 1974 and provide for standardization to the 

2 greatest extent possible among such disclosures from 

3 mortgage origination through the mortgage settle4 ment. 

5 (4) shall include, with respect to a residential 

6 home mortgage loan, a written statement of— 

7 (A) the principal amount of the loan; 

8 (B) the term of the loan; 

9 (C) whether the loan has a fixed rate of in10 terest or an adjustable rate of interest; 

11 (D) the annual percentage rate of interest 

12 under the loan as of the time of the disclosure; 

13 (E) if the rate of interest under the loan 

14 can adjust after the disclosure, for each such 

15 possible adjustment— 

16 (i) when such adjustment will or may 

17 occur; and 

18 (ii) the maximum annual percentage 

19 rate of interest to which it can be adjusted; 

20 (F) the total monthly payment under the 

21 loan (including loan principal and interest, 

22 property taxes, and insurance) at the time of 

23 the disclosure; 
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1 (G) the maximum total estimated monthly 

2 maximum payment pursuant to each such pos3 sible adjustment; 

4 (H) the total settlement charges in connec5 tion with the loan and the amount of any down6 payment and cash required at settlement; and 

7 (I) whether or not the loan has a prepay8 ment penalty or balloon payment and the terms, 

9 timing, and amount of any such penalty or pay10 ment. 

11 (c) SUSPENSION OF 2008 RESPA RULE.— 

12 (1) REQUIREMENT.—The Secretary of Housing 

13 and Urban Development shall, during the period be14 ginning on the date of the enactment of this Act and 

15 ending upon issuance of proposed regulations pursu16 ant to subsection (a), suspend implementation of 

17 any provisions of the final rule referred to in para18 graph (2) that would establish and implement a new 

19 standardized good faith estimate and a new stand20 ardized uniform settlement statement. Any such pro21 visions shall be replaced by the regulations issued 

22 pursuant to subsections (a) and (b). 

23 (2) 2008 RULE.—The final rule referred to in 

24 this paragraph is the rule of the Department of 

25 Housing and Urban Development published on No-
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1 vember 17, 2008, on pages 68204–68288 of Volume 

2 73 of the Federal Register (Docket No. FR–5180– 

3 F–03; relating to ‘‘Real Estate Settlement Proce4 dures Act (RESPA): Rule to Simplify and Improve 

5 the Process of Obtaining Mortgages and Reduce 

6 Consumer Settlement Costs’’). 

7 (d) IMPLEMENTATION.—The regulations required 

8 under subsection (a) shall take effect, and shall provide 

9 an implementation date for the new disclosures required 

10 under such regulations, not later than the expiration of 

11 the 12-month period beginning upon the date of the enact12 ment of this Act. 

13 (e) FAILURE TO ISSUE COMPATIBLE DISCLO14 SURES.—If the Secretary of Housing and Urban Develop15 ment and the Board of Governors of the Federal Reserve 

16 System cannot agree on compatible disclosures pursuant 

17 to subsections (a) and (b), the Secretary and the Board 

18 shall submit a report to the Congress, after the 6-month 

19 period referred to in subsection (a), explaining the reasons 

20 for such disagreement. After the 15-day period beginning 

21 upon submission of such report, the Secretary and the 

22 Board may separately issue for public comment regula23 tions providing for disclosures under the Real Estate Set24 tlement Procedures Act of 1974 and the Truth in Lending 

25 Act, respectively. Any final disclosures as a result of such 
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1 regulations issued by the Secretary and the Board shall 

2 take effect on the same date, and not later than the expi3 ration of the 12-month period beginning on the date of 

4 the enactment of this Act. If either the Secretary or the 

5 Board fails to act during such 12-month period, either 

6 such agency may act independently and implement final 

7 regulations. 

8 (f) STANDARDIZED DISCLOSURE FORMS.— 

9 (1) IN GENERAL.—Any regulations proposed or 

10 issued pursuant to the requirements of this section 

11 shall include model disclosure forms. 

12 (2) OPTION FOR MANDATORY USE.—In issuing 

13 proposed regulations under subsection (a), the Sec14 retary of Housing and Urban Development and the 

15 Board of Governors of the Federal Reserve System 

16 shall include regulations for the mandatory use of 

17 standardized disclosure forms if they jointly deter18 mine that it would substantially benefit the con19 sumer. 

20 SEC. 107. STUDY OF SHARED APPRECIATION MORTGAGES. 

21 (a) STUDY.—The Secretary of Housing and Urban 

22 Development, in consultation with the Secretary of the 

23 Treasury and other relevant agencies, shall conduct a com24 prehensive study to determine prudent statutory and regu25 latory requirements sufficient to provide for the wide-
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1 spread use of shared appreciation mortgages to strengthen 

2 local housing markets, provide new opportunities for af3 fordable homeownership, and enable homeowners at-risk 

4 of foreclosure to refinance or modify their mortgages. 

5 (b) REPORT.—Not later than the expiration of the 

6 6-month period beginning on the date of the enactment 

7 of this Act, the Secretary of Housing and Urban Develop8 ment shall submit a report to the Congress on the results 

9 of the study, which shall include recommendations for the 

10 regulatory and legislative requirements referred to in sub11 section (a). 

12 TITLE II—MINIMUM STANDARDS 

13 FOR MORTGAGES 

14 SEC. 201. ABILITY TO REPAY. 

15 (a) IN GENERAL.—Chapter 2 of the Truth in Lend16 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

17 after section 129B (as added by section 102(a)) the fol18 lowing new section: 

19 ‘‘§ 129C. Minimum standards for residential mortgage 

20 loans 

21 ‘‘(a) ABILITY TO REPAY.— 

22 ‘‘(1) IN GENERAL.—In accordance with regula23 tions prescribed jointly by the Federal banking agen24 cies, in consultation with the Commission, no cred25 itor may make a residential mortgage loan unless 
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1 the creditor makes a reasonable and good faith de2 termination based on verified and documented infor3 mation that, at the time the loan is consummated, 

4 the consumer has a reasonable ability to repay the 

5 loan, according to its terms, and all applicable taxes, 

6 insurance, and assessments. 

7 ‘‘(2) MULTIPLE LOANS.—If the creditor knows, 

8 or has reason to know, that 1 or more residential 

9 mortgage loans secured by the same dwelling will be 

10 made to the same consumer, the creditor shall make 

11 a reasonable and good faith determination, based on 

12 verified and documented information, that the con13 sumer has a reasonable ability to repay the com14 bined payments of all loans on the same dwelling ac15 cording to the terms of those loans and all applicable 

16 taxes, insurance, and assessments. 

17 ‘‘(3) BASIS FOR DETERMINATION.—A deter18 mination under this subsection of a consumer’s abil19 ity to repay a residential mortgage loan shall include 

20 consideration of the consumer’s credit history, cur21 rent income, expected income the consumer is rea22 sonably assured of receiving, current obligations, 

23 debt-to-income ratio, employment status, and other 

24 financial resources other than the consumer’s equity 
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1 in the dwelling or real property that secures repay2 ment of the loan. 

3 ‘‘(4) INCOME VERIFICATION.—In order to safe4 guard against fraudulent reporting, any consider5 ation of a consumer’s income history in making a 

6 determination under this subsection shall include the 

7 verification of such income by the use of— 

8 ‘‘(A) Internal Revenue Service transcripts 

9 of tax returns provided by a third party; or 

10 ‘‘(B) such other similar method that quick11 ly and effectively verifies income documentation 

12 by a third party as the Federal banking agen13 cies may jointly prescribe. 

14 ‘‘(5) NONSTANDARD LOANS.— 

15 ‘‘(A) VARIABLE RATE LOANS THAT DEFER

16 REPAYMENT OF ANY PRINCIPAL OR INTER17 EST.—For purposes of determining, under this 

18 subsection, a consumer’s ability to repay a vari19 able rate residential mortgage loan that allows 

20 or requires the consumer to defer the repay21 ment of any principal or interest, the creditor 

22 shall use a fully amortizing repayment schedule. 

23 ‘‘(B) INTEREST-ONLY LOANS.—For pur24 poses of determining, under this subsection, a 

25 consumer’s ability to repay a residential mort-
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1 gage loan that permits or requires the payment 

2 of interest only, the creditor shall use the pay3 ment amount required to amortize the loan by 

4 its final maturity. 

5 ‘‘(C) CALCULATION FOR NEGATIVE AMOR6 TIZATION.—In making any determination under 

7 this subsection, a creditor shall also take into 

8 consideration any balance increase that may ac9 crue from any negative amortization provision. 

10 ‘‘(D) CALCULATION PROCESS.—For pur11 poses of making any determination under this 

12 subsection, a creditor shall calculate the month13 ly payment amount for principal and interest on 

14 any residential mortgage loan by assuming— 

15 ‘‘(i) the loan proceeds are fully dis16 bursed on the date of the consummation of 

17 the loan; 

18 ‘‘(ii) the loan is to be repaid in sub19 stantially equal monthly amortizing pay20 ments for principal and interest over the 

21 entire term of the loan with no balloon 

22 payment, unless the loan contract requires 

23 more rapid repayment (including balloon 

24 payment), in which case the calculation 

25 shall be made (I) in accordance with regu-
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1 lations prescribed by the Federal banking 

2 agencies, with respect to any loan which 

3 has an annual percentage rate that does 

4 not exceed the average prime offer rate for 

5 a comparable transaction, as of the date 

6 the interest rate is set, by 1.5 or more per7 centage points for a first lien residential 

8 mortgage loan; and by 3.5 or more per9 centage points for a subordinate lien resi10 dential mortgage loan; or (II) using the 

11 contract’s repayment schedule, with re12 spect to a loan which has an annual per13 centage rate, as of the date the interest 

14 rate is set, that is at least 1.5 percentage 

15 points above the average prime offer rate 

16 for a first lien residential mortgage loan; 

17 and 3.5 percentage points above the aver18 age prime offer rate for a subordinate lien 

19 residential mortgage loan; and 

20 ‘‘(iii) the interest rate over the entire 

21 term of the loan is a fixed rate equal to the 

22 fully indexed rate at the time of the loan 

23 closing, without considering the introduc24 tory rate. 
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1 ‘‘(E) REFINANCE OF HYBRID LOANS WITH

2 CURRENT LENDER.—In considering any appli3 cation for refinancing an existing hybrid loan 

4 by the creditor into a standard loan to be made 

5 by the same creditor in any case in which the 

6 sole net-tangible benefit to the mortgagor would 

7 be a reduction in monthly payment and the 

8 mortgagor has not been delinquent on any pay9 ment on the existing hybrid loan, the creditor 

10 may— 

11 ‘‘(i) consider the mortgagor’s good 

12 standing on the existing mortgage; 

13 ‘‘(ii) consider if the extension of new 

14 credit would prevent a likely default should 

15 the original mortgage reset and give such 

16 concerns a higher priority as an acceptable 

17 underwriting practice; and 

18 ‘‘(iii) offer rate discounts and other 

19 favorable terms to such mortgagor that 

20 would be available to new customers with 

21 high credit ratings based on such under22 writing practice. 

23 ‘‘(6) FULLY-INDEXED RATE DEFINED.—For 

24 purposes of this subsection, the term ‘fully indexed 

25 rate’ means the index rate prevailing on a residential 
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1 mortgage loan at the time the loan is made plus the 

2 margin that will apply after the expiration of any in3 troductory interest rates.’’. 

4 (b) CLERICAL AMENDMENT.—The table of sections 

5 for chapter 2 of the Truth in Lending Act is amended 

6 by inserting after the item relating to section 129B (as 

7 added by section 102(b)) the following new item: 

‘‘129C. Minimum standards for residential mortgage loans.’’. 

8 SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF 

9 RESIDENTIAL MORTGAGE LOANS. 

10 Section 129C of the Truth in Lending Act (as added 

11 by section 201(a)) is amended by inserting after sub12 section (a) the following new subsection: 

13 ‘‘(b) NET TANGIBLE BENEFIT FOR REFINANCING OF

14 RESIDENTIAL MORTGAGE LOANS.— 

15 ‘‘(1) IN GENERAL.—In accordance with regula16 tions prescribed under paragraph (3), no creditor 

17 may extend credit in connection with any residential 

18 mortgage loan that involves a refinancing of a prior 

19 existing residential mortgage loan unless the creditor 

20 reasonably and in good faith determines, at the time 

21 the loan is consummated and on the basis of infor22 mation known by or obtained in good faith by the 

23 creditor, that the refinanced loan will provide a net 

24 tangible benefit to the consumer. 
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1 ‘‘(2) CERTAIN LOANS PROVIDING NO NET TAN2 GIBLE BENEFIT.—A residential mortgage loan that 

3 involves a refinancing of a prior existing residential 

4 mortgage loan shall not be considered to provide a 

5 net tangible benefit to the consumer if the costs of 

6 the refinanced loan, including points, fees and other 

7 charges, exceed the amount of any newly advanced 

8 principal without any corresponding changes in the 

9 terms of the refinanced loan that are advantageous 

10 to the consumer. 

11 ‘‘(3) NET TANGIBLE BENEFIT.—The Federal 

12 banking agencies shall jointly prescribe regulations 

13 defining the term ‘net tangible benefit’ for purposes 

14 of this subsection.’’. 

15 SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 

16 Section 129C of the Truth in Lending Act is amend17 ed by inserting after subsection (b) (as added by section 

18 202) the following new subsection: 

19 ‘‘(c) PRESUMPTION OF ABILITY TO REPAY AND NET

20 TANGIBLE BENEFIT.— 

21 ‘‘(1) IN GENERAL.—Any creditor with respect 

22 to any residential mortgage loan, and any assignee 

23 or securitizer of such loan, may presume that the 

24 loan has met the requirements of subsections (a) 

25 and (b), if the loan is a qualified mortgage. 
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1 ‘‘(2) DEFINITIONS.—For purposes of this sub2 section, the following definitions shall apply: 

3 ‘‘(A) QUALIFIED MORTGAGE.—The term 

4 ‘qualified mortgage’ means any residential 

5 mortgage loan— 

6 ‘‘(i) that does not allow a consumer to 

7 defer repayment of principal or interest, or 

8 is not otherwise deemed a ‘non-traditional 

9 mortgage’ under guidance, advisories, or 

10 regulations prescribed by the Federal 

11 Banking Agencies; 

12 ‘‘(ii) that does not provide for a re13 payment schedule that results in negative 

14 amortization at any time; 

15 ‘‘(iii) for which the terms are fully 

16 amortizing and which does not result in a 

17 balloon payment, where a ‘balloon pay18 ment’ is a scheduled payment that is more 

19 than twice as large as the average of ear20 lier scheduled payments; 

21 ‘‘(iv) which has an annual percentage 

22 rate that does not exceed the average 

23 prime offer rate for a comparable trans24 action, as of the date the interest rate is 

25 set— 
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1 ‘‘(I) by 1.5 or more percentage 

2 points, in the case of a first lien resi3 dential mortgage loan having a origi4 nal principal obligation amount that is 

5 equal to or less than the amount of 

6 the maximum limitation on the origi7 nal principal obligation of mortgage in 

8 effect for a residence of the applicable 

9 size, as of the date of such interest 

10 rate set, pursuant to the sixth sen11 tence of section 305(a)(2) the Federal 

12 Home Loan Mortgage Corporation 

13 Act (12 U.S.C. 1454(a)(2)); 

14 ‘‘(II) by 2.5 or more percentage 

15 points, in the case of a first lien resi16 dential mortgage loan having a origi17 nal principal obligation amount that is 

18 more than the amount of the max19 imum limitation on the original prin20 cipal obligation of mortgage in effect 

21 for a residence of the applicable size, 

22 as of the date of such interest rate 

23 set, pursuant to the sixth sentence of 

24 section 305(a)(2) the Federal Home 
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1 Loan Mortgage Corporation Act (12 

2 U.S.C. 1454(a)(2)); and 

3 ‘‘(III) by 3.5 or more percentage 

4 points, in the case of a subordinate 

5 lien residential mortgage loan; 

6 ‘‘(v) for which the income and finan7 cial resources relied upon to qualify the ob8 ligors on the loan are verified and docu9 mented; 

10 ‘‘(vi) in the case of a fixed rate loan, 

11 for which the underwriting process is based 

12 on a payment schedule that fully amortizes 

13 the loan over the loan term and takes into 

14 account all applicable taxes, insurance, and 

15 assessments; 

16 ‘‘(vii) in the case of an adjustable rate 

17 loan, for which the underwriting is based 

18 on the maximum rate permitted under the 

19 loan during the first seven years, and a 

20 payment schedule that fully amortizes the 

21 loan over the loan term and takes into ac22 count all applicable taxes, insurance, and 

23 assessments; 

24 ‘‘(viii) that does not cause the con25 sumer’s total monthly debts, including 
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1 amounts under the loan, to exceed a per2 centage established by regulation of the 

3 consumer’s monthly gross income or such 

4 other maximum percentage of such income 

5 as may be prescribed by regulation under 

6 paragraph (4), and such rules shall also 

7 take into consideration the consumer’s in8 come available to pay regular expenses 

9 after payment of all installment and revolv10 ing debt; 

11 ‘‘(ix) for which the total points and 

12 fees payable in connection with the loan do 

13 not exceed 2 percent of the total loan 

14 amount, where ‘points and fees’ means 

15 points and fees as defined by Section 

16 103(aa)(4) of the Truth in Lending Act 

17 (15 U.S.C. 1602(aa)(4)); and 

18 ‘‘(x) for which the term of the loan 

19 does not exceed 30 years, except as such 

20 term may be extended under paragraph 

21 (4). 

22 ‘‘(B) AVERAGE PRIME OFFER RATE.—The 

23 term ‘average prime offer rate’ means an an24 nual percentage rate that is derived from aver25 age interest rates, points, and other loan pric-
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1 ing terms currently offered to consumers by a 

2 representative sample of creditors for mortgage 

3 transactions that have low risk pricing charac4 teristics. 

5 ‘‘(3) PUBLICATION OF AVERAGE PRIME OFFER

6 RATE AND APR THRESHOLDS.—The Board— 

7 ‘‘(A) shall publish, and update at least 

8 weekly, average prime offer rates; 

9 ‘‘(B) may publish multiple rates based on 

10 varying types of mortgage transactions; and 

11 ‘‘(C) shall adjust the thresholds of 1.50 

12 percentage points in paragraph (2)(A)(iv)(I), 

13 2.50 percentage points in paragraph 

14 (2)(A)(iv)(II), and 3.50 percentage points in 

15 paragraph (2)(A)(v)(III), as necessary to reflect 

16 significant changes in market conditions and to 

17 effectuate the purposes of the Mortgage Reform 

18 and Anti-Predatory Lending Act. 

19 ‘‘(4) REGULATIONS.— 

20 ‘‘(A) IN GENERAL.—The Federal banking 

21 agencies shall jointly prescribe regulations to 

22 carry out the purposes of this subsection. 

23 ‘‘(B) REVISION OF SAFE HARBOR CRI24 TERIA.— 
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1 ‘‘(i) IN GENERAL.—The Federal bank2 ing agencies may jointly prescribe regula3 tions that revise, add to, or subtract from 

4 the criteria that define a qualified mort5 gage upon a finding that such regulations 

6 are necessary or proper to ensure that re7 sponsible, affordable mortgage credit re8 mains available to consumers in a manner 

9 consistent with the purposes of this sec10 tion, necessary and appropriate to effec11 tuate the purposes of this section and sec12 tion 129B, to prevent circumvention or 

13 evasion thereof, or to facilitate compliance 

14 with such sections. 

15 ‘‘(ii) LOAN DEFINITION.—The fol16 lowing agencies shall, in consultation with 

17 the Federal banking agencies, prescribe 

18 rules defining the types of loans they in19 sure, guarantee or administer, as the case 

20 may be, that are Qualified Mortgages for 

21 purposes of subsection (c)(1)(A) upon a 

22 finding that such rules are consistent with 

23 the purposes of this section and section 

24 129B, to prevent circumvention or evasion 
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1 thereof, or to facilitate compliance with 

2 such sections— 

3 ‘‘(I) The Department of Housing 

4 and Urban Development, with regard 

5 to mortgages insured under title II of 

6 the National Housing Act (12 U.S.C. 

7 1707 et seq.); 

8 ‘‘(II) The Secretary of Veterans 

9 Affairs, with regard to a loan made or 

10 guaranteed by the Secretary of Vet11 erans Affairs; 

12 ‘‘(III) The Secretary of Agri13 culture, with regard loans guaranteed 

14 by the Secretary of Agriculture pursu15 ant to 42 U.S.C. 1472(h); 

16 ‘‘(IV) The Federal Housing Fi17 nance Agency, with regard to loans 

18 meeting the conforming loan stand19 ards of the Federal National Mort20 gage Corporation or the Federal 

21 Home Loan Mortgage Corporation; 

22 and 

23 ‘‘(V) The Rural Housing Service, 

24 with regard to loans insured by the 

25 Rural Housing Service.’’. 
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1 SEC. 204. LIABILITY. 

2 Section 129C of the Truth in Lending Act is amend3 ed by inserting after subsection (c) (as added by section 

4 203) the following new subsection: 

5 ‘‘(d) LIABILITY FOR VIOLATIONS.— 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) RESCISSION.—In addition to any 

8 other liability under this title for a violation by 

9 a creditor of subsection (a) or (b) (for example 

10 under section 130) and subject to the statute of 

11 limitations in paragraph (9), a civil action may 

12 be maintained against a creditor for a violation 

13 of subsection (a) or (b) with respect to a resi14 dential mortgage loan for the rescission of the 

15 loan, and such additional costs as the obligor 

16 may have incurred as a result of the violation 

17 and in connection with obtaining a rescission of 

18 the loan, including a reasonable attorney’s fee. 

19 ‘‘(B) CURE.—A creditor shall not be liable 

20 for rescission under subparagraph (A) with re21 spect to a residential mortgage loan if, no later 

22 than 90 days after the receipt of notification 

23 from the consumer that the loan violates sub24 section (a) or (b), the creditor, acting in good 

25 faith, a cure. 
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1 ‘‘(2) LIMITED ASSIGNEE AND SECURITIZER LI2 ABILITY.—Notwithstanding sections 125(e) and 131 

3 and except as provided in paragraph (3), a civil ac4 tion which may be maintained against a creditor 

5 with respect to a residential mortgage loan for a vio6 lation of subsection (a) or (b) may be maintained 

7 against any assignee or securitizer of such residen8 tial mortgage loan, who has acted in good faith, for 

9 the following liabilities only: 

10 ‘‘(A) Rescission of the loan. 

11 ‘‘(B) Such additional costs as the obligor 

12 may have incurred as a result of the violation 

13 and in connection with obtaining a rescission of 

14 the loan, including a reasonable attorney’s fee. 

15 ‘‘(3) ASSIGNEE AND SECURITIZER EXEMP16 TION.—No assignee or securitizer of a residential 

17 mortgage loan that has exercised reasonable due dili18 gence in complying with the requirements of sub19 sections (a) and (b), consistent with reasonable due 

20 diligence practices prescribed by the Federal banking 

21 agencies, shall be liable under paragraph (2) with re22 spect to such loan if, no later than 90 days after the 

23 receipt of notification from the consumer that the 

24 loan violates subsection (a) or (b), the assignee or 
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1 securitizer provides a cure so that the loan satisfies 

2 the requirements of subsections (a) and (b). 

3 ‘‘(4) ABSENT PARTIES.— 

4 ‘‘(A) ABSENT CREDITOR.—Notwith5 standing the exemption provided in paragraph 

6 (3), if the creditor with respect to a residential 

7 mortgage loan made in violation of subsection 

8 (a) or (b) has ceased to exist as a matter of law 

9 or has filed for bankruptcy protection under 

10 title 11, United States Code, or has had a re11 ceiver, conservator, or liquidating agent ap12 pointed, a consumer may maintain a civil action 

13 against an assignee to cure the residential 

14 mortgage loan, plus the costs and reasonable 

15 attorney’s fees incurred in obtaining such rem16 edy. 

17 ‘‘(B) ABSENT CREDITOR AND ASSIGNEE.— 

18 Notwithstanding the exemption provided in 

19 paragraph (3), if the creditor with respect to a 

20 residential mortgage loan made in violation of 

21 subsection (a) or (b) and each assignee of such 

22 loan have ceased to exist as a matter of law or 

23 have filed for bankruptcy protection under title 

24 11, United States Code, or have had receivers, 

25 conservators, or liquidating agents appointed, 
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1 the consumer may maintain the civil action re2 ferred to in subparagraph (A) against the 

3 securitizer. 

4 ‘‘(5) CURE DEFINED.—For purposes of this 

5 subsection, the term ‘cure’ means, with respect to a 

6 residential mortgage loan that violates subsection (a) 

7 or (b), the modification or refinancing, at no cost to 

8 the consumer, of the loan to provide terms that sat9 isfy the requirements of subsections (a) and (b) and 

10 the payment of such additional costs as the obligor 

11 may have incurred in connection with obtaining a 

12 cure of the loan, including a reasonable attorney’s 

13 fee. 

14 ‘‘(6) DISAGREEMENT OVER CURE.—If any cred15 itor, assignee, or securitizer and a consumer fail to 

16 reach agreement on a cure with respect to a residen17 tial mortgage loan that violates subsection (a) or (b), 

18 or the consumer fails to accept a cure proffered by 

19 a creditor, assignee, or securitizer— 

20 ‘‘(A) the creditor, assignee, or securitizer 

21 may provide the cure; and 

22 ‘‘(B) the consumer may challenge the ade23 quacy of the cure during the 6-month period be24 ginning when the cure is provided. 
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1 If the consumer’s challenge, under this paragraph, 

2 of a cure is successful, the creditor, assignee, or 

3 securitizer shall be liable to the consumer for rescis4 sion of the loan and such additional costs under 

5 paragraph (2). 

6 ‘‘(7) INABILITY TO PROVIDE OR OBTAIN RE7 SCISSION.—If a creditor, assignee, or securitizer 

8 cannot provide, or a consumer cannot obtain, rescis9 sion under paragraph (1) or (2), the liability of such 

10 creditor, assignee, or securitizer shall be met by pro11 viding the financial equivalent of a rescission, to12 gether with such additional costs as the obligor may 

13 have incurred as a result of the violation and in con14 nection with obtaining a rescission of the loan, in15 cluding a reasonable attorney’s fee. 

16 ‘‘(8) NO CLASS ACTIONS AGAINST ASSIGNEE OR

17 SECURITIZER UNDER PARAGRAPH (2).—Only indi18 vidual actions may be brought against an assignee 

19 or securitizer of a residential mortgage loan for a 

20 violation of subsection (a) or (b). 

21 ‘‘(9) STATUTE OF LIMITATIONS.—The liability 

22 of a creditor, assignee, or securitizer under this sub23 section shall apply in any original action against a 

24 creditor under paragraph (1) or an assignee or 
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1 securitizer under paragraph (2) which is brought be2 fore— 

3 ‘‘(A) in the case of any residential mort4 gage loan other than a loan to which subpara5 graph (B) applies, the end of the 3-year period 

6 beginning on the date the loan is consummated; 

7 or 

8 ‘‘(B) in the case of a residential mortgage 

9 loan that provides for a fixed interest rate for 

10 an introductory period and then resets or ad11 justs to a variable rate or that provides for a 

12 nonamortizing payment schedule and then con13 verts to an amortizing payment schedule, the 

14 earlier of— 

15 ‘‘(i) the end of the 1-year period be16 ginning on the date of such reset, adjust17 ment, or conversion; or 

18 ‘‘(ii) the end of the 6-year period be19 ginning on the date the loan is con20 summated. 

