89–008 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 111–365 

PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 4173) TO PROVIDE 

FOR FINANCIAL REGULATORY REFORM, TO PROTECT CONSUMERS AND 

INVESTORS, TO ENHANCE FEDERAL UNDERSTANDING OF INSURANCE 

ISSUES, TO REGULATE THE OVER-THE-COUNTER DERIVATIVES MARKETS, AND FOR OTHER PURPOSES 

DECEMBER 8, 2009.—Referred to the House Calendar and ordered to be printed 

Mr. PERLMUTTER, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 956] 

The Committee on Rules, having had under consideration House 

Resolution 956, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration of H.R. 4173, the ‘‘Wall 

Street Reform and Consumer Protection Act of 2009.’’ The resolution provides three hours of general debate with two hours to be 

equally divided and controlled by the chair and ranking minority 

member of the Committee on Financial Services, 30 minutes to be 

equally divided and controlled by the chair and ranking minority 

member of the Committee on Agriculture, and 30 minutes to be 

equally divided and controlled by the chair and ranking minority 

member of the Committee on Energy and Commerce. The resolution waives all points of order against consideration of the bill except those arising under clause 9 and 10 of rule XXI. 

The resolution provides that the amendment printed in this report shall be considered as adopted in the House and in the Committee of the Whole. The resolution provides that the Committee 

of the Whole shall rise without motion after general debate and 

that no further consideration of the bill shall occur except pursuant 

to a subsequent order of the House. The resolution also provides 

that the Chair of the Committee of the Whole may entertain a motion that the Committee rise only if offered by the Chair of the 

Committee on Financial Services or his designee. 


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EXPLANATION OF WAIVERS

Although the rule waives all points of order against consideration 

of the bill (except for clauses 9 and 10 of rule XXI), the Committee 

is not aware of any points of order. The waiver is prophylactic. 

SUMMARY OF AMENDMENT TO BE CONSIDERED AS ADOPTED

The amendment addresses jurisdictional concerns among the 

committees of jurisdiction affected by H.R. 4173. The amendment 

also contains a revised version of H.R. 1728, the Mortgage Reform 

and Anti-Predatory Lending Act of 2009, which was passed by the 

House on May 7, 2009 by a vote of 300–114, updated to conform 

with the pending legislation. The amendment includes reverse 

mortgages in the definition of a ‘‘qualified mortgage’’ subject to provisions of the Truth in Lending Act (TILA). The amendment also 

makes the bill paygo compliant. 

TEXT OF THE AMENDMENT TO BE CONSIDERED AS ADOPTED

Page 13, line 16, strike ‘‘and’’. 

Page 13, line 18, strike the period and insert ‘‘; and’’ and after 

such line insert the following: 

(C) that is not a Farm Credit System institution chartered under and subject to the provisions of the Farm 

Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.). 

Page 18, line 4, insert ‘‘any retail foreign exchange dealer,’’ after 

‘‘adviser,’’. 

Page 18, beginning on line 12, strike ‘‘organization’’ and insert 

‘‘organization, designated contract market, or swap execution facility’’. 

Page 28, line 9, after ‘‘report to’’ insert the following: ‘‘the Committee on Ways and Means, the Committee on Agriculture, and’’. 

Page 28, line 10, strike ‘‘Representatives,’’ and insert ‘‘Representatives and the Committee on Finance, the Committee on Agriculture, and’’. 

Page 29, line 13, insert before ‘‘Committee’’ the following: ‘‘Committee on Ways and Means, the Committee on Agriculture, and 

the’’. 

Page 29, line 14, insert before ‘‘Committee’’ the following: ‘‘Committee on Finance, the Committee on Agriculture, and the’’. 

Page 29, line 23, after ‘‘to the’’ insert the following: ‘‘Committee 

on Ways and Means, the Committee on Agriculture, and the’’. 

Page 29, line 25, after ‘‘and the’’ insert the following: ‘‘Committee 

on Finance, the Committee on Agriculture, and the’’. 

Page 30, line 5, after ‘‘to the’’ insert the following: ‘‘Committee on 

Ways and Means, the Committee on Agriculture, and the’’. 

Page 30, line 7, after ‘‘and the’’ insert the following: ‘‘Committee 

on Finance, the Committee on Agriculture, and the’’. 

Page 104, beginning on line 6, strike ‘‘, unless the President’’ and 

all that follows through page 110, line 7, and insert a period. 

Page 277, line 22, strike the period and insert ‘‘; and’’ and after 

such line insert the following: 

(C) that is not a Farm Credit System institution chartered under and subject to the provisions of the Farm 

Credit Act of 1971, as amended (12 U.S.C. 2001 et seq.). 


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Page 383, strike line 21 and all that follows through page 384, 

line 2, and insert the following: 

(9) EXEMPT TAX STATUS.— 

(A) EXEMPTION FROM FEDERAL INCOME TAX.—Subsection 

(l) of section 501 of the Internal Revenue Code of 1986 is 

amended by adding at the end the following new paragraph: 

‘‘(4) Any bridge financial company organized under section 

1609(h) of the Financial Stability Improvement Act of 2009.’’. 

(B) EXEMPTION FROM CERTAIN OTHER TAXES.—Notwithstanding any other provision of Federal or State law, a 

bridge financial company, its franchise, property, and income shall be exempt from all taxation now or hereafter 

imposed by any territory, dependency, or possession of the 

United States, or by any State, county, municipality, or 

local taxing authority. 

Page 416, beginning on line 16, strike ‘‘shall be introduced in the 

House’’ and all that follows through ‘‘minority leader of the Senate’’ 

and insert ‘‘shall be introduced in the House by the majority leader 

of the House and in the Senate by the majority leader of the Senate’’. 

Page 417, line 21, insert ‘‘for the majority leader’’ after ‘‘resolution,’’. 

Page 437, line 25, strike ‘‘Congress’’ and insert ‘‘House of Representatives and the Senate’’. 

Page 440, beginning on line 25, strike ‘‘and minority leader of the 

House’’. 

Page 441, beginning on line 2, strike ‘‘and minority leader of the 

Senate’’. 

Page 441, line 20, strike ‘‘each committee’’ and insert ‘‘all committees’’. 

Page 441, line 21, strike ‘‘reports’’ and insert ‘‘have reported’’. 

Page 441, line 22, strike ‘‘has been’’ and insert ‘‘have been’’. 

Page 442, line 1, insert ‘‘for the majority leader’’ after ‘‘resolution,’’. 

Page 443, beginning line 12, strike ‘‘resolution’’ and insert ‘‘resolution in the Senate’’. 

Page 443, line 14, insert ‘‘in the Senate’’ after ‘‘introduction’’. 

Page 446, line 14, insert ‘‘on adoption’’ after ‘‘fails’’. 

Page 448, line 9, strike ‘‘use of authority relevant to’’. 

Page 665, strike lines 19 and 20 and insert the following: 

(2) AGENCY.—The term ‘‘Agency’’ means— 

(A) before the Agency conversion date, the Consumer Financial Protection Agency; and 

(B) on and after the Agency conversion date, the commission established under section 4103. 

Page 668, strike lines 22 and 23 and insert the following: 

(15) DIRECTOR.—The term ‘‘Director’’ means— 

(A) before the Agency conversion date, the Director of 

the Agency; and 


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(B) on and after the Agency conversion date, the commission established under section 4103. 

Page 676, strike line 23 and all that follows through page 677, 

line 3, and insert the following: 

(aa) the activity is financial in nature or is 

otherwise a permissible activity for a bank or 

bank holding company, including a financial 

holding company, under any provision of Federal law or regulation applicable to a bank or 

bank holding company, including a financial 

holding company; 

Page 678, beginning on line 8, strike ‘‘BUSINESS OF INSURANCE

EXCEPTION’’and insert ‘‘EXCEPTIONS’’. 

Page 678, line 10, insert before the period the following: ‘‘ or the 

provision of electronic data transmission, routing, intermediate or 

transient storage, or connections to a system or network, where the 

person providing such services does not select or modify the content 

of the electronic data, is not the sender or the intended recipient 

of the data, and such person transmits, routes, stores, or provides 

connections for electronic data, including financial data, in a manner that such data is undifferentiated from other types of data that 

such person transmits, routes, stores, or provides connections’’. 

Page 680, line 24, strike ‘‘or’’. 

Page 680, line 24, strike ‘‘to the extent’’ and insert ‘‘, retail foreign exchange dealer, or swap execution facility to the extent’’. 

Page 687, after line 9, insert the following new paragraph: 

(38) AGENCY CONVERSION DATE.—The term ‘‘Agency conversion date’’ means the date that is two years after the designated transfer date. 

Page 687, after line 18, insert the following new subsection (and 

redesignate succeeding subsections accordingly): 

(b) AGENCY STRUCTURE.— 

(1) INITIAL STRUCTURE.—The Agency shall be led by a Director or Acting Director, established pursuant to section 4102, 

until the day before the Agency conversion date. 

(2) SUBSEQUENT STRUCTURE.—On and after the Agency conversion date, the Agency shall consist of the commission established under section 4103. 

Page 688, line 9, insert before the period the following: ‘‘and shall 

exercise any authorities granted under this title and all other laws 

within the Director’s jurisdiction’’. 

Page 688, strike lines 11 through 14 and insert the following 

(and redesignate succeeding paragraphs accordingly): 

(1) NOMINATION.—Within 60 days after the date of enactment of this title, the President shall nominate the Director, 

from among individuals who— 

(A) are citizens of the United States; and 

(B) have strong competencies and experiences related to 

consumer financial protection. 

(2) APPOINTMENT SUBJECT TO CONFIRMATION.—The Director 

nominated under paragraph (1) shall be appointed by and with 

the advice and consent of the Senate 


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(3) ACTING DIRECTOR BEFORE SENATE CONFIRMATION.—The 

individual nominated pursuant to paragraph (1) shall serve as 

Acting Director with full authorities granted to the Director 

under this title until the Director is confirmed by the Senate. 

Page 688, line 16, strike ‘‘of 5 years’’ and insert ‘‘that ends on the 

Agency conversion date’’. 

Page 688, line 24, strike ‘‘paragraph (1)’’ and insert ‘‘paragraph 

(2)’’. 

Page 689, beginning on line 4, strike ‘‘In the event of a vacancy 

in the position of Director or during the absence or disability of the 

Director’’ and insert ‘‘In the event of vacancy or during the absence 

of the Director (who has been confirmed by the Senate pursuant to 

paragraph (2))’’. 

Page 690, before line 1, insert the following new section (and redesignate succeeding sections accordingly): 

SEC. 4103. ESTABLISHMENT AND COMPOSITION OF THE COMMISSION. 

(a) ESTABLISHMENT OF THE COMMISSION.— (1) IN GENERAL.—On the Agency conversion date, there shall 

be established a commission (hereinafter in this section referred to as the ‘‘Commission’’) that shall by operation of law 

succeed to all of the authorities of the Director of the Agency 

granted under this title and any other law. 

(2) AUTHORITY TO PRESCRIBE REGULATIONS.—The Commission may prescribe such regulations and issue such orders in 

accordance with this title as the Commission may determine to 

be necessary for carrying out this title and all other laws within the Commission’s jurisdiction and shall exercise any authorities granted under this title and all other laws within the 

Commission’s jurisdiction. 

(b) COMPOSITION OF THE COMMISSION.— (1) IN GENERAL.—The Commission shall be composed of 5 

members who shall be appointed by the President, by and with 

the advice and consent of the Senate, from among individuals 

who— 

(A) are citizens of the United States; and 

(B) have strong competencies and experiences related to 

consumer financial protection. 

(2) INITIAL APPOINTMENTS.— (A) IN GENERAL.—The initial members of the Commission, other than the initial Chair, may be appointed by the 

President, by and with the advice and consent of the Senate, prior to the Agency conversion date, but may not serve 

in their positions until such date. 

(B) STAGGERING.—Except as provided under subsection 

(d)(1), the members of the Commission shall serve staggered terms, which initially shall be established by the 

President for terms of 1, 2, 4, and 5 years, respectively. 

(3) TERMS.— 

(A) IN GENERAL.—Except as provided in subsection 

(d)(1), each member of the Commission, including the 

Chair, shall serve for a term of 5 years. 

(B) REMOVAL FOR CAUSE.—The President may remove 

any member of the Commission only for inefficiency, neglect of duty, or malfeasance in office. 


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(C) VACANCIES.—Any member of the Commission appointed to fill a vacancy occurring before the expiration of 

the term to which that member’s predecessor was appointed (including the Chair) shall be appointed only for 

the remainder of the term. 

(D) CONTINUATION OF SERVICE.—Each member of the 

Commission may continue to serve after the expiration of 

the term of office to which that member was appointed 

until a successor has been appointed by the President and 

confirmed by the Senate, except that a member may not 

continue to serve more than 1 year after the date on which 

that member’s term would otherwise expire. 

(E) OTHER EMPLOYMENT PROHIBITED.—No member of the 

Commission shall engage in any other business, vocation, 

or employment. 

(c) AFFILIATION.—With respect to members appointed pursuant 

to subsection (b), not more than 3 shall be members of any one political party. 

(d) CHAIR OF THE COMMISSION.— (1) APPOINTMENT.— (A) INITIAL CHAIR.—The first Chair of the Commission 

shall be the Director or Acting Director serving on the day 

before the Agency conversion date, and such individual 

shall serve in the position of Chair for a period of 3 years. 

(B) SUBSEQUENT CHAIRS.—Subsequent chairs shall be 

appointed by the President from among the members of 

the Commission to serve as the Chair. 

(2) AUTHORITY.—The Chair shall be the principal executive 

officer of the Agency, and shall exercise all of the executive and 

administrative functions of the Agency, including with respect 

to— 

(A) the appointment and supervision of personnel employed under the Agency (other than personnel employed 

regularly and full time in the immediate offices of members of the Commission other than the Chair); 

(B) the distribution of business among personnel appointed and supervised by the Chair and among administrative units of the Agency; and 

(C) the use and expenditure of funds. 

(3) LIMITATION.—In carrying out any of the Chair’s functions 

under the provisions of this subsection the Chair shall be governed by general policies of the Commission and by such regulatory decisions, findings, and determinations as the Commission may by law be authorized to make. 

(4) REQUESTS OR ESTIMATES RELATED TO APPROPRIATIONS.— 

Requests or estimates for regular, supplemental, or deficiency 

appropriations on behalf of the Commission may not be submitted by the Chair without the prior approval of the commission. 

(e) NO IMPAIRMENT BY REASON OF VACANCIES.—No vacancy in 

the members of the Commission shall impair the right of the remaining members of the Commission to exercise all the powers of 

the Commission. Three members of the Commission shall constitute a quorum for the transaction of business, except that if 

there are only 3 members serving on the Commission because of 


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vacancies in the Commission, 2 members of the Commission shall 

constitute a quorum for the transaction of business. If there are 

only 2 members serving on the Commission because of vacancies in 

the Commission, 2 members shall constitute a quorum for the 6- 

month period beginning on the date of the vacancy which caused 

the number of Commission members to decline to 2. 

(f) SEAL.—The Commission shall have an official seal. 

(g) COMPENSATION.— (1) CHAIR.—The Chair shall receive compensation at the rate 

prescribed for level I of the Executive Schedule under section 

5313 of title 5, United States Code. 

(2) OTHER MEMBERS OF THE COMMISSION.—The 4 other members of the Commission shall each receive compensation at the 

rate prescribed for level II of the Executive Schedule under 

section 5314 of title 5, United States Code. 