21 ‘‘(10) TRUSTEES, POOLS, AND INVESTORS IN

22 POOLS EXCLUDED.—In the case of residential mort23 gage loans acquired or aggregated for the purpose of 

24 including such loans in a pool of assets held for the 

25 purpose of issuing or selling instruments rep-
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1 resenting interests in such pools including through a 

2 securitization vehicle, the terms ‘assignee’ and 

3 ‘securitizer’, as used in this section, do not include 

4 the securitization vehicle, any trustee that holds 

5 such loans solely for the benefit of the securitization 

6 vehicle, the pools of such loans or any original or 

7 subsequent purchaser of any interest in the 

8 securitization vehicle or any instrument representing 

9 a direct or indirect interest in such pool. 

10 ‘‘(e) OBLIGATION OF SECURITIZERS, AND PRESERVA11 TION OF BORROWER REMEDIES.— 

12 ‘‘(1) OBLIGATION TO RETAIN ACCESS.—Any 

13 securitizer of a residential mortgage loan sold or to 

14 be sold as part of a securitization vehicle shall, in 

15 any document or contract providing for the transfer, 

16 conveyance, or the establishment of such 

17 securitization vehicle, reserve the right and preserve 

18 the ability— 

19 ‘‘(A) to identify and obtain access to any 

20 such loan; 

21 ‘‘(B) to acquire any such loan in the event 

22 of a violation of subsection (a) or (b) of this 

23 section; and 
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1 ‘‘(C) to provide to the consumer any and 

2 all remedies provided for under this title for 

3 any violation of this title. 

4 ‘‘(2) ADDITIONAL DAMAGES.—Any creditor, as5 signee, or securitizer of a residential mortgage loan 

6 that is subject to a remedy under subsection (d) and 

7 has failed to comply with paragraph (1) shall be 

8 subject to additional exemplary or punitive damages 

9 not to exceed the original principal balance of such 

10 loan. 

11 ‘‘(3) CONTACT INFORMATION NOTICE.—The 

12 servicer with respect to a residential mortgage loan 

13 shall provide a written notice to a consumer identi14 fying the name and contact information of the cred15 itor or any assignee or securitizer who should be 

16 contacted by the consumer for any reason con17 cerning the consumer’s rights with respect to the 

18 loan. Such notice shall be provided— 

19 ‘‘(A) upon request of the consumer; 

20 ‘‘(B) whenever there is a change in owner21 ship of a residential mortgage loan; or 

22 ‘‘(C) on a regular basis, not less than an23 nually. 

24 ‘‘(f) RULES TO ESTABLISH PROCESS.—The Board 

25 shall promulgate rules to govern the rescission process es-
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1 tablished for violations of subsections (a) and (b) of this 

2 section. Such rules shall provide that notice given to a 

3 servicer or holder is sufficient notice regardless of the 

4 identity of the party or the parties liable under this title.’’. 

5 SEC. 205. DEFENSE TO FORECLOSURE. 

6 Section 129C of the Truth in Lending Act is amend7 ed by inserting after subsection (f) (as added by section 

8 204) the following new subsections: 

9 ‘‘(g) DEFENSE TO FORECLOSURE.—Notwithstanding 

10 any other provision of law— 

11 ‘‘(1) when the holder of a residential mortgage 

12 loan or anyone acting for such holder initiates a ju13 dicial or nonjudicial foreclosure— 

14 ‘‘(A) a consumer who has the right to re15 scind under this section with respect to such 

16 loan against the creditor or any assignee or 

17 securitizer may assert such right as a defense 

18 to foreclosure or counterclaim to such fore19 closure against the holder, or 

20 ‘‘(B) if the foreclosure proceeding begins 

21 after the end of the period during which a con22 sumer may bring an action for rescission under 

23 subsection (d) and the consumer would have 

24 had a valid basis for such an action if it had 

25 been brought before the end of such period, the 
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1 consumer may seek actual damages incurred by 

2 reason of the violation which gave rise to the 

3 right of rescission, together with costs of the 

4 action, including a reasonable attorney’s fee 

5 against the creditor or any assignee or 

6 securitizer; and 

7 ‘‘(2) such holder or anyone acting for such 

8 holder or any other applicable third party may sell, 

9 transfer, convey, or assign a residential mortgage 

10 loan to a creditor, any assignee, or any securitizer, 

11 or their designees, subject to the rights of the con12 sumer described in this subsection, to effect a rescis13 sion or cure.’’. 

14 SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS. 

15 (a) IN GENERAL.—Section 129C of the Truth in 

16 Lending Act is amended by inserting after subsection (g) 

17 (as added by section 205) the following new subsections: 

18 ‘‘(h) PROHIBITION ON CERTAIN PREPAYMENT PEN19 ALTIES.— 

20 ‘‘(1) PROHIBITED ON CERTAIN LOANS.—A resi21 dential mortgage loan that is not a ‘qualified mort22 gage’ may not contain terms under which a con23 sumer must pay a prepayment penalty for paying all 

24 or part of the principal after the loan is con25 summated. For purposes of this subsection, a ‘quali-
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1 fied mortgage’ may not include a residential mort2 gage loan that has an adjustable rate. 

3 ‘‘(2) PHASED-OUT PENALTIES ON QUALIFIED

4 MORTGAGES.—A qualified mortgage (as defined in 

5 subsection (c)) may not contain terms under which 

6 a consumer must pay a prepayment penalty for pay7 ing all or part of the principal after the loan is con8 summated in excess of the following limitations: 

9 ‘‘(A) During the 1-year period beginning 

10 on the date the loan is consummated, the pre11 payment penalty shall not exceed an amount 

12 equal to 3 percent of the outstanding balance 

13 on the loan. 

14 ‘‘(B) During the 1-year period beginning 

15 after the period described in subparagraph (A), 

16 the prepayment penalty shall not exceed an 

17 amount equal to 2 percent of the outstanding 

18 balance on the loan. 

19 ‘‘(C) During the 1-year period beginning 

20 after the 1-year period described in subpara21 graph (B), the prepayment penalty shall not ex22 ceed an amount equal to 1 percent of the out23 standing balance on the loan. 

24 ‘‘(D) After the end of the 3-year period be25 ginning on the date the loan is consummated, 
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1 no prepayment penalty may be imposed on a 

2 qualified mortgage. 

3 ‘‘(3) OPTION FOR NO PREPAYMENT PENALTY

4 REQUIRED.—A creditor may not offer a consumer a 

5 residential mortgage loan product that has a prepay6 ment penalty for paying all or part of the principal 

7 after the loan is consummated as a term of the loan 

8 without offering the consumer a residential mort9 gage loan product that does not have a prepayment 

10 penalty as a term of the loan. 

11 ‘‘(i) SINGLE PREMIUM CREDIT INSURANCE PROHIB12 ITED.—No creditor may finance, directly or indirectly, in 

13 connection with any residential mortgage loan or with any 

14 extension of credit under an open end consumer credit 

15 plan secured by the principal dwelling of the consumer 

16 (other than a reverse mortgage), any credit life, credit dis17 ability, credit unemployment or credit property insurance, 

18 or any other accident, loss-of-income, life or health insur19 ance, or any payments directly or indirectly for any debt 

20 cancellation or suspension agreement or contract, except 

21 that— 

22 ‘‘(1) insurance premiums or debt cancellation or 

23 suspension fees calculated and paid in full on a 

24 monthly basis shall not be considered financed by 

25 the creditor; and 
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1 ‘‘(2) this subsection shall not apply to credit 

2 unemployment insurance for which the unemploy3 ment insurance premiums are reasonable, the cred4 itor receives no direct or indirect compensation in 

5 connection with the unemployment insurance pre6 miums, and the unemployment insurance premiums 

7 are paid pursuant to another insurance contract and 

8 not paid to an affiliate of the creditor. 

9 ‘‘(j) ARBITRATION.— 

10 ‘‘(1) IN GENERAL.—No residential mortgage 

11 loan and no extension of credit under an open end 

12 consumer credit plan secured by the principal dwell13 ing of the consumer, other than a reverse mortgage, 

14 may include terms which require arbitration or any 

15 other nonjudicial procedure as the method for resolv16 ing any controversy or settling any claims arising 

17 out of the transaction. 

18 ‘‘(2) POST-CONTROVERSY AGREEMENTS.—Sub19 ject to paragraph (3), paragraph (1) shall not be 

20 construed as limiting the right of the consumer and 

21 the creditor, any assignee, or any securitizer to 

22 agree to arbitration or any other nonjudicial proce23 dure as the method for resolving any controversy at 

24 any time after a dispute or claim under the trans25 action arises. 
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1 ‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC2 TION.—No provision of any residential mortgage 

3 loan or of any extension of credit under an open end 

4 consumer credit plan secured by the principal dwell5 ing of the consumer (other than a reverse mort6 gage), and no other agreement between the con7 sumer and the creditor relating to the residential 

8 mortgage loan or extension of credit referred to in 

9 paragraph (1), shall be applied or interpreted so as 

10 to bar a consumer from bringing an action in an ap11 propriate district court of the United States, or any 

12 other court of competent jurisdiction, pursuant to 

13 section 130 or any other provision of law, for dam14 ages or other relief in connection with any alleged 

15 violation of this section, any other provision of this 

16 title, or any other Federal law. 

17 ‘‘(k) MORTGAGES WITH NEGATIVE AMORTIZA18 TION.—No creditor may extend credit to a borrower in 

19 connection with a consumer credit transaction under an 

20 open or closed end consumer credit plan secured by a 

21 dwelling or residential real property that includes a dwell22 ing, other than a reverse mortgage, that provides or per23 mits a payment plan that may, at any time over the term 

24 of the extension of credit, result in negative amortization 

25 unless, before such transaction is consummated— 
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1 ‘‘(1) the creditor provides the consumer with a 

2 statement that— 

3 ‘‘(A) the pending transaction will or may, 

4 as the case may be, result in negative amortiza5 tion; 

6 ‘‘(B) describes negative amortization in 

7 such manner as the Federal banking agencies 

8 shall prescribe; 

9 ‘‘(C) negative amortization increases the 

10 outstanding principal balance of the account; 

11 and 

12 ‘‘(D) negative amortization reduces the 

13 consumer’s equity in the dwelling or real prop14 erty; and 

15 ‘‘(2) in the case of a first-time borrower with 

16 respect to a residential mortgage loan that is not a 

17 qualified mortgage, the first-time borrower provides 

18 the creditor with sufficient documentation to dem19 onstrate that the consumer received homeownership 

20 counseling from organizations or counselors certified 

21 by the Secretary of Housing and Urban Develop22 ment as competent to provide such counseling.’’. 

23 (b) CONFORMING AMENDMENT RELATING TO EN24 FORCEMENT.—Section 108(a) of the Truth in Lending 
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1 Act (15 U.S.C. 1607(a)) is amended by inserting after 

2 paragraph (6) the following new paragraph: 

3 ‘‘(7) sections 21B and 21C of the Securities 

4 Exchange Act of 1934, in the case of a broker or 

5 dealer, other than a depository institution, by the 

6 Securities and Exchange Commission.’’. 

7 (c) PROTECTION AGAINST LOSS OF ANTI-DEFI8 CIENCY PROTECTION.—Section 129C of the Truth in 

9 Lending Act is amended by inserting after subsection (k) 

10 (as added by subsection (a) of this section) the following 

11 new subsection (and designated succeeding subsections ac12 cordingly): 

13 ‘‘(l) PROTECTION AGAINST LOSS OF ANTI-DEFI14 CIENCY PROTECTION.— 

15 ‘‘(1) DEFINITION.—For purposes of this sub16 section, the term ‘anti-deficiency law’ means the law 

17 of any State which provides that, in the event of 

18 foreclosure on the residential property of a consumer 

19 securing a mortgage, the consumer is not liable, in 

20 accordance with the terms and limitations of such 

21 State law, for any deficiency between the sale price 

22 obtained on such property through foreclosure and 

23 the outstanding balance of the mortgage. 

24 ‘‘(2) NOTICE AT TIME OF CONSUMMATION.—In 

25 the case of any residential mortgage loan that is, or 
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1 upon consummation will be, subject to protection 

2 under an anti-deficiency law, the creditor or mort3 gage originator shall provide a written notice to the 

4 consumer describing the protection provided by the 

5 anti-deficiency law and the significance for the con6 sumer of the loss of such protection before such loan 

7 is consummated. 

8 ‘‘(3) NOTICE BEFORE REFINANCING THAT

9 WOULD CAUSE LOSS OF PROTECTION.—In the case 

10 of any residential mortgage loan that is subject to 

11 protection under an anti-deficiency law, if a creditor 

12 or mortgage originator provides an application to a 

13 consumer, or receives an application from a con14 sumer, for any type of refinancing for such loan that 

15 would cause the loan to lose the protection of such 

16 anti-deficiency law, the creditor or mortgage origi17 nator shall provide a written notice to the consumer 

18 describing the protection provided by the anti-defi19 ciency law and the significance for the consumer of 

20 the loss of such protection before any agreement for 

21 any such refinancing is consummated.’’. 

22 (d) POLICY REGARDING ACCEPTANCE OF PARTIAL

23 PAYMENT.—Section 129C of the Truth in Lending Act 

24 is amended by inserting after subsection (l) the following 
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1 new subsection (and redesignating subsequent subsections 

2 of such section accordingly): 

3 ‘‘(m) POLICY REGARDING ACCEPTANCE OF PARTIAL

4 PAYMENT.—In the case of any residential mortgage loan, 

5 a creditor shall disclose prior to settlement or, in the case 

6 of a person becoming a creditor with respect to an existing 

7 residential mortgage loan, at the time such person be8 comes a creditor— 

9 ‘‘(1) the creditor’s policy regarding the accept10 ance of partial payments; and 

11 ‘‘(2) if partial payments are accepted, how such 

12 payments will be applied to such mortgage and if 

13 such payments will be placed in escrow.’’. 

14 SEC. 207. RULE OF CONSTRUCTION. 

15 Except as otherwise expressly provided in section 

16 129B or 129C of the Truth in Lending Act (as added by 

17 this Act), no provision of such section 129B or 129C shall 

18 be construed as superseding, repealing, or affecting any 

19 duty, right, obligation, privilege, or remedy of any person 

20 under any other provision of the Truth in Lending Act 

21 or any other provision of Federal or State law. 

22 SEC. 208. EFFECT ON STATE LAWS. 

23 (a) IN GENERAL.—Except as provided in subsection 

24 (b), section 129C(d) of the Truth in Lending Act (as 

25 added by section 204) shall supersede any State law to 
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1 the extent that it provides additional remedies against any 

2 assignee, securitizer, or securitization vehicle for a viola3 tion of subsection (a) or (b) of section 129C of such Act 

4 or any other State law the terms of which address the 

5 specific subject matter of subsection (a) (determination of 

6 ability to repay) or (b) (requirement of a net tangible ben7 efit) of section 129C of such Act, and the remedies de8 scribed in section 129C(d) shall constitute the sole rem9 edies against any assignee, securitizer, or securitization 

10 vehicle for such violations. 

11 (b) RULES OF CONSTRUCTION.—No provision of this 

12 section shall be construed as limiting— 

13 (1) the application of any State law, or the 

14 availability of remedies under such law, against a 

15 creditor for a particular residential mortgage loan 

16 regardless of whether such creditor also acts as an 

17 assignee, securitizer, or securitization vehicle for 

18 such loan; 

19 (2) the application of any State law, or the 

20 availability of remedies under such law, against an 

21 assignee, securitizer, or securitization vehicle under 

22 State law, other than a provision of such law the 

23 terms of which address the specific subject matter of 

24 subsection (a) (determination of ability to repay) or 
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1 (b) (requirement of a net tangible benefit) of section 

2 129C of such Act; 

3 (3)(A) the application of any State law, or the 

4 availability of remedies under such law, against an 

5 assignee, securitizer or securitization vehicle for its 

6 participation in or direction of the credit or under7 writing decisions of a creditor relating to the making 

8 of a residential mortgage loan; or 

9 (B) the ability of a consumer to assert any 

10 rights against or obtain any remedies from an as11 signee, securitizer or securitization vehicle with re12 spect to a residential mortgage loan as a defense to 

13 foreclosure under section 129C(g); 

14 (4) the availability of any equitable remedies, 

15 including injunctive relief, under State law; or 

16 (5) notwithstanding paragraph (2), the avail17 ability of any remedies under State law against any 

18 assignee, securitizer or securitization vehicle that— 

19 (A) are in addition to those remedies pro20 vided for in section 129C; and 

21 (B) were in effect on the date of enactment 

22 of this Act. 

23 SEC. 209. REGULATIONS. 

24 Regulations required or authorized to be prescribed 

25 under this title or the amendments made by this title— 
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1 (1) shall be prescribed in final form before the 

2 end of the 12-month period beginning on the date of 

3 the enactment of this Act; and 

4 (2) shall take effect not later than 18 months 

5 after the date of the enactment of this Act. 

6 SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 

7 (a) INCREASE IN AMOUNT OF CIVIL MONEY PEN8 ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a)(2) of 

9 the Truth in Lending Act (15 U.S.C. 1640(a)(2)) is 

10 amended— 

11 (1) by striking ‘‘$100’’ and inserting ‘‘$200’’; 

12 (2) by striking ‘‘$1,000’’ and inserting 

13 ‘‘$2,000’’; and 

14 (3) by striking ‘‘$500,000’’ and inserting 

15 ‘‘$1,000,000’’. 

16 (b) STATUTE OF LIMITATIONS EXTENDED FOR SEC17 TION 129 VIOLATIONS.—Section 130(e) of the Truth in 

18 Lending Act (15 U.S.C. 1640(e)) is amended— 

19 (1) in the first sentence, by striking ‘‘Any ac20 tion’’ and inserting ‘‘Except as provided in the sub21 sequent sentence, any action’’; and 

22 (2) by inserting after the first sentence the fol23 lowing new sentence: ‘‘Any action under this section 

24 with respect to any violation of section 129 may be 

25 brought in any United States district court, or in 
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1 any other court of competent jurisdiction, before the 

2 end of the 3-year period beginning on the date of the 

3 occurrence of the violation.’’. 

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

5 DECEPTION. 

6 Section 130 of the Truth in Lending Act is amended 

7 by adding at the end the following new subsection: 

8 ‘‘(k) EXEMPTION FROM LIABILITY AND RESCISSION

9 IN CASE OF BORROWER FRAUD OR DECEPTION.—In ad10 dition to any other remedy available by law or contract, 

11 no creditor, assignee, or securitizer shall be liable to an 

12 obligor under this section, nor shall it be subject to the 

13 right of rescission of any obligor under 129B, if such obli14 gor, or co-obligor, knowingly, or willfully and with actual 

15 knowledge furnished material information known to be 

16 false for the purpose of obtaining such residential mort17 gage loan.’’. 

18 SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF 

19 HYBRID ADJUSTABLE RATE MORTGAGES. 

20 (a) IN GENERAL.—Chapter 2 of the Truth in Lend21 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

22 after section 128 the following new section: 

23 ‘‘§ 128A. Reset of hybrid adjustable rate mortgages 

24 ‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DE25 FINED.—For purposes of this section, the term ‘hybrid ad-
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1 justable rate mortgage’ means a consumer credit trans2 action secured by the consumer’s principal residence with 

3 a fixed interest rate for an introductory period that ad4 justs or resets to a variable interest rate after such period. 

5 ‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—Dur6 ing the 1-month period that ends 6 months before the date 

7 on which the interest rate in effect during the introductory 

8 period of a hybrid adjustable rate mortgage adjusts or 

9 resets to a variable interest rate or, in the case of such 

10 an adjustment or resetting that occurs within the first 6 

11 months after consummation of such loan, at consumma12 tion, the creditor or servicer of such loan shall provide a 

13 written notice, separate and distinct from all other cor14 respondence to the consumer, that includes the following: 

15 ‘‘(1) Any index or formula used in making ad16 justments to or resetting the interest rate and a 

17 source of information about the index or formula. 

18 ‘‘(2) An explanation of how the new interest 

19 rate and payment would be determined, including an 

20 explanation of how the index was adjusted, such as 

21 by the addition of a margin. 

22 ‘‘(3) A good faith estimate, based on accepted 

23 industry standards, of the creditor or servicer of the 

24 amount of the monthly payment that will apply after 
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1 the date of the adjustment or reset, and the assump2 tions on which this estimate is based. 

3 ‘‘(4) A list of alternatives consumers may pur4 sue before the date of adjustment or reset, and de5 scriptions of the actions consumers must take to 

6 pursue these alternatives, including— 

7 ‘‘(A) refinancing; 

8 ‘‘(B) renegotiation of loan terms; 

9 ‘‘(C) payment forbearances; and 

10 ‘‘(D) pre-foreclosure sales. 

11 ‘‘(5) The names, addresses, telephone numbers, 

12 and Internet addresses of counseling agencies or 

13 programs reasonably available to the consumer that 

14 have been certified or approved and made publicly 

15 available by the Secretary of Housing and Urban 

16 Development or a State housing finance authority 

17 (as defined in section 1301 of the Financial Institu18 tions Reform, Recovery, and Enforcement Act of 

19 1989). 

20 ‘‘(6) The address, telephone number, and Inter21 net address for the State housing finance authority 

22 (as so defined) for the State in which the consumer 

23 resides.’’. 

24 (b) CLERICAL AMENDMENT.—The table of sections 

25 for chapter 2 of the Truth in Lending Act is amended 
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1 by inserting after the item relating to section 128 the fol2 lowing new item: 

‘‘128A. Reset of hybrid adjustable rate mortgages.’’. 

3 SEC. 213. CREDIT RISK RETENTION. 

4 Section 129C of the Truth in Lending Act is amend5 ed by inserting after subsection (k) (as added by section 

6 206) the following new subsection: 

7 ‘‘(l) CREDIT RISK RETENTION.— 

8 ‘‘(1) IN GENERAL.—The Federal banking agen9 cies shall prescribe regulations jointly to require any 

10 creditor that makes a residential mortgage loan that 

11 is not a qualified mortgage (as defined under section 

12 129C(c)(2)(A)), to retain an economic interest in a 

13 material portion of the credit risk for any such loan 

14 that the creditor transfers, sells or conveys to a 

15 third party. 

16 ‘‘(2) STANDARDS FOR REGULATIONS.—Regula17 tions prescribed under paragraph (1) shall— 

18 ‘‘(A) apply only to residential mortgage 

19 loans that are not qualified mortgages (as so 

20 defined); 

21 ‘‘(B) prohibit a creditor from directly or 

22 indirectly hedging or otherwise transferring the 

23 credit risk such creditor is required to retain 

24 under the regulations with respect to any resi25 dential mortgage loan; 
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1 ‘‘(C) require a creditor to retain at least 5 

2 percent of the credit risk on any non-qualified 

3 mortgage that is transferred, sold or conveyed 

4 by such creditor; and 

5 ‘‘(D) specify the permissible forms of the 

6 required risk retention (for example, first loss 

7 position or pro rata vertical slice) and the min8 imum duration of the required risk retention. 

9 ‘‘(3) EXCEPTIONS AND ADJUSTMENTS.— 

10 ‘‘(A) IN GENERAL.—The Federal banking 

11 agencies shall have authority to jointly provide 

12 exceptions or adjustments to the requirements 

13 of this subsection, including exceptions or ad14 justments relating to the 5 percent risk reten15 tion threshold and the hedging prohibition. 

16 ‘‘(B) APPLICABLE STANDARDS.—Any ex17 ceptions or adjustments granted by the Federal 

18 banking agencies shall— 

19 ‘‘(i) be consistent with the purpose of 

20 this subsection to help ensure high quality 

21 underwriting standards for creditors that 

22 make residential mortgage loans that are 

23 not qualified mortgages; and 

24 ‘‘(ii) facilitate appropriate risk man25 agement practices by such creditors, im-
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1 prove access of consumers to mortgage 

2 credit on reasonable terms, or otherwise 

3 serve the public interest. 

4 ‘‘(4) ALTERNATIVE RISK RETENTION FOR

5 SECURITIZERS.—The Federal banking agencies may 

6 jointly, in their discretion, apply the risk retention 

7 requirements of this subsection to securitizers of res8 idential mortgages (or particular types of residential 

9 mortgages) that are not qualified mortgages in addi10 tion to or in substitution for any or all of the re11 quirements that apply to creditors that make such 

12 mortgages if the agencies jointly determine that ap13 plying the requirements to such securitizers would— 

14 ‘‘(A) be consistent with the purpose of this 

15 subsection to help ensure high quality under16 writing standards for creditors of residential 

17 mortgage loans that are not qualified mort18 gages; and 

19 ‘‘(B) facilitate appropriate risk manage20 ment practices by such creditors, improve ac21 cess of consumers to mortgage credit on reason22 able terms, or otherwise serve the public inter23 est. 

24 ‘‘(m) Section 129C and any regulations promulgated 

25 thereunder do not apply to an extension of credit relating 
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1 to a plan described in section 101(53D) of title 11, United 

2 States Code.’’. 

3 SEC. 214. REQUIRED DISCLOSURES. 

4 Section 128(a) of Truth in Lending Act (15 U.S.C. 

5 1638(a)) is amended by adding at the end the following 

6 new paragraphs: 

7 ‘‘(16) In the case of a variable rate residential 

8 mortgage loan for which an escrow or impound ac9 count will be established for the payment of all ap10 plicable taxes, insurance, and assessments— 

11 ‘‘(A) the amount of initial monthly pay12 ment due under the loan for the payment of 

13 principal and interest, and the amount of such 

14 initial monthly payment including the monthly 

15 payment deposited in the account for the pay16 ment of all applicable taxes, insurance, and as17 sessments; and 

18 ‘‘(B) the amount of the fully indexed 

19 monthly payment due under the loan for the 

20 payment of principal and interest, and the 

21 amount of such fully indexed monthly payment 

22 including the monthly payment deposited in the 

23 account for the payment of all applicable taxes, 

24 insurance, and assessments. 
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1 ‘‘(17) In the case of a residential mortgage 

2 loan, the aggregate amount of settlement charges for 

3 all settlement services provided in connection with 

4 the loan, the amount of charges that are included in 

5 the loan and the amount of such charges the bor6 rower must pay at closing, the approximate amount 

7 of the wholesale rate of funds in connection with the 

8 loan, and the aggregate amount of other fees or re9 quired payments in connection with the loan. 

10 ‘‘(18) In the case of a residential mortgage 

11 loan, the aggregate amount of fees paid to the mort12 gage originator in connection with the loan, the 

13 amount of such fees paid directly by the consumer, 

14 and any additional amount received by the originator 

15 from the creditor. 