(h) INITIAL QUORUM ESTABLISHED.—During any time period prior 

to the confirmation of at least two members of the Commission 

under subsection (b)(2), one member of the Commission shall constitute a quorum for the transaction of business. Following the confirmation of at least 2 additional commissioners, the quorum requirements of subsection (e) shall apply. 

(i) DEFINITIONS.—Notwithstanding section 4002, for purposes of 

this section: 

(1) AGENCY.—The term ‘‘Agency’’ means the Consumer Financial Protection Agency. 

(2) DIRECTOR.—The term ‘‘Director’’ means the Director of 

the Agency. 

Page 700, line 18, insert before ‘‘other Federal’’ the following: 

‘‘the Federal Trade Commission,’’. 

Page 723, after line 19, insert the following: 

(D) OFFSETTING COLLECTIONS.—Fees assessed under this 

paragraph— 

(i) shall not be collected for any fiscal year except to 

the extent provided in advance in appropriation Acts; 

and 

(ii) shall be deposited and credited as offsetting collections to the account providing appropriations to the 

Agency. 

Page 730, strike lines 11 through page 731, line 3, and insert the 

following: 

(3) USE OF FUNDS.— 

(A) DEPOSITORY INSTITUTION FUND.—Funds obtained by, 

transferred to, or credited to the Consumer Financial Protection Agency Depository Institution Fund shall be immediately available to the Agency, and remain available until 

expended, to pay the expenses of the Agency in carrying 

out the duties and responsibilities of the Director and the 

Agency, including the payment of compensation of the Director and officers and employees of the Agency. 

(B) NONDEPOSITORY INSTITUTION FUND.—Funds obtained 

by, transferred to, or credited to the Consumer Financial 

Protection Agency Nondepository Institution Fund shall be 

available to the Agency to the extent provided in advance 

in appropriation Acts, and may remain available until exVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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pended, to pay the expenses of the Agency in carrying out 

the duties and responsibilities of the Director and the 

Agency, including the payment of compensation of the Director and officers and employees of the Agency. 

Page 747, after line 21, insert the following: 

(i) PRESERVATION OF FARM CREDIT ADMINISTRATION AUTHORITY.—No provision of this title shall be construed as modifying, limiting, or otherwise affecting the authority of the Farm Credit Administration. 

Page 712, line 19, after ‘‘Treasury’’ insert ‘‘the Federal Trade 

Commission,’’. 

Page 714, beginning on line 13, strike ‘‘its central database on 

complaints’’. 

Page 716, line 6, after ‘‘Services’’ insert ‘‘and the House Committee on Energy and Commerce’’. 

Page 716, after line 11, insert the following new section (and redesignate succeeding sections accordingly): 

SEC. 4110. GAO SMALL BUSINESS STUDIES. 

(a) STUDIES REQUIRED.—Not later than the end of the 3-year period beginning on the designated transfer date, and also 3 years 

thereafter, the Comptroller General of the United States shall 

carry out a study to examine the effects that regulations issued by 

the Agency have on small businesses. 

(b) REPORT.—At the conclusion of each study required under subsection (a), the Comptroller General of the United States shall 

issue a report to the Congress containing the finding and determinations made by the Comptroller General in carrying out such 

study. 

Page 724, strike line 2 and insert the following: ‘‘$200,000,000 for 

each of fiscal years 2010, 2011, 2012, 2013, and 2014.’’. 

Page 743, strike line 14 and all that follows through page 745, 

line 14, and insert the following: 

(1) THE AGENCY TO HAVE PRIMARY ENFORCEMENT AUTHORITY.—To the extent that a Federal law authorizes the Agency 

and another Federal agency to enforce a provision of a law, the 

Agency shall have primary enforcement authority to enforce 

the provision of that Federal law with respect to any person in 

accordance with this subsection. 

(2) COORDINATION WITH THE FEDERAL TRADE COMMISSION.— 

(A) NOTICE.—If the Federal Trade Commission is authorized to enforce any Federal law described in paragraph 

(1), or a regulation prescribed under any such Federal law, 

either the Agency or the Federal Trade Commission shall 

serve written notice to the other of any enforcement action 

prior to initiating such an enforcement action, except that 

if the agency or commission filing the action determines 

that prior notice is not feasible, that agency or commission 

may provide notice immediately upon initiating such enforcement action. 

(B) INTERVENTION BY EITHER ENTITY.—Upon receiving 

any notice under subparagraph (A) with respect to an enforcement action, the Agency or Federal Trade Commission 


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may intervene in such enforcement action, and upon intervening— 

(i) be heard on all matters arising in such enforcement action; and 

(ii) file petitions for appeal in such enforcement action. 

(C) PENDENCY OF ACTION.—Whenever a civil action has 

been instituted by or on behalf of the Agency or the Federal Trade Commission for any violation of any Federal 

law described in paragraph (1), or a regulation prescribed 

under any such Federal law, the other entity may not, during the pendency of that action, institute a civil action 

under such law or regulation against any defendant named 

in the complaint in such pending action for any violation 

alleged in the complaint. 

(D) AGREEMENTS BETWEEN ENTITIES.— 

(i) NEGOTIATIONS AUTHORIZED.—The Agency and the 

Federal Trade Commission may negotiate an agreement to establish procedures to ensure that the enforcement actions of the 2 agencies are appropriately 

coordinated. 

(ii) SCOPE OF NEGOTIATED AGREEMENT.—The terms 

of any agreement negotiated pursuant to clause (i) 

may modify or supersede the provisions of subparagraphs (A), (B), and (C). 

Page 761, after line 13, insert the following new paragraph (and 

redesignated the succeeding paragraphs accordingly): 

(2) NO EXCLUSION FOR CERTAIN PRIVATE EDUCATION LOANS.— 

Paragraph (1) shall not apply to any private education loan (as 

defined in section 140(a) of the Truth in Lending Act) provided 

by a private educational lender (as defined in such section), including a covered educational institution (as defined in such 

section). 

Page 766, strike line 17 and all that follows through page 768, 

line 3, and insert the following (and redesignate succeeding subsections accordingly): 

(f) EXCLUSION FOR PERSONS REGULATED BY THE FARM CREDIT

ADMINISTRATION.—No provision of this title shall be constructed as 

altering, amending, or affecting the authority of the Farm Credit 

Administration to adopt rules, institute enforcement proceedings, 

or take any other action with respect to a person regulated by the 

Farm Credit Administration. The Director and Agency shall have 

no authority to exercise any power to enforce this title, compel registration, or to order assessments with respect to a person regulated by the Farm Credit Administration. For purposes of this subsection, the term ‘‘person regulated by the Farm Credit Administration’’ means any Farm Credit System Institution. 

(g) EMPLOYEE BENEFIT AND COMPENSATION PLANS AND CERTAIN

OTHER ARRANGEMENTS UNDER THE INTERNAL REVENUE CODE OF

1986.— 

(1) AUTHORITY RETAINED BY OTHER AGENCIES.—No provision 

of this title shall be construed as altering, amending, or affecting the authority of the Secretary of the Treasury, the Secretary of Labor, or the Commissioner of Internal Revenue to 


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adopt regulations, initiate enforcement proceedings, or take 

any actions with respect to any specified plan or arrangement. 

(2) ACTIVITIES NOT CONSTITUTING FINANCIAL ACTIVITIES.—For 

the purposes of this title, a person shall not be treated as having engaged in a financial activity, as defined in section 

4002(19), solely because such person is a specified plan or arrangement or is engaged in the activity of establishing or 

maintaining, for the benefit of employees of such person (or for 

members of an employee organization), any specified plan or 

arrangement. 

(3) REGULATORY COORDINATION.—In the case of regulations 

promulgated under this title that address any financial activity 

specifically pertaining to the administration and maintenance 

of a specified plan or arrangement, the Director shall coordinate with the Secretary of Labor and the Secretary of Treasury, as appropriate. 

(4) SPECIFIED PLAN OR ARRANGEMENT.—For purposes of this 

subsection, the term ‘‘specified plan or arrangement’’ means 

any plan, account, or arrangement described in section 220, 

223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the Internal Revenue Code of 1986, or any employee benefit or compensation plan or arrangement, including a plan that is subject 

to title I of the Employee Retirement Income Security Act of 

1974. 

Page 785, after line 6, insert the following new paragraph (and 

redesignate succeeding paragraphs accordingly): 

(4) CONSULTATION WITH THE FEDERAL TRADE COMMISSION.— 

In developing and implementing report requirements under 

this subsection, the Agency shall consult with the Federal 

Trade Commission, where appropriate. 

Page 800, line 2, insert after the period the following: ‘‘Nothing 

in this section shall be construed as limiting or superseding the 

protection provided to any provider or user qualifying for protection 

under section 230(c)(1) of the Communications Act of 1934 (47 

U.S.C. 230(c)(1))’’. 

Page 895, line 22, insert after the period the following: ‘‘This 

transfer shall not be subject to the provisions of section 3503 of 

title 5, United States Code’’. 

Page 895, strike line 23 and all that follows through page 896, 

line 15, and insert the following: 

(B) FEDERAL TRADE COMMISSION AUTHORITY.—The Agency shall have all powers and duties that were vested in the 

Federal Trade Commission that were contained within the 

enumerated statutes, except as provided in section 4202(e), 

on the day before the designated transfer date. 

Page 898, strike line 23 and all that follows through page 901, 

line 3, and insert the following: 

SEC. 4604. DESIGNATED TRANSFER DATE. 

The designated transfer date shall be 180 days after the date of 

enactment of this title. 

Page 903, strike lines 5 through 7 and insert the following: 

(c) FEDERAL TRADE COMMISSION.—Section 4601(a)(5) shall 


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Page 903, strike lines 17 through 25. 

Page 934, beginning on line 19, strike ‘‘is confirmed by the Senate’’. 

Page 1019, line 20, insert before the period the following: ‘‘Nothing in this section shall be construed as limiting or superseding the 

protection provided to any provider or user qualifying for protection 

under section 230(c)(1) of the Communications Act of 1934 (47 

U.S.C. 230(c)(1)’’. 

Page 1020, line 4-5, strike ‘‘(without regard to any reference in 

such section to sections 556 and 557 of such title)’’. 

Page 1020, after line 13, insert the following (and redesignate 

the succeeding paragraph accordingly): 

(4) in subsection (c) (as redesignated), by inserting ‘‘prescribed’’ after ‘‘rule’’. 

Page 1020, after line 14, insert the following (and redesignate 

succeeding subparagraphs accordingly): 

(A) in paragraph (1)(A) by striking ‘‘promulgated’’ and 

inserting ‘‘prescribed’’; 

Page 1020, after line 20, insert the following: 

(d) Section 16(a)(2) of the Federal Trade Commission Act (15 

U.S.C. 56(a)(2)) is amended— 

(1) in subparagraph (D), by striking ‘‘; or’’ and inserting a 

semicolon; and 

(2) by inserting after subparagraph (E) the following: 

‘‘(F) to obtain a civil penalty authorized under any provision of law enforced by the Commission.’’. 

(e) Section 5(l) of the Federal Trade Commission Act (15 U.S.C. 

45(l)) is amended in the first sentence by inserting ‘‘the Commission or’’ after ‘‘brought by’’. 

Strike section 7511. 

Page 123, after line 2, insert the following new section: 

SEC. 1118. ANTITRUST SAVINGS CLAUSE. 

Nothing in this subtitle shall be construed to modify, impair, or 

supercede the operation of any of the antitrust laws. For purposes 

of the preceding sentence, the term ‘‘antitrust laws’’ has the meaning given such term in subsection (a) of the first section of the 

Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent that such section relates 

to unfair methods of competition. 

Page 253, line 23, strike ‘‘8(c)(5)’’ and insert ‘‘8(c)’’. 

Page 253, line 24, strike ‘‘1828(c)(5)’’ and insert ‘‘1828(c)’’. 

Page 254, line 1, insert after ‘‘(1)’’ the following: ‘‘in paragraph 

(5),’’. 

Page 254, line 2, strike ‘‘; and’’ and insert a semicolon. 

Page 254, line 3, insert after ‘‘(2)’’ the following: ‘‘in paragraph 

(5),’’. 

Page 254, line 9, strike the period and insert ‘‘; and’’. 

Page 254, after line 9, insert the following new paragraph: 

(3) in paragraph (7)(B), by inserting ‘‘subparagraphs (A) and 

(B) of’’ before ‘‘paragraph’’. 


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Page 274, strike lines 3 through 6 and insert the following: 

SEC. 1601. SHORT TITLE; PURPOSE. 

(a) SHORT TITLE.—This subtitle may be cited as the ‘‘Dissolution 

Authority for Large, Interconnected Financial Companies Act of 

2009’’. 

(b) PURPOSE.—The purpose of this subtitle is to protect the financial system of the United States in times of severe crisis by providing for the orderly resolution of large, interconnected financial 

companies whose failure could create, or increase, the risk of significant liquidity, credit, or other financial problems spreading 

among financial institutions or markets and thereby threaten the 

stability of the overall financial system of the United States. There 

shall be a strong presumption that resolution under the bankruptcy laws will remain the primary method of resolving financial 

companies, and the authorities contained in this subtitle will only 

be used in the most exigent circumstances. 

Page 282, line 15, after ‘‘Urban Affairs’’ insert ‘‘and the Committee on the Judiciary’’. 

Page 282, line 16, after ‘‘Financial Services’’ insert ‘‘and the Committee on the Judiciary’’. 

Page 290, line 20, strike ‘‘The Corporation’s’’ and insert the following: 

(a) TERMINATION AND EXCLUSION OF BANKRUPTCY.—The Corporation’s 

Page 290, line 21, strike ‘‘title’’ and insert ‘‘subtitle’’. 

Page 291, after line 4, insert the following new subsections: 

(b) CONVERSION TO BANKRUPTCY.— (1) CONVERSION.—The Corporation may at any time, with 

the approval of the Secretary and after consulting with the 

Council, convert the receivership of a covered financial company to a proceeding under chapter 7 or 11 of title 11, United 

States Code, by filing a petition against the covered financial 

company under section 303(m) of such title. The Corporation 

may serve as the trustee for the covered financial company in 

bankruptcy. 

(2) BRIDGE FINANCIAL COMPANY.—The Corporation’s exercise 

of authority under paragraph (1) shall not affect any powers or 

duties of the Corporation with regard to any bridge financial 

company established under section 1609(h). 

(c) REPORTING TO THE CONGRESS.— 

(1) IN GENERAL.— 

(A) INITIAL REPORT.—Upon the appointment of the Corporation as receiver under section 1604(a), the Corporation 

shall issue a report on the issue described under paragraph (3)(A). 

(B) CONTINUING REPORTS.—At the end of each 180-day 

period after the appointment of the Corporation as receiver 

under section 1604(a), and continuing while the Corporation is acting as receiver, the Corporation shall issue a report on the issues described under subparagraphs (A) 

through (C) of paragraph (3). 

(2) COMMITTEES TO RECEIVE REPORTS.—Reports issued under 

this subsection shall be issued to the Committee on Banking, 


dcolon on DSK2BSOYB1PROD with REPORTS
13 

Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and 

the Committee on the Judiciary of the House of Representatives. 

(3) REPORTING ISSUES.— 

(A) Why the receivership should continue instead of converting the receivership into a proceeding under chapter 7 

or 11 of title 11, United States Code. 