16 ‘‘(19) In the case of a residential mortgage 

17 loan, the total amount of interest that the consumer 

18 will pay over the life of the loan as a percentage of 

19 the principal of the loan. Such amount shall be com20 puted assuming the consumer makes each monthly 

21 payment in full and on-time, and does not make any 

22 over-payments.’’. 
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1 SEC. 215. DISCLOSURES REQUIRED IN MONTHLY STATE2 MENTS FOR RESIDENTIAL MORTGAGE 

3 LOANS. 

4 Section 128 of the Truth in Lending Act (15 U.S.C. 

5 1638) is amended by adding at the end the following new 

6 subsection: 

7 ‘‘(f) PERIODIC STATEMENTS FOR RESIDENTIAL

8 MORTGAGE LOANS.— 

9 ‘‘(1) IN GENERAL.—The creditor, assignee, or 

10 servicer with respect to any residential mortgage 

11 loan shall transmit to the obligor, for each billing 

12 cycle, a statement setting forth each of the following 

13 items, to the extent applicable, in a conspicuous and 

14 prominent manner: 

15 ‘‘(A) The amount of the principal obliga16 tion under the mortgage. 

17 ‘‘(B) The current interest rate in effect for 

18 the loan. 

19 ‘‘(C) The date on which the interest rate 

20 may next reset or adjust. 

21 ‘‘(D) The amount of any prepayment fee 

22 to be charged, if any. 

23 ‘‘(E) A description of any late payment 

24 fees. 
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1 ‘‘(F) A telephone number and electronic 

2 mail address that may be used by the obligor to 

3 obtain information regarding the mortgage. 

4 ‘‘(G) The names, addresses, telephone 

5 numbers, and Internet addresses of counseling 

6 agencies or programs reasonably available to 

7 the consumer that have been certified or ap8 proved and made publicly available by the Sec9 retary of Housing and Urban Development or a 

10 State housing finance authority (as defined in 

11 section 1301 of the Financial Institutions Re12 form, Recovery, and Enforcement Act of 1989). 

13 ‘‘(H) Such other information as the Board 

14 may prescribe in regulations. 

15 ‘‘(2) DEVELOPMENT AND USE OF STANDARD

16 FORM.—The Federal banking agencies shall jointly 

17 develop and prescribe a standard form for the disclo18 sure required under this subsection, taking into ac19 count that the statements required may be trans20 mitted in writing or electronically.’’. 

21 SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED 

22 ISSUES. 

23 (a) ESTABLISHMENT.—The Secretary of Housing 

24 and Urban Development (hereafter in this section referred 

25 to as the ‘‘Secretary’’ shall establish a program for making 
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1 grants for providing a full range of foreclosure legal assist2 ance to low- and moderate-income homeowners and ten3 ants related to home ownership preservation, home fore4 closure prevention, and tenancy associated with home fore5 closure. 

6 (b) COMPETITIVE ALLOCATION.—The Secretary shall 

7 allocate amounts made available for grants under this sec8 tion to State and local legal organizations on the basis 

9 of a competitive process. For purposes of this subsection 

10 ‘‘State and local legal organizations’’ are those State and 

11 local organizations whose primary business or mission is 

12 to provide legal assistance. 

13 (c) PRIORITY TO CERTAIN AREAS.—In allocating 

14 amounts in accordance with subsection (b), the Secretary 

15 shall give priority consideration to State and local legal 

16 organizations that are operating in the 100 metropolitan 

17 statistical areas (as that term is defined by the Director 

18 of the Office of Management and Budget) with the highest 

19 home foreclosure rates. 

20 (d) LEGAL ASSISTANCE.— 

21 (1) IN GENERAL.—Any State or local legal or22 ganization that receives financial assistance pursu23 ant to this section may use such amounts only to as24 sist— 
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1 (A) homeowners of owner-occupied homes 

2 with mortgages in default, in danger of default, 

3 or subject to or at risk of foreclosure; and 

4 (B) tenants at risk of or subject to eviction 

5 as a result of foreclosure of the property in 

6 which such tenant resides. 

7 (2) COMMENCE USE WITHIN 90 DAYS.—Any 

8 State or local legal organization that receives finan9 cial assistance pursuant to this section shall begin 

10 using any financial assistance received under this 

11 section within 90 days after receipt of the assist12 ance. 

13 (3) PROHIBITION ON CLASS ACTIONS.—No 

14 funds provided to a State or local legal organization 

15 under this section may be used to support any class 

16 action litigation. 

17 (4) LIMITATION ON LEGAL ASSISTANCE.—Legal 

18 assistance funded with amounts provided under this 

19 section shall be limited to mortgage-related default, 

20 eviction, or foreclosure proceedings, without regard 

21 to whether such foreclosure is judicial or nonjudicial. 

22 (5) EFFECTIVE DATE.—Notwithstanding sec23 tion 217, this subsection shall take effect on the 

24 date of the enactment of this Act. 
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1 (e) LIMITATION ON DISTRIBUTION OF ASSIST2 ANCE.— 

3 (1) IN GENERAL.—None of the amounts made 

4 available under this section shall be distributed to— 

5 (A) any organization which has been con6 victed for a violation under Federal law relating 

7 to an election for Federal office; or 

8 (B) any organization which employs appli9 cable individuals. 

10 (2) DEFINITION OF APPLICABLE INDIVID11 UALS.—In this subsection, the term ‘‘applicable indi12 vidual’’ means an individual who— 

13 (A) is— 

14 (i) employed by the organization in a 

15 permanent or temporary capacity; 

16 (ii) contracted or retained by the or17 ganization; or 

18 (iii) acting on behalf of, or with the 

19 express or apparent authority of, the orga20 nization; and 

21 (B) has been convicted for a violation 

22 under Federal law relating to an election for 

23 Federal office. 

24 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

25 are authorized to be appropriated to the Secretary 
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1 $35,000,000 for each of fiscal years 2009 through 2012 

2 for grants under this section. 

3 SEC. 217. EFFECTIVE DATE. 

4 The amendments made by this title shall apply to 

5 transactions consummated on or after the effective date 

6 of the regulations specified in section 209. 

7 SEC. 218. REPORT BY THE GAO. 

8 (a) REPORT REQUIRED.—The Comptroller General 

9 shall conduct a study to determine the effects the enact10 ment of this Act will have on the availability and afford11 ability of credit for consumers, small businesses, home12 buyers, and mortgage lending, including the effect— 

13 (1) on the mortgage market for mortgages that 

14 are not within the safe harbor provided in the 

15 amendments made by this title; 

16 (2) on the ability of prospective homebuyers to 

17 obtain financing; 

18 (3) on the ability of homeowners facing resets 

19 or adjustments to refinance—for example, do they 

20 have fewer refinancing options due to the unavail21 ability of certain loan products that were available 

22 before the enactment of this Act; 

23 (4) on minorities’ ability to access affordable 

24 credit compared with other prospective borrowers; 

25 (5) on home sales and construction; 
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1 (6) of extending the rescission right, if any, on 

2 adjustable rate loans and its impact on litigation; 

3 (7) of State foreclosure laws and, if any, an in4 vestor’s ability to transfer a property after fore5 closure; 

6 (8) of expanding the existing provisions of the 

7 Home Ownership and Equity Protection Act of 

8 1994; 

9 (9) of prohibiting prepayment penalties on 

10 high-cost mortgages; and 

11 (10) of establishing counseling services under 

12 the Department of Housing and Urban Development 

13 and offered through the Office of Housing Coun14 seling. 

15 (b) REPORT.—Before the end of the 1-year period be16 ginning on the date of the enactment of this Act, the 

17 Comptroller General shall submit a report to the Congress 

18 containing the findings and conclusions of the Comptroller 

19 General with respect to the study conducted pursuant to 

20 subsection (a). 

21 (c) EXAMINATION RELATED TO CERTAIN CREDIT

22 RISK RETENTION PROVISIONS.—The report required by 

23 subsection (b) shall also include an analysis by the Comp24 troller General of the effect on the capital reserves and 

25 funding of lenders of credit risk retention provisions for 
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1 non-qualified mortgages, including an analysis of the ex2 ceptions and adjustments authorized in section 

3 129C(l)(3)(A) of the Truth in Lending Act and a rec4 ommendation on whether a uniform standard is needed. 

5 (d) ANALYSIS OF CREDIT RISK RETENTION PROVI6 SIONS.—The report required by subsection (b) shall also 

7 include— 

8 (1) an analysis by the Comptroller General of 

9 whether the credit risk retention provisions have sig10 nificantly reduced risks to the larger credit market 

11 of the repackaging and selling of securitized loans on 

12 a secondary market; and 

13 (2) recommendations to the Congress on adjust14 ments that should be made, or additional measures 

15 that should be undertaken. 

16 SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AU17 THORITY. 

18 Section 130(e) of the Truth in Lending Act (15 

19 U.S.C. 1640(e)) is amended by striking ‘‘section 129 may 

20 also’’ and inserting ‘‘section 129, 129B, or 129C of this 

21 Act, section 220 of the Mortgage Reform and Anti-Preda22 tory Lending Act, or any amendment made by section 220 

23 of the Mortgage Reform and Anti-Predatory Lending Act 

24 may also’’. 
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1 SEC. 220. TENANT PROTECTION. 

2 (a) TENANT PROTECTION GENERALLY.— 

3 (1) IN GENERAL.—In the case of any fore4 closure on any dwelling or residential real property, 

5 after the date of the enactment of the Mortgage Re6 form and Anti-Predatory Lending Act, the imme7 diate successor in interest in such property pursuant 

8 to the foreclosure shall assume such interest subject 

9 to— 

10 (A) except as provided in paragraph (2), 

11 the rights of any bona fide tenant, as of the 

12 date of foreclosure under any bona fide lease 

13 entered into before the date of foreclosure, to 

14 occupy the premises until the end of the re15 maining term of the lease; and 

16 (B) the rights of any bona fide tenant, as 

17 of the date of foreclosure, without a lease or 

18 with a lease terminable at will under State law, 

19 subject to the provision by the immediate suc20 cessor in interest and the receipt by the tenant 

21 in the unit, of a notice to vacate at least 90 

22 days before the effective date of such notice. 

23 (2) EXCEPTION FOR SUBSEQUENT OWNER-OC24 CUPANT.—Notwithstanding paragraph (1), if the im25 mediate successor in interest of any dwelling or resi26 dential real property that is otherwise subject to 
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1 paragraph (1) is a purchaser who will occupy a unit 

2 of the dwelling or residential real property as a pri3 mary residence, or such successor in interest sells 

4 the dwelling or residential real property to a pur5 chaser who will occupy a unit of the dwelling or resi6 dential real property, as a primary residence— 

7 (A) such purchaser may terminate a lease 

8 relating to such unit on the effective date of a 

9 notice to vacate; and 

10 (B)(i) such notice to vacate shall be pro11 vided by the purchaser to the tenant in such 

12 unit at least 90 days before the effective date 

13 of such notice; and (ii) with respect to a single14 family residence for which the borrower rented 

15 the unit in violation of the mortgage contract, 

16 such notice to vacate shall be provided by the 

17 purchaser to the tenant in such unit at least 30 

18 days before the effective date of such notice, 

19 and shall include a copy of the mortgage con20 tract prohibiting the rental of the unit. 

21 (3) BONA FIDE LEASE OR TENANCY.—For pur22 poses of this subsection, a lease or tenancy shall be 

23 considered bona fide only if— 

24 (A) the mortgagor under the contract is 

25 not the tenant; 
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1 (B) the lease or tenancy was the result of 

2 an arms-length transaction; and 

3 (C) the lease or tenancy requires the re4 ceipt of rent that is not substantially less than 

5 fair market rent for the property or the unit’s 

6 rent is reduced or subsidized due to a Federal, 

7 State, or local subsidy. 

8 (4) RULE OF CONSTRUCTION.—Except for the 

9 specific provisions of this subsection, no provision of 

10 this subsection shall be construed as affecting the 

11 requirements for termination of any Federal- or 

12 State-subsidized tenancy. The provisions of this sub13 section shall not be construed to limit any State or 

14 local law that provides longer time periods or other 

15 additional protections for tenants. 

16 (b) CORRESPONDING PROVISION RELATING TO EF17 FECT OF FORECLOSURES ON SECTION 8 TENANCIES.— 

18 Paragraph (7) of section 8(o) of the United States Hous19 ing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended— 

20 (1) in subparagraph (C), by inserting before the 

21 semicolon at the end the following: ‘‘, and in the 

22 case of an owner who is an immediate successor in 

23 interest pursuant to foreclosure— 

24 ‘‘(i) during the initial term of the ten25 ant’s lease, having the property vacant 
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1 prior to sale shall not constitute good 

2 cause; and 

3 ‘‘(ii) in subsequent lease terms of the 

4 tenant’s lease, who will occupy the unit as 

5 a primary residence, who sells the property 

6 to a purchaser who will occupy a unit of 

7 the property as a primary residence, or if 

8 the unit is unmarketable while occupied, 

9 such owner may terminate a lease relating 

10 to such unit for good cause on the effective 

11 date of the notice to vacate, where such 

12 notice is provided by the owner to the ten13 ant in such unit at least 90 days before the 

14 effective date of such notice;’’. 

15 (2) in subparagraph (E), by striking ‘‘and’’ at 

16 the end; 

17 (3) by redesignating subparagraph (F) as sub18 paragraph (G); and 

19 (4) by inserting after subparagraph (E) the fol20 lowing: 

21 ‘‘(F) shall provide that in the case of any 

22 foreclosure on any residential real property in 

23 which a recipient of assistance under this sub24 section resides, the immediate successor in in25 terest in such property pursuant to the fore-
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1 closure shall assume such interest subject to the 

2 lease between the prior owner and the tenant 

3 and to the housing assistance payments con4 tract between the prior owner and the public 

5 housing agency for the occupied unit; if a public 

6 housing agency is unable to make payments 

7 under the contract to the immediate successor 

8 in interest after foreclosure, due to action or in9 action by the successor in interest, including 

10 the rejection of payments or the failure of the 

11 successor to maintain the unit in compliance 

12 with paragraph (8) or an inability to identify 

13 the successor, the agency may use funds that 

14 would have been used to pay the rental amount 

15 on behalf of the family— 

16 ‘‘(i) to pay for utilities that are the 

17 responsibility of the owner under the lease 

18 or applicable law, after taking reasonable 

19 steps to notify the owner that it intends to 

20 make payments to a utility provider in lieu 

21 of payments to the owner, except prior no22 tification shall not be required in any case 

23 in which the unit will be or has been ren24 dered uninhabitable due to the termination 

25 or threat of termination of service, in 
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1 which case the public housing agency shall 

2 notify the owner within a reasonable time 

3 after making such payment; or 

4 ‘‘(ii) for the family’s reasonable mov5 ing costs, including security deposit costs; 

6 except that this subparagraph and the provi7 sions related to foreclosure in subparagraph (C) 

8 shall not affect any State or local law that pro9 vides longer time periods or other additional 

10 protections for tenants.’’. 

11 (c) LANDLORD NOTICE TO TENANTS.—Notwith12 standing the law of any State or the terms of any con13 sumer residential lease, each person who owns a dwelling 

14 or residential real property— 

15 (1) which is leased to a bona fide tenant (in16 cluding a tenancy terminable at will), or which the 

17 landlord offers to lease to a prospective tenant; and 

18 (2) which, pursuant to the terms of a valid loan 

19 to such person which is secured by such dwelling or 

20 property, is or becomes subject to foreclosure or with 

21 respect to which the person is in default, 

22 shall promptly notify any such tenant or prospective ten23 ant of the circumstances prevailing with respect to such 

24 property and the effect of any such default or foreclosure. 

25 The requirements of this subsection shall have no effect 
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1 on any State or local law that provides additional notice 

2 or other additional protections for tenants. 

3 (d) EFFECTIVE DATE.—Notwithstanding section 

4 217, this section and the amendments made by this sec5 tion shall take effect on the date of the enactment of this 

6 Act. 

7 TITLE III—HIGH-COST 

8 MORTGAGES 

9 SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORT10 GAGES. 

11 (a) HIGH-COST MORTGAGE DEFINED.—Section 

12 103(aa) of the Truth in Lending Act (15 U.S.C. 

13 1602(aa)) is amended by striking all that precedes para14 graph (2) and inserting the following: 

15 ‘‘(aa) HIGH-COST MORTGAGE.— 

16 ‘‘(1) DEFINITION.— 

17 ‘‘(A) IN GENERAL.—The term ‘high-cost 

18 mortgage’, and a mortgage referred to in this 

19 subsection, means a consumer credit trans20 action that is secured by the consumer’s prin21 cipal dwelling, other than a reverse mortgage 

22 transaction, if— 

23 ‘‘(i) in the case of a credit transaction 

24 secured— 
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1 ‘‘(I) by a first mortgage on the 

2 consumer’s principal dwelling, the an3 nual percentage rate at consummation 

4 of the transaction will exceed by more 

5 than 6.5 percentage points (8.5 per6 centage points, if the dwelling is per7 sonal property and the transaction is 

8 for less than $50,000) the average 

9 prime offer rate, as defined in section 

10 129C(c)(2)(B), for a comparable 

11 transaction; or 

12 ‘‘(II) by a subordinate or junior 

13 mortgage on the consumer’s principal 

14 dwelling, the annual percentage rate 

15 at consummation of the transaction 

16 will exceed by more than 8.5 percent17 age points the average prime offer 

18 rate, as defined in section 

19 129C(c)(2)(B), for a comparable 

20 transaction; 

21 ‘‘(ii) the total points and fees payable 

22 in connection with the transaction ex23 ceed— 
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1 ‘‘(I) in the case of a transaction 

2 for $20,000 or more, 5 percent of the 

3 total transaction amount; or 

4 ‘‘(II) in the case of a transaction 

5 for less than $20,000, the lesser of 8 

6 percent of the total transaction 

7 amount or $1,000 (or such other dol8 lar amount as the Board shall pre9 scribe by regulation); or 

10 ‘‘(iii) the credit transaction documents 

11 permit the creditor to charge or collect pre12 payment fees or penalties more than 36 

13 months after the transaction closing or 

14 such fees or penalties exceed, in the aggre15 gate, more than 2 percent of the amount 

16 prepaid. 

17 ‘‘(B) INTRODUCTORY RATES TAKEN INTO

18 ACCOUNT.—For purposes of subparagraph 

19 (A)(i), the annual percentage rate of interest 

20 shall be determined based on the following in21 terest rate: 

22 ‘‘(i) In the case of a fixed-rate trans23 action in which the annual percentage rate 

24 will not vary during the term of the loan, 
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1 the interest rate in effect on the date of 

2 consummation of the transaction. 

3 ‘‘(ii) In the case of a transaction in 

4 which the rate of interest varies solely in 

5 accordance with an index, the interest rate 

6 determined by adding the index rate in ef7 fect on the date of consummation of the 

8 transaction to the maximum margin per9 mitted at any time during the transaction 

10 agreement. 

11 ‘‘(iii) In the case of any other trans12 action in which the rate may vary at any 

13 time during the term of the loan for any 

14 reason, the interest charged on the trans15 action at the maximum rate that may be 

16 charged during the term of the trans17 action.’’. 

18 (b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 

19 103(aa)(2) of the Truth in Lending Act (15 U.S.C. 

20 1602(aa)(2)) is amended by striking subparagraph (B) 

21 and inserting the following new subparagraph: 

22 ‘‘(B) An increase or decrease under sub23 paragraph (A)— 

24 ‘‘(i) may not result in the number of 

25 percentage points referred to in paragraph 
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1 (1)(A)(i)(I) being less than 6 percentage 

2 points or greater than 10 percentage 

3 points; and 

4 ‘‘(ii) may not result in the number of 

5 percentage points referred to in paragraph 

6 (1)(A)(i)(II) being less than 8 percentage 

7 points or greater than 12 percentage 

8 points.’’. 

9 (c) POINTS AND FEES DEFINED.— 

10 (1) IN GENERAL.—Section 103(aa)(4) of the 

11 Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is 

12 amended— 

13 (A) by striking subparagraph (B) and in14 serting the following: 

15 ‘‘(B) all compensation paid directly or indi16 rectly by a consumer or creditor to a mortgage 

17 originator from any source, including a mort18 gage originator that originates a loan in the 

19 name of the creditor in a table-funded trans20 action;’’; 

21 (B) in subparagraph (C)(ii), by inserting 

22 ‘‘except where applied to the charges set forth 

23 in section 106(e)(1) where a creditor may re24 ceive indirect compensation solely as a result of 

25 obtaining distributions of profits from an affili-
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1 ated entity based on its ownership interest in 

2 compliance with section 8(c)(4) of the Real Es3 tate Settlement Procedures Act of 1974’’ before 

4 the semicolon at the end; 

5 (C) in subparagraph (C)(iii), by striking ‘‘; 

6 and’’ and inserting ‘‘, except as provided for in 

7 clause (ii);’’; 

8 (D) by redesignating subparagraph (D) as 

9 subparagraph (G); and 

10 (E) by inserting after subparagraph (C) 

11 the following new subparagraphs: 

12 ‘‘(D) premiums or other charges payable at 

13 or before closing for any credit life, credit dis14 ability, credit unemployment, or credit property 

15 insurance, or any other accident, loss-of-income, 

16 life or health insurance, or any payments di17 rectly or indirectly for any debt cancellation or 

18 suspension agreement or contract, except that 

19 insurance premiums or debt cancellation or sus20 pension fees calculated and paid in full on a 

21 monthly basis shall not be considered financed 

22 by the creditor; 

23 ‘‘(E) except as provided in subsection (cc), 

24 the maximum prepayment fees and penalties 
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1 which may be charged or collected under the 

2 terms of the credit transaction; 

3 ‘‘(F) all prepayment fees or penalties that 

4 are incurred by the consumer if the loan refi5 nances a previous loan made or currently held 

6 by the same creditor or an affiliate of the cred7 itor; and’’. 

8 (2) CALCULATION OF POINTS AND FEES FOR

9 OPEN-END CONSUMER CREDIT PLANS.—Section 

10 103(aa) of the Truth in Lending Act (15 U.S.C. 

11 1602(aa)) is amended— 

12 (A) by redesignating paragraph (5) as 

13 paragraph (6); and 

14 (B) by inserting after paragraph (4) the 

15 following new paragraph: 

16 ‘‘(5) CALCULATION OF POINTS AND FEES FOR

17 OPEN-END CONSUMER CREDIT PLANS.—In the case 

18 of open-end consumer credit plans, points and fees 

19 shall be calculated, for purposes of this section and 

20 section 129, by adding the total points and fees 

21 known at or before closing, including the maximum 

22 prepayment penalties which may be charged or col23 lected under the terms of the credit transaction, plus 

24 the minimum additional fees the consumer would be 
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1 required to pay to draw down an amount equal to 

2 the total credit line.’’. 

3 (d) BONA FIDE DISCOUNT LOAN DISCOUNT

4 POINTS.—Section 103 of the Truth in Lending Act (15 

5 U.S.C. 1602) is amended by inserting after subsection (cc) 

6 (as added by section 101) the following new subsection: 

7 ‘‘(dd) BONA FIDE DISCOUNT POINTS AND PREPAY8 MENT PENALTIES.—For the purposes of determining the 

9 amount of points and fees for purposes of subsection (aa), 

10 either the amounts described in paragraph (1) or (2) of 

11 the following paragraphs, but not both, shall be excluded: 

12 ‘‘(1) Up to and including 2 bona fide discount 

13 points payable by the consumer in connection with 

14 the mortgage, but only if the interest rate from 

15 which the mortgage’s interest rate will be discounted 

16 does not exceed by more than 1 percentage point— 

17 ‘‘(A) the required net yield for a 90-day 

18 standard mandatory delivery commitment for a 

19 reasonably comparable loan from either the 

20 Federal National Mortgage Association or the 

21 Federal Home Loan Mortgage Corporation, 

22 whichever is greater; or 

23 ‘‘(B) if secured by a personal property 

24 loan, the average rate on a loan in connection 

25 with which insurance is provided under title I 
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1 of the National Housing Act (12 U.S.C. 1702 

2 et seq.). 

3 ‘‘(2) Unless 2 bona fide discount points have 

4 been excluded under paragraph (1), up to and in5 cluding 1 bona fide discount point payable by the 

6 consumer in connection with the mortgage, but only 

7 if the interest rate from which the mortgage’s inter8 est rate will be discounted does not exceed by more 

9 than 2 percentage points— 

10 ‘‘(A) the required net yield for a 90-day 

11 standard mandatory delivery commitment for a 

12 reasonably comparable loan from either the 

13 Federal National Mortgage Association or the 

14 Federal Home Loan Mortgage Corporation, 

15 whichever is greater; or 

16 ‘‘(B) if secured by a personal property 

17 loan, the average rate on a loan in connection 

18 with which insurance is provided under title I 

19 of the National Housing Act (12 U.S.C. 1702 

20 et seq.). 

21 ‘‘(3) For purposes of paragraph (1), the term 

22 ‘bona fide discount points’ means loan discount 

23 points which are knowingly paid by the consumer for 

24 the purpose of reducing, and which in fact result in 
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1 a bona fide reduction of, the interest rate or time2 price differential applicable to the mortgage. 

3 ‘‘(4) Paragraphs (1) and (2) shall not apply to 

4 discount points used to purchase an interest rate re5 duction unless the amount of the interest rate reduc6 tion purchased is reasonably consistent with estab7 lished industry norms and practices for secondary 

8 mortgage market transactions.’’. 

9 SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR 

10 CERTAIN MORTGAGES. 

11 (a) PREPAYMENT PENALTY PROVISIONS.—Section 

12 129(c)(2) of the Truth in Lending Act (15 U.S.C. 

13 1639(c)(2)) is hereby repealed. 

14 (b) NO BALLOON PAYMENTS.—Section 129(e) of the 

15 Truth in Lending Act (15 U.S.C. 1639(e)) is amended to 

16 read as follows: 

17 ‘‘(e) NO BALLOON PAYMENTS.—No high-cost mort18 gage may contain a scheduled payment that is more than 

19 twice as large as the average of earlier scheduled pay20 ments. This subsection shall not apply when the payment 

21 schedule is adjusted to the seasonal or irregular income 

22 of the consumer.’’. 
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1 SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN 

2 MORTGAGES. 

3 (a) ADDITIONAL REQUIREMENTS FOR CERTAIN

4 MORTGAGES.—Section 129 of the Truth in Lending Act 

5 (15 U.S.C. 1639) is amended— 

6 (1) by redesignating subsections (j), (k) and (l) 

7 as subsections (n), (o) and (p) respectively; and 

8 (2) by inserting after subsection (i) the fol9 lowing new subsections: 

10 ‘‘(j) RECOMMENDED DEFAULT.—No creditor shall 

11 recommend or encourage default on an existing loan or 

12 other debt prior to and in connection with the closing or 

13 planned closing of a high-cost mortgage that refinances 

14 all or any portion of such existing loan or debt. 

15 ‘‘(k) LATE FEES.— 

16 ‘‘(1) IN GENERAL.—No creditor may impose a 

17 late payment charge or fee in connection with a 

18 high-cost mortgage— 

19 ‘‘(A) in an amount in excess of 4 percent 

20 of the amount of the payment past due; 

21 ‘‘(B) unless the loan documents specifically 

22 authorize the charge or fee; 

23 ‘‘(C) before the end of the 15-day period 

24 beginning on the date the payment is due, or in 

25 the case of a loan on which interest on each in26 stallment is paid in advance, before the end of 
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1 the 30-day period beginning on the date the 

2 payment is due; or 

3 ‘‘(D) more than once with respect to a sin4 gle late payment. 

5 ‘‘(2) COORDINATION WITH SUBSEQUENT LATE

6 FEES.—If a payment is otherwise a full payment for 

7 the applicable period and is paid on its due date or 

8 within an applicable grace period, and the only delin9 quency or insufficiency of payment is attributable to 

10 any late fee or delinquency charge assessed on any 

11 earlier payment, no late fee or delinquency charge 

12 may be imposed on such payment. 

13 ‘‘(3) FAILURE TO MAKE INSTALLMENT PAY14 MENT.—If, in the case of a loan agreement the 

15 terms of which provide that any payment shall first 

16 be applied to any past due principal balance, the 

17 consumer fails to make an installment payment and 

18 the consumer subsequently resumes making install19 ment payments but has not paid all past due install20 ments, the creditor may impose a separate late pay21 ment charge or fee for any principal due (without 

22 deduction due to late fees or related fees) until the 

23 default is cured. 

24 ‘‘(l) ACCELERATION OF DEBT.—No high-cost mort25 gage may contain a provision which permits the creditor 
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1 to accelerate the indebtedness, except when repayment of 

2 the loan has been accelerated by default in payment, or 

3 pursuant to a due-on-sale provision, or pursuant to a ma4 terial violation of some other provision of the loan docu5 ment unrelated to payment schedule. 

6 ‘‘(m) RESTRICTION ON FINANCING POINTS AND

7 FEES.—No creditor may directly or indirectly finance, in 

8 connection with any high-cost mortgage, any of the fol9 lowing: 

10 ‘‘(1) Any prepayment fee or penalty payable by 

11 the consumer in a refinancing transaction if the 

12 creditor or an affiliate of the creditor is the 

13 noteholder of the note being refinanced. 

14 ‘‘(2) Any points or fees.’’. 

15 (b) PROHIBITIONS ON EVASIONS.—Section 129 of 

16 the Truth in Lending Act (15 U.S.C. 1639) is amended 

17 by inserting after subsection (p) (as so redesignated by 

18 subsection (a)(1)) the following new subsection: 

19 ‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF

20 TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 

21 creditor may not take any action in connection with a 

22 high-cost mortgage— 

23 ‘‘(1) to structure a loan transaction as an open24 end credit plan or another form of loan for the pur-
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1 pose and with the intent of evading the provisions of 

2 this title; or 

3 ‘‘(2) to divide any loan transaction into sepa4 rate parts for the purpose and with the intent of 

5 evading provisions of this title.’’. 

6 (c) MODIFICATION OR DEFERRAL FEES.—Section 

7 129 of the Truth in Lending Act (15 U.S.C. 1639) is 

8 amended by inserting after subsection (q) (as added by 

9 subsection (b) of this section) the following new sub10 section: 

11 ‘‘(r) MODIFICATION AND DEFERRAL FEES PROHIB12 ITED.— 

13 ‘‘(1) CREDITORS.—A creditor may not charge a 

14 consumer any fee to modify, renew, extend, or 

15 amend a high-cost mortgage, or to defer any pay16 ment due under the terms of such mortgage, unless 

17 the modification, renewal, extension or amendment 

18 results in a lower annual percentage rate on the 

19 mortgage for the consumer and then only if the 

20 amount of the fee is comparable to fees imposed for 

21 similar transactions in connection with consumer 

22 credit transactions that are secured by a consumer’s 

23 principal dwelling and are not high-cost mortgages. 

24 ‘‘(2) THIRD PARTIES.—A third-party may not 

25 charge a consumer any fee to— 
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1 ‘‘(A) modify, renew, extend, or amend a 

2 high-cost mortgage, or defer any payment due 

3 under the terms of such mortgage; 

4 ‘‘(B) negotiate with a creditor on behalf of 

5 a consumer, the modification, renewal, exten6 sion, or amendment of a high-cost mortgage; or 

7 ‘‘(C) negotiate with a creditor on behalf of 

8 a consumer, the deferral of any payment due 

9 under the terms of such mortgage, 

10 unless the modification renewal, extension or amend11 ment results in a significantly lower annual percent12 age rate on the mortgage, or a significant reduction 

13 in the amount of the outstanding principal on the 

14 mortgage, for the consumer and then only if the 

15 amount of the fee is comparable to fees imposed for 

16 similar transactions in connection with consumer 

17 credit transactions that are secured by a consumer’s 

18 principal dwelling and are not high-cost mortgages. 

19 ‘‘(3) ENFORCEMENT.—Section 130 shall be ap20 plied for purposes of paragraph (2) by— 

21 ‘‘(A) substituting ‘third party’ for 

22 ‘creditor’each place such term appears; and 

23 ‘‘(B) substituting ‘any fee charged by a 

24 third party’ for ‘finance charge’ each place such 

25 term appears.’’. 
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1 (d) PAYOFF STATEMENT.—Section 129 of the Truth 

2 in Lending Act (15 U.S.C. 1639) is amended by inserting 

3 after subsection (r) (as added by subsection (c) of this 

4 section) the following new subsection: 

5 ‘‘(s) PAYOFF STATEMENT.— 

6 ‘‘(1) FEES.— 

7 ‘‘(A) IN GENERAL.—Except as provided in 

8 subparagraph (B), no creditor or servicer may 

9 charge a fee for informing or transmitting to 

10 any person the balance due to pay off the out11 standing balance on a high-cost mortgage. 

12 ‘‘(B) TRANSACTION FEE.—When payoff in13 formation referred to in subparagraph (A) is 

14 provided by facsimile transmission or by a cou15 rier service, a creditor or servicer may charge a 

16 processing fee to cover the cost of such trans17 mission or service in an amount not to exceed 

18 an amount that is comparable to fees imposed 

19 for similar services provided in connection with 

20 consumer credit transactions that are secured 

21 by the consumer’s principal dwelling and are 

22 not high-cost mortgages. 

23 ‘‘(C) FEE DISCLOSURE.—Prior to charging 

24 a transaction fee as provided in subparagraph 

25 (B), a creditor or servicer shall disclose that 
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1 payoff balances are available for free pursuant 

2 to subparagraph (A). 

3 ‘‘(D) MULTIPLE REQUESTS.—If a creditor 

4 or servicer has provided payoff information re5 ferred to in subparagraph (A) without charge, 

6 other than the transaction fee allowed by sub7 paragraph (B), on 4 occasions during a cal8 endar year, the creditor or servicer may there9 after charge a reasonable fee for providing such 

10 information during the remainder of the cal11 endar year. 

12 ‘‘(2) PROMPT DELIVERY.—Payoff balances shall 

13 be provided within 5 business days after receiving a 

14 request by a consumer or a person authorized by the 

15 consumer to obtain such information. 

16 ‘‘(3) SERVICES CONSIDERED ASSIGNEE.—For 

17 the purposes of this subsection, a servicer shall be 

18 considered an assignee under the Truth in Lending 

19 Act.’’. 

20 (e) PRE-LOAN COUNSELING REQUIRED.—Section 

21 129 of the Truth in Lending Act (15 U.S.C. 1639) is 

22 amended by inserting after subsection (s) (as added by 

23 subsection (d) of this section) the following new sub24 section: 

25 ‘‘(t) PRE-LOAN COUNSELING.— 
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1 ‘‘(1) IN GENERAL.—A creditor may not extend 

2 credit to a consumer under a high-cost mortgage 

3 without first receiving certification from a counselor 

4 that is approved by the Secretary of Housing and 

5 Urban Development, or at the discretion of the Sec6 retary, a State housing finance authority, that the 

7 consumer has received counseling on the advisability 

8 of the mortgage. Such counselor shall not be em9 ployed by the creditor or an affiliate of the creditor 

10 or be affiliated with the creditor. 

11 ‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUN12 SELING.—No counselor may certify that a consumer 

13 has received counseling on the advisability of the 

14 high-cost mortgage unless the counselor can verify 

15 that the consumer has received each statement re16 quired (in connection with such loan) by this section 

17 or the Real Estate Settlement Procedures Act of 

18 1974 with respect to the transaction. 

19 ‘‘(3) REGULATIONS.—The Board may prescribe 

20 such regulations as the Board determines to be ap21 propriate to carry out the requirements of paragraph 

22 (1).’’. 

23 (f) FLIPPING PROHIBITED.—Section 129 of the 

24 Truth in Lending Act (15 U.S.C. 1639) is amended by 
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1 inserting after subsection (t) (as added by subsection (e)) 

2 the following new subsection: 

3 ‘‘(u) FLIPPING.— 

4 ‘‘(1) IN GENERAL.—No creditor may knowingly 

5 or intentionally engage in the unfair act or practice 

6 of flipping in connection with a high-cost mortgage. 

7 ‘‘(2) FLIPPING DEFINED.—For purposes of this 

8 subsection, the term ‘flipping’ means the making of 

9 a loan or extension of credit in the form a high-cost 

10 mortgage to a consumer which refinances an existing 

11 mortgage when the new loan or extension of credit 

12 does not have reasonable, net tangible benefit (as de13 termined in accordance with regulations prescribed 

14 under section 129C(b)) to the consumer considering 

15 all of the circumstances, including the terms of both 

16 the new and the refinanced loans or credit, the cost 

17 of the new loan or credit, and the consumer’s cir18 cumstances. 

19 ‘‘(v) CORRECTIONS AND UNINTENTIONAL VIOLA20 TIONS.—A creditor or assignee in a high cost loan who, 

21 when acting in good faith, fails to comply with any re22 quirement under this section will not be deemed to have 

23 violated such requirement if the creditor or assignee estab24 lishes that either— 
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1 ‘‘(1) within 30 days of the loan closing and 

2 prior to the institution of any action, the consumer 

3 is notified of or discovers the violation, appropriate 

4 restitution is made, and whatever adjustments are 

5 necessary are made to the loan to either, at the 

6 choice of the consumer— 

7 ‘‘(A) make the loan satisfy the require8 ments of this chapter; or 

9 ‘‘(B) in the case of a high-cost mortgage, 

10 change the terms of the loan in a manner bene11 ficial to the consumer so that the loan will no 

12 longer be a high-cost mortgage; or 

13 ‘‘(2) within 60 days of the creditor’s discovery 

14 or receipt of notification of an unintentional viola15 tion or bona fide error as described in subsection (c) 

16 and prior to the institution of any action, the con17 sumer is notified of the compliance failure, appro18 priate restitution is made, and whatever adjustments 

19 are necessary are made to the loan to either, at the 

20 choice of the consumer— 

21 ‘‘(A) make the loan satisfy the require22 ments of this chapter; or 

23 ‘‘(B) in the case of a high-cost mortgage, 

24 change the terms of the loan in a manner bene-
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1 ficial so that the loan will no longer be a high2 cost mortgage.’’. 

3 SEC. 304. REGULATIONS. 

4 (a) IN GENERAL.—The Board of Governors of the 

5 Federal Reserve System shall publish regulations imple6 menting this title and the amendments made by this title 

7 in final form before the end of the 6-month period begin8 ning on the date of the enactment of this Act. 

9 (b) CONSUMER MORTGAGE EDUCATION.— 

10 (1) REGULATIONS.—The Board of Governors of 

11 the Federal Reserve System may prescribe regula12 tions requiring or encouraging creditors to provide 

13 consumer mortgage education to prospective cus14 tomers or direct such customers to qualified con15 sumer mortgage education or counseling programs 

16 in the vicinity of the residence of the consumer. 

17 (2) COORDINATION WITH STATE LAW.—No re18 quirement established by the Board of Governors of 

19 the Federal Reserve System pursuant to paragraph 

20 (1) shall be construed as affecting or superseding 

21 any requirement under the law of any State with re22 spect to consumer mortgage counseling or education. 

23 SEC. 305. EFFECTIVE DATE. 

24 The amendments made by this title shall take effect 

25 at the end of the 6-month period beginning on the date 
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1 of the enactment of this Act and shall apply to mortgages 

2 referred to in section 103(aa) of the Truth in Lending 

3 Act (15 U.S.C. 1602(aa)) for which an application is re4 ceived by the creditor after the end of such period. 

5 TITLE IV—OFFICE OF HOUSING 

6 COUNSELING 

7 SEC. 401. SHORT TITLE. 

8 This title may be cited as the ‘‘Expand and Preserve 

9 Home Ownership Through Counseling Act’’. 

10 SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUN11 SELING. 

12 Section 4 of the Department of Housing and Urban 

13 Development Act (42 U.S.C. 3533) is amended by adding 

14 at the end the following new subsection: 

15 ‘‘(g) OFFICE OF HOUSING COUNSELING.— 

16 ‘‘(1) ESTABLISHMENT.—There is established, 

17 in the Department, the Office of Housing Coun18 seling. 

19 ‘‘(2) DIRECTOR.—There is established the posi20 tion of Director of Housing Counseling. The Direc21 tor shall be the head of the Office of Housing Coun22 seling and shall be appointed by, and shall report to, 

23 the Secretary. Such position shall be a career-re24 served position in the Senior Executive Service. 

25 ‘‘(3) FUNCTIONS.— 
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1 ‘‘(A) IN GENERAL.—The Director shall 

2 have primary responsibility within the Depart3 ment for all activities and matters relating to 

4 homeownership counseling and rental housing 

5 counseling, including— 

6 ‘‘(i) research, grant administration, 

7 public outreach, and policy development re8 lating to such counseling; and 

9 ‘‘(ii) establishment, coordination, and 

10 administration of all regulations, require11 ments, standards, and performance meas12 ures under programs and laws adminis13 tered by the Department that relate to 

14 housing counseling, homeownership coun15 seling (including maintenance of homes), 

16 mortgage-related counseling (including 

17 home equity conversion mortgages and 

18 credit protection options to avoid fore19 closure), and rental housing counseling, in20 cluding the requirements, standards, and 

21 performance measures relating to housing 

22 counseling. 

23 ‘‘(B) SPECIFIC FUNCTIONS.—The Director 

24 shall carry out the functions assigned to the Di25 rector and the Office under this section and any 
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1 other provisions of law. Such functions shall in2 clude establishing rules necessary for— 

3 ‘‘(i) the counseling procedures under 

4 section 106(g)(1) of the Housing and 

5 Urban Development Act of 1968 (12 

6 U.S.C. 1701x(h)(1)); 

7 ‘‘(ii) carrying out all other functions 

8 of the Secretary under section 106(g) of 

9 the Housing and Urban Development Act 

10 of 1968, including the establishment, oper11 ation, and publication of the availability of 

12 the toll-free telephone number under para13 graph (2) of such section; 

14 ‘‘(iii) contributing to the preparation 

15 and distribution of home buying informa16 tion booklets pursuant to section 5 of the 

17 Real Estate Settlement Procedures Act of 

18 1974 (12 U.S.C. 2604); 

19 ‘‘(iv) carrying out the certification 

20 program under section 106(e) of the Hous21 ing and Urban Development Act of 1968 

22 (12 U.S.C. 1701x(e)); 

23 ‘‘(v) carrying out the assistance pro24 gram under section 106(a)(4) of the Hous25 ing and Urban Development Act of 1968, 
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1 including criteria for selection of applica2 tions to receive assistance; 

3 ‘‘(vi) carrying out any functions re4 garding abusive, deceptive, or unscrupulous 

5 lending practices relating to residential 

6 mortgage loans that the Secretary con7 siders appropriate, which shall include con8 ducting the study under section 6 of the 

9 Expand and Preserve Home Ownership 

10 Through Counseling Act; 

11 ‘‘(vii) providing for operation of the 

12 advisory committee established under para13 graph (4) of this subsection; 

14 ‘‘(viii) collaborating with community15 based organizations with expertise in the 

16 field of housing counseling; and 

17 ‘‘(ix) providing for the building of ca18 pacity to provide housing counseling serv19 ices in areas that lack sufficient services, 

20 including underdeveloped areas that lack 

21 basic water and sewer systems, electricity 

22 services, and safe, sanitary housing. 

23 ‘‘(4) ADVISORY COMMITTEE.— 

24 ‘‘(A) IN GENERAL.—The Secretary shall 

25 appoint an advisory committee to provide advice 
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1 regarding the carrying out of the functions of 

2 the Director. 

3 ‘‘(B) MEMBERS.—Such advisory committee 

4 shall consist of not more than 12 individuals, 

5 and the membership of the committee shall 

6 equally represent the mortgage and real estate 

7 industry, including consumers and housing 

8 counseling agencies certified by the Secretary. 

9 ‘‘(C) TERMS.—Except as provided in sub10 paragraph (D), each member of the advisory 

11 committee shall be appointed for a term of 3 

12 years. Members may be reappointed at the dis13 cretion of the Secretary. 

14 ‘‘(D) TERMS OF INITIAL APPOINTEES.—As 

15 designated by the Secretary at the time of ap16 pointment, of the members first appointed to 

17 the advisory committee, 4 shall be appointed for 

18 a term of 1 year and 4 shall be appointed for 

19 a term of 2 years. 

20 ‘‘(E) PROHIBITION OF PAY; TRAVEL EX21 PENSES.—Members of the advisory committee 

22 shall serve without pay, but shall receive travel 

23 expenses, including per diem in lieu of subsist24 ence, in accordance with applicable provisions 
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1 under subchapter I of chapter 57 of title 5, 

2 United States Code. 

3 ‘‘(F) ADVISORY ROLE ONLY.—The advi4 sory committee shall have no role in reviewing 

5 or awarding housing counseling grants. 

6 ‘‘(5) SCOPE OF HOMEOWNERSHIP COUN7 SELING.—In carrying out the responsibilities of the 

8 Director, the Director shall ensure that homeowner9 ship counseling provided by, in connection with, or 

10 pursuant to any function, activity, or program of the 

11 Department addresses the entire process of home12 ownership, including the decision to purchase a 

13 home, the selection and purchase of a home, issues 

14 arising during or affecting the period of ownership 

15 of a home (including refinancing, default and fore16 closure, and other financial decisions), and the sale 

17 or other disposition of a home.’’. 

18 SEC. 403. COUNSELING PROCEDURES. 

19 (a) IN GENERAL.—Section 106 of the Housing and 

20 Urban Development Act of 1968 (12 U.S.C. 1701x) is 

21 amended by adding at the end the following new sub22 section: 

23 ‘‘(g) PROCEDURES AND ACTIVITIES.— 

24 ‘‘(1) COUNSELING PROCEDURES.— 
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1 ‘‘(A) IN GENERAL.—The Secretary shall 

2 establish, coordinate, and monitor the adminis3 tration by the Department of Housing and 

4 Urban Development of the counseling proce5 dures for homeownership counseling and rental 

6 housing counseling provided in connection with 

7 any program of the Department, including all 

8 requirements, standards, and performance 

9 measures that relate to homeownership and 

10 rental housing counseling. 

11 ‘‘(B) HOMEOWNERSHIP COUNSELING.— 

12 For purposes of this subsection and as used in 

13 the provisions referred to in this subparagraph, 

14 the term ‘homeownership counseling’ means 

15 counseling related to homeownership and resi16 dential mortgage loans. Such term includes 

17 counseling related to homeownership and resi18 dential mortgage loans that is provided pursu19 ant to— 

20 ‘‘(i) section 105(a)(20) of the Housing 

21 and Community Development Act of 1974 

22 (42 U.S.C. 5305(a)(20)); 

23 ‘‘(ii) in the United States Housing 

24 Act of 1937— 
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1 ‘‘(I) section 9(e) (42 U.S.C. 

2 1437g(e)); 

3 ‘‘(II) section 8(y)(1)(D) (42 

4 U.S.C. 1437f(y)(1)(D)); 

5 ‘‘(III) section 18(a)(4)(D) (42 

6 U.S.C. 1437p(a)(4)(D)); 

7 ‘‘(IV) section 23(c)(4) (42 U.S.C. 

8 1437u(c)(4)); 

9 ‘‘(V) section 32(e)(4) (42 U.S.C. 

10 1437z–4(e)(4)); 

11 ‘‘(VI) section 33(d)(2)(B) (42 

12 U.S.C. 1437z–5(d)(2)(B)); 

13 ‘‘(VII) sections 302(b)(6) and 

14 303(b)(7) (42 U.S.C. 1437aaa– 

15 1(b)(6), 1437aaa–2(b)(7)); and 

16 ‘‘(VIII) section 304(c)(4) (42 

17 U.S.C. 1437aaa–3(c)(4)); 

18 ‘‘(iii) section 302(a)(4) of the Amer19 ican Homeownership and Economic Oppor20 tunity Act of 2000 (42 U.S.C. 1437f note); 

21 ‘‘(iv) sections 233(b)(2) and 258(b) of 

22 the Cranston-Gonzalez National Affordable 

23 Housing Act (42 U.S.C. 12773(b)(2), 

24 12808(b)); 
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1 ‘‘(v) this section and section 101(e) of 

2 the Housing and Urban Development Act 

3 of 1968 (12 U.S.C. 1701x, 1701w(e)); 

4 ‘‘(vi) section 220(d)(2)(G) of the Low5 Income Housing Preservation and Resident 

6 Homeownership Act of 1990 (12 U.S.C. 

7 4110(d)(2)(G)); 

8 ‘‘(vii) sections 422(b)(6), 423(b)(7), 

9 424(c)(4), 442(b)(6), and 443(b)(6) of the 

10 Cranston-Gonzalez National Affordable 

11 Housing Act (42 U.S.C. 12872(b)(6), 

12 12873(b)(7), 12874(c)(4), 12892(b)(6), 

13 and 12893(b)(6)); 

14 ‘‘(viii) section 491(b)(1)(F)(iii) of the 

15 McKinney-Vento Homeless Assistance Act 

16 (42 U.S.C. 11408(b)(1)(F)(iii)); 

17 ‘‘(ix) sections 202(3) and 

18 810(b)(2)(A) of the Native American 

19 Housing and Self-Determination Act of 

20 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

21 ‘‘(x) in the National Housing Act— 

22 ‘‘(I) in section 203 (12 U.S.C. 

23 1709), the penultimate undesignated 

24 paragraph of paragraph (2) of sub-
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1 section (b), subsection (c)(2)(A), and 

2 subsection (r)(4); 

3 ‘‘(II) subsections (a) and (c)(3) 

4 of section 237 (12 U.S.C. 1715z–2); 

5 and 

6 ‘‘(III) subsections (d)(2)(B) and 

7 (m)(1) of section 255 (12 U.S.C. 

8 1715z–20); 

9 ‘‘(xi) section 502(h)(4)(B) of the 

10 Housing Act of 1949 (42 U.S.C. 

11 1472(h)(4)(B)); 

12 ‘‘(xii) section 508 of the Housing and 

13 Urban Development Act of 1970 (12 

14 U.S.C. 1701z–7); and 

15 ‘‘(xiii) section 106 of the Energy Pol16 icy Act of 1992 (42 U.S.C. 12712 note). 

17 ‘‘(C) RENTAL HOUSING COUNSELING.— 

18 For purposes of this subsection, the term ‘rent19 al housing counseling’ means counseling related 

20 to rental of residential property, which may in21 clude counseling regarding future homeowner22 ship opportunities and providing referrals for 

23 renters and prospective renters to entities pro24 viding counseling and shall include counseling 
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1 related to such topics that is provided pursuant 

2 to— 

3 ‘‘(i) section 105(a)(20) of the Housing 

4 and Community Development Act of 1974 

5 (42 U.S.C. 5305(a)(20)); 

6 ‘‘(ii) in the United States Housing 

7 Act of 1937— 

8 ‘‘(I) section 9(e) (42 U.S.C. 

9 1437g(e)); 

10 ‘‘(II) section 18(a)(4)(D) (42 

11 U.S.C. 1437p(a)(4)(D)); 

12 ‘‘(III) section 23(c)(4) (42 

13 U.S.C. 1437u(c)(4)); 

14 ‘‘(IV) section 32(e)(4) (42 U.S.C. 

15 1437z–4(e)(4)); 

16 ‘‘(V) section 33(d)(2)(B) (42 

17 U.S.C. 1437z–5(d)(2)(B)); and 

18 ‘‘(VI) section 302(b)(6) (42 

19 U.S.C. 1437aaa–1(b)(6)); 

20 ‘‘(iii) section 233(b)(2) of the Cran21 ston-Gonzalez National Affordable Housing 

22 Act (42 U.S.C. 12773(b)(2)); 

23 ‘‘(iv) section 106 of the Housing and 

24 Urban Development Act of 1968 (12 

25 U.S.C. 1701x); 
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1 ‘‘(v) section 422(b)(6) of the Cran2 ston-Gonzalez National Affordable Housing 

3 Act (42 U.S.C. 12872(b)(6)); 

4 ‘‘(vi) section 491(b)(1)(F)(iii) of the 

5 McKinney-Vento Homeless Assistance Act 

6 (42 U.S.C. 11408(b)(1)(F)(iii)); 

7 ‘‘(vii) sections 202(3) and 

8 810(b)(2)(A) of the Native American 

9 Housing and Self-Determination Act of 

10 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

11 and 

12 ‘‘(viii) the rental assistance program 

13 under section 8 of the United States Hous14 ing Act of 1937 (42 U.S.C. 1437f). 

15 ‘‘(2) STANDARDS FOR MATERIALS.—The Sec16 retary, in consultation with the advisory committee 

17 established under subsection (g)(4) of the Depart18 ment of Housing and Urban Development Act, shall 

19 establish standards for materials and forms to be 

20 used, as appropriate, by organizations providing 

21 homeownership counseling services, including any re22 cipients of assistance pursuant to subsection (a)(4). 

23 ‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 

24 ‘‘(A) CERTIFICATION.—The Secretary shall 

25 provide for the certification of various computer 
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1 software programs for consumers to use in eval2 uating different residential mortgage loan pro3 posals. The Secretary shall require, for such 

4 certification, that the mortgage software sys5 tems take into account— 

6 ‘‘(i) the consumer’s financial situation 

7 and the cost of maintaining a home, in8 cluding insurance, taxes, and utilities; 

9 ‘‘(ii) the amount of time the consumer 

10 expects to remain in the home or expected 

11 time to maturity of the loan; and 

12 ‘‘(iii) such other factors as the Sec13 retary considers appropriate to assist the 

14 consumer in evaluating whether to pay 

15 points, to lock in an interest rate, to select 

16 an adjustable or fixed rate loan, to select 

17 a conventional or government-insured or 

18 guaranteed loan and to make other choices 

19 during the loan application process. 

20 If the Secretary determines that available exist21 ing software is inadequate to assist consumers 

22 during the residential mortgage loan application 

23 process, the Secretary shall arrange for the de24 velopment by private sector software companies 
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1 of new mortgage software systems that meet 

2 the Secretary’s specifications. 

3 ‘‘(B) USE AND INITIAL AVAILABILITY.— 

4 Such certified computer software programs 

5 shall be used to supplement, not replace, hous6 ing counseling. The Secretary shall provide that 

7 such programs are initially used only in connec8 tion with the assistance of housing counselors 

9 certified pursuant to subsection (e). 

10 ‘‘(C) AVAILABILITY.—After a period of ini11 tial availability under subparagraph (B) as the 

12 Secretary considers appropriate, the Secretary 

13 shall take reasonable steps to make mortgage 

14 software systems certified pursuant to this 

15 paragraph widely available through the Internet 

16 and at public locations, including public librar17 ies, senior-citizen centers, public housing sites, 

18 offices of public housing agencies that admin19 ister rental housing assistance vouchers, and 

20 housing counseling centers. 