(B) The extent to which unsecured creditors are likely to 

receive at least as much as they would receive if the receivership of the covered financial company was converted 

to a case under chapter 7 of title 11, United States Code. 

(C) An explanation of each instance where the Corporation as receiver of a covered financial company waived the 

requirement of 12 C.F.R. Part 366 with respect to conflicts 

of interest by any person in the private sector who was retained to provide services to the Corporation in connection 

with such receivership. 

Page 291, line 6, after ‘‘may’’ insert the following: ‘‘, after following the notice and comment rulemaking requirements under the 

Administrative Procedure Act,’’. 

Page 295, beginning on line 11, strike ‘‘If a filing’’ and all that 

follows through the end of the subclause and insert the following: 

‘‘If notification under section 7A of the Clayton Act is required with 

respect to such transaction, then the required waiting period shall 

end on the 15th day after the date on which the Attorney General 

and the Federal Trade Commission receive such notification, unless 

the waiting period is terminated earlier under subsection (b)(2) of 

such section, or is extended pursuant to subsection (e)(2) of such 

section.’’. 

Page 296, beginning on line 4, strike ‘‘1 or more of the covered 

financial companies’’ and insert ‘‘the covered financial company’’. 

Page 296, line 6, strike ‘‘approvals and filings’’ and insert ‘‘approval and prior notification’’. 

Page 296, line 8, strike ‘‘transactions’’ and insert ‘‘transaction’’. 

Page 296, line 10, insert the following after the period: ‘‘The preceding sentence shall not otherwise modify, impair, or supercede 

the operation of any of the antitrust laws (as defined in subsection 

(a) of the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent 

that such section 5 relates to unfair methods of competition).’’. 

Page 299, after line 14, insert the following new subparagraph: 

(M) APPOINTMENT OF CONSUMER PRIVACY ADVISOR.— 

(i) APPOINTMENT.—Upon the appointment of the 

Corporation as receiver under section 1604(a), the Corporation shall appoint a Consumer Privacy Advisor. 

(ii) DUTIES.—The Consumer Privacy Advisor appointed under clause (i) shall advise the Corporation 

with respect to— 

(I) the covered financial company’s consumer 

privacy policies; 

(II) the potential losses or gains of privacy to 

consumers upon any sale, lease, or other transfer 


dcolon on DSK2BSOYB1PROD with REPORTS
14 

of material assets of the covered financial company; 

(III) the potential costs or benefits to consumers 

upon any sale, lease, or other transfer of material 

assets of the covered financial company; and 

(IV) the potential alternatives that would mitigate potential privacy loses or potential costs to 

consumers. 

Page 301, line 2, after ‘‘shall’’ insert the following: ‘‘, after following the notice and comment rulemaking requirements under the 

Administrative Procedure Act,’’. 

Page 324, after line 12, insert the following new subparagraphs 

(and redesignated succeeding subparagraphs accordingly): 

(C) Wages, salaries, or commissions, including vacation, 

severance, and sick leave pay earned by an individual 

(other than management responsible for the failed condition of the covered financial company who have been removed), subject to the limitations for such payments contained in title 11, United States Code, including the 

amount (11 U.S.C. 507(a)(4)) and restrictions on severance 

payments to insiders (11 U.S.C. 503(c)). 

(D) Contributions to employee benefit plans, subject to 

the limitations in title 11, United States Code (11 U.S.C. 

507(a)(5)). 

Page 324, line 15, strike ‘‘(D)’’ and insert ‘‘(F)’’. 

Page 324, line 19, strike ‘‘(E)’’ and insert ‘‘(G)’’. 

Page 327, after line 8, insert the following new paragraph: 

(5) RULEMAKING.—The Corporation shall, after following the 

notice and comment rulemaking requirements under the Administrative Procedure Act, prescribe rules to carry out this 

section. 

Page 369, after line 3, insert the following new paragraph: 

(16) AUTHORITY REGARDING COLLECTIVE BARGAINING AGREE- MENTS.—The Corporation as receiver for any covered financial 

company shall not disaffirm or repudiate any collective bargaining agreement to which the covered financial company is 

a party unless the Corporation determines that repudiation is 

necessary for the orderly resolution of the covered financial 

company after taking into consideration the cost to taxpayers 

and the financial stability of the United States. 

Page 384, beginning on line 18, strike ‘‘If a filing’’ and all that 

follows through the end of the subparagraph and insert the following: ‘‘If notification under section 7A of the Clayton Act is required with respect to such transaction, then the required waiting 

period shall end on the 15th day after the date on which the Attorney General and the Federal Trade Commission receive such notification, unless the waiting period is terminated earlier under subsection (b)(2) of such section, or is extended pursuant to subsection 

(e)(2) of such section.’’. 

Page 385, line 9, strike ‘‘approvals and filings’’ and insert ‘‘approval and prior notification’’. 

Page 385, line 12, insert after the period the following: ‘‘The preceding sentence shall not otherwise modify, impair, or supercede 


dcolon on DSK2BSOYB1PROD with REPORTS
15 

the operation of any of the antitrust laws (as defined in subsection 

(a) of the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent 

that such section 5 relates to unfair methods of competition).’’. 

Page 424, after line 21, insert the following new subsection: 

(u) STUDY OF PAYMENT OF CONSUMER CLAIMS.—Not later than 6 

months following the dissolution of a covered financial company 

under section 1603(b), the Comptroller General of the United 

States shall carry out a study, and report on such study to the 

Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary of the Senate and the Committee on Financial Services and the Committee on the Judiciary of the House of 

Representatives, regarding the satisfaction of claims arising from 

violations of the provisions of the Truth in Lending Act, if any, in 

instances where any assets were transferred from such covered financial company. 

Page 432, line 7, strike ‘‘Section’’ and insert the following: 

(1) Section 

Page 432, after line 12, insert the following new paragraphs: 

(2) Section 303 of title 11, United States Code, is amended— 

(A) in subsection (h)— 

(i) by striking ‘‘or’’ at the end of paragraph (1); 

(ii) by striking the period at the end of paragraph (2) 

and inserting ‘‘; or’’; and 

(iii) by adding at the end the following new paragraph: 

‘‘(3) an involuntary case is filed against a covered financial 

company, as defined in section 1602(5) of the Dissolution Authority for Large, Interconnected Financial Companies Act of 

2009, by the Federal Deposit Insurance Corporation under section 1607 of that Act.’’; and 

(B) by adding at the end the following new subsection: 

‘‘(m) Notwithstanding subsections (a) and (b) of this section and 

section 109(b)(2), an involuntary case may be commenced by the 

Federal Deposit Insurance Corporation against a covered financial 

company (as defined in section 1602(5) of the Dissolution Authority 

for Large, Interconnected Financial Companies Act of 2009). Such 

involuntary case may be commenced by the Federal Deposit Insurance Corporation in accordance with section 1607 of that Act.’’. 

(3) Title 11, United States Code, is amended by inserting 

after section 303 the following new section: 

‘‘SEC. 304. CASES INVOLVING FDIC DISSOLUTION AUTHORITY. 

‘‘(a) APPOINTMENT.—In any case commenced by the Federal Deposit Insurance Corporation under section 303(m), on the request 

of the Federal Deposit Insurance Corporation, such Corporation 

shall be appointed to serve as trustee in such case, notwithstanding 

any other provision of this title. 

‘‘(b) QUALIFICATION.—Sections 321, 322, 324, and 326 shall not 

apply with respect to the appointment or service of such Corporation as trustee in any case so commenced.’’. 

Page 436, after line 11, insert the following new section: 


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16 

SEC. 1615. STUDY ON THE EFFECT OF SAFE HARBOR PROVISIONS IN 

INSOLVENCY CASES. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study of the safe harbor provisions under Federal law for 

derivatives, swaps, and securities transactions addressing— 

(1) how the safe harbor provisions have been applied in insolvency cases; 

(2) how such provisions impact the rights of parties in interest in insolvency cases; 

(3) whether these provisions impede or interfere with allowing a debtor a reasonable period of time to pursue rehabilitation and reorganization; and 

(4) whether these provisions had an adverse impact on the 

financial marketplace. 

(b) REPORT TO THE CONGRESS.—Not later than 180 days after the 

date of the enactment of this title, the Comptroller General shall 

submit to the President pro tempore of the Senate and the Speaker 

of the House of Representatives a report on the results of the study 

conducted under subsection (a), together with any recommendations for legislation to address any adverse impacts presented by 

the Federal safe harbor provisions. 

Page 643, strike line 23, and all that follows through page 644, 

line 7. 

Page 768, beginning on line 4, strike ‘‘, TAX PREPARERS, AND ATTORNEYS’’ and insert ‘‘AND TAX PREPARERS’’. 

Page 769, line 5, insert ‘‘or’’ after the semicolon. 

Page 769, beginning on line 8, strike ‘‘; or’’ and insert a period. 

Page 769, strike line 10 and all that follows through page 770, 

line 4 (and redesignate succeeding paragraphs accordingly). 

Page 770, line 15, strike ‘‘or (1)(C)’’. 

Page 770, line 20, strike ‘‘, (1)(B) or (1)(C)’’ and insert ‘‘or (1)(B)’’. 

Page 776, after line 19, insert the following new subsection: 

(l) EXCLUSION FOR PRACTICE OF LAW.— 

(1) IN GENERAL.—Except as provided under paragraph (2), 

nothing in this title shall apply with respect to an activity engaged in by an attorney, or engaged in under the direction of 

an attorney, as part of the practice of law under the laws of 

a State in which the attorney is licensed to practice law. 

(2) RULE OF CONSTRUCTION.— 

(A) IN GENERAL.—Paragraph (1) shall not be construed 

to limit the exercise by the Director and the Agency of any 

rulemaking, supervisory, enforcement, or other authority, 

including authority to order assessments, regarding any 

activity that is a financial activity described in any subparagraph of section 4002(19) and is not engaged in as— 

(i) part of the practice of law; or 

(ii) incidental to the practice of law, to the extent 

that such activity is provided exclusively within the 

scope of the attorney-client relationship and is not otherwise provided by or under the direction of the attorney to any consumer who is not receiving legal advice 

or services from the attorney in connection with such 

activity. 


dcolon on DSK2BSOYB1PROD with REPORTS
17 

(B) CONSTRUCTION.—Paragraph (1) shall not be construed to limit the authority of the Director and the Agency with respect to any activity to the extent that such activity is otherwise subject to any of the enumerated consumer laws or the authorities transferred under subtitles 

F or H. 

(3) EXCEPTION.—Notwithstanding paragraph (1), an individual who provides legal advice or services related to preventing a foreclosure shall be subject to this title unless such 

individual provides foreclosure prevention services in connection with— 

(A) the preparation and filing of a bankruptcy petition; 

or 

(B) court proceedings to avoid a foreclosure. 

Page 844, strike lines 18 through 20 and redesignate succeeding 

paragraphs accordingly. 

Page 846, beginning on line 25, strike ‘‘the district court of the 

United States for any district in which such person is found, resides, or transacts business’’ and insert ‘‘an appropriate United 

States district court may’’. 

Page 847, line 5, strike ‘‘shall have jurisdiction to’’. 

Page 847, strike lines 9 through 11. 

Page 851, strike lines 1 through 10. 

Page 854, beginning on line 7, strike ‘‘Any Agency investigator’’ 

and insert ‘‘The examination of any person pursuant to a demand 

for oral testimony served under this subsection shall be taken before an officer authorized to administer oaths and affirmations by 

the laws of the United States or of the place where the examination is held. The officer’’. 

Page 854, beginning on line 12, strike ‘‘investigator’’ and insert 

‘‘officer’’. 

Page 854, beginning on line 19, strike ‘‘Agency investigator’’ and 

insert ‘‘officer’’. 

Page 858, line 12, after ‘‘it,’’ insert ‘‘the officer or’’. 

Page 858, line 19, strike ‘‘Agency investigator’’ and insert ‘‘officer’’. 

Page 858, line 23, insert ‘‘the officer or’’ before ‘‘the Agency’’. 

Page 880, line 11, strike ‘‘may’’ and insert ‘‘shall’’. 

Page 1118, beginning on line 20, strike ‘‘and shall be subject’’ and 

all that follows through line 21 and insert a period. 

Page 1144, strike line 16 and all that follows through the item 

after line 18, page 1145, and insert the following: 

SEC. 7214. EXPANDED ACCESS TO GRAND JURY INFORMATION. 

Subsection (b) of section 3322 of title 18, United States Code, is 

amended— 

(1) in paragraph (1), by striking ‘‘matters occurring before a 

grand jury’’ and inserting ‘‘grand jury information obtained’’; 

(2) by redesignating paragraph (2) as paragraph (3); 

(3) in paragraph (3) (as so redesignated), by inserting ‘‘or (2)’’ 

after ‘‘(1)’’; and 

(4) by inserting after paragraph (1), the following new paragraph: 


dcolon on DSK2BSOYB1PROD with REPORTS
18 

‘‘(2) Upon motion of an attorney for the government, a court 

may direct disclosure of grand jury information obtained during an investigation of a securities law violation to identified 

personnel of the Securities and Exchange Commission— 

‘‘(A) for use in relation to any matter within the jurisdiction of the Commission; or 

‘‘(B) to assist an attorney for the government to whom 

matters have been disclosed under subsection (a).’’. 

At the end of the bill, insert the following new title: 

TITLE VII—MORTGAGE REFORM AND 

ANTI-PREDATORY LENDING ACT 

SEC. 9000. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER 

LAW. 

(a) SHORT TITLE.—This title may be cited as the ‘‘Mortgage Reform and Anti-Predatory Lending Act’’. 

(b) DESIGNATION AS ENUMERATED CONSUMER LAW UNDER THE

PURVIEW OF THE CONSUMER FINANCIAL PROTECTION AGENCY.— Subtitles A, B, C, and E and sections 9501, 9502, and 9506, and 

the amendments made by such subtitles and sections, shall be enumerated consumer laws, as defined in section 4002(16), and come 

under the purview of the Consumer Financial Protection Agency 

for purposes of title IV, including the transfer of functions and personnel under subtitle F of title IV and the savings provisions of 

such subtitle. 

Subtitle A—Residential Mortgage Loan 

Origination Standards 

SEC. 9001. DEFINITIONS. 

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 

amended by adding at the end the following new subsection: 

‘‘(cc) DEFINITIONS RELATING TO MORTGAGE ORIGINATION AND

RESIDENTIAL MORTGAGE LOANS.— 

‘‘(1) COMMISSION.—Unless otherwise specified, the term 

‘Commission’ means the Federal Trade Commission. 

‘‘(2) FEDERAL BANKING AGENCIES.—The term ‘Federal banking agencies’ means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of 

the Office of Thrift Supervision, the Federal Deposit Insurance 

Corporation, and the National Credit Union Administration 

Board. All rule writing by the ‘Federal banking agencies’ as 

designated by the Mortgage Reform and Anti-Predatory Lending Act will be coordinated through the Financial Institutions 

Examination Council in consultation with the Chairman of the 

State Liaison Committee. 