21 ‘‘(D) BUDGET COMPLIANCE.—This para22 graph shall be effective only to the extent that 

23 amounts to carry out this paragraph are made 

24 available in advance in appropriations Acts. 
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1 ‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA

2 CAMPAIGNS TO PROMOTE HOUSING COUNSELING.— 

3 ‘‘(A) IN GENERAL.—The Director of Hous4 ing Counseling shall develop, implement, and 

5 conduct national public service multimedia cam6 paigns designed to make persons facing mort7 gage foreclosure, persons considering a 

8 subprime mortgage loan to purchase a home, el9 derly persons, persons who face language bar10 riers, low-income persons, minorities, and other 

11 potentially vulnerable consumers aware that it 

12 is advisable, before seeking or maintaining a 

13 residential mortgage loan, to obtain homeowner14 ship counseling from an unbiased and reliable 

15 sources and that such homeownership coun16 seling is available, including through programs 

17 sponsored by the Secretary of Housing and 

18 Urban Development. 

19 ‘‘(B) CONTACT INFORMATION.—Each seg20 ment of the multimedia campaign under sub21 paragraph (A) shall publicize the toll-free tele22 phone number and website of the Department 

23 of Housing and Urban Development through 

24 which persons seeking housing counseling can 

25 locate a housing counseling agency in their 
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1 State that is certified by the Secretary of Hous2 ing and Urban Development and can provide 

3 advice on buying a home, renting, defaults, 

4 foreclosures, credit issues, and reverse mort5 gages. 

6 ‘‘(C) AUTHORIZATION OF APPROPRIA7 TIONS.—There are authorized to be appro8 priated to the Secretary, not to exceed 

9 $3,000,000 for fiscal years 2009, 2010, and 

10 2011, for the development, implementation, and 

11 conduct of national public service multimedia 

12 campaigns under this paragraph. 

13 ‘‘(D) FORECLOSURE RESCUE EDUCATION

14 PROGRAMS.— 

15 ‘‘(i) IN GENERAL.—Ten percent of 

16 any funds appropriated pursuant to the 

17 authorization under subparagraph (C) 

18 shall be used by the Director of Housing 

19 Counseling to conduct an education pro20 gram in areas that have a high density of 

21 foreclosure. Such program shall involve di22 rect mailings to persons living in such 

23 areas describing— 

24 ‘‘(I) tips on avoiding foreclosure 

25 rescue scams; 
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1 ‘‘(II) tips on avoiding predatory 

2 lending mortgage agreements; 

3 ‘‘(III) tips on avoiding for-profit 

4 foreclosure counseling services; and 

5 ‘‘(IV) local counseling resources 

6 that are approved by the Department 

7 of Housing and Urban Development. 

8 ‘‘(ii) PROGRAM EMPHASIS.—In con9 ducting the education program described 

10 under clause (i), the Director of Housing 

11 Counseling shall also place an emphasis on 

12 serving communities that have a high per13 centage of retirement communities or a 

14 high percentage of low-income minority 

15 communities. 

16 ‘‘(iii) TERMS DEFINED.—For pur17 poses of this subparagraph: 

18 ‘‘(I) HIGH DENSITY OF FORE19 CLOSURES.—An area has a ‘high den20 sity of foreclosures’ if such area is one 

21 of the metropolitan statistical areas 

22 (as that term is defined by the Direc23 tor of the Office of Management and 

24 Budget) with the highest home fore25 closure rates. 
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1 ‘‘(II) HIGH PERCENTAGE OF RE2 TIREMENT COMMUNITIES.—An area 

3 has a ‘high percentage of retirement 

4 communities’ if such area is one of 

5 the metropolitan statistical areas (as 

6 that term is defined by the Director of 

7 the Office of Management and Budg8 et) with the highest percentage of 

9 residents aged 65 or older. 

10 ‘‘(III) HIGH PERCENTAGE OF

11 LOW-INCOME MINORITY COMMU12 NITIES.—An area has a ‘high percent13 age of low-income minority commu14 nities’ if such area contains a higher15 than-normal percentage of residents 

16 who are both minorities and low-in17 come, as defined by the Director of 

18 Housing Counseling. 

19 ‘‘(5) EDUCATION PROGRAMS.—The Secretary 

20 shall provide advice and technical assistance to 

21 States, units of general local government, and non22 profit organizations regarding the establishment and 

23 operation of, including assistance with the develop24 ment of content and materials for, educational pro25 grams to inform and educate consumers, particularly 
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1 those most vulnerable with respect to residential 

2 mortgage loans (such as elderly persons, persons 

3 facing language barriers, low-income persons, mi4 norities, and other potentially vulnerable con5 sumers), regarding home mortgages, mortgage refi6 nancing, home equity loans, home repair loans, and 

7 where appropriate by region, any requirements and 

8 costs associated with obtaining flood or other dis9 aster-specific insurance coverage.’’. 

10 (b) CONFORMING AMENDMENTS TO GRANT PRO11 GRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZA12 TIONS.—Section 106(c)(5)(A)(ii) of the Housing and 

13 Urban Development Act of 1968 (12 U.S.C. 

14 1701x(c)(5)(A)(ii)) is amended— 

15 (1) in subclause (III), by striking ‘‘and’’ at the 

16 end; 

17 (2) in subclause (IV) by striking the period at 

18 the end and inserting ‘‘; and’’; and 

19 (3) by inserting after subclause (IV) the fol20 lowing new subclause: 

21 ‘‘(V) notify the housing or mort22 gage applicant of the availability of 

23 mortgage software systems provided 

24 pursuant to subsection (g)(3).’’. 
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1 SEC. 404. GRANTS FOR HOUSING COUNSELING ASSIST2 ANCE. 

3 Section 106(a) of the Housing and Urban Develop4 ment Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended 

5 by adding at the end the following new paragraph: 

6 ‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING

7 ASSISTANCE.— 

8 ‘‘(A) IN GENERAL.—The Secretary shall make 

9 financial assistance available under this paragraph 

10 to HUD-approved housing counseling agencies and 

11 State housing finance agencies. 

12 ‘‘(B) QUALIFIED ENTITIES.—The Secretary 

13 shall establish standards and guidelines for eligibility 

14 of organizations (including governmental and non15 profit organizations) to receive assistance under this 

16 paragraph, in accordance with subparagraph (D). 

17 ‘‘(C) DISTRIBUTION.—Assistance made avail18 able under this paragraph shall be distributed in a 

19 manner that encourages efficient and successful 

20 counseling programs and that ensures adequate dis21 tribution of amounts for rural areas having tradi22 tionally low levels of access to such counseling serv23 ices, including areas with insufficient access to the 

24 Internet. In distributing such assistance, the Sec25 retary may give priority consideration to entities 
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1 serving areas with the highest home foreclosure 

2 rates. 

3 ‘‘(D) LIMITATION ON DISTRIBUTION OF ASSIST4 ANCE.— 

5 ‘‘(i) IN GENERAL.—None of the amounts 

6 made available under this paragraph shall be 

7 distributed to— 

8 ‘‘(I) any organization which has been 

9 convicted for a violation under Federal law 

10 relating to an election for Federal office; or 

11 ‘‘(II) any organization which employs 

12 applicable individuals. 

13 ‘‘(ii) DEFINITION OF APPLICABLE INDIVID14 UALS.—In this subparagraph, the term ‘appli15 cable individual’ means an individual who— 

16 ‘‘(I) is— 

17 ‘‘(aa) employed by the organiza18 tion in a permanent or temporary ca19 pacity; 

20 ‘‘(bb) contracted or retained by 

21 the organization; or 

22 ‘‘(cc) acting on behalf of, or with 

23 the express or apparent authority of, 

24 the organization; and 
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1 ‘‘(II) has been convicted for a viola2 tion under Federal law relating to an elec3 tion for Federal office. 

4 ‘‘(E) GRANTMAKING PROCESS.—In making as5 sistance available under this paragraph, the Sec6 retary shall consider appropriate ways of stream7 lining and improving the processes for grant applica8 tion, review, approval, and award. 

9 ‘‘(F) AUTHORIZATION OF APPROPRIATIONS.— 

10 There are authorized to be appropriated 

11 $45,000,000 for each of fiscal years 2009 through 

12 2012 for— 

13 ‘‘(i) the operations of the Office of Hous14 ing Counseling of the Department of Housing 

15 and Urban Development; 

16 ‘‘(ii) the responsibilities of the Director of 

17 Housing Counseling under paragraphs (2) 

18 through (5) of subsection (g); and 

19 ‘‘(iii) assistance pursuant to this para20 graph for entities providing homeownership and 

21 rental counseling.’’. 

22 SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUN23 SELORS UNDER HUD PROGRAMS. 

24 Section 106(e) of the Housing and Urban Develop25 ment Act of 1968 (12 U.S.C. 1701x(e)) is amended— 
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1 (1) by striking paragraph (1) and inserting the 

2 following new paragraph: 

3 ‘‘(1) REQUIREMENT FOR ASSISTANCE.—An or4 ganization may not receive assistance for counseling 

5 activities under subsection (a)(1)(iii), (a)(2), (a)(4), 

6 (c), or (d) of this section, or under section 101(e), 

7 unless the organization, or the individuals through 

8 which the organization provides such counseling, has 

9 been certified by the Secretary under this subsection 

10 as competent to provide such counseling.’’; 

11 (2) in paragraph (2)— 

12 (A) by inserting ‘‘and for certifying organi13 zations’’ before the period at the end of the 

14 first sentence; and 

15 (B) in the second sentence by striking ‘‘for 

16 certification’’ and inserting ‘‘, for certification 

17 of an organization, that each individual through 

18 which the organization provides counseling shall 

19 demonstrate, and, for certification of an indi20 vidual,’’; 

21 (3) in paragraph (3), by inserting ‘‘organiza22 tions and’’ before ‘‘individuals’’; 

23 (4) by redesignating paragraph (3) as para24 graph (5); and 
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1 (5) by inserting after paragraph (2) the fol2 lowing new paragraphs: 

3 ‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.— 

4 Any homeownership counseling or rental housing 

5 counseling (as such terms are defined in subsection 

6 (g)(1)) required under, or provided in connection 

7 with, any program administered by the Department 

8 of Housing and Urban Development shall be pro9 vided only by organizations or counselors certified by 

10 the Secretary under this subsection as competent to 

11 provide such counseling. 

12 ‘‘(4) OUTREACH.—The Secretary shall take 

13 such actions as the Secretary considers appropriate 

14 to ensure that individuals and organizations pro15 viding homeownership or rental housing counseling 

16 are aware of the certification requirements and 

17 standards of this subsection and of the training and 

18 certification programs under subsection (f).’’. 

19 SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES. 

20 The Secretary of Housing and Urban Development 

21 shall conduct an extensive study of the root causes of de22 fault and foreclosure of home loans, using as much empir23 ical data as are available. The study shall also examine 

24 the role of escrow accounts in helping prime and nonprime 

25 borrowers to avoid defaults and foreclosures, and the role 
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1 of computer registries of mortgages, including those used 

2 for trading mortgage loans. Not later than 12 months 

3 after the date of the enactment of this Act, the Secretary 

4 shall submit to the Congress a preliminary report regard5 ing the study. Not later than 24 months after such date 

6 of enactment, the Secretary shall submit a final report re7 garding the results of the study, which shall include any 

8 recommended legislation relating to the study, and rec9 ommendations for best practices and for a process to iden10 tify populations that need counseling the most. 

11 SEC. 407. DEFAULT AND FORECLOSURE DATABASE. 

12 (a) ESTABLISHMENT.—The Secretary of Housing 

13 and Urban Development, in consultation with the Federal 

14 agencies responsible for regulation of banking and finan15 cial institutions involved in residential mortgage lending 

16 and servicing, shall establish and maintain a database of 

17 information on foreclosures and defaults on mortgage 

18 loans for one- to four-unit residential properties and shall 

19 make such information publicly available. 

20 (b) CENSUS TRACT DATA.—Information in the data21 base shall be collected, aggregated, and made available on 

22 a census tract basis. 

23 (c) REQUIREMENTS.—Information collected and 

24 made available through the database shall include— 
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1 (1) the number and percentage of such mort2 gage loans that are delinquent by more than 30 

3 days; 

4 (2) the number and percentage of such mort5 gage loans that are delinquent by more than 90 

6 days; 

7 (3) the number and percentage of such prop8 erties that are real estate-owned; 

9 (4) number and percentage of such mortgage 

10 loans that are in the foreclosure process; 

11 (5) the number and percentage of such mort12 gage loans that have an outstanding principal obli13 gation amount that is greater than the value of the 

14 property for which the loan was made; and 

15 (6) such other information as the Secretary 

16 considers appropriate. 

17 SEC. 408. DEFINITIONS FOR COUNSELING-RELATED PRO18 GRAMS. 

19 Section 106 of the Housing and Urban Development 

20 Act of 1968 (12 U.S.C. 1701x), as amended by the pre21 ceding provisions of this title, is further amended by add22 ing at the end the following new subsection: 

23 ‘‘(h) DEFINITIONS.—For purposes of this section: 

24 ‘‘(1) NONPROFIT ORGANIZATION.—The term 

25 ‘nonprofit organization’ has the meaning given such 
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1 term in section 104(5) of the Cranston-Gonzalez Na2 tional Affordable Housing Act (42 U.S.C. 

3 12704(5)), except that subparagraph (D) of such 

4 section shall not apply for purposes of this section. 

5 ‘‘(2) STATE.—The term ‘State’ means each of 

6 the several States, the Commonwealth of Puerto 

7 Rico, the District of Columbia, the Commonwealth 

8 of the Northern Mariana Islands, Guam, the Virgin 

9 Islands, American Samoa, the Trust Territories of 

10 the Pacific, or any other possession of the United 

11 States. 

12 ‘‘(3) UNIT OF GENERAL LOCAL GOVERN13 MENT.—The term ‘unit of general local government’ 

14 means any city, county, parish, town, township, bor15 ough, village, or other general purpose political sub16 division of a State. 

17 ‘‘(4) HUD-APPROVED COUNSELING AGENCY.— 

18 The term ‘HUD-approved counseling agency’ means 

19 a private or public nonprofit organization that is— 

20 ‘‘(A) exempt from taxation under section 

21 501(c) of the Internal Revenue Code of 1986; 

22 and 

23 ‘‘(B) certified by the Secretary to provide 

24 housing counseling services. 
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1 ‘‘(5) STATE HOUSING FINANCE AGENCY.—The 

2 term ‘State housing finance agency’ means any pub3 lic body, agency, or instrumentality specifically cre4 ated under State statute that is authorised to fi5 nance activities designed to provide housing and re6 lated facilities throughout an entire State through 

7 land acquisition, construction, or rehabilitation.’’. 

8 SEC. 409. ACCOUNTABILITY AND TRANSPARENCY FOR 

9 GRANT RECIPIENTS. 

10 Section 106 of the Housing and Urban Development 

11 Act of 1968 (12 U.S.C. 1701x), as amended by the pre12 ceding provisions of this title, is further amended by add13 ing at the end the following: 

14 ‘‘(i) ACCOUNTABILITY FOR RECIPIENTS OF COVERED

15 ASSISTANCE.— 

16 ‘‘(1) TRACKING OF FUNDS.—The Secretary 

17 shall— 

18 ‘‘(A) develop and maintain a system to en19 sure that any organization or entity that re20 ceives any covered assistance uses all amounts 

21 of covered assistance in accordance with this 

22 section or section 216 of the Mortgage Reform 

23 and Anti-Predatory Lending Act, as applicable, 

24 the regulations issued under this section or 

25 such section 216, as applicable, and any re-
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1 quirements or conditions under which such 

2 amounts were provided; and 

3 ‘‘(B) require any organization or entity, as 

4 a condition of receipt of any covered assistance, 

5 to agree to comply with such requirements re6 garding covered assistance as the Secretary 

7 shall establish, which shall include— 

8 ‘‘(i) appropriate periodic financial and 

9 grant activity reporting, record retention, 

10 and audit requirements for the duration of 

11 the covered assistance to the organization 

12 or entity to ensure compliance with the 

13 limitations and requirements of this section 

14 or section 216 of the Mortgage Reform 

15 and Anti-Predatory Lending Act, as appli16 cable, the regulations under this section or 

17 such section 216, as applicable, and any 

18 requirements or conditions under which 

19 such amounts were provided; and 

20 ‘‘(ii) any other requirements that the 

21 Secretary determines are necessary to en22 sure appropriate administration and com23 pliance. 

24 ‘‘(2) MISUSE OF FUNDS.—If any organization 

25 or entity that receives any covered assistance is de-
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1 termined by the Secretary to have used any covered 

2 assistance in a manner that is materially in violation 

3 of this section or section 216 of the Mortgage Re4 form and Anti-Predatory Lending Act, as applicable, 

5 the regulations issued under this section or such sec6 tion 216, as applicable, or any requirements or con7 ditions under which such assistance was provided— 

8 ‘‘(A) the Secretary shall require that, with9 in 12 months after the determination of such 

10 misuse, the organization or entity shall reim11 burse the Secretary for such misused amounts 

12 and return to the Secretary any such amounts 

13 that remain unused or uncommitted for use; 

14 and 

15 ‘‘(B) such organization or entity shall be 

16 ineligible, at any time after such determination, 

17 to apply for or receive any further covered as18 sistance. 

19 The remedies under this paragraph are in addition 

20 to any other remedies that may be available under 

21 law. 

22 ‘‘(3) COVERED ASSISTANCE.—For purposes of 

23 this subsection, the term ‘covered assistance’ means 

24 any grant or other financial assistance provided 

25 under— 
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1 ‘‘(A) this section; or 

2 ‘‘(B) section 216 of the Mortgage Reform 

3 and Anti-Predatory Lending Act.’’. 

4 SEC. 410. UPDATING AND SIMPLIFICATION OF MORTGAGE 

5 INFORMATION BOOKLET. 

6 Section 5 of the Real Estate Settlement Procedures 

7 Act of 1974 (12 U.S.C. 2604) is amended— 

8 (1) in the section heading, by striking ‘‘SPE9 CIAL’’ and inserting ‘‘HOME BUYING’’; 

10 (2) by striking subsections (a) and (b) and in11 serting the following new subsections: 

12 ‘‘(a) PREPARATION AND DISTRIBUTION.—The Sec13 retary shall prepare, at least once every 5 years, a booklet 

14 to help consumers applying for federally related mortgage 

15 loans to understand the nature and costs of real estate 

16 settlement services. The Secretary shall prepare the book17 let in various languages and cultural styles, as the Sec18 retary determines to be appropriate, so that the booklet 

19 is understandable and accessible to homebuyers of dif20 ferent ethnic and cultural backgrounds. The Secretary 

21 shall distribute such booklets to all lenders that make fed22 erally related mortgage loans. The Secretary shall also dis23 tribute to such lenders lists, organized by location, of 

24 homeownership counselors certified under section 106(e) 

25 of the Housing and Urban Development Act of 1968 (12 
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1 U.S.C. 1701x(e)) for use in complying with the require2 ment under subsection (c) of this section. 

3 ‘‘(b) CONTENTS.—Each booklet shall be in such form 

4 and detail as the Secretary shall prescribe and, in addition 

5 to such other information as the Secretary may provide, 

6 shall include in plain and understandable language the fol7 lowing information: 

8 ‘‘(1) A description and explanation of the na9 ture and purpose of the costs incident to a real es10 tate settlement or a federally related mortgage loan. 

11 The description and explanation shall provide gen12 eral information about the mortgage process as well 

13 as specific information concerning, at a minimum— 

14 ‘‘(A) balloon payments; 

15 ‘‘(B) prepayment penalties; 

16 ‘‘(C) the advantages of prepayment; and 

17 ‘‘(D) the trade-off between closing costs 

18 and the interest rate over the life of the loan. 

19 ‘‘(2) An explanation and sample of the uniform 

20 settlement statement required by section 4. 

21 ‘‘(3) A list and explanation of lending practices, 

22 including those prohibited by the Truth in Lending 

23 Act or other applicable Federal law, and of other un24 fair practices and unreasonable or unnecessary 
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1 charges to be avoided by the prospective buyer with 

2 respect to a real estate settlement. 

3 ‘‘(4) A list and explanation of questions a con4 sumer obtaining a federally related mortgage loan 

5 should ask regarding the loan, including whether the 

6 consumer will have the ability to repay the loan, 

7 whether the consumer sufficiently shopped for the 

8 loan, whether the loan terms include prepayment 

9 penalties or balloon payments, and whether the loan 

10 will benefit the borrower. 

11 ‘‘(5) An explanation of the right of rescission as 

12 to certain transactions provided by sections 125 and 

13 129 of the Truth in Lending Act. 

14 ‘‘(6) A brief explanation of the nature of a vari15 able rate mortgage and a reference to the booklet 

16 entitled ‘Consumer Handbook on Adjustable Rate 

17 Mortgages’, published by the Board of Governors of 

18 the Federal Reserve System pursuant to section 

19 226.19(b)(1) of title 12, Code of Federal Regula20 tions, or to any suitable substitute of such booklet 

21 that such Board of Governors may subsequently 

22 adopt pursuant to such section. 

23 ‘‘(7) A brief explanation of the nature of a 

24 home equity line of credit and a reference to the 
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1 pamphlet required to be provided under section 

2 127A of the Truth in Lending Act. 

3 ‘‘(8) Information about homeownership coun4 seling services made available pursuant to section 

5 106(a)(4) of the Housing and Urban Development 

6 Act of 1968 (12 U.S.C. 1701x(a)(4)), a rec7 ommendation that the consumer use such services, 

8 and notification that a list of certified providers of 

9 homeownership counseling in the area, and their 

10 contact information, is available. 

11 ‘‘(9) An explanation of the nature and purpose 

12 of escrow accounts when used in connection with 

13 loans secured by residential real estate and the re14 quirements under section 10 of this Act regarding 

15 such accounts. 

16 ‘‘(10) An explanation of the choices available to 

17 buyers of residential real estate in selecting persons 

18 to provide necessary services incidental to a real es19 tate settlement. 

20 ‘‘(11) An explanation of a consumer’s respon21 sibilities, liabilities, and obligations in a mortgage 

22 transaction. 

23 ‘‘(12) An explanation of the nature and purpose 

24 of real estate appraisals, including the difference be25 tween an appraisal and a home inspection. 
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1 ‘‘(13) Notice that the Office of Housing of the 

2 Department of Housing and Urban Development has 

3 made publicly available a brochure regarding loan 

4 fraud and a World Wide Web address and toll-free 

5 telephone number for obtaining the brochure. 

6 The booklet prepared pursuant to this section shall take 

7 into consideration differences in real estate settlement pro8 cedures that may exist among the several States and terri9 tories of the United States and among separate political 

10 subdivisions within the same State and territory.’’; 

11 (3) in subsection (c), by inserting at the end 

12 the following new sentence: ‘‘Each lender shall also 

13 include with the booklet a reasonably complete or 

14 updated list of homeownership counselors who are 

15 certified pursuant to section 106(e) of the Housing 

16 and Urban Development Act of 1968 (12 U.S.C. 

17 1701x(e)) and located in the area of the lender.’’; 

18 and 

19 (4) in subsection (d), by inserting after the pe20 riod at the end of the first sentence the following: 

21 ‘‘The lender shall provide the HUD-issued booklet in 

22 the version that is most appropriate for the person 

23 receiving it.’’. 

24 SEC. 411. HOME INSPECTION COUNSELING. 

25 (a) PUBLIC OUTREACH.— 
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1 (1) IN GENERAL.—The Secretary of Housing 

2 and Urban Development (in this section referred to 

3 as the ‘‘Secretary’’) shall take such actions as may 

4 be necessary to inform potential homebuyers of the 

5 availability and importance of obtaining an inde6 pendent home inspection. Such actions shall in7 clude— 

8 (A) publication of the HUD/FHA form 

9 HUD 92564–CN entitled ‘‘For Your Protec10 tion: Get a Home Inspection’’, in both English 

11 and Spanish languages; 

12 (B) publication of the HUD/FHA booklet 

13 entitled ‘‘For Your Protection: Get a Home In14 spection’’, in both English and Spanish lan15 guages; 

16 (C) development and publication of a HUD 

17 booklet entitled ‘‘For Your Protection—Get a 

18 Home Inspection’’ that does not reference 

19 FHA-insured homes, in both English and Span20 ish languages; and 

21 (D) publication of the HUD document en22 titled ‘‘Ten Important Questions To Ask Your 

23 Home Inspector’’, in both English and Spanish 

24 languages. 
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1 (2) AVAILABILITY.—The Secretary shall make 

2 the materials specified in paragraph (1) available for 

3 electronic access and, where appropriate, inform po4 tential homebuyers of such availability through home 

5 purchase counseling public service announcements 

6 and toll-free telephone hotlines of the Department of 

7 Housing and Urban Development. The Secretary 

8 shall give special emphasis to reaching first-time and 

9 low-income homebuyers with these materials and ef10 forts. 

11 (3) UPDATING.—The Secretary may periodi12 cally update and revise such materials, as the Sec13 retary determines to be appropriate. 

14 (b) REQUIREMENT FOR FHA-APPROVED LEND15 ERS.—Each mortgagee approved for participation in the 

16 mortgage insurance programs under title II of the Na17 tional Housing Act shall provide prospective homebuyers, 

18 at first contact, whether upon pre-qualification, pre-ap19 proval, or initial application, the materials specified in 

20 subparagraphs (A), (B), and (D) of subsection (a)(1). 

21 (c) REQUIREMENTS FOR HUD-APPROVED COUN22 SELING AGENCIES.—Each counseling agency certified 

23 pursuant by the Secretary to provide housing counseling 

24 services shall provide each of their clients, as part of the 
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1 home purchase counseling process, the materials specified 

2 in subparagraphs (C) and (D) of subsection (a)(1). 

3 (d) TRAINING.—Training provided the Department 

4 of Housing and Urban Development for housing coun5 seling agencies, whether such training is provided directly 

6 by the Department or otherwise, shall include— 

7 (1) providing information on counseling poten8 tial homebuyers of the availability and importance of 

9 getting an independent home inspection; 

10 (2) providing information about the home in11 spection process, including the reasons for specific 

12 inspections such as radon and lead-based paint test13 ing; 

14 (3) providing information about advising poten15 tial homebuyers on how to locate and select a quali16 fied home inspector; and 

17 (4) review of home inspection public outreach 

18 materials of the Department. 

19 SEC. 412. WARNINGS TO HOMEOWNERS OF FORECLOSURE 

20 RESCUE SCAMS. 

21 (a) ASSISTANCE TO NRC.—Notwithstanding any 

22 other provision of law, of any amounts made available for 

23 any fiscal year pursuant to section 106(a)(4)(F) of the 

24 Housing and Urban Development Act of 1968 (12 U.S.C. 

25 1701x(a)(4)(F)) (as added by section 404 of this Act), 10 
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1 percent shall be used only for assistance to the Neighbor2 hood Reinvestment Corporation for activities, in consulta3 tion with servicers of residential mortgage loans, to pro4 vide notice to borrowers under such loans who are delin5 quent with respect to payments due under such loans that 

6 makes such borrowers aware of the dangers of fraudulent 

7 activities associated with foreclosure. 