‘‘(3) MORTGAGE ORIGINATOR.—The term ‘mortgage originator’— 

‘‘(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect 

compensation or gain— 

‘‘(i) takes a residential mortgage loan application; 


dcolon on DSK2BSOYB1PROD with REPORTS
19 

‘‘(ii) assists a consumer in obtaining or applying to 

obtain a residential mortgage loan; or 

‘‘(iii) offers or negotiates terms of a residential mortgage loan; 

‘‘(B) includes any person who represents to the public, 

through advertising or other means of communicating or 

providing information (including the use of business cards, 

stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any 

of the services or perform any of the activities described in 

subparagraph (A); 

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

described in subparagraph (A) or (B) and who performs 

purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph, or (ii) an 

employee of a retailer of manufactured homes who is not 

described in clause (i) or (iii) of subparagraph (A) and who 

does not advise a consumer on loan terms (including rates, 

fees, and other costs); 

‘‘(D) does not include a person or entity that only performs real estate brokerage activities and is licensed or 

registered in accordance with applicable State law, unless 

such person or entity is compensated for performing such 

brokerage activities by a lender, a mortgage broker, or 

other mortgage originator or by any agent of such lender, 

mortgage broker, or other mortgage originator; 

‘‘(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month 

period, provided that such loan— 

‘‘(i) is fully amortizing; 

‘‘(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer 

has a reasonable ability to repay the loan; 

‘‘(iii) has a fixed rate or an adjustable rate that is 

adjustable after 5 or more years, subject to reasonable 

annual and lifetime limitations on interest rate increases; and 

‘‘(iv) meets any other criteria the Federal banking 

agencies may prescribe; and 

‘‘(F) does not include a servicer or servicer employees, 

agents and contractors, including but not limited to those 

who offer or negotiate terms of a residential mortgage loan 

for purposes of renegotiating, modifying, replacing and 

subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a 

reasonable likelihood of being in default or falling behind. 

‘‘(4) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY.—The term ‘Nationwide Mortgage Licensing System and 

Registry’ has the same meaning as in the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. 

‘‘(5) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGI- NATOR.—For purposes of this subsection, a person ‘assists a 

consumer in obtaining or applying to obtain a residential mortgage loan’ by, among other things, advising on residential 


dcolon on DSK2BSOYB1PROD with REPORTS
20 

mortgage loan terms (including rates, fees, and other costs), 

preparing residential mortgage loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan. 

‘‘(6) RESIDENTIAL MORTGAGE LOAN.—The term ‘residential 

mortgage loan’ means any consumer credit transaction that is 

secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real 

property that includes a dwelling, other than a consumer credit 

transaction under an open end credit plan or, for purposes of 

sections 129B and 129C and section 128(a) (16), (17), and (18), 

and 128(f) and any regulations promulgated thereunder, an extension of credit relating to a plan described in section 

101(53D) of title 11, United States Code. 

‘‘(7) SECRETARY.—The term ‘Secretary’, when used in connection with any transaction or person involved with a residential 

mortgage loan, means the Secretary of Housing and Urban Development. 

‘‘(8) SECURITIZATION VEHICLE.—The term ‘securitization vehicle’ means a trust, corporation, partnership, limited liability 

entity, special purpose entity, or other structure that— 

‘‘(A) is the issuer, or is created by the issuer, of mortgage 

pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed 

by a pool of assets that includes residential mortgage 

loans; and 

‘‘(B) holds such loans. 

‘‘(9) SECURITIZER.—The term ‘securitizer’ means the person 

that transfers, conveys, or assigns, or causes the transfer, conveyance, or assignment of, residential mortgage loans, including through a special purpose vehicle, to any securitization vehicle, excluding any trustee that holds such loans solely for the 

benefit of the securitization vehicle. 

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

as in section 6(i)(2) of the Real Estate Settlement Procedures 

Act of 1974.’’. 

SEC. 9002. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129A the 

following new section: 

‘‘§ 129B. Residential mortgage loan origination 

‘‘(a) FINDING AND PURPOSE.— 

‘‘(1) FINDING.—The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible, affordable mortgage credit remains available to consumers. 

‘‘(2) PURPOSE.—It is the purpose of this section and section 

129C to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive or abusive. 

‘‘(b) DUTY OF CARE.— 


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21 

‘‘(1) STANDARD.—Subject to regulations prescribed under this 

subsection, each mortgage originator shall, in addition to the 

duties imposed by otherwise applicable provisions of State or 

Federal law— 

‘‘(A) be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair 

Enforcement for Mortgage Licensing Act of 2008; 

‘‘(B) with respect to each consumer seeking or inquiring 

about a residential mortgage loan, diligently work to 

present the consumer with a range of residential mortgage 

loan products for which the consumer likely qualifies and 

which are appropriate to the consumer’s existing circumstances, based on information known by, or obtained 

in good faith by, the originator; 

‘‘(C) make full, complete, and timely disclosure to each 

such consumer in writing, the receipt and understanding 

of which shall be acknowledged by the signature of the 

mortgage originator and the consumer, of— 

‘‘(i) the comparative costs and benefits of each residential mortgage loan product offered, discussed, or 

referred to by the originator (and such comparative 

costs and benefits for each such product shall be presented side by side and the disclosures for each such 

product shall have equal prominence); 

‘‘(ii) the nature of the originator’s relationship to the 

consumer (including the cost of the services to be provided by the originator and a statement that the mortgage originator is or is not acting as an agent for the 

consumer, as the case may be); and 

‘‘(iii) any relevant conflicts of interest between the 

originator and the consumer; 

‘‘(D) certify to the creditor, with respect to any transaction involving a residential mortgage loan, that the 

mortgage originator has fulfilled all requirements applicable to the originator under this section with respect to the 

transaction; and 

‘‘(E) include on all loan documents any unique identifier 

of the mortgage originator provided by the Nationwide 

Mortgage Licensing System and Registry. 

‘‘(2) CLARIFICATION OF EXTENT OF DUTY TO PRESENT RANGE

OF PRODUCTS AND APPROPRIATE PRODUCTS.— 

‘‘(A) NO DUTY TO OFFER PRODUCTS FOR WHICH ORIGINATOR IS NOT AUTHORIZED TO TAKE AN APPLICATION.— 

Paragraph (1)(B) shall not be construed as requiring— 

‘‘(i) a mortgage originator to present to any consumer any specific residential mortgage loan product 

that is offered by a creditor which does not accept consumer referrals from, or consumer applications submitted by or through, such originator; or 

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

does not offer to the general public. 

‘‘(B) APPROPRIATE LOAN PRODUCT.—For purposes of paragraph (1)(B), a residential mortgage loan shall be presumed to be appropriate for a consumer if— 


dcolon on DSK2BSOYB1PROD with REPORTS
22 

‘‘(i) the mortgage originator determines in good 

faith, based on then existing information and without 

undergoing a full underwriting process, that the consumer has a reasonable ability to repay and, in the 

case of a refinancing of an existing residential mortgage loan, receives a net tangible benefit, as determined in accordance with regulations prescribed under 

subsections (a) and (b) of section 129C; and 

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

or effects (such as equity stripping and excessive fees 

and abusive terms) as determined in accordance with 

regulations prescribed under paragraph (4). 

‘‘(3) RULES OF CONSTRUCTION.—No provision of this subsection shall be construed as— 

‘‘(A) creating an agency or fiduciary relationship between 

a mortgage originator and a consumer if the originator 

does not hold himself or herself out as such an agent or 

fiduciary; or 

‘‘(B) restricting a mortgage originator from holding himself or herself out as an agent or fiduciary of a consumer 

subject to any additional duty, requirement, or limitation 

applicable to agents or fiduciaries under any Federal or 

State law. 

‘‘(4) REGULATIONS.— ‘‘(A) IN GENERAL.—The Federal banking agencies, in consultation with the Secretary, and the Commission, shall 

jointly prescribe regulations to— 

‘‘(i) further define the duty established under paragraph (1); 

‘‘(ii) implement the requirements of this subsection; 

‘‘(iii) establish the time period within which any disclosure required under paragraph (1) shall be made to 

the consumer; and 

‘‘(iv) establish such other requirements for any mortgage originator as such regulatory agencies may determine to be appropriate to meet the purposes of this 

subsection. 

‘‘(B) COMPLEMENTARY AND NONDUPLICATIVE DISCLO- SURES.—The agencies referred to in subparagraph (A) shall 

endeavor to make the required disclosures to consumers 

under this subsection complementary and nonduplicative 

with other disclosures for mortgage consumers to the extent such efforts— 

‘‘(i) are practicable; and 

‘‘(ii) do not reduce the value of any such disclosure 

to recipients of such disclosures. 

‘‘(5) COMPLIANCE PROCEDURES REQUIRED.—The Federal banking agencies shall prescribe regulations requiring depository 

institutions to establish and maintain procedures reasonably 

designed to assure and monitor the compliance of such depository institutions, the subsidiaries of such institutions, and the 

employees of such institutions or subsidiaries with the requirements of this section and the registration procedures established under section 1507 of the Secure and Fair Enforcement 

for Mortgage Licensing Act of 2008.’’. 


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23 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 2 of 

the Truth in Lending Act is amended by inserting after the item 

relating to section 129 the following new items: 

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

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

SEC. 9003. PROHIBITION ON STEERING INCENTIVES. 

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

102(a)) is amended by inserting after subsection (b) the following 

new subsection: 

‘‘(c) PROHIBITION ON STEERING INCENTIVES.— ‘‘(1) IN GENERAL.—For any mortgage loan, the total amount 

of direct and indirect compensation from all sources permitted 

to a mortgage originator may not vary based on the terms of 

the loan (other than the amount of the principal). 

‘‘(2) RESTRUCTURING OF FINANCING ORIGINATION FEE.— ‘‘(A) IN GENERAL.—For any mortgage loan, a mortgage 

originator may not arrange for a consumer to finance 

through rate any origination fee or cost except bona fide 

third party settlement charges not retained by the creditor 

or mortgage originator. 

‘‘(B) EXCEPTION.—Notwithstanding paragraph subparagraph (A), a mortgage originator may arrange for a consumer to finance through rate an origination fee or cost 

if— 

‘‘(i) the mortgage originator does not receive any 

other compensation from the consumer except the 

compensation that is financed through rate; and 

‘‘(ii) the mortgage is a qualified mortgage. 

‘‘(3) REGULATIONS.—The Federal banking agencies, in consultation with the Secretary and the Commission, shall jointly 

prescribe regulations to prohibit— 

‘‘(A) mortgage originators from steering any consumer to 

a residential mortgage loan that— 

‘‘(i) the consumer lacks a reasonable ability to repay 

(in accordance with regulations prescribed under section 129C(a)); 

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

mortgage loan, does not provide the consumer with a 

net tangible benefit (in accordance with regulations 

prescribed under section 129C(b)); or 

‘‘(iii) has predatory characteristics or effects (such as 

equity stripping, excessive fees, or abusive terms); 

‘‘(B) mortgage originators from steering any consumer 

from a residential mortgage loan for which the consumer 

is qualified that is a qualified mortgage (as defined in section 129C(c)(3)) to a residential mortgage loan that is not 

a qualified mortgage; 

‘‘(C) abusive or unfair lending practices that promote 

disparities among consumers of equal credit worthiness 

but of different race, ethnicity, gender, or age; 

‘‘(D) mortgage originators from assessing excessive 

points and fees (as such term is described under section 

103(aa)(4) of the Truth in Lending Act (15 U.S.C. 

1602(aa)(4))) to a consumer for the origination of a residential mortgage loan based on such consumer’s decision to fiVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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nance all or part of the payment through the rate for such 

points and fees; and 

‘‘(E) mortgage originators from— 

‘‘(i) mischaracterizing the credit history of a consumer or the residential mortgage loans available to a 

consumer; 

‘‘(ii) mischaracterizing or suborning the 

mischaracterization of the appraised value of the property securing the extension of credit; or 

‘‘(iii) if unable to suggest, offer, or recommend to a 

consumer a loan that is not more expensive than a 

loan for which the consumer qualifies, discouraging a 

consumer from seeking a home mortgage loan secured 

by a consumer’s principal dwelling from another mortgage originator. 

‘‘(4) RULES OF CONSTRUCTION.—No provision of this subsection shall be construed as— 

‘‘(A) permitting yield spread premiums or other similar 

incentive compensation; 

‘‘(B) affecting the mechanism for providing the total 

amount of direct and indirect compensation permitted to a 

mortgage originator; 

‘‘(C) limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan 

to a subsequent purchaser; 

‘‘(D) restricting a consumer’s ability to finance, including 

through principal, any origination fees or costs permitted 

under this subsection, or the mortgage originator’s ability 

to receive such fees or costs (including compensation) from 

any person, so long as such fees or costs were fully and 

clearly disclosed to the consumer earlier in the application 

process as required by 129B(b)(1)(C)(i) and do not vary 

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

the principal) or the consumer’s decision about whether to 

finance such fees or costs; or 

‘‘(E) prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans 

originated within a specified period of time.’’. 

SEC. 9004. LIABILITY. 

Section 129B of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 103) the following new 

subsection: 

‘‘(d) LIABILITY FOR VIOLATIONS.— 

‘‘(1) IN GENERAL.—For purposes of providing a cause of action for any failure by a mortgage originator to comply with 

any requirement imposed under this section and any regulation prescribed under this section, subsections (a) and (b) of 

section 130 shall be applied with respect to any such failure by 

substituting ‘mortgage originator’ for ‘creditor’ each place such 

term appears in each such subsection. 

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

mortgage originator under paragraph (1) to a consumer for any 

violation of this section shall not exceed the greater of actual 

damages or an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00024 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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gage originator in connection with the residential mortgage 

loan involved in the violation, plus the costs to the consumer 

of the action, including a reasonable attorney’s fee.’’. 

SEC. 9005. REGULATIONS. 

(a) DISCRETIONARY REGULATORY AUTHORITY.—Section 129B of 

the Truth in Lending Act is amended by inserting after subsection 

(d) (as added by section 104) the following new subsection: 

‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.— 

‘‘(1) IN GENERAL.—The Federal banking agencies shall, by 

regulations issued jointly, prohibit or condition terms, acts or 

practices relating to residential mortgage loans that the agencies find to be abusive, unfair, deceptive, predatory, inconsistent with reasonable underwriting standards, necessary or 

proper to ensure that responsible, affordable mortgage credit 

remains available to consumers in a manner consistent with 

the purposes of this section and section 129B, necessary or 

proper to effectuate the purposes of this section and section 

129C, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections, or are not in the interest 

of the borrower. 

‘‘(2) APPLICATION.—The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans 

and shall be applied in the same manner as regulations prescribed under section 105. 

‘‘(f) Section 129B and any regulations promulgated thereunder do 

not apply to an extension of credit relating to a plan described in 

section 101(53D) of title 11, United States Code.’’. 

(b) EFFECTIVE DATE.—The regulations required or authorized to 

be prescribed under this subtitle or the amendments made by this 

subtitle— 

(1) shall be prescribed in final form before the end of the 12- 

month period beginning on the date of the enactment of this 

Act; and 

(2) shall take effect not later than 18 months after the date 

of the enactment of this Act. 

(c) TECHNICAL AND CONFORMING AMENDMENTS.—Section 129(l)(2) 

of the Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by 

inserting ‘‘referred to in section 103(aa)’’ after ‘‘loans’’ each place 

such term appears. 

SEC. 9006. STUDY OF SHARED APPRECIATION MORTGAGES. 

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

in consultation with the Secretary of the Treasury and other relevant agencies, shall conduct a comprehensive study to determine 

prudent statutory and regulatory requirements sufficient to provide 

for the widespread use of shared appreciation mortgages to 

strengthen local housing markets, provide new opportunities for affordable homeownership, and enable homeowners at-risk of foreclosure to refinance or modify their mortgages. 

(b) REPORT.—Not later than the expiration of the 6-month period 

beginning on the date of the enactment of this Act, the Secretary 

of Housing and Urban Development shall submit a report to the 

Congress on the results of the study, which shall include recommendations for the regulatory and legislative requirements referred to in subsection (a). 


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Subtitle B—Minimum Standards for 

Mortgages 

SEC. 9101. ABILITY TO REPAY. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129B (as 

added by section 102(a)) the following new section: 

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

‘‘(a) ABILITY TO REPAY.— ‘‘(1) IN GENERAL.—In accordance with regulations prescribed 

jointly by the Federal banking agencies, in consultation with 

the Commission, no creditor may make a residential mortgage 

loan unless the creditor makes a reasonable and good faith determination based on verified and documented information 

that, at the time the loan is consummated, the consumer has 

a reasonable ability to repay the loan, according to its terms, 

and all applicable taxes, insurance, and assessments. 

‘‘(2) MULTIPLE LOANS.—If the creditor knows, or has reason 

to know, that 1 or more residential mortgage loans secured by 

the same dwelling will be made to the same consumer, the 

creditor shall make a reasonable and good faith determination, 

based on verified and documented information, that the consumer has a reasonable ability to repay the combined payments of all loans on the same dwelling according to the terms 

of those loans and all applicable taxes, insurance, and assessments. 

‘‘(3) BASIS FOR DETERMINATION.—A determination under this 

subsection of a consumer’s ability to repay a residential mortgage loan shall include consideration of the consumer’s credit 

history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio, employment status, and other financial resources 

other than the consumer’s equity in the dwelling or real property that secures repayment of the loan. 

‘‘(4) INCOME VERIFICATION.—In order to safeguard against 

fraudulent reporting, any consideration of a consumer’s income 

history in making a determination under this subsection shall 

include the verification of such income by the use of— 

‘‘(A) Internal Revenue Service transcripts of tax returns 

provided by a third party; or 

‘‘(B) such other similar method that quickly and effectively verifies income documentation by a third party as 

the Federal banking agencies may jointly prescribe. 

‘‘(5) NONSTANDARD LOANS.— 

‘‘(A) VARIABLE RATE LOANS THAT DEFER REPAYMENT OF

ANY PRINCIPAL OR INTEREST.—For purposes of determining, 

under this subsection, a consumer’s ability to repay a variable rate residential mortgage loan that allows or requires 

the consumer to defer the repayment of any principal or 

interest, the creditor shall use a fully amortizing repayment schedule. 

‘‘(B) INTEREST-ONLY LOANS.—For purposes of determining, under this subsection, a consumer’s ability to 


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repay a residential mortgage loan that permits or requires 

the payment of interest only, the creditor shall use the 

payment amount required to amortize the loan by its final 

maturity. 

‘‘(C) CALCULATION FOR NEGATIVE AMORTIZATION.—In 

making any determination under this subsection, a creditor shall also take into consideration any balance increase 

that may accrue from any negative amortization provision. 

‘‘(D) CALCULATION PROCESS.—For purposes of making 

any determination under this subsection, a creditor shall 

calculate the monthly payment amount for principal and 

interest on any residential mortgage loan by assuming— 

‘‘(i) the loan proceeds are fully disbursed on the date 

of the consummation of the loan; 

‘‘(ii) the loan is to be repaid in substantially equal 

monthly amortizing payments for principal and interest over the entire term of the loan with no balloon 

payment, unless the loan contract requires more rapid 

repayment (including balloon payment), in which case 

the calculation shall be made (I) in accordance with 

regulations prescribed by the Federal banking agencies, with respect to any loan which has an annual 

percentage rate that does not exceed the average 

prime offer rate for a comparable transaction, as of the 

date the interest rate is set, by 1.5 or more percentage 

points for a first lien residential mortgage loan; and by 

3.5 or more percentage points for a subordinate lien 

residential mortgage loan; or (II) using the contract’s 

repayment schedule, with respect to a loan which has 

an annual percentage rate, as of the date the interest 

rate is set, that is at least 1.5 percentage points above 

the average prime offer rate for a first lien residential 

mortgage loan; and 3.5 percentage points above the 

average prime offer rate for a subordinate lien residential mortgage loan; and 

‘‘(iii) the interest rate over the entire term of the 

loan is a fixed rate equal to the fully indexed rate at 

the time of the loan closing, without considering the 

introductory rate. 

‘‘(E) REFINANCE OF HYBRID LOANS WITH CURRENT LENDER.—In considering any application for refinancing an existing hybrid loan by the creditor into a standard loan to 

be made by the same creditor in any case in which the sole 

net-tangible benefit to the mortgagor would be a reduction 

in monthly payment and the mortgagor has not been delinquent on any payment on the existing hybrid loan, the 

creditor may— 

‘‘(i) consider the mortgagor’s good standing on the 

existing mortgage; 

‘‘(ii) consider if the extension of new credit would 

prevent a likely default should the original mortgage 

reset and give such concerns a higher priority as an 

acceptable underwriting practice; and 

‘‘(iii) offer rate discounts and other favorable terms 

to such mortgagor that would be available to new cusVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00027 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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tomers with high credit ratings based on such underwriting practice. 

‘‘(6) FULLY-INDEXED RATE DEFINED.—For purposes of this 

subsection, the term ‘fully indexed rate’ means the index rate 

prevailing on a residential mortgage loan at the time the loan 

is made plus the margin that will apply after the expiration of 

any introductory interest rates. 

‘‘(7) REVERSE MORTGAGES.—This subsection shall not apply 

with respect to any reverse mortgage’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 2 of 

the Truth in Lending Act is amended by inserting after the item 

relating to section 129B (as added by section 102(b)) the following 

new item: 

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

SEC. 9102. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE LOANS. 

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

9101(a)) is amended by inserting after subsection (a) the following 

new subsection: 

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

MORTGAGE LOANS.— 

‘‘(1) IN GENERAL.—In accordance with regulations prescribed 

under paragraph (3), no creditor may extend credit in connection with any residential mortgage loan that involves a refinancing of a prior existing residential mortgage loan unless the 

creditor reasonably and in good faith determines, at the time 

the loan is consummated and on the basis of information 

known by or obtained in good faith by the creditor, that the refinanced loan will provide a net tangible benefit to the consumer. 

‘‘(2) CERTAIN LOANS PROVIDING NO NET TANGIBLE BENEFIT.— 

A residential mortgage loan that involves a refinancing of a 

prior existing residential mortgage loan shall not be considered 

to provide a net tangible benefit to the consumer if the costs 

of the refinanced loan, including points, fees and other charges, 

exceed the amount of any newly advanced principal without 

any corresponding changes in the terms of the refinanced loan 

that are advantageous to the consumer. 

‘‘(3) NET TANGIBLE BENEFIT.—The Federal banking agencies 

shall jointly prescribe regulations defining the term ‘net tangible benefit’ for purposes of this subsection.’’. 

SEC. 9103. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 

Section 129C of the Truth in Lending Act is amended by inserting after subsection (b) (as added by section 9102) the following 

new subsection: 

‘‘(c) PRESUMPTION OF ABILITY TO REPAY AND NET TANGIBLE BENEFIT.— 

‘‘(1) IN GENERAL.—Any creditor with respect to any residential mortgage loan, and any assignee or securitizer of such 

loan, may presume that the loan has met the requirements of 

subsections (a) and (b), if the loan is a qualified mortgage. 

‘‘(2) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 


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‘‘(A) QUALIFIED MORTGAGE.—The term ‘qualified mortgage’ means any residential mortgage loan— 

‘‘(i) that does not allow a consumer to defer repayment of principal or interest, or is not otherwise 

deemed a ‘non-traditional mortgage’ under guidance, 

advisories, or regulations prescribed by the Federal 

Banking Agencies; 

‘‘(ii) that does not provide for a repayment schedule 

that results in negative amortization at any time; 

‘‘(iii) for which the terms are fully amortizing and 

which does not result in a balloon payment, where a 

‘balloon payment’ is a scheduled payment that is more 

than twice as large as the average of earlier scheduled 

payments; 

‘‘(iv) which has an annual percentage rate that does 

not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is 

set— 

‘‘(I) by 1.5 or more percentage points, in the case 

of a first lien residential mortgage loan having a 

original principal obligation amount that is equal 

to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, 

as of the date of such interest rate set, pursuant 

to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 

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

‘‘(II) by 2.5 or more percentage points, in the 

case of a first lien residential mortgage loan having a original principal obligation amount that is 

more than the amount of the maximum limitation 

on the original principal obligation of mortgage in 

effect for a residence of the applicable size, as of 

the date of such interest rate set, pursuant to the 

sixth sentence of section 305(a)(2) the Federal 

Home Loan Mortgage Corporation Act (12 U.S.C. 

1454(a)(2)); and 

‘‘(III) by 3.5 or more percentage points, in the 

case of a subordinate lien residential mortgage 

loan; 

‘‘(v) for which the income and financial resources relied upon to qualify the obligors on the loan are 

verified and documented; 

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

underwriting process is based on a payment schedule 

that fully amortizes the loan over the loan term and 

takes into account all applicable taxes, insurance, and 

assessments; 

‘‘(vii) in the case of an adjustable rate loan, for 

which the underwriting is based on the maximum rate 

permitted under the loan during the first seven years, 

and a payment schedule that fully amortizes the loan 

over the loan term and takes into account all applicable taxes, insurance, and assessments; 


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‘‘(viii) that does not cause the consumer’s total 

monthly debts, including amounts under the loan, to 

exceed a percentage established by regulation of the 

consumer’s monthly gross income or such other maximum percentage of such income as may be prescribed 

by regulation under paragraph (4), and such rules 

shall also take into consideration the consumer’s income available to pay regular expenses after payment 

of all installment and revolving debt; 

‘‘(ix) for which the total points and fees payable in 

connection with the loan do not exceed 2 percent of the 

total loan amount, where ‘points and fees’ means 

points and fees as defined by Section 103(aa)(4) of the 

Truth in Lending Act (15 U.S.C. 1602(aa)(4)); and 

‘‘(x) for which the term of the loan does not exceed 

30 years, except as such term may be extended under 

paragraph (4). 

‘‘(B) AVERAGE PRIME OFFER RATE.—The term ‘average 

prime offer rate’ means an annual percentage rate that is 

derived from average interest rates, points, and other loan 

pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions 

that have low risk pricing characteristics. 

‘‘(C) REVERSE MORTGAGES.—For purposes of this subsection, the term ‘qualified mortgage’ includes any reverse 

mortgage that complies with the condition established in 

subparagraph (A)(iv). 

‘‘(3) PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR

THRESHOLDS.—The Board— 

‘‘(A) shall publish, and update at least weekly, average 

prime offer rates; 

‘‘(B) may publish multiple rates based on varying types 

of mortgage transactions; and 

‘‘(C) shall adjust the thresholds of 1.50 percentage points 

in paragraph (2)(A)(iv)(I), 2.50 percentage points in paragraph (2)(A)(iv)(II), and 3.50 percentage points in paragraph (2)(A)(v)(III), as necessary to reflect significant 

changes in market conditions and to effectuate the purposes of the Mortgage Reform and Anti-Predatory Lending 

Act. 

‘‘(4) REGULATIONS.— 

‘‘(A) IN GENERAL.—The Federal banking agencies shall 

jointly prescribe regulations to carry out the purposes of 

this subsection. 

‘‘(B) REVISION OF SAFE HARBOR CRITERIA.— 

‘‘(i) IN GENERAL.—The Federal banking agencies 

may jointly prescribe regulations that revise, add to, 

or subtract from the criteria that define a qualified 

mortgage upon a finding that such regulations are 

necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers 

in a manner consistent with the purposes of this section, necessary and appropriate to effectuate the purposes of this section and section 129B, to prevent cirVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00030 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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cumvention or evasion thereof, or to facilitate compliance with such sections. 

‘‘(ii) LOAN DEFINITION.—The following agencies shall, 

in consultation with the Federal banking agencies, 

prescribe rules defining the types of loans they insure, 

guarantee or administer, as the case may be, that are 

Qualified Mortgages for purposes of subsection 

(c)(1)(A) upon a finding that such rules are consistent 

with the purposes of this section and section 129B, to 

prevent circumvention or evasion thereof, or to facilitate compliance with such sections— 

‘‘(I) The Department of Housing and Urban Development, with regard to mortgages insured 

under title II of the National Housing Act (12 

U.S.C. 1707 et seq.); 

‘‘(II) The Secretary of Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of Veterans Affairs; 

‘‘(III) The Secretary of Agriculture, with regard 

loans guaranteed by the Secretary of Agriculture 

pursuant to 42 U.S.C. 1472(h); 

‘‘(IV) The Federal Housing Finance Agency, 

with regard to loans meeting the conforming loan 

standards of the Federal National Mortgage Corporation or the Federal Home Loan Mortgage Corporation; and 

‘‘(V) The Rural Housing Service, with regard to 

loans insured by the Rural Housing Service.’’. 

SEC. 9104. LIABILITY. 

Section 129C of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 9103) the following 

new subsection: 

‘‘(d) LIABILITY FOR VIOLATIONS.— 

‘‘(1) IN GENERAL.— 

‘‘(A) RESCISSION.—In addition to any other liability 

under this title for a violation by a creditor of subsection 

(a) or (b) (for example under section 130) and subject to 

the statute of limitations in paragraph (9), a civil action 

may be maintained against a creditor for a violation of 

subsection (a) or (b) with respect to a residential mortgage 

loan for the rescission of the loan, and such additional 

costs as the obligor may have incurred as a result of the 

violation and in connection with obtaining a rescission of 

the loan, including a reasonable attorney’s fee. 

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

under subparagraph (A) with respect to a residential mortgage loan if, no later than 90 days after the receipt of notification from the consumer that the loan violates subsection (a) or (b), the creditor, acting in good faith, a cure. 

‘‘(2) LIMITED ASSIGNEE AND SECURITIZER LIABILITY.—Notwithstanding sections 125(e) and 131 and except as provided in 

paragraph (3), a civil action which may be maintained against 

a creditor with respect to a residential mortgage loan for a violation of subsection (a) or (b) may be maintained against any 


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assignee or securitizer of such residential mortgage loan, who 

has acted in good faith, for the following liabilities only: 

‘‘(A) Rescission of the loan. 

‘‘(B) Such additional costs as the obligor may have incurred as a result of the violation and in connection with 

obtaining a rescission of the loan, including a reasonable 

attorney’s fee. 

‘‘(3) ASSIGNEE AND SECURITIZER EXEMPTION.—No assignee or 

securitizer of a residential mortgage loan that has exercised 

reasonable due diligence in complying with the requirements of 

subsections (a) and (b), consistent with reasonable due diligence practices prescribed by the Federal banking agencies, 

shall be liable under paragraph (2) with respect to such loan 

if, no later than 90 days after the receipt of notification from 

the consumer that the loan violates subsection (a) or (b), the 

assignee or securitizer provides a cure so that the loan satisfies 

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

‘‘(4) ABSENT PARTIES.— ‘‘(A) ABSENT CREDITOR.—Notwithstanding the exemption 

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

residential mortgage loan made in violation of subsection 

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

for bankruptcy protection under title 11, United States 

Code, or has had a receiver, conservator, or liquidating 

agent appointed, a consumer may maintain a civil action 

against an assignee to cure the residential mortgage loan, 

plus the costs and reasonable attorney’s fees incurred in 

obtaining such remedy. 