8 (b) NOTICE.—The Neighborhood Reinvestment Cor9 poration, in consultation with servicers of residential mort10 gage loans, shall use the amounts provided pursuant to 

11 subsection (a) to carry out activities to inform borrowers 

12 under residential mortgage loans— 

13 (1) that the foreclosure process is complex and 

14 can be confusing; 

15 (2) that the borrower may be approached dur16 ing the foreclosure process by persons regarding sav17 ing their home and they should use caution in any 

18 such dealings; 

19 (3) that there are Federal Government and 

20 nonprofit agencies that may provide information 

21 about the foreclosure process, including the Depart22 ment of Housing and Urban Development; 

23 (4) that they should contact their lender imme24 diately, contact the Department of Housing and 

25 Urban Development to find a housing counseling 
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1 agency certified by the Department to assist in 

2 avoiding foreclosure, or visit the Department’s 

3 website regarding tips for avoiding foreclosure; and 

4 (5) of the telephone number of the loan servicer 

5 or successor, the telephone number of the Depart6 ment of Housing and Urban Development housing 

7 counseling line, and the Uniform Resource Locators 

8 (URLs) for the Department of Housing and Urban 

9 Development websites for housing counseling and for 

10 tips for avoiding foreclosure. 

11 TITLE V—MORTGAGE SERVICING 

12 SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO 

13 CERTAIN CONSUMER CREDIT TRANS14 ACTIONS. 

15 (a) IN GENERAL.—Chapter 2 of the Truth in Lend16 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

17 after section 129C (as added by section 201) the following 

18 new section: 

19 ‘‘SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING 

20 TO CERTAIN CONSUMER CREDIT TRANS21 ACTIONS. 

22 ‘‘(a) IN GENERAL.—Except as provided in subsection 

23 (b), (c), or (d) , a creditor, in connection with the forma24 tion or consummation of a consumer credit transaction se25 cured by a first lien on the principal dwelling of the con-
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1 sumer, other than a consumer credit transaction under an 

2 open end credit plan or a reverse mortgage, shall establish, 

3 before the consummation of such transaction, an escrow 

4 or impound account for the payment of taxes and hazard 

5 insurance, and, if applicable, flood insurance, mortgage in6 surance, ground rents, and any other required periodic 

7 payments or premiums with respect to the property or the 

8 loan terms, as provided in, and in accordance with, this 

9 section. 

10 ‘‘(b) WHEN REQUIRED.—No impound, trust, or other 

11 type of account for the payment of property taxes, insur12 ance premiums, or other purposes relating to the property 

13 may be required as a condition of a real property sale con14 tract or a loan secured by a first deed of trust or mortgage 

15 on the principal dwelling of the consumer, other than a 

16 consumer credit transaction under an open end credit plan 

17 or a reverse mortgage, except when— 

18 ‘‘(1) any such impound, trust, or other type of 

19 escrow or impound account for such purposes is re20 quired by Federal or State law; 

21 ‘‘(2) a loan is made, guaranteed, or insured by 

22 a State or Federal governmental lending or insuring 

23 agency; 

24 ‘‘(3) the transaction is secured by a first mort25 gage or lien on the consumer’s principal dwelling 
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1 having an original principal obligation amount 

2 that— 

3 ‘‘(A) does not exceed the amount of the 

4 maximum limitation on the original principal 

5 obligation of mortgage in effect for a residence 

6 of the applicable size, as of the date such inter7 est rate set, pursuant to the sixth sentence of 

8 section 305(a)(2) the Federal Home Loan 

9 Mortgage Corporation Act (12 U.S.C. 

10 1454(a)(2)), and the annual percentage rate 

11 will exceed the average prime offer rate for a 

12 comparable transaction by 1.5 or more percent13 age points; or 

14 ‘‘(B) exceeds the amount of the maximum 

15 limitation on the original principal obligation of 

16 mortgage in effect for a residence of the appli17 cable size, as of the date such interest rate set, 

18 pursuant to the sixth sentence of section 

19 305(a)(2) the Federal Home Loan Mortgage 

20 Corporation Act (12 U.S.C. 1454(a)(2)), and 

21 the annual percentage rate will exceed the aver22 age prime offer rate for a comparable trans23 action by 2.5 or more percentage points; or 

24 ‘‘(4) so required pursuant to regulation. 
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1 ‘‘(c) DURATION OF MANDATORY ESCROW OR IM2 POUND ACCOUNT.—An escrow or impound account estab3 lished pursuant to subsection (b), shall remain in existence 

4 for a minimum period of 5 years, beginning with the date 

5 of the consummation of the loan, and until such borrower 

6 has sufficient equity in the dwelling securing the consumer 

7 credit transaction so as to no longer be required to main8 tain private mortgage insurance, or such other period as 

9 may be provided in regulations to address situations such 

10 as borrower delinquency, unless the underlying mortgage 

11 establishing the account is terminated. 

12 ‘‘(d) LIMITED EXEMPTIONS FOR LOANS SECURED BY

13 SHARES IN A COOPERATIVE AND FOR CERTAIN CONDO14 MINIUM UNITS.—Escrow accounts need not be established 

15 for loans secured by shares in a cooperative. Insurance 

16 premiums need not be included in escrow accounts for 

17 loans secured by condominium units, where the condo18 minium association has an obligation to the condominium 

19 unit owners to maintain a master policy insuring condo20 minium units. 

21 ‘‘(e) CLARIFICATION ON ESCROW ACCOUNTS FOR

22 LOANS NOT MEETING STATUTORY TEST.—For mort23 gages not covered by the requirements of subsection (b), 

24 no provision of this section shall be construed as pre25 cluding the establishment of an impound, trust, or other 
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1 type of account for the payment of property taxes, insur2 ance premiums, or other purposes relating to the prop3 erty— 

4 ‘‘(1) on terms mutually agreeable to the parties 

5 to the loan; 

6 ‘‘(2) at the discretion of the lender or servicer, 

7 as provided by the contract between the lender or 

8 servicer and the borrower; or 

9 ‘‘(3) pursuant to the requirements for the 

10 escrowing of flood insurance payments for regulated 

11 lending institutions in section 102(d) of the Flood 

12 Disaster Protection Act of 1973. 

13 ‘‘(f) ADMINISTRATION OF MANDATORY ESCROW OR

14 IMPOUND ACCOUNTS.— 

15 ‘‘(1) IN GENERAL.—Except as may otherwise 

16 be provided for in this title or in regulations pre17 scribed by the Board, escrow or impound accounts 

18 established pursuant to subsection (b) shall be estab19 lished in a federally insured depository institution. 

20 ‘‘(2) ADMINISTRATION.—Except as provided in 

21 this section or regulations prescribed under this sec22 tion, an escrow or impound account subject to this 

23 section shall be administered in accordance with— 
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1 ‘‘(A) the Real Estate Settlement Proce2 dures Act of 1974 and regulations prescribed 

3 under such Act; 

4 ‘‘(B) the Flood Disaster Protection Act of 

5 1973 and regulations prescribed under such 

6 Act; and 

7 ‘‘(C) the law of the State, if applicable, 

8 where the real property securing the consumer 

9 credit transaction is located. 

10 ‘‘(3) APPLICABILITY OF PAYMENT OF INTER11 EST.—If prescribed by applicable State or Federal 

12 law, each creditor shall pay interest to the consumer 

13 on the amount held in any impound, trust, or escrow 

14 account that is subject to this section in the manner 

15 as prescribed by that applicable State or Federal 

16 law. 

17 ‘‘(4) PENALTY COORDINATION WITH RESPA.— 

18 Any action or omission on the part of any person 

19 which constitutes a violation of the Real Estate Set20 tlement Procedures Act of 1974 or any regulation 

21 prescribed under such Act for which the person has 

22 paid any fine, civil money penalty, or other damages 

23 shall not give rise to any additional fine, civil money 

24 penalty, or other damages under this section, unless 
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1 the action or omission also constitutes a direct viola2 tion of this section. 

3 ‘‘(g) DISCLOSURES RELATING TO MANDATORY ES4 CROW OR IMPOUND ACCOUNT.—In the case of any im5 pound, trust, or escrow account that is subject to this sec6 tion, the creditor shall disclose by written notice to the 

7 consumer at least 3 business days before the consumma8 tion of the consumer credit transaction giving rise to such 

9 account or in accordance with timeframes established in 

10 prescribed regulations the following information: 

11 ‘‘(1) The fact that an escrow or impound ac12 count will be established at consummation of the 

13 transaction. 

14 ‘‘(2) The amount required at closing to initially 

15 fund the escrow or impound account. 

16 ‘‘(3) The amount, in the initial year after the 

17 consummation of the transaction, of the estimated 

18 taxes and hazard insurance, including flood insur19 ance, if applicable, and any other required periodic 

20 payments or premiums that reflects, as appropriate, 

21 either the taxable assessed value of the real property 

22 securing the transaction, including the value of any 

23 improvements on the property or to be constructed 

24 on the property (whether or not such construction 
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1 will be financed from the proceeds of the trans2 action) or the replacement costs of the property. 

3 ‘‘(4) The estimated monthly amount payable to 

4 be escrowed for taxes, hazard insurance (including 

5 flood insurance, if applicable) and any other re6 quired periodic payments or premiums. 

7 ‘‘(5) The fact that, if the consumer chooses to 

8 terminate the account at the appropriate time in the 

9 future, the consumer will become responsible for the 

10 payment of all taxes, hazard insurance, and flood in11 surance, if applicable, as well as any other required 

12 periodic payments or premiums on the property un13 less a new escrow or impound account is established. 

14 ‘‘(6) Such other information as the Federal 

15 banking agencies jointly determine necessary for the 

16 protection of the consumer. 

17 ‘‘(h) DEFINITIONS.—For purposes of this section, the 

18 following definitions shall apply: 

19 ‘‘(1) FLOOD INSURANCE.—The term ‘flood in20 surance’ means flood insurance coverage provided 

21 under the national flood insurance program pursu22 ant to the National Flood Insurance Act of 1968. 

23 ‘‘(2) HAZARD INSURANCE.—The term ‘hazard 

24 insurance’ shall have the same meaning as provided 

25 for ‘hazard insurance’, ‘casualty insurance’, ‘home-
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1 owner’s insurance’, or other similar term under the 

2 law of the State where the real property securing the 

3 consumer credit transaction is located.’’. 

4 (b) IMPLEMENTATION.— 

5 (1) REGULATIONS.—The Board of Governors of 

6 the Federal Reserve System, the Comptroller of the 

7 Currency, the Director of the Office of Thrift Super8 vision, the Federal Deposit Insurance Corporation, 

9 the National Credit Union Administration Board, 

10 (hereafter in this Act referred to as the ‘‘Federal 

11 banking agencies’’) and the Federal Trade Commis12 sion shall prescribe, in final form, such regulations 

13 as determined to be necessary to implement the 

14 amendments made by subsection (a) before the end 

15 of the 180-day period beginning on the date of the 

16 enactment of this Act. 

17 (2) EFFECTIVE DATE.—The amendments made 

18 by subsection (a) shall only apply to covered mort19 gage loans consummated after the end of the 1-year 

20 period beginning on the date of the publication of 

21 final regulations in the Federal Register. 

22 (c) CLERICAL AMENDMENT.—The table of sections 

23 for chapter 2 of the Truth in Lending Act is amended 

24 by inserting after the item relating to section 129C (as 

25 added by section 201) the following new item: 
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‘‘129D. Escrow or impound accounts relating to certain consumer credit transactions.’’. 

1 SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CON2 SUMERS WHO WAIVE ESCROW SERVICES. 

3 (a) IN GENERAL.—Section 129D of the Truth in 

4 Lending Act (as added by section 501) is amended by add5 ing at the end the following new subsection: 

6 ‘‘(i) DISCLOSURE NOTICE REQUIRED FOR CON7 SUMERS WHO WAIVE ESCROW SERVICES.— 

8 ‘‘(1) IN GENERAL.—If— 

9 ‘‘(A) an impound, trust, or other type of 

10 account for the payment of property taxes, in11 surance premiums, or other purposes relating to 

12 real property securing a consumer credit trans13 action is not established in connection with the 

14 transaction; or 

15 ‘‘(B) a consumer chooses, and provides 

16 written notice to the creditor or servicer of such 

17 choice, at any time after such an account is es18 tablished in connection with any such trans19 action and in accordance with any statute, reg20 ulation, or contractual agreement, to close such 

21 account, 

22 the creditor or servicer shall provide a timely and 

23 clearly written disclosure to the consumer that ad24 vises the consumer of the responsibilities of the con-
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1 sumer and implications for the consumer in the ab2 sence of any such account. 

3 ‘‘(2) DISCLOSURE REQUIREMENTS.—Any dis4 closure provided to a consumer under paragraph (1) 

5 shall include the following: 

6 ‘‘(A) Information concerning any applica7 ble fees or costs associated with either the non8 establishment of any such account at the time 

9 of the transaction, or any subsequent closure of 

10 any such account. 

11 ‘‘(B) A clear and prominent notice that the 

12 consumer is responsible for personally and di13 rectly paying the non-escrowed items, in addi14 tion to paying the mortgage loan payment, in 

15 the absence of any such account, and the fact 

16 that the costs for taxes, insurance, and related 

17 fees can be substantial. 

18 ‘‘(C) A clear explanation of the con19 sequences of any failure to pay non-escrowed 

20 items, including the possible requirement for 

21 the forced placement of insurance by the cred22 itor or servicer and the potentially higher cost 

23 (including any potential commission payments 

24 to the servicer) or reduced coverage for the con-
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1 sumer in the event of any such creditor-placed 

2 insurance. 

3 ‘‘(D) Such other information as the Fed4 eral banking agencies jointly determine nec5 essary for the protection of the consumer.’’. 

6 (b) IMPLEMENTATION.— 

7 (1) REGULATIONS.—The Federal banking agen8 cies and the Federal Trade Commission shall pre9 scribe, in final form, such regulations as such agen10 cies determine to be necessary to implement the 

11 amendments made by subsection (a) before the end 

12 of the 180-day period beginning on the date of the 

13 enactment of this Act. 

14 (2) EFFECTIVE DATE.—The amendments made 

15 by subsection (a) shall only apply in accordance with 

16 the regulations established in paragraph (1) and be17 ginning on the date occurring 180-days after the 

18 date of the publication of final regulations in the 

19 Federal Register. 

20 SEC. 503. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 

21 1974 AMENDMENTS. 

22 (a) SERVICER PROHIBITIONS.—Section 6 of the Real 

23 Estate Settlement Procedures Act of 1974 (12 U.S.C. 

24 2605) is amended by adding at the end the following new 

25 subsections: 
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1 ‘‘(k) SERVICER PROHIBITIONS.— 

2 ‘‘(1) IN GENERAL.—A servicer of a federally re3 lated mortgage shall not— 

4 ‘‘(A) obtain force-placed hazard insurance 

5 unless there is a reasonable basis to believe the 

6 borrower has failed to comply with the loan 

7 contract’s requirements to maintain property 

8 insurance; 

9 ‘‘(B) charge fees for responding to valid 

10 qualified written requests (as defined in regula11 tions which the Secretary shall prescribe) under 

12 this section; 

13 ‘‘(C) fail to take timely action to respond 

14 to a borrower’s requests to correct errors relat15 ing to allocation of payments, final balances for 

16 purposes of paying off the loan, or avoiding 

17 foreclosure, or other standard servicer’s duties; 

18 ‘‘(D) fail to respond within 10 business 

19 days to a request from a borrower to provide 

20 the identity, address, and other relevant contact 

21 information about the owner assignee of the 

22 loan; or 

23 ‘‘(E) fail to comply with any other obliga24 tion found by the Secretary, by regulation, to 
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1 be appropriate to carry out the consumer pro2 tection purposes of this Act. 

3 ‘‘(2) FORCE-PLACED INSURANCE DEFINED.— 

4 For purposes of this subsection and subsections (l) 

5 and (m), the term ‘force-placed insurance’ means 

6 hazard insurance coverage obtained by a servicer of 

7 a federally related mortgage when the borrower has 

8 failed to maintain or renew hazard insurance on 

9 such property as required of the borrower under the 

10 terms of the mortgage. 

11 ‘‘(l) REQUIREMENTS FOR FORCE-PLACED INSUR12 ANCE.—A servicer of a federally related mortgage shall 

13 not be construed as having a reasonable basis for obtain14 ing force-placed insurance unless the requirements of this 

15 subsection have been met. 

16 ‘‘(1) WRITTEN NOTICES TO BORROWER.—A 

17 servicer may not impose any charge on any borrower 

18 for force-placed insurance with respect to any prop19 erty securing a federally related mortgage unless— 

20 ‘‘(A) the servicer has sent, by first-class 

21 mail, a written notice to the borrower con22 taining— 

23 ‘‘(i) a reminder of the borrower’s obli24 gation to maintain hazard insurance on the 
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1 property securing the federally related 

2 mortgage; 

3 ‘‘(ii) a statement that the servicer 

4 does not have evidence of insurance cov5 erage of such property; 

6 ‘‘(iii) a clear and conspicuous state7 ment of the procedures by which the bor8 rower may demonstrate that the borrower 

9 already has insurance coverage; and 

10 ‘‘(iv) a statement that the servicer 

11 may obtain such coverage at the borrower’s 

12 expense if the borrower does not provide 

13 such demonstration of the borrower’s exist14 ing coverage in a timely manner; 

15 ‘‘(B) the servicer has sent, by first-class 

16 mail, a second written notice, at least 30 days 

17 after the mailing of the notice under subpara18 graph (A) that contains all the information de19 scribed in each clause of such subparagraph; 

20 and 

21 ‘‘(C) the servicer has not received from the 

22 borrower any demonstration of hazard insur23 ance coverage for the property securing the 

24 mortgage by the end of the 15-day period be-
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1 ginning on the date the notice under subpara2 graph (B) was sent by the servicer. 

3 ‘‘(2) SUFFICIENCY OF DEMONSTRATION.—A 

4 servicer of a federally related mortgage shall accept 

5 any reasonable form of written confirmation from a 

6 borrower of existing insurance coverage, which shall 

7 include the existing insurance policy number along 

8 with the identity of, and contact information for, the 

9 insurance company or agent. 

10 ‘‘(3) TERMINATION OF FORCE-PLACED INSUR11 ANCE.—Within 15 days of the receipt by a servicer 

12 of confirmation of a borrower’s existing insurance 

13 coverage, the servicer shall— 

14 ‘‘(A) terminate the force-placed insurance; 

15 and 

16 ‘‘(B) refund to the consumer all force17 placed insurance premiums paid by the bor18 rower during any period during which the bor19 rower’s insurance coverage and the force-placed 

20 insurance coverage were each in effect, and any 

21 related fees charged to the consumer’s account 

22 with respect to the force-placed insurance dur23 ing such period. 

24 ‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD

25 DISASTER PROTECTION ACT.—No provision of this 
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1 section shall be construed as prohibiting a servicer 

2 from providing simultaneous or concurrent notice of 

3 a lack of flood insurance pursuant to section 102(e) 

4 of the Flood Disaster Protection Act of 1973. 

5 ‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE

6 CHARGES.—All charges for force-placed insurance pre7 miums shall be bona fide and reasonable in amount.’’. 

8 (b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) 

9 of the Real Estate Settlement Procedures Act of 1974 (12 

10 U.S.C. 2605(f)) is amended— 

11 (1) in paragraphs (1)(B) and (2)(B), by strik12 ing ‘‘$1,000’’ each place such term appears and in13 serting ‘‘$2,000’’; and 

14 (2) in paragraph (2)(B)(i), by striking 

15 ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 

16 (c) DECREASE IN RESPONSE TIMES.—Section 6(e) of 

17 the Real Estate Settlement Procedures Act of 1974 (12 

18 U.S.C. 2605(e)) is amended— 

19 (1) in paragraph (1)(A), by striking ‘‘20 days’’ 

20 and inserting ‘‘5 days’’; 

21 (2) in paragraph (2), by striking ‘‘60 days’’ and 

22 inserting ‘‘30 days’’; and 

23 (3) by adding at the end the following new 

24 paragraph: 
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1 ‘‘(4) LIMITED EXTENSION OF RESPONSE

2 TIME.—The 30-day period described in paragraph 

3 (2) may be extended for not more than 15 days if, 

4 before the end of such 30-day period, the servicer 

5 notifies the borrower of the extension and the rea6 sons for the delay in responding.’’. 

7 (d) PROMPT REFUND OF ESCROW ACCOUNTS UPON

8 PAYOFF.—Section 6(g) of the Real Estate Settlement 

9 Procedures Act of 1974 (12 U.S.C. 2605(g)) is amended 

10 by adding at the end the following new sentence: ‘‘Any 

11 balance in any such account that is within the servicer’s 

12 control at the time the loan is paid off shall be promptly 

13 returned to the borrower within 20 business days or cred14 ited to a similar account for a new mortgage loan to the 

15 borrower with the same lender.’’. 

16 SEC. 504. TRUTH IN LENDING ACT AMENDMENTS. 

17 (a) REQUIREMENTS FOR PROMPT CREDITING OF

18 HOME LOAN PAYMENTS.—Chapter 2 of the Truth in 

19 Lending Act (15 U.S.C. 1631 et seq.) is amended by in20 serting after section 129E (as added by section 602) the 

21 following new section (and by amending the table of con22 tents accordingly): 
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1 ‘‘SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF 

2 HOME LOAN PAYMENTS. 

3 ‘‘(a) IN GENERAL.—In connection with a consumer 

4 credit transaction secured by a consumer’s principal dwell5 ing, no servicer shall fail to credit a payment to the con6 sumer’s loan account as of the date of receipt, except when 

7 a delay in crediting does not result in any charge to the 

8 consumer or in the reporting of negative information to 

9 a consumer reporting agency, except as required in sub10 section (b). 

11 ‘‘(b) EXCEPTION.—If a servicer specifies in writing 

12 requirements for the consumer to follow in making pay13 ments, but accepts a payment that does not conform to 

14 the requirements, the servicer shall credit the payment as 

15 of 5 days after receipt.’’. 

16 (b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 

17 of such Act is further amended by inserting after section 

18 129F (as added by subsection (a)) the following new sec19 tion (and by amending the table of contents accordingly): 

20 ‘‘SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME 

21 LOAN. 

22 ‘‘A creditor or servicer of a home loan shall send an 

23 accurate payoff balance within a reasonable time, but in 

24 no case more than 7 business days, after the receipt of 

25 a written request for such balance from or on behalf of 

26 the borrower.’’. 
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1 SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 

2 Section 128(b) of the Truth in Lending Act (15 

3 U.S.C. 1638(b)) is amended by adding at the end the fol4 lowing new paragraph: 

5 ‘‘(4) REPAYMENT ANALYSIS REQUIRED TO IN6 CLUDE ESCROW PAYMENTS.— 

7 ‘‘(A) IN GENERAL.—In the case of any 

8 consumer credit transaction secured by a first 

9 mortgage or lien on the principal dwelling of 

10 the consumer, other than a consumer credit 

11 transaction under an open end credit plan or a 

12 reverse mortgage, for which an impound, trust, 

13 or other type of account has been or will be es14 tablished in connection with the transaction for 

15 the payment of property taxes, hazard and flood 

16 (if any) insurance premiums, or other periodic 

17 payments or premiums with respect to the 

18 property, the information required to be pro19 vided under subsection (a) with respect to the 

20 number, amount, and due dates or period of 

21 payments scheduled to repay the total of pay22 ments shall take into account the amount of 

23 any monthly payment to such account for each 

24 such repayment in accordance with section 

25 10(a)(2) of the Real Estate Settlement Proce26 dures Act of 1974. 
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1 ‘‘(B) ASSESSMENT VALUE.—The amount 

2 taken into account under subparagraph (A) for 

3 the payment of property taxes, hazard and flood 

4 (if any) insurance premiums, or other periodic 

5 payments or premiums with respect to the 

6 property shall reflect the taxable assessed value 

7 of the real property securing the transaction 

8 after the consummation of the transaction, in9 cluding the value of any improvements on the 

10 property or to be constructed on the property 

11 (whether or not such construction will be fi12 nanced from the proceeds of the transaction), if 

13 known, and the replacement costs of the prop14 erty for hazard insurance, in the initial year 

15 after the transaction.’’. 

16 TITLE VI—APPRAISAL 

17 ACTIVITIES 

18 SEC. 601. PROPERTY APPRAISAL REQUIREMENTS. 

19 Chapter 2 of the Truth in Lending Act (15 U.S.C. 

20 1631 et seq.) is amended by inserting after 129G (as 

21 added by section 504) the following new section: 

22 ‘‘SEC. 129H PROPERTY APPRAISAL REQUIREMENTS. 

23 ‘‘(a) IN GENERAL.—A creditor may not extend credit 

24 in the form of a subprime mortgage to any consumer with25 out first obtaining a written appraisal of the property to 
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1 be mortgaged prepared in accordance with the require2 ments of this section. 

3 ‘‘(b) APPRAISAL REQUIREMENTS.— 

4 ‘‘(1) PHYSICAL PROPERTY VISIT.—An appraisal 

5 of property to be secured by a subprime mortgage 

6 does not meet the requirement of this section unless 

7 it is performed by a qualified appraiser who con8 ducts a physical property visit of the interior of the 

9 mortgaged property. 

10 ‘‘(2) SECOND APPRAISAL UNDER CERTAIN CIR11 CUMSTANCES.— 

12 ‘‘(A) IN GENERAL.—If the purpose of a 

13 subprime mortgage is to finance the purchase 

14 or acquisition of the mortgaged property from 

15 a person within 180 days of the purchase or ac16 quisition of such property by that person at a 

17 price that was lower than the current sale price 

18 of the property, the creditor shall obtain a sec19 ond appraisal from a different qualified ap20 praiser. The second appraisal shall include an 

21 analysis of the difference in sale prices, changes 

22 in market conditions, and any improvements 

23 made to the property between the date of the 

24 previous sale and the current sale. 
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1 ‘‘(B) NO COST TO APPLICANT.—The cost 

2 of any second appraisal required under sub3 paragraph (A) may not be charged to the appli4 cant. 

5 ‘‘(3) QUALIFIED APPRAISER DEFINED.—For 

6 purposes of this section, the term ‘qualified ap7 praiser’ means a person who— 

8 ‘‘(A) is, at a minimum, certified or licensed 

9 by the State in which the property to be ap10 praised is located; and 

11 ‘‘(B) performs each appraisal in con12 formity with the Uniform Standards of Profes13 sional Appraisal Practice and title XI of the Fi14 nancial Institutions Reform, Recovery, and En15 forcement Act of 1989, and the regulations pre16 scribed under such title, as in effect on the date 

17 of the appraisal. 

18 ‘‘(c) FREE COPY OF APPRAISAL.—A creditor shall 

19 provide 1 copy of each appraisal conducted in accordance 

20 with this section in connection with a subprime mortgage 

21 to the applicant without charge, and at least 3 days prior 

22 to the transaction closing date. 

23 ‘‘(d) CONSUMER NOTIFICATION.—At the time of the 

24 initial mortgage application, the applicant shall be pro25 vided with a statement by the creditor that any appraisal 
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1 prepared for the mortgage is for the sole use of the cred2 itor, and that the applicant may choose to have a separate 

3 appraisal conducted at their own expense. 

4 ‘‘(e) VIOLATIONS.—In addition to any other liability 

5 to any person under this title, a creditor found to have 

6 willfully failed to obtain an appraisal as required in this 

7 section shall be liable to the applicant or borrower for the 

8 sum of $2,000. 