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

the exemption provided in paragraph (3), if the creditor 

with respect to a residential mortgage loan made in violation of subsection (a) or (b) and each assignee of such loan 

have ceased to exist as a matter of law or have filed for 

bankruptcy protection under title 11, United States Code, 

or have had receivers, conservators, or liquidating agents 

appointed, the consumer may maintain the civil action referred to in subparagraph (A) against the securitizer. 

‘‘(5) CURE DEFINED.—For purposes of this subsection, the 

term ‘cure’ means, with respect to a residential mortgage loan 

that violates subsection (a) or (b), the modification or refinancing, at no cost to the consumer, of the loan to provide 

terms that satisfy the requirements of subsections (a) and (b) 

and the payment of such additional costs as the obligor may 

have incurred in connection with obtaining a cure of the loan, 

including a reasonable attorney’s fee. 

‘‘(6) DISAGREEMENT OVER CURE.—If any creditor, assignee, or 

securitizer and a consumer fail to reach agreement on a cure 

with respect to a residential mortgage loan that violates subsection (a) or (b), or the consumer fails to accept a cure proffered by a creditor, assignee, or securitizer— 

‘‘(A) the creditor, assignee, or securitizer may provide 

the cure; and 

‘‘(B) the consumer may challenge the adequacy of the 

cure during the 6-month period beginning when the cure 

is provided. 


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If the consumer’s challenge, under this paragraph, of a cure is 

successful, the creditor, assignee, or securitizer shall be liable 

to the consumer for rescission of the loan and such additional 

costs under paragraph (2). 

‘‘(7) INABILITY TO PROVIDE OR OBTAIN RESCISSION.—If a creditor, assignee, or securitizer cannot provide, or a consumer cannot obtain, rescission under paragraph (1) or (2), the liability 

of such creditor, assignee, or securitizer shall be met by providing the financial equivalent of a rescission, together with 

such additional costs as the obligor may have incurred as a result of the violation and in connection with obtaining a rescission of the loan, including a reasonable attorney’s fee. 

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

UNDER PARAGRAPH (2).—Only individual actions may be 

brought against an assignee or securitizer of a residential 

mortgage loan for a violation of subsection (a) or (b). 

‘‘(9) STATUTE OF LIMITATIONS.—The liability of a creditor, assignee, or securitizer under this subsection shall apply in any 

original action against a creditor under paragraph (1) or an assignee or securitizer under paragraph (2) which is brought before— 

‘‘(A) in the case of any residential mortgage loan other 

than a loan to which subparagraph (B) applies, the end of 

the 3-year period beginning on the date the loan is consummated; or 

‘‘(B) in the case of a residential mortgage loan that provides for a fixed interest rate for an introductory period 

and then resets or adjusts to a variable rate or that provides for a nonamortizing payment schedule and then converts to an amortizing payment schedule, the earlier of— 

‘‘(i) the end of the 1-year period beginning on the 

date of such reset, adjustment, or conversion; or 

‘‘(ii) the end of the 6-year period beginning on the 

date the loan is consummated. 

‘‘(10) TRUSTEES, POOLS, AND INVESTORS IN POOLS EX- CLUDED.—In the case of residential mortgage loans acquired or 

aggregated for the purpose of including such loans in a pool of 

assets held for the purpose of issuing or selling instruments 

representing interests in such pools including through a 

securitization vehicle, the terms ‘assignee’ and ‘securitizer’, as 

used in this section, do not include the securitization vehicle, 

any trustee that holds such loans solely for the benefit of the 

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

subsequent purchaser of any interest in the securitization vehicle or any instrument representing a direct or indirect interest 

in such pool. 

‘‘(e) OBLIGATION OF SECURITIZERS, AND PRESERVATION OF BOR- ROWER REMEDIES.— 

‘‘(1) OBLIGATION TO RETAIN ACCESS.—Any securitizer of a residential mortgage loan sold or to be sold as part of a 

securitization vehicle shall, in any document or contract providing for the transfer, conveyance, or the establishment of 

such securitization vehicle, reserve the right and preserve the 

ability— 

‘‘(A) to identify and obtain access to any such loan; 


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‘‘(B) to acquire any such loan in the event of a violation 

of subsection (a) or (b) of this section; and 

‘‘(C) to provide to the consumer any and all remedies 

provided for under this title for any violation of this title. 

‘‘(2) ADDITIONAL DAMAGES.—Any creditor, assignee, or 

securitizer of a residential mortgage loan that is subject to a 

remedy under subsection (d) and has failed to comply with 

paragraph (1) shall be subject to additional exemplary or punitive damages not to exceed the original principal balance of 

such loan. 

‘‘(3) CONTACT INFORMATION NOTICE.—The servicer with respect to a residential mortgage loan shall provide a written notice to a consumer identifying the name and contact information of the creditor or any assignee or securitizer who should 

be contacted by the consumer for any reason concerning the 

consumer’s rights with respect to the loan. Such notice shall be 

provided— 

‘‘(A) upon request of the consumer; 

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

‘‘(C) on a regular basis, not less than annually. 

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

rules to govern the rescission process established for violations of 

subsections (a) and (b) of this section. Such rules shall provide that 

notice given to a servicer or holder is sufficient notice regardless 

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

SEC. 9105. DEFENSE TO FORECLOSURE. 

Section 129C of the Truth in Lending Act is amended by inserting after subsection (f) (as added by section 9104) the following new 

subsections: 

‘‘(g) DEFENSE TO FORECLOSURE.—Notwithstanding any other provision of law— 

‘‘(1) when the holder of a residential mortgage loan or anyone acting for such holder initiates a judicial or nonjudicial 

foreclosure— 

‘‘(A) a consumer who has the right to rescind under this 

section with respect to such loan against the creditor or 

any assignee or securitizer may assert such right as a defense to foreclosure or counterclaim to such foreclosure 

against the holder, or 

‘‘(B) if the foreclosure proceeding begins after the end of 

the period during which a consumer may bring an action 

for rescission under subsection (d) and the consumer would 

have had a valid basis for such an action if it had been 

brought before the end of such period, the consumer may 

seek actual damages incurred by reason of the violation 

which gave rise to the right of rescission, together with 

costs of the action, including a reasonable attorney’s fee 

against the creditor or any assignee or securitizer; and 

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

other applicable third party may sell, transfer, convey, or assign a residential mortgage loan to a creditor, any assignee, or 

any securitizer, or their designees, subject to the rights of the 

consumer described in this subsection, to effect a rescission or 

cure.’’. 


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SEC. 9106. ADDITIONAL STANDARDS AND REQUIREMENTS. 

(a) IN GENERAL.—Section 129C of the Truth in Lending Act is 

amended by inserting after subsection (g) (as added by section 

9105) the following new subsections: 

‘‘(h) PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.— 

‘‘(1) PROHIBITED ON CERTAIN LOANS.—A residential mortgage 

loan that is not a ‘qualified mortgage’ may not contain terms 

under which a consumer must pay a prepayment penalty for 

paying all or part of the principal after the loan is consummated. For purposes of this subsection, a ‘qualified mortgage’ may not include a residential mortgage loan that has an 

adjustable rate. 

‘‘(2) PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES.—A 

qualified mortgage (as defined in subsection (c)) may not contain terms under which a consumer must pay a prepayment 

penalty for paying all or part of the principal after the loan is 

consummated in excess of the following limitations: 

‘‘(A) During the 1-year period beginning on the date the 

loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan. 

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

described in subparagraph (A), the prepayment penalty 

shall not exceed an amount equal to 2 percent of the outstanding balance on the loan. 

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

period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the 

outstanding balance on the loan. 

‘‘(D) After the end of the 3-year period beginning on the 

date the loan is consummated, no prepayment penalty may 

be imposed on a qualified mortgage. 

‘‘(3) OPTION FOR NO PREPAYMENT PENALTY REQUIRED.—A 

creditor may not offer a consumer a residential mortgage loan 

product that has a prepayment penalty for paying all or part 

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

loan without offering the consumer a residential mortgage loan 

product that does not have a prepayment penalty as a term of 

the loan. 

‘‘(i) SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.—No creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an 

open end consumer credit plan secured by the principal dwelling of 

the consumer (other than a reverse mortgage), any credit life, credit disability, credit unemployment or credit property insurance, or 

any other accident, loss-of-income, life or health insurance, or any 

payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that— 

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

fees calculated and paid in full on a monthly basis shall not 

be considered financed by the creditor; and 

‘‘(2) this subsection shall not apply to credit unemployment 

insurance for which the unemployment insurance premiums 

are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance preVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00035 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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miums, and the unemployment insurance premiums are paid 

pursuant to another insurance contract and not paid to an affiliate of the creditor. 

‘‘(j) ARBITRATION.— ‘‘(1) IN GENERAL.—No residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a 

reverse mortgage, may include terms which require arbitration 

or any other nonjudicial procedure as the method for resolving 

any controversy or settling any claims arising out of the transaction. 

‘‘(2) POST-CONTROVERSY AGREEMENTS.—Subject to paragraph 

(3), paragraph (1) shall not be construed as limiting the right 

of the consumer and the creditor, any assignee, or any 

securitizer to agree to arbitration or any other nonjudicial procedure as the method for resolving any controversy at any time 

after a dispute or claim under the transaction arises. 

‘‘(3) NO WAIVER OF STATUTORY CAUSE OF ACTION.—No provision of any residential mortgage loan or of any extension of 

credit under an open end consumer credit plan secured by the 

principal dwelling of the consumer (other than a reverse mortgage), and no other agreement between the consumer and the 

creditor relating to the residential mortgage loan or extension 

of credit referred to in paragraph (1), shall be applied or interpreted so as to bar a consumer from bringing an action in an 

appropriate district court of the United States, or any other 

court of competent jurisdiction, pursuant to section 130 or any 

other provision of law, for damages or other relief in connection 

with any alleged violation of this section, any other provision 

of this title, or any other Federal law. 

‘‘(k) MORTGAGES WITH NEGATIVE AMORTIZATION.—No creditor 

may extend credit to a borrower in connection with a consumer 

credit transaction under an open or closed end consumer credit 

plan secured by a dwelling or residential real property that includes a dwelling, other than a reverse mortgage, that provides or 

permits a payment plan that may, at any time over the term of the 

extension of credit, result in negative amortization unless, before 

such transaction is consummated— 

‘‘(1) the creditor provides the consumer with a statement 

that— 

‘‘(A) the pending transaction will or may, as the case 

may be, result in negative amortization; 

‘‘(B) describes negative amortization in such manner as 

the Federal banking agencies shall prescribe; 

‘‘(C) negative amortization increases the outstanding 

principal balance of the account; and 

‘‘(D) negative amortization reduces the consumer’s equity 

in the dwelling or real property; and 

‘‘(2) in the case of a first-time borrower with respect to a residential mortgage loan that is not a qualified mortgage, the 

first-time borrower provides the creditor with sufficient documentation to demonstrate that the consumer received homeownership counseling from organizations or counselors certified 

by the Secretary of Housing and Urban Development as competent to provide such counseling.’’. 


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(b) CONFORMING AMENDMENT RELATING TO ENFORCEMENT.—Section 108(a) of the Truth in Lending Act (15 U.S.C. 1607(a)) is 

amended by inserting after paragraph (6) the following new paragraph: 

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

1934, in the case of a broker or dealer, other than a depository 

institution, by the Securities and Exchange Commission.’’. 

(c) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTEC- TION.—Section 129C of the Truth in Lending Act is amended by inserting after subsection (k) (as added by subsection (a) of this section) the following new subsection (and designated succeeding subsections accordingly): 

‘‘(l) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTEC- TION.— 

‘‘(1) DEFINITION.—For purposes of this subsection, the term 

‘anti-deficiency law’ means the law of any State which provides 

that, in the event of foreclosure on the residential property of 

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

accordance with the terms and limitations of such State law, 

for any deficiency between the sale price obtained on such 

property through foreclosure and the outstanding balance of 

the mortgage. 

‘‘(2) NOTICE AT TIME OF CONSUMMATION.—In the case of any 

residential mortgage loan that is, or upon consummation will 

be, subject to protection under an anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the 

consumer describing the protection provided by the anti-deficiency law and the significance for the consumer of the loss of 

such protection before such loan is consummated. 

‘‘(3) NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS

OF PROTECTION.—In the case of any residential mortgage loan 

that is subject to protection under an anti-deficiency law, if a 

creditor or mortgage originator provides an application to a 

consumer, or receives an application from a consumer, for any 

type of refinancing for such loan that would cause the loan to 

lose the protection of such anti-deficiency law, the creditor or 

mortgage originator shall provide a written notice to the consumer describing the protection provided by the anti-deficiency 

law and the significance for the consumer of the loss of such 

protection before any agreement for any such refinancing is 

consummated.’’. 

(d) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.—Section 129C of the Truth in Lending Act is amended by inserting 

after subsection (l) (as added by subsection (c)) the following new 

subsection: 

‘‘(m) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.—In 

the case of any residential mortgage loan, a creditor shall disclose 

prior to settlement or, in the case of a person becoming a creditor 

with respect to an existing residential mortgage loan, at the time 

such person becomes a creditor— 

‘‘(1) the creditor’s policy regarding the acceptance of partial 

payments; and 

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

will be applied to such mortgage and if such payments will be 

placed in escrow.’’. 


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SEC. 9107. RULE OF CONSTRUCTION. 

Except as otherwise expressly provided in section 129B or 129C 

of the Truth in Lending Act (as added by this subtitle), no provision of such section 129B or 129C shall be construed as superseding, repealing, or affecting any duty, right, obligation, privilege, 

or remedy of any person under any other provision of the Truth in 

Lending Act or any other provision of Federal or State law. 

SEC. 9108. EFFECT ON STATE LAWS. 

(a) IN GENERAL.—Except as provided in subsection (b), section 

129C(d) of the Truth in Lending Act (as added by section 9104) 

shall supersede any State law to the extent that it provides additional remedies against any assignee, securitizer, or securitization 

vehicle for a violation of subsection (a) or (b) of section 129C of 

such Act or any other State law the terms of which address the 

specific subject matter of subsection (a) (determination of ability to 

repay) or (b) (requirement of a net tangible benefit) of section 129C 

of such Act, and the remedies described in section 129C(d) shall 

constitute the sole remedies against any assignee, securitizer, or 

securitization vehicle for such violations. 

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

be construed as limiting— 

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

remedies under such law, against a creditor for a particular 

residential mortgage loan regardless of whether such creditor 

also acts as an assignee, securitizer, or securitization vehicle 

for such loan; 

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

remedies under such law, against an assignee, securitizer, or 

securitization vehicle under State law, other than a provision 

of such law the terms of which address the specific subject 

matter of subsection (a) (determination of ability to repay) or 

(b) (requirement of a net tangible benefit) of section 129C of 

such Act; 

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

remedies under such law, against an assignee, securitizer or 

securitization vehicle for its participation in or direction of the 

credit or underwriting decisions of a creditor relating to the 

making of a residential mortgage loan; or 

(B) the ability of a consumer to assert any rights against or 

obtain any remedies from an assignee, securitizer or 

securitization vehicle with respect to a residential mortgage 

loan as a defense to foreclosure under section 129C(g); 

(4) the availability of any equitable remedies, including injunctive relief, under State law; or 

(5) notwithstanding paragraph (2), the availability of any 

remedies under State law against any assignee, securitizer or 

securitization vehicle that— 

(A) are in addition to those remedies provided for in section 129C; and 

(B) were in effect on the date of enactment of this Act. 

SEC. 9109. REGULATIONS. 

Regulations required or authorized to be prescribed under this 

subtitle or the amendments made by this subtitle— 


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(1) shall be prescribed in final form before the end of the 12- 

month period beginning on the date of the enactment of this 

Act; and 

(2) shall take effect not later than 18 months after the date 

of the enactment of this Act. 

SEC. 9110. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 

(a) INCREASE IN AMOUNT OF CIVIL MONEY PENALTIES FOR CERTAIN VIOLATIONS.—Section 130(a)(2) of the Truth in Lending Act 

(15 U.S.C. 1640(a)(2)) is amended— 

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

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

(3) by striking ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 

(b) STATUTE OF LIMITATIONS EXTENDED FOR SECTION 129 VIOLATIONS.—Section 130(e) of the Truth in Lending Act (15 U.S.C. 

1640(e)) is amended— 

(1) in the first sentence, by striking ‘‘Any action’’ and inserting ‘‘Except as provided in the subsequent sentence, any action’’; and 

(2) by inserting after the first sentence the following new 

sentence: ‘‘Any action under this section with respect to any 

violation of section 129 may be brought in any United States 

district court, or in any other court of competent jurisdiction, 

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

occurrence of the violation.’’. 

SEC. 9111. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION. 

Section 130 of the Truth in Lending Act is amended by adding 

at the end the following new subsection: 

‘‘(k) EXEMPTION FROM LIABILITY AND RESCISSION IN CASE OF

BORROWER FRAUD OR DECEPTION.—In addition to any other remedy 

available by law or contract, no creditor, assignee, or securitizer 

shall be liable to an obligor under this section, nor shall it be subject to the right of rescission of any obligor under 129B, if such obligor, or co-obligor, knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining such residential mortgage loan.’’. 

SEC. 9112. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID 

ADJUSTABLE RATE MORTGAGES. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 128 the 

following new section: 

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

‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DEFINED.—For purposes of this section, the term ‘hybrid adjustable rate mortgage’ 

means a consumer credit transaction secured by the consumer’s 

principal residence with a fixed interest rate for an introductory 

period that adjusts or resets to a variable interest rate after such 

period. 

‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—During the 1-month 

period that ends 6 months before the date on which the interest 

rate in effect during the introductory period of a hybrid adjustable 

rate mortgage adjusts or resets to a variable interest rate or, in the 

case of such an adjustment or resetting that occurs within the first 


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6 months after consummation of such loan, at consummation, the 

creditor or servicer of such loan shall provide a written notice, separate and distinct from all other correspondence to the consumer, 

that includes the following: 

‘‘(1) Any index or formula used in making adjustments to or 

resetting the interest rate and a source of information about 

the index or formula. 

‘‘(2) An explanation of how the new interest rate and payment would be determined, including an explanation of how 

the index was adjusted, such as by the addition of a margin. 

‘‘(3) A good faith estimate, based on accepted industry standards, of the creditor or servicer of the amount of the monthly 

payment that will apply after the date of the adjustment or 

reset, and the assumptions on which this estimate is based. 

‘‘(4) A list of alternatives consumers may pursue before the 

date of adjustment or reset, and descriptions of the actions consumers must take to pursue these alternatives, including— 

‘‘(A) refinancing; 

‘‘(B) renegotiation of loan terms; 

‘‘(C) payment forbearances; and 

‘‘(D) pre-foreclosure sales. 

‘‘(5) The names, addresses, telephone numbers, and Internet 

addresses of counseling agencies or programs reasonably available to the consumer that have been certified or approved and 

made publicly available by the Secretary of Housing and 

Urban Development or a State housing finance authority (as 

defined in section 1301 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989). 

‘‘(6) The address, telephone number, and Internet address for 

the State housing finance authority (as so defined) for the 

State in which the consumer resides.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 2 of 

the Truth in Lending Act is amended by inserting after the item 

relating to section 128 the following new item: 

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

SEC. 9113. REQUIRED DISCLOSURES. 

Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is 

amended by adding at the end the following new paragraphs: 

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

for which an escrow or impound account will be established for 

the payment of all applicable taxes, insurance, and assessments— 

‘‘(A) the amount of initial monthly payment due under 

the loan for the payment of principal and interest, and the 

amount of such initial monthly payment including the 

monthly payment deposited in the account for the payment 

of all applicable taxes, insurance, and assessments; and 

‘‘(B) the amount of the fully indexed monthly payment 

due under the loan for the payment of principal and interest, and the amount of such fully indexed monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, 

and assessments. 


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‘‘(17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services 

provided in connection with the loan, the amount of charges 

that are included in the loan and the amount of such charges 

the borrower must pay at closing, the approximate amount of 

the wholesale rate of funds in connection with the loan, and 

the aggregate amount of other fees or required payments in 

connection with the loan. 

‘‘(18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by the 

consumer, and any additional amount received by the originator from the creditor. 

‘‘(19) In the case of a residential mortgage loan, the total 

amount of interest that the consumer will pay over the life of 

the loan as a percentage of the principal of the loan. Such 

amount shall be computed assuming the consumer makes each 

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

over-payments.’’. 

SEC. 9114. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR 

RESIDENTIAL MORTGAGE LOANS. 

Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is 

amended by adding at the end the following new subsection: 

‘‘(f) PERIODIC STATEMENTS FOR RESIDENTIAL MORTGAGE LOANS.— 

‘‘(1) IN GENERAL.—The creditor, assignee, or servicer with respect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement setting forth each of 

the following items, to the extent applicable, in a conspicuous 

and prominent manner: 

‘‘(A) The amount of the principal obligation under the 

mortgage. 

‘‘(B) The current interest rate in effect for the loan. 

‘‘(C) The date on which the interest rate may next reset 

or adjust. 

‘‘(D) The amount of any prepayment fee to be charged, 

if any. 

‘‘(E) A description of any late payment fees. 

‘‘(F) A telephone number and electronic mail address 

that may be used by the obligor to obtain information regarding the mortgage. 

‘‘(G) The names, addresses, telephone numbers, and 

Internet addresses of counseling agencies or programs reasonably available to the consumer that have been certified 

or approved and made publicly available by the Secretary 

of Housing and Urban Development or a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 

1989). 

‘‘(H) Such other information as the Board may prescribe 

in regulations. 

‘‘(2) DEVELOPMENT AND USE OF STANDARD FORM.—The Federal banking agencies shall jointly develop and prescribe a 

standard form for the disclosure required under this subsection, taking into account that the statements required may 

be transmitted in writing or electronically.’’. 


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SEC. 9115. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development (hereafter in this section referred to as the ‘‘Secretary’’ 

shall establish a program for making grants for providing a full 

range of foreclosure legal assistance to low- and moderate-income 

homeowners and tenants related to home ownership preservation, 

home foreclosure prevention, and tenancy associated with home 

foreclosure. 

(b) COMPETITIVE ALLOCATION.—The Secretary shall allocate 

amounts made available for grants under this section to State and 

local legal organizations on the basis of a competitive process. For 

purposes of this subsection ‘‘State and local legal organizations’’ are 

those State and local organizations whose primary business or mission is to provide legal assistance. 

(c) PRIORITY TO CERTAIN AREAS.—In allocating amounts in accordance with subsection (b), the Secretary shall give priority consideration to State and local legal organizations that are operating 

in the 100 metropolitan statistical areas (as that term is defined 

by the Director of the Office of Management and Budget) with the 

highest home foreclosure rates. 

(d) LEGAL ASSISTANCE.— 

(1) IN GENERAL.—Any State or local legal organization that 

receives financial assistance pursuant to this section may use 

such amounts only to assist— 

(A) homeowners of owner-occupied homes with mortgages in default, in danger of default, or subject to or at 

risk of foreclosure; and 

(B) tenants at risk of or subject to eviction as a result 

of foreclosure of the property in which such tenant resides. 

(2) COMMENCE USE WITHIN 90 DAYS.—Any State or local legal 

organization that receives financial assistance pursuant to this 

section shall begin using any financial assistance received 

under this section within 90 days after receipt of the assistance. 

(3) PROHIBITION ON CLASS ACTIONS.—No funds provided to a 

State or local legal organization under this section may be used 

to support any class action litigation. 

(4) LIMITATION ON LEGAL ASSISTANCE.—Legal assistance 

funded with amounts provided under this section shall be limited to mortgage-related default, eviction, or foreclosure proceedings, without regard to whether such foreclosure is judicial 

or nonjudicial. 

(5) EFFECTIVE DATE.—Notwithstanding section 9116, this 

subsection shall take effect on the date of the enactment of this 

Act. 

(e) LIMITATION ON DISTRIBUTION OF ASSISTANCE.— 

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

this section shall be distributed to— 

(A) any organization which has been convicted for a violation under Federal law relating to an election for Federal 

office; or 

(B) any organization which employs applicable individuals. 


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(2) DEFINITION OF APPLICABLE INDIVIDUALS.—In this subsection, the term ‘‘applicable individual’’ means an individual 

who— 

(A) is— 

(i) employed by the organization in a permanent or 

temporary capacity; 

(ii) contracted or retained by the organization; or 

(iii) acting on behalf of, or with the express or apparent authority of, the organization; and 

(B) has been convicted for a violation under Federal law 

relating to an election for Federal office. 

(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated to the Secretary $35,000,000 for each of fiscal 

years 2009 through 2012 for grants under this section. 

SEC. 9116. EFFECTIVE DATE. 

The amendments made by this subtitle shall apply to transactions consummated on or after the effective date of the regulations specified in section 9109. 

SEC. 9117. REPORT BY THE GAO. 

(a) REPORT REQUIRED.—The Comptroller General shall conduct a 

study to determine the effects the enactment of this Act will have 

on the availability and affordability of credit for consumers, small 

businesses, homebuyers, and mortgage lending, including the effect— 

(1) on the mortgage market for mortgages that are not within the safe harbor provided in the amendments made by this 

subtitle; 

(2) on the ability of prospective homebuyers to obtain financing; 

(3) on the ability of homeowners facing resets or adjustments 

to refinance—for example, do they have fewer refinancing options due to the unavailability of certain loan products that 

were available before the enactment of this Act; 

(4) on minorities’ ability to access affordable credit compared 

with other prospective borrowers; 

(5) on home sales and construction; 

(6) of extending the rescission right, if any, on adjustable 

rate loans and its impact on litigation; 

(7) of State foreclosure laws and, if any, an investor’s ability 

to transfer a property after foreclosure; 

(8) of expanding the existing provisions of the Home Ownership and Equity Protection Act of 1994; 

(9) of prohibiting prepayment penalties on high-cost mortgages; and 

(10) of establishing counseling services under the Department of Housing and Urban Development and offered through 

the Office of Housing Counseling. 

(b) REPORT.—Before the end of the 1-year period beginning on 

the date of the enactment of this Act, the Comptroller General 

shall submit a report to the Congress containing the findings and 

conclusions of the Comptroller General with respect to the study 

conducted pursuant to subsection (a). 

(c) EXAMINATION RELATED TO CERTAIN CREDIT RISK RETENTION

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clude an analysis by the Comptroller General of the effect on the 

capital reserves and funding of lenders of credit risk retention provisions for non-qualified mortgages, including an analysis of the exceptions and adjustments authorized in section 129C(l)(3)(A) of the 

Truth in Lending Act and a recommendation on whether a uniform 

standard is needed. 

(d) ANALYSIS OF CREDIT RISK RETENTION PROVISIONS.—The report required by subsection (b) shall also include— 

(1) an analysis by the Comptroller General of whether the 

credit risk retention provisions have significantly reduced risks 

to the larger credit market of the repackaging and selling of 

securitized loans on a secondary market; and 

(2) recommendations to the Congress on adjustments that 

should be made, or additional measures that should be undertaken. 

SEC. 9118. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY. 

Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 

amended by striking ‘‘section 129 may also’’ and inserting ‘‘section 

129, 129B, or 129C of this Act may also’’. 

Subtitle C—High-Cost Mortgages 

SEC. 9201. DEFINITIONS RELATING TO HIGH-COST MORTGAGES. 

(a) HIGH-COST MORTGAGE DEFINED.—Section 103(aa) of the 

Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by striking 

all that precedes paragraph (2) and inserting the following: 

‘‘(aa) HIGH-COST MORTGAGE.— 

‘‘(1) DEFINITION.— 

‘‘(A) IN GENERAL.—The term ‘high-cost mortgage’, and a 

mortgage referred to in this subsection, means a consumer 

credit transaction that is secured by the consumer’s principal dwelling, other than a reverse mortgage transaction, 

if— 

‘‘(i) in the case of a credit transaction secured— 

‘‘(I) by a first mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more 

than 6.5 percentage points (8.5 percentage points, 

if the dwelling is personal property and the transaction is for less than $50,000) the average prime 

offer rate, as defined in section 129C(c)(2)(B), for 

a comparable transaction; or 

‘‘(II) by a subordinate or junior mortgage on the 

consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will 

exceed by more than 8.5 percentage points the average prime offer rate, as defined in section 

129C(c)(2)(B), for a comparable transaction; 

‘‘(ii) the total points and fees payable in connection 

with the transaction exceed— 

‘‘(I) in the case of a transaction for $20,000 or 

more, 5 percent of the total transaction amount; 

or 


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‘‘(II) in the case of a transaction for less than 

$20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar 

amount as the Board shall prescribe by regulation); or 

‘‘(iii) the credit transaction documents permit the 

creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction closing or such fees or penalties exceed, in the aggregate, 

more than 2 percent of the amount prepaid. 

‘‘(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT.—For 

purposes of subparagraph (A)(i), the annual percentage 

rate of interest shall be determined based on the following 

interest rate: 

‘‘(i) In the case of a fixed-rate transaction in which 

the annual percentage rate will not vary during the 

term of the loan, the interest rate in effect on the date 

of consummation of the transaction. 

‘‘(ii) In the case of a transaction in which the rate 

of interest varies solely in accordance with an index, 

the interest rate determined by adding the index rate 

in effect on the date of consummation of the transaction to the maximum margin permitted at any time 

during the transaction agreement. 

‘‘(iii) In the case of any other transaction in which 

the rate may vary at any time during the term of the 

loan for any reason, the interest charged on the transaction at the maximum rate that may be charged during the term of the transaction.’’. 

(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 103(aa)(2) of 

the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by 

striking subparagraph (B) and inserting the following new subparagraph: 

‘‘(B) An increase or decrease under subparagraph (A)— 

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

points referred to in paragraph (1)(A)(i)(I) being less 

than 6 percentage points or greater than 10 percentage points; and 

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

points referred to in paragraph (1)(A)(i)(II) being less 

than 8 percentage points or greater than 12 percentage points.’’. 

(c) POINTS AND FEES DEFINED.— 

(1) IN GENERAL.—Section 103(aa)(4) of the Truth in Lending 

Act (15 U.S.C. 1602(aa)(4)) is amended— 

(A) by striking subparagraph (B) and inserting the following: 

‘‘(B) all compensation paid directly or indirectly by a consumer or creditor to a mortgage originator from any 

source, including a mortgage originator that originates a 

loan in the name of the creditor in a table-funded transaction;’’; 

(B) in subparagraph (C)(ii), by inserting ‘‘except where 

applied to the charges set forth in section 106(e)(1) where 

a creditor may receive indirect compensation solely as a reVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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sult of obtaining distributions of profits from an affiliated 

entity based on its ownership interest in compliance with 

section 8(c)(4) of the Real Estate Settlement Procedures 

Act of 1974’’ before the semicolon at the end; 

(C) in subparagraph (C)(iii), by striking ‘‘; and’’ and inserting ‘‘, except as provided for in clause (ii);’’; 

(D) by redesignating subparagraph (D) as subparagraph 

(G); and 

(E) by inserting after subparagraph (C) the following 

new subparagraphs: 

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

closing for any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-of-income, life or health insurance, or any payments directly or indirectly for any debt cancellation or 

suspension agreement or contract, except that insurance 

premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be 

considered financed by the creditor; 

‘‘(E) except as provided in subsection (cc), the maximum 

prepayment fees and penalties which may be charged or 

collected under the terms of the credit transaction; 

‘‘(F) all prepayment fees or penalties that are incurred 

by the consumer if the loan refinances a previous loan 

made or currently held by the same creditor or an affiliate 

of the creditor; and’’. 