9 ‘‘(f) SUBPRIME MORTGAGE DEFINED.—For purposes 

10 of this section, the term ‘subprime mortgage’ means a res11 idential mortgage loan secured by a principal dwelling with 

12 an annual percentage rate that exceeds the average prime 

13 offer rate for a comparable transaction, as of the date the 

14 interest rate is set— 

15 ‘‘(1) by 1.5 or more percentage points, in the 

16 case of a first lien residential mortgage loan having 

17 an original principal obligation amount that does not 

18 exceed the amount of the maximum limitation on the 

19 original principal obligation of mortgage in effect for 

20 a residence of the applicable size, as of the date of 

21 such interest rate set, pursuant to the sixth sentence 

22 of section 305(a)(2) the Federal Home Loan Mort23 gage Corporation Act (12 U.S.C. 1454(a)(2)); 

24 ‘‘(2) by 2.5 or more percentage points, in the 

25 case of a first lien residential mortgage loan having 
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1 an original principal obligation amount that exceeds 

2 the amount of the maximum limitation on the origi3 nal principal obligation of mortgage in effect for a 

4 residence of the applicable size, as of the date of 

5 such interest rate set, pursuant to the sixth sentence 

6 of section 305(a)(2) the Federal Home Loan Mort7 gage Corporation Act (12 U.S.C. 1454(a)(2)); and 

8 ‘‘(3) by 3.5 or more percentage points for a 

9 subordinate lien residential mortgage loan.’’. 

10 SEC. 602. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 

11 RELATING TO CERTAIN CONSUMER CREDIT 

12 TRANSACTIONS. 

13 (a) IN GENERAL.—Chapter 2 of the Truth in Lend14 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

15 after section 129D (as added by section 501(a)) the fol16 lowing new section: 

17 ‘‘SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 

18 RELATING TO CERTAIN CONSUMER CREDIT 

19 TRANSACTIONS. 

20 ‘‘(a) IN GENERAL.—It shall be unlawful, in extending 

21 credit or in providing any services for a consumer credit 

22 transaction secured by the principal dwelling of the con23 sumer, to engage in any unfair or deceptive act or practice 

24 as described in or pursuant to regulations prescribed 

25 under this section. 
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1 ‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of 

2 subsection (a), unfair and deceptive practices shall in3 clude— 

4 ‘‘(1) any appraisal of a property offered as se5 curity for repayment of the consumer credit trans6 action that is conducted in connection with such 

7 transaction in which a person with an interest in the 

8 underlying transaction compensates, coerces, extorts, 

9 colludes, instructs, induces, bribes, or intimidates a 

10 person conducting or involved in an appraisal, or at11 tempts, to compensate, coerce, extort, collude, in12 struct, induce, bribe, or intimidate such a person, 

13 for the purpose of causing the appraised value as14 signed, under the appraisal, to the property to be 

15 based on any factor other than the independent 

16 judgment of the appraiser; 

17 ‘‘(2) mischaracterizing, or suborning any 

18 mischaracterization of, the appraised value of the 

19 property securing the extension of the credit; 

20 ‘‘(3) seeking to influence an appraiser or other21 wise to encourage a targeted value in order to facili22 tate the making or pricing of the transaction; and 

23 ‘‘(4) withholding or threatening to withhold 

24 timely payment for an appraisal report or for ap25 praisal services rendered. 
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1 ‘‘(c) EXCEPTIONS.—The requirements of subsection 

2 (b) shall not be construed as prohibiting a mortgage lend3 er, mortgage broker, mortgage banker, real estate broker, 

4 appraisal management company, employee of an appraisal 

5 management company, consumer, or any other person 

6 with an interest in a real estate transaction from asking 

7 an appraiser to provide 1 or more of the following services: 

8 ‘‘(1) Consider additional, appropriate property 

9 information, including the consideration of addi10 tional comparable properties to make or support an 

11 appraisal. 

12 ‘‘(2) Provide further detail, substantiation, or 

13 explanation for the appraiser’s value conclusion. 

14 ‘‘(3) Correct errors in the appraisal report. 

15 ‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.— 

16 No certified or licensed appraiser conducting, and no ap17 praisal management company procuring or facilitating, an 

18 appraisal in connection with a consumer credit transaction 

19 secured by the principal dwelling of a consumer may have 

20 a direct or indirect interest, financial or otherwise, in the 

21 property or transaction involving the appraisal. 

22 ‘‘(e) MANDATORY REPORTING.—Any mortgage lend23 er, mortgage broker, mortgage banker, real estate broker, 

24 appraisal management company, employee of an appraisal 

25 management company, or any other person involved in a 
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1 real estate transaction involving an appraisal in connection 

2 with a consumer credit transaction secured by the prin3 cipal dwelling of a consumer who has a reasonable basis 

4 to believe an appraiser is failing to comply with the Uni5 form Standards of Professional Appraisal Practice, is vio6 lating applicable laws, or is otherwise engaging in uneth7 ical or unprofessional conduct, shall refer the matter to 

8 the applicable State appraiser certifying and licensing 

9 agency. 

10 ‘‘(f) NO EXTENSION OF CREDIT.—In connection with 

11 a consumer credit transaction secured by a consumer’s 

12 principal dwelling, a creditor who knows, at or before loan 

13 consummation, of a violation of the appraisal independ14 ence standards established in subsections (b) or (d) shall 

15 not extend credit based on such appraisal unless the cred16 itor documents that the creditor has acted with reasonable 

17 diligence to determine that the appraisal does not materi18 ally misstate or misrepresent the value of such dwelling. 

19 ‘‘(g) RULEMAKING PROCEEDINGS.—The Board, the 

20 Comptroller of the Currency, the Director of the Office 

21 of Thrift Supervision, the Federal Deposit Insurance Cor22 poration, the National Credit Union Administration 

23 Board, and the Federal Trade Commission— 

24 ‘‘(1) shall, for purposes of this section, jointly 

25 prescribe regulations no later than 180 days after 
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1 the date of the enactment of this section, and where 

2 such regulations have an effective date of no later 

3 than 1 year after the date of the enactment of this 

4 section, defining with specificity acts or practices 

5 which are unfair or deceptive in the provision of 

6 mortgage lending services for a consumer credit 

7 transaction secured by the principal dwelling of the 

8 consumer or mortgage brokerage services for such a 

9 transaction and defining any terms in this section or 

10 such regulations; and 

11 ‘‘(2) may jointly issue interpretive guidelines 

12 and general statements of policy with respect to un13 fair or deceptive acts or practices in the provision of 

14 mortgage lending services for a consumer credit 

15 transaction secured by the principal dwelling of the 

16 consumer and mortgage brokerage services for such 

17 a transaction, within the meaning of subsections (a), 

18 (b), (c), (d), (e), and (f). 

19 ‘‘(h) PENALTIES.— 

20 ‘‘(1) FIRST VIOLATION.—In addition to the en21 forcement provisions referred to in section 130, each 

22 person who violates this section shall forfeit and pay 

23 a civil penalty of not more than $10,000 for each 

24 day any such violation continues. 
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1 ‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of 

2 any person on whom a civil penalty has been im3 posed under paragraph (1), paragraph (1) shall be 

4 applied by substituting ‘$20,000’ for ‘$10,000’ with 

5 respect to all subsequent violations. 

6 ‘‘(3) ASSESSMENT.—The agency referred to in 

7 subsection (a) or (c) of section 108 with respect to 

8 any person described in paragraph (1) shall assess 

9 any penalty under this subsection to which such per10 son is subject.’’. 

11 (b) CLERICAL AMENDMENT.—The table of sections 

12 for chapter 2 of the Truth in Lending Act is amended 

13 by inserting after the item relating to section 129D (as 

14 added by section 501(c)) the following new item: 

‘‘129E. Unfair and deceptive practices and acts relating to certain consumer 

credit transactions.’’. 

15 SEC. 603. AMENDMENTS RELATING TO APPRAISAL SUB16 COMMITTEE OF FIEC, APPRAISER INDEPEND17 ENCE MONITORING, APPROVED APPRAISER 

18 EDUCATION, APPRAISAL MANAGEMENT COM19 PANIES, APPRAISER COMPLAINT HOTLINE, 

20 AUTOMATED VALUATION MODELS, AND 

21 BROKER PRICE OPINIONS. 

22 (a) CONSUMER PROTECTION MISSION.— 

23 (1) PURPOSES.—Section 1101 of the Financial 

24 Institutions Reform, Recovery, and Enforcement Act 
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1 of 1989 (12 U.S.C. 3331) is amended by inserting 

2 ‘‘and to provide the Appraisal Subcommittee with a 

3 consumer protection mandate’’ before the period at 

4 the end. 

5 (2) FUNCTIONS OF APPRAISAL SUB6 COMMITTEE.—Section 1103(a) of the Financial In7 stitutions Reform, Recovery, and Enforcement Act 

8 of 1989 (12 U.S.C. 3332(a)) is amended— 

9 (A) by striking ‘‘and’’ at the end of para10 graph (3); and 

11 (B) by amending paragraph (4) to read as 

12 follows: 

13 ‘‘(4) monitor the efforts of, and requirements 

14 established by, States and the Federal financial in15 stitutions regulatory agencies to protect consumers 

16 from improper appraisal practices and the preda17 tions of unlicensed appraisers in consumer credit 

18 transactions that are secured by a consumer’s prin19 cipal dwelling; and’’. 

20 (3) THRESHOLD LEVELS.—Section 1112(b) of 

21 the Financial Institutions Reform, Recovery, and 

22 Enforcement Act of 1989 (12 U.S.C. 3341(b)) is 

23 amended by inserting before the period the fol24 lowing: ‘‘, and that such threshold level provides rea25 sonable protection for consumers who purchase 1–4 
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1 unit single-family residences. In determining whether 

2 a threshold level provides reasonable protection for 

3 consumers, each Federal financial institutions regu4 latory agency shall consult with consumer groups 

5 and convene a public hearing’’. 

6 (b) ANNUAL REPORT OF APPRAISAL SUB7 COMMITTEE.—Section 1103(a) of the Financial Institu8 tions Reform, Recovery, and Enforcement Act of 1989 (12 

9 U.S.C. 3332(a)) is amended at the end by inserting the 

10 following new paragraph: 

11 ‘‘(5) transmit an annual report to the Congress 

12 not later than January 31 of each year that de13 scribes the manner in which each function assigned 

14 to the Appraisal Subcommittee has been carried out 

15 during the preceding year. The report shall also de16 tail the activities of the Appraisal Subcommittee, in17 cluding the results of all audits of State appraiser 

18 regulatory agencies, and provide an accounting of 

19 disapproved actions and warnings taken in the pre20 vious year, including a description of the conditions 

21 causing the disapproval and actions taken to achieve 

22 compliance.’’. 

23 (c) OPEN MEETINGS.—Section 1104(b) of the Finan24 cial Institutions Reform, Recovery, and Enforcement Act 

25 of 1989 (12 U.S.C. 3333(b)) is amended by inserting ‘‘in 
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1 public session after notice in the Federal Register’’ after 

2 ‘‘shall meet’’. 

3 (d) REGULATIONS.—Section 1106 of the Financial 

4 Institutions Reform, Recovery, and Enforcement Act of 

5 1989 (12 U.S.C. 3335) is amended— 

6 (1) by inserting ‘‘prescribe regulations after no7 tice and opportunity for comment,’’ after ‘‘hold 

8 hearings’’; and 

9 (2) at the end by inserting ‘‘Any regulations 

10 prescribed by the Appraisal Subcommittee shall (un11 less otherwise provided in this title) be limited to the 

12 following functions: temporary practice, national reg13 istry, information sharing, and enforcement. For 

14 purposes of prescribing regulations, the Appraisal 

15 Subcommittee shall establish an advisory committee 

16 of industry participants, including appraisers, lend17 ers, consumer advocates, and government agencies, 

18 and hold meetings as necessary to support the devel19 opment of regulations.’’. 

20 (e) APPRAISALS AND APPRAISAL REVIEWS.—Section 

21 1113 of the Financial Institutions Reform, Recovery, and 

22 Enforcement Act of 1989 (12 U.S.C. 3342) is amended— 

23 (1) by striking ‘‘In determining’’ and inserting 

24 ‘‘(a) IN GENERAL.—In determining’’; 
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1 (2) in subsection (a) (as designated by para2 graph (1)), by inserting before the period the fol3 lowing: ‘‘, where a complex 1-to-4 unit single family 

4 residential appraisal means an appraisal for which 

5 the property to be appraised, the form of ownership, 

6 the property characteristics, or the market condi7 tions are atypical’’; and 

8 (3) by adding at the end the following new sub9 section: 

10 ‘‘(b) APPRAISALS AND APPRAISAL REVIEWS.—All ap11 praisals performed at a property within a State shall be 

12 prepared by appraisers licensed or certified in the State 

13 where the property is located. All appraisal reviews, in14 cluding appraisal reviews by a lender, appraisal manage15 ment company, or other third party organization, shall be 

16 performed by an appraiser who is duly licensed or certified 

17 by a State appraisal board.’’. 

18 (f) APPRAISAL MANAGEMENT SERVICES.— 

19 (1) SUPERVISION OF THIRD PARTY PROVIDERS

20 OF APPRAISAL MANAGEMENT SERVICES.—Section 

21 1103(a) of the Financial Institutions Reform, Recov22 ery, and Enforcement Act of 1989 (12 U.S.C. 

23 3332(a)) (as previously amended by this section) is 

24 further amended— 
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1 (A) by amending paragraph (1) to read as 

2 follows: 

3 ‘‘(1) monitor the requirements established by 

4 States— 

5 ‘‘(A) for the certification and licensing of 

6 individuals who are qualified to perform ap7 praisals in connection with federally related 

8 transactions, including a code of professional 

9 responsibility; and 

10 ‘‘(B) for the registration and supervision 

11 of the operations and activities of an appraisal 

12 management company;’’; and 

13 (B) by adding at the end the following new 

14 paragraph: 

15 ‘‘(7) maintain a national registry of appraisal 

16 management companies that either are registered 

17 with and subject to supervision of a State appraiser 

18 certifying and licensing agency or are operating sub19 sidiaries of a Federally regulated financial institu20 tion.’’. 

21 (2) APPRAISAL MANAGEMENT COMPANY MIN22 IMUM QUALIFICATIONS.—Title XI of the Financial 

23 Institutions Reform, Recovery, and Enforcement Act 

24 of 1989 (12 U.S.C. 3331 et seq.) is amended by 
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1 adding at the end the following new section (and 

2 amending the table of contents accordingly): 

3 ‘‘SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM 

4 QUALIFICATIONS. 

5 ‘‘(a) IN GENERAL.—The Appraiser Qualifications 

6 Board of the Appraisal Foundation shall establish min7 imum qualifications to be applied by a State in the reg8 istration of appraisal management companies. Such quali9 fications shall include a requirement that such compa10 nies— 

11 ‘‘(1) register with and be subject to supervision 

12 by a State appraiser certifying and licensing agency 

13 in each State in which such company operates; 

14 ‘‘(2) verify that only licensed or certified ap15 praisers are used for federally related transactions; 

16 ‘‘(3) require that appraisals coordinated by an 

17 appraisal management company comply with the 

18 Uniform Standards of Professional Appraisal Prac19 tice; and 

20 ‘‘(4) require that appraisals are conducted inde21 pendently and free from inappropriate influence and 

22 coercion pursuant to the appraisal independence 

23 standards established under section 129E of the 

24 Truth in Lending Act. 
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1 ‘‘(b) EXCEPTION FOR FEDERALLY REGULATED FI2 NANCIAL INSTITUTIONS.—The requirements of subsection 

3 (a) shall not apply to an appraisal management company 

4 that is a subsidiary owned and controlled by a financial 

5 institution and regulated by a federal financial institution 

6 regulatory agency. In such case, the appropriate federal 

7 financial institutions regulatory agency shall, at a min8 imum, develop regulations affecting the operations of the 

9 appraisal management company to— 

10 ‘‘(1) verify that only licensed or certified ap11 praisers are used for federally related transactions; 

12 ‘‘(2) require that appraisals coordinated by an 

13 institution or subsidiary providing appraisal manage14 ment services comply with the Uniform Standards of 

15 Professional Appraisal Practice; and 

16 ‘‘(3) require that appraisals are conducted inde17 pendently and free from inappropriate influence and 

18 coercion pursuant to the appraisal independence 

19 standards established under section 129E of the 

20 Truth in Lending Act. 

21 ‘‘(c) REGISTRATION LIMITATIONS.—An appraisal 

22 management company shall not be registered by a State 

23 if such company, in whole or in part, directly or indirectly, 

24 is owned by any person who has had an appraiser license 

25 or certificate refused, denied, cancelled, surrendered in 
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1 lieu of revocation, or revoked in any State. Additionally, 

2 each person that owns more than 10 percent of an ap3 praisal management company shall be of good moral char4 acter, as determined by the State appraiser certifying and 

5 licensing agency, and shall submit to a background inves6 tigation carried out by the State appraiser certifying and 

7 licensing agency. 

8 ‘‘(d) REGULATIONS.—The Appraisal Subcommittee 

9 shall promulgate regulations to implement the minimum 

10 qualifications developed by the Appraiser Qualifications 

11 Board under this section, as such qualifications relate to 

12 the State appraiser certifying and licensing agencies. The 

13 Appraisal Subcommittee shall also promulgate regulations 

14 for the reporting of the activities of appraisal management 

15 companies in determining the payment of the annual reg16 istry fee. 

17 ‘‘(e) EFFECTIVE DATE.— 

18 ‘‘(1) IN GENERAL.—No appraisal management 

19 company may perform services related to a federally 

20 related transaction in a State after the date that is 

21 36 months after the date of the enactment of this 

22 section unless such company is registered with such 

23 State or subject to oversight by a federal financial 

24 institutions regulatory agency. 
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1 ‘‘(2) EXTENSION OF EFFECTIVE DATE.—Sub2 ject to the approval of the Council, the Appraisal 

3 Subcommittee may extend by an additional 12 

4 months the requirements for the registration and su5 pervision of appraisal management companies if it 

6 makes a written finding that a State has made sub7 stantial progress in establishing a State appraisal 

8 management company registration and supervision 

9 system that appears to conform with the provisions 

10 of this title.’’. 

11 (3) STATE APPRAISER CERTIFYING AND LI12 CENSING AGENCY AUTHORITY.—Section 1117 of the 

13 Financial Institutions Reform, Recovery, and En14 forcement Act of 1989 (12 U.S.C. 3346) is amended 

15 by adding at the end the following: ‘‘The duties of 

16 such agency may additionally include the registra17 tion and supervision of appraisal management com18 panies.’’. 

19 (4) APPRAISAL MANAGEMENT COMPANY DEFI20 NITION.—Section 1121 of the Financial Institutions 

21 Reform, Recovery, and Enforcement Act of 1989 

22 (12 U.S.C. 3350) is amended by adding at the end 

23 the following: 

24 ‘‘(11) APPRAISAL MANAGEMENT COMPANY.— 

25 The term ‘appraisal management company’ means, 
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1 in connection with valuing properties collateralizing 

2 mortgage loans or mortgages incorporated into a 

3 securitization, any external third party authorized ei4 ther by a creditor of a consumer credit transaction 

5 secured by a consumer’s principal dwelling or by an 

6 underwriter of or other principal in the secondary 

7 mortgage markets, that oversees a network or panel 

8 of more than 15 certified or licensed appraisers in 

9 a State or 25 or more nationally within a given 

10 year— 

11 ‘‘(A) to recruit, select, and retain apprais12 ers; 

13 ‘‘(B) to contract with licensed and certified 

14 appraisers to perform appraisal assignments; 

15 ‘‘(C) to manage the process of having an 

16 appraisal performed, including providing admin17 istrative duties such as receiving appraisal or18 ders and appraisal reports, submitting com19 pleted appraisal reports to creditors and under20 writers, collecting fees from creditors and un21 derwriters for services provided, and reimburs22 ing appraisers for services performed; or 

23 ‘‘(D) to review and verify the work of ap24 praisers.’’. 
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1 (g) STATE AGENCY REPORTING REQUIREMENT.— 

2 Section 1109(a) of the Financial Institutions Reform, Re3 covery, and Enforcement Act of 1989 (12 U.S.C. 3338(a)) 

4 is amended— 

5 (1) by striking ‘‘and’’ after the semicolon in 

6 paragraph (1); 

7 (2) by redesignating paragraph (2) as para8 graph (4); and 

9 (3) by inserting after paragraph (1) the fol10 lowing new paragraphs: 

11 ‘‘(2) transmit reports on sanctions, disciplinary 

12 actions, license and certification revocations, and li13 cense and certification suspensions on a timely basis 

14 to the national registry of the Appraisal Sub15 committee; 

16 ‘‘(3) transmit reports on a timely basis of su17 pervisory activities involving appraisal management 

18 companies or other third-party providers of apprais19 als and appraisal management services, including in20 vestigations initiated and disciplinary actions taken; 

21 and’’. 

22 (h) REGISTRY FEES MODIFIED.— 

23 (1) IN GENERAL.—Section 1109(a) of the Fi24 nancial Institutions Reform, Recovery, and Enforce-
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1 ment Act of 1989 (12 U.S.C. 3338(a)) is amend2 ed— 

3 (A) by amending paragraph (4) (as modi4 fied by section 603(g) of this Act) to read as 

5 follows: 

6 ‘‘(4) collect— 

7 ‘‘(A) from such individuals who perform or 

8 seek to perform appraisals in federally related 

9 transactions, an annual registry fee of not more 

10 than $40, such fees to be transmitted by the 

11 State agencies to the Council on an annual 

12 basis; and 

13 ‘‘(B) from an appraisal management com14 pany that either has registered with a State ap15 praiser certifying and licensing agency in ac16 cordance with this title or operates as a sub17 sidiary of a federally regulated financial institu18 tion, an annual registry fee of— 

19 ‘‘(i) in the case of such a company 

20 that has been in existence for more than a 

21 year, $25 multiplied by the number of ap22 praisers working for or contracting with 

23 such company in such State during the 

24 previous year, but where such $25 amount 

25 may be adjusted, up to a maximum of $50, 
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1 at the discretion of the Appraisal Sub2 committee, if necessary to carry out the 

3 Subcommittee’s functions under this title; 

4 and 

5 ‘‘(ii) in the case of such a company 

6 that has not been in existence for more 

7 than a year, $25 multiplied by an appro8 priate number to be determined by the Ap9 praisal Subcommittee, and where such 

10 number will be used for determining the 

11 fee of all such companies that were not in 

12 existence for more than a year, but where 

13 such $25 amount may be adjusted, up to 

14 a maximum of $50, at the discretion of the 

15 Appraisal Subcommittee, if necessary to 

16 carry out the Subcommittee’s functions 

17 under this title.’’; and 

18 (B) by amending the matter following 

19 paragraph (4), as redesignated, to read as fol20 lows: 

21 ‘‘Subject to the approval of the Council, the Appraisal 

22 Subcommittee may adjust the dollar amount of registry 

23 fees under paragraph (4)(A), up to a maximum of $80 

24 per annum, as necessary to carry out its functions under 

25 this title. The Appraisal Subcommittee shall consider at 
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1 least once every 5 years whether to adjust the dollar 

2 amount of the registry fees to account for inflation. In 

3 implementing any change in registry fees, the Appraisal 

4 Subcommittee shall provide flexibility to the States for 

5 multi-year certifications and licenses already in place, as 

6 well as a transition period to implement the changes in 

7 registry fees. In establishing the amount of the annual 

8 registry fee for an appraisal management company, the 

9 Appraisal Subcommittee shall have the discretion to im10 pose a minimum annual registry fee for an appraisal man11 agement company to protect against the under reporting 

12 of the number of appraisers working for or contracted by 

13 the appraisal management company.’’. 

14 (2) INCREMENTAL REVENUES.—Incremental 

15 revenues collected pursuant to the increases required 

16 by this subsection shall be placed in a separate ac17 count at the United States Treasury, entitled the 

18 ‘‘Appraisal Subcommittee Account’’. 

19 (i) GRANTS AND REPORTS.—Section 1109(b) of the 

20 Financial Institutions Reform, Recovery, and Enforce21 ment Act of 1989 (12 U.S.C. 3348(b)) is amended— 

22 (1) by striking ‘‘and’’ after the semicolon in 

23 paragraph (3); 

24 (2) by striking the period at the end of para25 graph (4) and inserting a semicolon; 
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1 (3) by adding at the end the following new 

2 paragraphs: 

3 ‘‘(5) to make grants to State appraiser certi4 fying and licensing agencies to support the efforts of 

5 such agencies to comply with this title, including— 

6 ‘‘(A) the complaint process, complaint in7 vestigations, and appraiser enforcement activi8 ties of such agencies; and 

9 ‘‘(B) the submission of data on State li10 censed and certified appraisers and appraisal 

11 management companies to the National ap12 praisal registry, including information affirming 

13 that the appraiser or appraisal management 

14 company meets the required qualification cri15 teria and formal and informal disciplinary ac16 tions; and 

17 ‘‘(6) to report to all State appraiser certifying 

18 and licensing agencies when a license or certification 

19 is surrendered, revoked, or suspended. 

20 Obligations authorized under this subsection may not ex21 ceed 75 percent of the fiscal year total of incremental in22 crease in fees collected and deposited in the ‘Appraisal 

23 Subcommittee Account’ pursuant to subsection (h).’’. 
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1 (j) CRITERIA.—Section 1116 of the Financial Institu2 tions Reform, Recovery, and Enforcement Act of 1989 (12 

3 U.S.C. 3345) is amended— 

4 (1) in subsection (c), by inserting ‘‘whose cri5 teria for the licensing of a real estate appraiser cur6 rently meet or exceed the minimum criteria issued 

7 by the Appraisal Qualifications Board of The Ap8 praisal Foundation for the licensing of real estate 

9 appraisers’’ before the period at the end; and 

10 (2) by striking subsection (e) and inserting the 

11 following new subsection: 

12 ‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.— 

13 Any requirements established for individuals in the posi14 tion of ‘Trainee Appraiser’ and ‘Supervisory Appraiser’ 

15 shall meet or exceed the minimum qualification require16 ments of the Appraiser Qualifications Board of The Ap17 praisal Foundation. The Appraisal Subcommittee shall 

18 have the authority to enforce these requirements.’’. 

19 (k) MONITORING OF STATE APPRAISER CERTIFYING

20 AND LICENSING AGENCIES.—Section 1118 of the Finan21 cial Institutions Reform, Recovery, and Enforcement Act 

22 of 1989 (12 U.S.C. 3347) is amended— 

23 (1) by amending subsection (a) to read as fol24 lows: 
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1 ‘‘(a) IN GENERAL.—The Appraisal Subcommittee 

2 shall monitor each State appraiser certifying and licensing 

3 agency for the purposes of determining whether such 

4 agency— 

5 ‘‘(1) has policies, practices, funding, staffing, 

6 and procedures that are consistent with this title; 

7 ‘‘(2) processes complaints and completes inves8 tigations in a reasonable time period; 

9 ‘‘(3) appropriately disciplines sanctioned ap10 praisers and appraisal management companies; 

11 ‘‘(4) maintains an effective regulatory program; 

12 and 

13 ‘‘(5) reports complaints and disciplinary actions 

14 on a timely basis to the national registries on ap15 praisers and appraisal management companies main16 tained by the Appraisal Subcommittee. 

17 The Appraisal Subcommittee shall have the authority to 

18 remove a State licensed or certified appraiser or a reg19 istered appraisal management company from a national 

20 registry on an interim basis pending State agency action 

21 on licensing, certification, registration, and disciplinary 

22 proceedings. The Appraisal Subcommittee and all agen23 cies, instrumentalities, and Federally recognized entities 

24 under this title shall not recognize appraiser certifications 

25 and licenses from States whose appraisal policies, prac-
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1 tices, funding, staffing, or procedures are found to be in2 consistent with this title. The Appraisal Subcommittee 

3 shall have the authority to impose sanctions, as described 

4 in this section, against a State agency that fails to have 

5 an effective appraiser regulatory program. In determining 

6 whether such a program is effective, the Appraisal Sub7 committee shall include an analyses of the licensing and 

8 certification of appraisers, the registration of appraisal 

9 management companies, the issuance of temporary li10 censes and certifications for appraisers, the receiving and 

11 tracking of submitted complaints against appraisers and 

12 appraisal management companies, the investigation of 

13 complaints, and enforcement actions against appraisers 

14 and appraisal management companies. The Appraisal 

15 Subcommittee shall have the authority to impose interim 

16 actions and suspensions against a State agency as an al17 ternative to, or in advance of, the derecognition of a State 

18 agency.’’. 

19 (2) in subsection (b)(2), by inserting after ‘‘au20 thority’’ the following: ‘‘or sufficient funding’’. 

21 (l) RECIPROCITY.—Subsection (b) of section 1122 of 

22 the Financial Institutions Reform, Recovery, and Enforce23 ment Act of 1989 (12 U.S.C. 3351(b)) is amended to read 

24 as follows: 
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1 ‘‘(b) RECIPROCITY.—A State appraiser certifying or 

2 licensing agency shall issue a reciprocal certification or li3 cense for an individual from another State when— 

4 ‘‘(1) the appraiser licensing and certification 

5 program of such other State is in compliance with 

6 the provisions of this title; and 

7 ‘‘(2) the appraiser holds a valid certification 

8 from a State whose requirements for certification or 

9 licensing meet or exceed the licensure standards es10 tablished by the State where an individual seeks ap11 praisal licensure.’’. 

12 (m) CONSIDERATION OF PROFESSIONAL APPRAISAL

13 DESIGNATIONS.—Section 1122(d) of the Financial Insti14 tutions Reform, Recovery, and Enforcement Act of 1989 

15 (12 U.S.C. 3351(d)) is amended by striking ‘‘shall not ex16 clude’’ and all that follows through the end of the sub17 section and inserting the following: ‘‘may include edu18 cation achieved, experience, sample appraisals, and ref19 erences from prior clients. Membership in a nationally rec20 ognized professional appraisal organization may be a cri21 teria considered, though lack of membership therein shall 

22 not be the sole bar against consideration for an assign23 ment under these criteria.’’. 

24 (n) APPRAISER INDEPENDENCE.—Section 1122 of 

25 the Financial Institutions Reform, Recovery, and Enforce-
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1 ment Act of 1989 (12 U.S.C. 3351) is amended by adding 

2 at the end the following new subsection: 

3 ‘‘(g) APPRAISER INDEPENDENCE MONITORING.— 

4 The Appraisal Subcommittee shall monitor each State ap5 praiser certifying and licensing agency for the purpose of 

6 determining whether such agency’s policies, practices, and 

7 procedures are consistent with the purposes of maintain8 ing appraiser independence and whether such State has 

9 adopted and maintains effective laws, regulations, and 

10 policies aimed at maintaining appraiser independence.’’. 

11 (o) APPRAISER EDUCATION.—Section 1122 of the 

12 Financial Institutions Reform, Recovery, and Enforce13 ment Act of 1989 (12 U.S.C. 3351) is amended by insert14 ing after subsection (g) (as added by subsection (l) of this 

15 section) the following new subsection: 

16 ‘‘(h) APPROVED EDUCATION.—The Appraisal Sub17 committee shall encourage the States to accept courses ap18 proved by the Appraiser Qualification Board’s Course Ap19 proval Program.’’. 

20 (p) APPRAISAL COMPLAINT HOTLINE.—Section 1122 

21 of the Financial Institutions Reform, Recovery, and En22 forcement Act of 1989 (12 U.S.C. 3351), as amended by 

23 this section, is further amended by adding at the end the 

24 following new subsection: 
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1 ‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.— 

2 If, 1 year after the date of the enactment of this sub3 section, the Appraisal Subcommittee determines that no 

4 national hotline exists to receive complaints of non-compli5 ance with appraisal independence standards and Uniform 

6 Standards of Professional Appraisal Practice, including 

7 complaints from appraisers, individuals, or other entities 

8 concerning the improper influencing or attempted im9 proper influencing of appraisers or the appraisal process, 

10 the Appraisal Subcommittee shall establish and operate 

11 such a national hotline, which shall include a toll-free tele12 phone number and an email address. If the Appraisal Sub13 committee operates such a national hotline, the Appraisal 

14 Subcommittee shall refer complaints for further action to 

15 appropriate governmental bodies, including a State ap16 praiser certifying and licensing agency, a financial institu17 tion regulator, or other appropriate legal authorities. For 

18 complaints referred to State appraiser certifying and li19 censing agencies or to Federal regulators, the Appraisal 

20 Subcommittee shall have the authority to follow up such 

21 complaint referrals in order to determine the status of the 

22 resolution of the complaint.’’. 

23 (q) AUTOMATED VALUATION MODELS.—Title XI of 

24 the Financial Institutions Reform, Recovery, and Enforce25 ment Act of 1989 (12 U.S.C. 3331 et seq.), as amended 
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1 by this section, is further amended by adding at the end 

2 the following new section (and amending the table of con3 tents accordingly): 

4 ‘‘SEC. 1125. AUTOMATED VALUATION MODELS USED TO 

5 VALUE CERTAIN MORTGAGES. 

6 ‘‘(a) IN GENERAL.—Automated valuation models 

7 shall adhere to quality control standards designed to— 

8 ‘‘(1) ensure a high level of confidence in the es9 timates produced by automated valuation models; 

10 ‘‘(2) protect against the manipulation of data; 

11 ‘‘(3) seek to avoid conflicts of interest; and 

12 ‘‘(4) require random sample testing and re13 views, where such testing and reviews are performed 

14 by an appraiser who is licensed or certified in the 

15 State where the testing and reviews take place. 

16 ‘‘(b) ADOPTION OF REGULATIONS.—The Appraisal 

17 Subcommittee and its member agencies, in consultation 

18 with the Appraisal Standards Board of the Appraisal 

19 Foundation and other interested parties, shall promulgate 

20 regulations to implement the quality control standards re21 quired under this section. 

22 ‘‘(c) ENFORCEMENT.—Compliance with regulations 

23 issued under this subsection shall be enforced by— 

24 ‘‘(1) with respect to a financial institution, or 

25 subsidiary owned and controlled by a financial insti-
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1 tution and regulated by a Federal financial institu2 tion regulatory agency, the Federal financial institu3 tion regulatory agency that acts as the primary Fed4 eral supervisor of such financial institution or sub5 sidiary; and 

6 ‘‘(2) with respect to other persons, the Ap7 praisal Subcommittee. 

8 ‘‘(d) AUTOMATED VALUATION MODEL DEFINED.— 

9 For purposes of this section, the term ‘automated valu10 ation model’ means any computerized model used by mort11 gage originators and secondary market issuers to deter12 mine the collateral worth of a mortgage secured by a con13 sumer’s principal dwelling.’’. 

14 (r) BROKER PRICE OPINIONS.—Title XI of the Fi15 nancial Institutions Reform, Recovery, and Enforcement 

16 Act of 1989 (12 U.S.C. 3331 et seq.), as amended by this 

17 section, is further amended by adding at the end the fol18 lowing new section (and amending the table of contents 

19 accordingly): 

20 ‘‘SEC. 1126. BROKER PRICE OPINIONS. 

21 ‘‘(a) GENERAL PROHIBITION.—In conjunction with 

22 the purchase of a consumer’s principal dwelling, broker 

23 price opinions may not be used as the primary basis to 

24 determine the value of a piece of property for the purpose 
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1 of a loan origination of a residential mortgage loan se2 cured by such piece of property. 

3 ‘‘(b) BROKER PRICE OPINION DEFINED.—For pur4 poses of this section, the term ‘broker price opinion’ means 

5 an estimate prepared by a real estate broker, agent, or 

6 sales person that details the probable selling price of a 

7 particular piece of real estate property and provides a 

8 varying level of detail about the property’s condition, mar9 ket, and neighborhood, and information on comparable 

10 sales, but does not include an automated valuation model, 

11 as defined in section 1125(c).’’. 

12 (s) AMENDMENTS TO APPRAISAL SUBCOMMITTEE.— 

13 Section 1011 of the Federal Financial Institutions Exam14 ination Council Act of 1978 (12 U.S.C. 3310) is amend15 ed— 

16 (1) in the first sentence, by adding before the 

17 period the following: ‘‘and the Federal Housing Fi18 nance Agency’’; and 

19 (2) by inserting at the end the following: ‘‘At 

20 all times at least one member of the Appraisal Sub21 committee shall have demonstrated knowledge and 

22 competence through licensure, certification, or pro23 fessional designation within the appraisal profes24 sion.’’. 

25 (t) TECHNICAL CORRECTIONS.— 
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1 (1) Section 1119(a)(2) of the Financial Institu2 tions Reform, Recovery, and Enforcement Act of 

3 1989 (12 U.S.C. 3348(a)(2)) is amended by striking 

4 ‘‘council,’’ and inserting ‘‘Council,’’. 

5 (2) Section 1121(6) of the Financial Institu6 tions Reform, Recovery, and Enforcement Act of 

7 1989 (12 U.S.C. 3350(6)) is amended by striking 

8 ‘‘Corporations,’’ and inserting ‘‘Corporation,’’. 

9 (3) Section 1121(8) of the Financial Institu10 tions Reform, Recovery, and Enforcement Act of 

11 1989 (12 U.S.C. 3350(8)) is amended by striking 

12 ‘‘council’’ and inserting ‘‘Council’’. 

13 (4) Section 1122 of the Financial Institutions 

14 Reform, Recovery, and Enforcement Act of 1989 

15 (12 U.S.C. 3351) is amended— 

16 (A) in subsection (a)(1) by moving the left 

17 margin of subparagraphs (A), (B), and (C) 2 

18 ems to the right; and 

19 (B) in subsection (c)— 

20 (i) by striking ‘‘Federal Financial In21 stitutions Examination Council’’ and in22 serting ‘‘Financial Institutions Examina23 tion Council’’; and 
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1 (ii) by striking ‘‘the council’s func2 tions’’ and inserting ‘‘the Council’s func3 tions’’. 

4 SEC. 604. STUDY REQUIRED ON IMPROVEMENTS IN AP5 PRAISAL PROCESS AND COMPLIANCE PRO6 GRAMS. 

7 (a) STUDY.—The Comptroller General shall conduct 

8 a comprehensive study on possible improvements in the 

9 appraisal process generally, and specifically on the consist10 ency in and the effectiveness of, and possible improve11 ments in, State compliance efforts and programs in ac12 cordance with title XI of the Financial Institutions Re13 form, Recovery, and Enforcement Act of 1989. In addi14 tion, this study shall examine the existing exemptions to 

15 the use of certified appraisers issued by Federal financial 

16 institutions regulatory agencies. The study shall also re17 view the threshold level established by Federal regulators 

18 for compliance under title XI and whether there is a need 

19 to revise them to reflect the addition of consumer protec20 tion to the purposes and functions of the Appraisal Sub21 committee. The study shall additionally examine the qual22 ity of different types of mortgage collateral valuations pro23 duced by broker price opinions, automated valuation mod24 els, licensed appraisals, and certified appraisals, among 

25 others, and the quality of appraisals provided through dif-
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1 ferent distribution channels, including appraisal manage2 ment companies, independent appraisal operations within 

3 a mortgage originator, and fee-for-service appraisals. The 

4 study shall also include an analysis and statistical break5 down of enforcement actions taken during the last 10 

6 years against different types of appraisers, including cer7 tified, licensed, supervisory, and trainee appraisers. Fur8 thermore, the study shall examine the benefits and costs, 

9 as well as the advantages and disadvantages, of estab10 lishing a national repository to collect data related to real 

11 estate property collateral valuations performed in the 

12 United States. 

13 (b) REPORT.—Before the end of the 18-month period 

14 beginning on the date of the enactment of this Act, the 

15 Comptroller General shall submit a report on the study 

16 under subsection (a) to the Committee on Financial Serv17 ices of the House of Representatives and the Committee 

18 on Banking, Housing, and Urban Affairs of the Senate, 

19 together with such recommendations for administrative or 

20 legislative action, at the Federal or State level, as the 

21 Comptroller General may determine to be appropriate. 

22 (c) ADDITIONAL STUDY REQUIRED.—The Comp23 troller General shall conduct an additional study to deter24 mine the effects that the changes to the seller-guide ap25 praisal requirements of Fannie Mae and Freddie Mac con-
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1 tained in the Home Valuation Code of Conduct have on 

2 small business, like mortgage brokers and independent ap3 praisers, and consumers, including the effect on the— 

4 (1) quality and costs of appraisals; 

5 (2) length of time for obtaining appraisals; 

6 (3) impact on consumer protection, especially 

7 regarding maintaining appraisal independence, abat8 ing appraisal inflation, and mitigating acts of ap9 praisal fraud; 

10 (4) structure of the appraisal industry, espe11 cially regarding appraisal management companies, 

12 fee-for-service appraisers, and the regulation of ap13 praisal management companies by the states; and 

14 (5) impact on mortgage brokers and other small 

15 business professionals in the financial services indus16 try. 

17 (d) ADDITIONAL REPORT.—Before the end of the 6- 

18 month period beginning on the date of the enactment of 

19 this Act, the Comptroller General shall submit an addi20 tional report to the Committee on Financial Services of 

21 the House of Representatives and the Committee on 

22 Banking, Housing, and Urban Affairs of the Senate con23 taining the findings and conclusions of the Comptroller 

24 General with respect to the study conducted pursuant to 

25 subsection (c). Such additional report shall take into con-
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1 sideration the Small Business Administration’s views on 

2 how small businesses are affected by the Home Valuation 

3 Code of Conduct. 

4 SEC. 605. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT. 

5 Subsection (e) of section 701 of the Equal Credit Op6 portunity Act ( U.S.C. 1691) is amended to read as fol7 lows: 

8 ‘‘(e) COPIES FURNISHED TO APPLICANTS.— 

9 ‘‘(1) IN GENERAL.—Each creditor shall furnish 

10 to an applicant a copy of any and all written ap11 praisals and valuations developed in connection with 

12 the applicant’s application for a loan that is secured 

13 or would have been secured by a first lien on a 

14 dwelling promptly upon completion, but in no case 

15 later than 3 days prior to the closing of the loan, 

16 whether the creditor grants or denies the applicant’s 

17 request for credit or the application is incomplete or 

18 withdrawn. 

19 ‘‘(2) WAIVER.—The applicant may waive the 3 

20 day requirement provided for in paragraph (1), ex21 cept where otherwise required in law. 

22 ‘‘(3) REIMBURSEMENT.—The applicant may be 

23 required to pay a reasonable fee to reimburse the 

24 creditor for the cost of the appraisal, except where 

25 otherwise required in law. 
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1 ‘‘(4) FREE COPY.—Notwithstanding paragraph 

2 (3), the creditor shall provide a copy of each written 

3 appraisal or valuation at no additional cost to the 

4 applicant. 

5 ‘‘(5) NOTIFICATION TO APPLICANTS.—At the 

6 time of application, the creditor shall notify an ap7 plicant in writing of the right to receive a copy of 

8 each written appraisal and valuation under this sub9 section. 

10 ‘‘(6) REGULATIONS.—The Board shall prescribe 

11 regulations to implement this subsection within 1 

12 year of the date of the enactment of this subsection. 

13 ‘‘(7) VALUATION DEFINED.—For purposes of 

14 this subsection, the term ‘valuation’ shall include 

15 any estimate of the value of a dwelling developed in 

16 connection with a creditor’s decision to provide cred17 it, including those values developed pursuant to a 

18 policy of a government sponsored enterprise or by an 

19 automated valuation model, a broker price opinion, 

20 or other methodology or mechanism.’’. 
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1 SEC. 606. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 

2 1974 AMENDMENT RELATING TO CERTAIN AP3 PRAISAL FEES. 

4 Section 4 of the Real Estate Settlement Procedures 

5 Act of 1974 is amended by adding at the end the following 

6 new subsection: 

7 ‘‘(c) The standard form described in subsection (a) 

8 shall include, in the case of an appraisal coordinated by 

9 an appraisal management company (as such term is de10 fined in section 1121(11) of the Financial Institutions Re11 form, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

12 3350(11))), a clear disclosure of— 

13 ‘‘(1) the fee paid directly to the appraiser by 

14 such company; and 

15 ‘‘(2) the administration fee charged by such 

16 company.’’. 
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1 TITLE VII—SENSE OF CONGRESS 

2 REGARDING THE IMPOR3 TANCE OF GOVERNMENT 

4 SPONSORED ENTERPRISES 

5 REFORM 

6 SEC. 701. SENSE OF CONGRESS REGARDING THE IMPOR7 TANCE OF GOVERNMENT-SPONSORED EN8 TERPRISES REFORM TO ENHANCE THE PRO9 TECTION, LIMITATION, AND REGULATION OF 

10 THE TERMS OF RESIDENTIAL MORTGAGE 

11 CREDIT. 

12 (a) FINDINGS.—The Congress finds as follows: 

13 (1) The Government-sponsored enterprises, 

14 Federal National Mortgage Association (Fannie 

15 Mae) and the Federal Home Loan Mortgage Cor16 poration (Freddie Mac), were chartered by Congress 

17 to ensure a reliable and affordable supply of mort18 gage funding, but enjoy a dual legal status as pri19 vately owned corporations with Government man20 dated affordable housing goals. 

21 (2) In 1996, the Department of Housing and 

22 Urban Development required that 42 percent of 

23 Fannie Mae’s and Freddie Mac’s mortgage financing 

24 should go to borrowers with income levels below the 

25 median for a given area. 
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1 (3) In 2004, the Department of Housing and 

2 Urban Development revised those goals, increasing 

3 them to 56 percent of their overall mortgage pur4 chases by 2008, and additionally mandated that 12 

5 percent of all mortgage purchases by Fannie Mae 

6 and Freddie Mac be ‘‘special affordable’’ loans made 

7 to borrowers with incomes less than 60 percent of an 

8 area’s median income, a target that ultimately in9 creased to 28 percent for 2008. 

10 (4) To help fulfill those mandated affordable 

11 housing goals, in 1995 the Department of Housing 

12 and Urban Development authorized Fannie Mae and 

13 Freddie Mac to purchase subprime securities that 

14 included loans made to low-income borrowers. 

15 (5) After this authorization to purchase 

16 subprime securities, subprime and near-prime loans 

17 increased from 9 percent of securitized mortgages in 

18 2001 to 40 percent in 2006, while the market share 

19 of conventional mortgages dropped from 78.8 per20 cent in 2003 to 50.1 percent by 2007 with a cor21 responding increase in subprime and Alt-A loans 

22 from 10.1 percent to 32.7 percent over the same pe23 riod. 

24 (6) In 2004 alone, Fannie Mae and Freddie 

25 Mac purchased $175,000,000,000 in subprime mort-
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1 gage securities, which accounted for 44 percent of 

2 the market that year, and from 2005 through 2007, 

3 Fannie Mae and Freddie Mac purchased approxi4 mately $1,000,000,000,000 in subprime and Alt-A 

5 loans, while Fannie Mae’s acquisitions of mortgages 

6 with less than 10 percent down payments almost tri7 pled. 

8 (7) According to data from the Federal Hous9 ing Finance Agency (FHFA) for the fourth quarter 

10 of 2008, Fannie Mae and Freddie Mac own or guar11 antee 75 percent of all newly originated mortgages, 

12 and Fannie Mae and Freddie Mac currently own 

13 13.3 percent of outstanding mortgage debt in the 

14 United States and have issued mortgage-backed se15 curities for 31.0 percent of the residential debt mar16 ket, a combined total of 44.3 percent of outstanding 

17 mortgage debt in the United States. 

18 (8) On September 7, 2008, the FHFA placed 

19 Fannie Mae and Freddie Mac into conservatorship, 

20 with the Treasury Department subsequently agree21 ing to purchase at least $200,000,000,000 of pre22 ferred stock from each enterprise in exchange for 

23 warrants for the purchase of 79.9 percent of each 

24 enterprise’s common stock. 
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1 (9) The conservatorship for Fannie Mae and 

2 Freddie Mac has potentially exposed taxpayers to 

3 upwards of $5,300,000,000,000 worth of risk. 

4 (10) The hybrid public-private status of Fannie 

5 Mae and Freddie Mac is untenable and must be re6 solved to assure that consumers are offered and re7 ceive residential mortgage loans on terms that rea8 sonably reflect their ability to repay the loans and 

9 that are understandable and not unfair, deceptive, or 

10 abusive. 

11 (b) SENSE OF THE CONGRESS.—It is the sense of 

12 the Congress that efforts to enhance by the protection, 

13 limitation, and regulation of the terms of residential mort14 gage credit and the practices related to such credit would 

15 be incomplete without enactment of meaningful structural 

16 reforms of Fannie Mae and Freddie Mac. 

17 TITLE VIII—REPORTS 

18 SEC. 801. GAO STUDY REPORT ON GOVERNMENT EFFORTS 

19 TO COMBAT MORTGAGE FORECLOSURE RES20 CUE SCAMS AND LOAN MODIFICATION 

21 FRAUD. 

22 (a) STUDY.—The Comptroller General of the United 

23 States shall conduct a study of the current inter-agency 

24 efforts of the Secretary of the Treasury, the Secretary of 

25 Housing and Urban Development, the Attorney General, 
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1 and the Federal Trade Commission to crackdown on mort2 gage foreclosure rescue scams and loan modification fraud 

3 in order to advise the Congress to the risks and 

4 vulnerabilities of emerging schemes in the loan modifica5 tion arena. 

6 (b) REPORT.— 

7 (1) IN GENERAL.—The Comptroller General 

8 shall submit a report to the Congress on the study 

9 conducted under subsection (a) containing such rec10 ommendations for legislative and administrative ac11 tions as the Comptroller General may determine to 

12 be appropriate in addition to the recommendations 

13 required under paragraph (2). 

14 (2) SPECIFIC TOPICS.—The report made under 

15 paragraph (1) shall include— 

16 (A) an evaluation of the effectiveness of 

17 the inter-agency task force current efforts to 

18 combat mortgage foreclosure rescue scams and 

19 loan modification fraud scams; 

20 (B) specific recommendations on agency or 

21 legislative action that are essential to properly 

22 protect homeowners from mortgage foreclosure 

23 rescue scams and loan modification fraud 

24 scams; and 
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1 (C) the adequacy of financial resources 

2 that the Federal Government is allocating to— 

3 (i) crackdown on loan modification 

4 and foreclosure rescue scams; and 

5 (ii) the education of homeowners 

6 about fraudulent scams relating to loan 

7 modification and foreclosure rescues. 

8 TITLE IX—MULTIFAMILY 

9 MORTGAGE RESOLUTION 

10 SEC. 901. MULTIFAMILY MORTGAGE RESOLUTION PRO11 GRAM. 

12 (a) ESTABLISHMENT.—Subject to subsection (e), the 

13 Secretary of the Treasury, in consultation with the Sec14 retary of Housing and Urban Development, shall develop 

15 a program to stabilize multifamily properties which are de16 linquent, at risk of default or disinvestment, or in fore17 closure. 

18 (b) FOCUS OF PROGRAM.—The program developed 

19 under this section shall be used to ensure the protection 

20 of current and future tenants of at risk multifamily prop21 erties, where feasible, by— 

22 (1) creating sustainable financing of such prop23 erties that is based on— 

24 (A) the current rental income generated by 

25 such properties; and 
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1 (B) the preservation of adequate operating 

2 reserves; 

3 (2) maintaining the level of Federal, State, and 

4 city subsidies in effect as of the date of enactment 

5 of this Act; and 

6 (3) facilitating the transfer, when necessary, of 

7 such properties to responsible new owners. 

8 (c) COORDINATION.—The Secretary of the Treasury 

9 shall in carrying out the program developed under this sec10 tion coordinate with the Secretary of Housing and Urban 

11 Development, the Federal Deposit Insurance Corporation, 

12 the Board of Governors of the Federal Reserve System, 

13 the Federal Housing Finance Agency, and any other Fed14 eral Government agency that the Secretary considers ap15 propriate. 

16 (d) DEFINITION.—For purposes of this section, the 

17 term ‘‘multifamily properties’’ means a residential struc18 ture that consists of 5 or more dwelling units. 

19 (e) AUTHORITY.—This section shall not limit the 

20 ability of the Secretary of the Treasury to use any existing 

21 authority to carry out the program under this section. 
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1 TITLE X—STUDY OF EFFECT OF 

2 DRYWALL PRESENCE ON 

3 FORECLOSURES 

4 SEC. 1001. STUDY OF EFFECT OF DRYWALL PRESENCE ON 

5 FORECLOSURES. 

6 (a) STUDY.—The Secretary of Housing and Urban 

7 Development, in consultation with the Secretary of the 

8 Treasury, shall conduct a study of the effect on residential 

9 mortgage loan foreclosures of— 

10 (1) the presence in residential structures sub11 ject to such mortgage loans of drywall that was im12 ported from China during the period beginning with 

13 2004 and ending at the end of 2007; and 

14 (2) the availability of property insurance for 

15 residential structures in which such drywall is 

16 present. 

17 (b) REPORT.—Not later than the expiration of the 

18 120-day period beginning on the date of the enactment 

19 of this Act, the Secretary of Housing and Urban Develop20 ment shall submit to the Congress a report on the study 

21 conducted under subsection (a) containing its findings, 

22 conclusions, and recommendations. 
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1 TITLE XI—FANNIE MAE GUIDE2 LINES FOR PURCHASE OF 

3 CONDOMINIUM AND COOPER4 ATIVE HOUSING MORTGAGES 

5 SEC. 1101. GUIDELINES FOR PURCHASE OF CONDOMINIUM 

6 AND COOPERATIVE HOUSING MORTGAGES. 

7 The Federal National Mortgage Association and the 

8 Federal Home Loan Mortgage Corporation shall take ac9 tions as are appropriate to establish and revise fee sched10 ules, occupancy and pre-sale guidelines, and other relevant 

11 underwriting standards for the purchase of condominium 

12 and cooperative housing, consistent with appropriate levels 

13 of credit risk. In setting such fees, guidelines, and stand14 ards, each association may consider factors such as the 

15 relative health of the local or regional housing market in 

16 which such housing is located, and whether the housing 

17 is in a new or existing development. 

Passed the House of Representatives May 7, 2009. 

Attest: 

Clerk. 

111TH CONGRESS 

1ST SESSION H. R. 1728 

AN ACT 

To amend the Truth in Lending Act to reform conand for other purposes. imum standards for consumer mortgage loans, ability for such practices, to provide certain min- sumer mortgage practices and provide account-