(2) CALCULATION OF POINTS AND FEES FOR OPEN-END CON- SUMER CREDIT PLANS.—Section 103(aa) of the Truth in Lending 

Act (15 U.S.C. 1602(aa)) is amended— 

(A) by redesignating paragraph (5) as paragraph (6); and 

(B) by inserting after paragraph (4) the following new 

paragraph: 

‘‘(5) CALCULATION OF POINTS AND FEES FOR OPEN-END CON- SUMER CREDIT PLANS.—In the case of open-end consumer credit 

plans, points and fees shall be calculated, for purposes of this 

section and section 129, by adding the total points and fees 

known at or before closing, including the maximum prepayment penalties which may be charged or collected under the 

terms of the credit transaction, plus the minimum additional 

fees the consumer would be required to pay to draw down an 

amount equal to the total credit line.’’. 

(d) BONA FIDE DISCOUNT LOAN DISCOUNT POINTS.—Section 103 

of the Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after subsection (cc) (as added by section 101) the following new 

subsection: 

‘‘(dd) BONA FIDE DISCOUNT POINTS AND PREPAYMENT PENALTIES.—For the purposes of determining the amount of points and 

fees for purposes of subsection (aa), either the amounts described 

in paragraph (1) or (2) of the following paragraphs, but not both, 

shall be excluded: 

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

by the consumer in connection with the mortgage, but only if 

the interest rate from which the mortgage’s interest rate will 

be discounted does not exceed by more than 1 percentage 

point— 


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‘‘(A) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable 

loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, 

whichever is greater; or 

‘‘(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

‘‘(2) Unless 2 bona fide discount points have been excluded 

under paragraph (1), up to and including 1 bona fide discount 

point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s 

interest rate will be discounted does not exceed by more than 

2 percentage points— 

‘‘(A) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable 

loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, 

whichever is greater; or 

‘‘(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

‘‘(3) For purposes of paragraph (1), the term ‘bona fide discount points’ means loan discount points which are knowingly 

paid by the consumer for the purpose of reducing, and which 

in fact result in a bona fide reduction of, the interest rate or 

time-price differential applicable to the mortgage. 

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

used to purchase an interest rate reduction unless the amount 

of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.’’. 

SEC. 9202. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN 

MORTGAGES. 

(a) PREPAYMENT PENALTY PROVISIONS.—Section 129(c)(2) of the 

Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed. 

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

Lending Act (15 U.S.C. 1639(e)) is amended to read as follows: 

‘‘(e) NO BALLOON PAYMENTS.—No high-cost mortgage may contain a scheduled payment that is more than twice as large as the 

average of earlier scheduled payments. This subsection shall not 

apply when the payment schedule is adjusted to the seasonal or irregular income of the consumer or in the case of a balance due 

under the customary terms of a reverse mortgage.’’. 

SEC. 9203. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES. 

(a) ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.—Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended— 

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

(n), (o) and (p) respectively; and 

(2) by inserting after subsection (i) the following new subsections: 


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‘‘(j) RECOMMENDED DEFAULT.—No creditor shall recommend or 

encourage default on an existing loan or other debt prior to and in 

connection with the closing or planned closing of a high-cost mortgage that refinances all or any portion of such existing loan or 

debt. 

‘‘(k) LATE FEES.— ‘‘(1) IN GENERAL.—No creditor may impose a late payment 

charge or fee in connection with a high-cost mortgage— 

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

of the payment past due; 

‘‘(B) unless the loan documents specifically authorize the 

charge or fee; 

‘‘(C) before the end of the 15-day period beginning on the 

date the payment is due, or in the case of a loan on which 

interest on each installment is paid in advance, before the 

end of the 30-day period beginning on the date the payment is due; or 

‘‘(D) more than once with respect to a single late payment. 

‘‘(2) COORDINATION WITH SUBSEQUENT LATE FEES.—If a payment is otherwise a full payment for the applicable period and 

is paid on its due date or within an applicable grace period, 

and the only delinquency or insufficiency of payment is attributable to any late fee or delinquency charge assessed on any 

earlier payment, no late fee or delinquency charge may be imposed on such payment. 

‘‘(3) FAILURE TO MAKE INSTALLMENT PAYMENT.—If, in the 

case of a loan agreement the terms of which provide that any 

payment shall first be applied to any past due principal balance, the consumer fails to make an installment payment and 

the consumer subsequently resumes making installment payments but has not paid all past due installments, the creditor 

may impose a separate late payment charge or fee for any 

principal due (without deduction due to late fees or related 

fees) until the default is cured. 

‘‘(l) ACCELERATION OF DEBT.—No high-cost mortgage may contain 

a provision which permits the creditor to accelerate the indebtedness, except when repayment of the loan has been accelerated by 

default in payment, or pursuant to a due-on-sale provision, or pursuant to a material violation of some other provision of the loan 

document unrelated to payment schedule. 

‘‘(m) RESTRICTION ON FINANCING POINTS AND FEES.—No creditor 

may directly or indirectly finance, in connection with any high-cost 

mortgage, any of the following: 

‘‘(1) Any prepayment fee or penalty payable by the consumer 

in a refinancing transaction if the creditor or an affiliate of the 

creditor is the noteholder of the note being refinanced. 

‘‘(2) Any points or fees.’’. 

(b) PROHIBITIONS ON EVASIONS.—Section 129 of the Truth in 

Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as so redesignated by subsection (a)(1)) the following 

new subsection: 

‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A creditor may not take any action in connection with a high-cost mortgage— 


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‘‘(1) to structure a loan transaction as an open-end credit 

plan or another form of loan for the purpose and with the intent of evading the provisions of this title; or 

‘‘(2) to divide any loan transaction into separate parts for the 

purpose and with the intent of evading provisions of this title.’’. 

(c) MODIFICATION OR DEFERRAL FEES.—Section 129 of the Truth 

in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as added by subsection (b) of this section) the following 

new subsection: 

‘‘(r) MODIFICATION AND DEFERRAL FEES PROHIBITED.— 

‘‘(1) CREDITORS.—A creditor may not charge a consumer any 

fee to modify, renew, extend, or amend a high-cost mortgage, 

or to defer any payment due under the terms of such mortgage, 

unless the modification, renewal, extension or amendment results in a lower annual percentage rate on the mortgage for 

the consumer and then only if the amount of the fee is comparable to fees imposed for similar transactions in connection 

with consumer credit transactions that are secured by a consumer’s principal dwelling and are not high-cost mortgages. 

‘‘(2) THIRD PARTIES.—A third-party may not charge a consumer any fee to— 

‘‘(A) modify, renew, extend, or amend a high-cost mortgage, or defer any payment due under the terms of such 

mortgage; 

‘‘(B) negotiate with a creditor on behalf of a consumer, 

the modification, renewal, extension, or amendment of a 

high-cost mortgage; or 

‘‘(C) negotiate with a creditor on behalf of a consumer, 

the deferral of any payment due under the terms of such 

mortgage, 

unless the modification renewal, extension or amendment results in a significantly lower annual percentage rate on the 

mortgage, or a significant reduction in the amount of the outstanding principal on the mortgage, for the consumer and then 

only if the amount of the fee is comparable to fees imposed for 

similar transactions in connection with consumer credit transactions that are secured by a consumer’s principal dwelling 

and are not high-cost mortgages. 

‘‘(3) ENFORCEMENT.—Section 130 shall be applied for purposes of paragraph (2) by— 

‘‘(A) substituting ‘third party’ for ‘creditor’each place 

such term appears; and 

‘‘(B) substituting ‘any fee charged by a third party’ for ‘finance charge’ each place such term appears.’’. 

(d) PAYOFF STATEMENT.—Section 129 of the Truth in Lending Act 

(15 U.S.C. 1639) is amended by inserting after subsection (r) (as 

added by subsection (c) of this section) the following new subsection: 

‘‘(s) PAYOFF STATEMENT.— 

‘‘(1) FEES.— 

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), no creditor or servicer may charge a fee for informing 

or transmitting to any person the balance due to pay off 

the outstanding balance on a high-cost mortgage. 


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50 

‘‘(B) TRANSACTION FEE.—When payoff information referred to in subparagraph (A) is provided by facsimile 

transmission or by a courier service, a creditor or servicer 

may charge a processing fee to cover the cost of such 

transmission or service in an amount not to exceed an 

amount that is comparable to fees imposed for similar 

services provided in connection with consumer credit 

transactions that are secured by the consumer’s principal 

dwelling and are not high-cost mortgages. 

‘‘(C) FEE DISCLOSURE.—Prior to charging a transaction 

fee as provided in subparagraph (B), a creditor or servicer 

shall disclose that payoff balances are available for free 

pursuant to subparagraph (A). 

‘‘(D) MULTIPLE REQUESTS.—If a creditor or servicer has 

provided payoff information referred to in subparagraph 

(A) without charge, other than the transaction fee allowed 

by subparagraph (B), on 4 occasions during a calendar 

year, the creditor or servicer may thereafter charge a reasonable fee for providing such information during the remainder of the calendar year. 

‘‘(2) PROMPT DELIVERY.—Payoff balances shall be provided 

within 5 business days after receiving a request by a consumer 

or a person authorized by the consumer to obtain such information. 

‘‘(3) SERVICES CONSIDERED ASSIGNEE.—For the purposes of 

this subsection, a servicer shall be considered an assignee 

under the Truth in Lending Act.’’. 

(e) PRE-LOAN COUNSELING REQUIRED.—Section 129 of the Truth 

in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (s) (as added by subsection (d) of this section) the following 

new subsection: 

‘‘(t) PRE-LOAN COUNSELING.— 

‘‘(1) IN GENERAL.—A creditor may not extend credit to a consumer under a high-cost mortgage without first receiving certification from a counselor that is approved by the Secretary of 

Housing and Urban Development, or at the discretion of the 

Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. Such counselor shall not be employed by the creditor or 

an affiliate of the creditor or be affiliated with the creditor. 

‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUNSELING.—No 

counselor may certify that a consumer has received counseling 

on the advisability of the high-cost mortgage unless the counselor can verify that the consumer has received each statement 

required (in connection with such loan) by this section or the 

Real Estate Settlement Procedures Act of 1974 with respect to 

the transaction. 

‘‘(3) REGULATIONS.—The Board may prescribe such regulations as the Board determines to be appropriate to carry out 

the requirements of paragraph (1).’’. 

(f) FLIPPING PROHIBITED.—Section 129 of the Truth in Lending 

Act (15 U.S.C. 1639) is amended by inserting after subsection (t) 

(as added by subsection (e)) the following new subsection: 

‘‘(u) FLIPPING.— 


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51 

‘‘(1) IN GENERAL.—No creditor may knowingly or intentionally engage in the unfair act or practice of flipping in connection with a high-cost mortgage. 

‘‘(2) FLIPPING DEFINED.—For purposes of this subsection, the 

term ‘flipping’ means the making of a loan or extension of credit in the form a high-cost mortgage to a consumer which refinances an existing mortgage when the new loan or extension 

of credit does not have reasonable, net tangible benefit (as determined in accordance with regulations prescribed under section 129C(b)) to the consumer considering all of the circumstances, including the terms of both the new and the refinanced loans or credit, the cost of the new loan or credit, and 

the consumer’s circumstances. 

‘‘(v) CORRECTIONS AND UNINTENTIONAL VIOLATIONS.—A creditor 

or assignee in a high cost loan who, when acting in good faith, fails 

to comply with any requirement under this section will not be 

deemed to have violated such requirement if the creditor or assignee establishes that either— 

‘‘(1) within 30 days of the loan closing and prior to the institution of any action, the consumer is notified of or discovers 

the violation, appropriate restitution is made, and whatever 

adjustments are necessary are made to the loan to either, at 

the choice of the consumer— 

‘‘(A) make the loan satisfy the requirements of this chapter; or 

‘‘(B) in the case of a high-cost mortgage, change the 

terms of the loan in a manner beneficial to the consumer 

so that the loan will no longer be a high-cost mortgage; or 

‘‘(2) within 60 days of the creditor’s discovery or receipt of 

notification of an unintentional violation or bona fide error as 

described in subsection (c) and prior to the institution of any 

action, the consumer is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are 

necessary are made to the loan to either, at the choice of the 

consumer— 

‘‘(A) make the loan satisfy the requirements of this chapter; or 

‘‘(B) in the case of a high-cost mortgage, change the 

terms of the loan in a manner beneficial so that the loan 

will no longer be a high-cost mortgage.’’. 

SEC. 9204. REGULATIONS. 

(a) IN GENERAL.—The Board of Governors of the Federal Reserve 

System shall publish regulations implementing this subtitle and 

the amendments made by this subtitle in final form before the end 

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

this Act. 

(b) CONSUMER MORTGAGE EDUCATION.— 

(1) REGULATIONS.—The Board of Governors of the Federal 

Reserve System may prescribe regulations requiring or encouraging creditors to provide consumer mortgage education to prospective customers or direct such customers to qualified consumer mortgage education or counseling programs in the vicinity of the residence of the consumer. 

(2) COORDINATION WITH STATE LAW.—No requirement established by the Board of Governors of the Federal Reserve SysVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00051 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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tem pursuant to paragraph (1) shall be construed as affecting 

or superseding any requirement under the law of any State 

with respect to consumer mortgage counseling or education. 

SEC. 9205. EFFECTIVE DATE. 

The amendments made by this subtitle shall take effect at the 

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

of this Act and shall apply to mortgages referred to in section 

103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) for which 

an application is received by the creditor after the end of such period. 

Subtitle D—Office of Housing Counseling 

SEC. 9301. SHORT TITLE. 

This subtitle may be cited as the ‘‘Expand and Preserve Home 

Ownership Through Counseling Act’’. 

SEC. 9302. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING. 

Section 4 of the Department of Housing and Urban Development 

Act (42 U.S.C. 3533) is amended by adding at the end the following 

new subsection: 

‘‘(g) OFFICE OF HOUSING COUNSELING.— ‘‘(1) ESTABLISHMENT.—There is established, in the Department, the Office of Housing Counseling. 

‘‘(2) DIRECTOR.—There is established the position of Director 

of Housing Counseling. The Director shall be the head of the 

Office of Housing Counseling and shall be appointed by, and 

shall report to, the Secretary. Such position shall be a careerreserved position in the Senior Executive Service. 

‘‘(3) FUNCTIONS.— ‘‘(A) IN GENERAL.—The Director shall have primary responsibility within the Department for all activities and 

matters relating to homeownership counseling and rental 

housing counseling, including— 

‘‘(i) research, grant administration, public outreach, 

and policy development relating to such counseling; 

and 

‘‘(ii) establishment, coordination, and administration 

of all regulations, requirements, standards, and performance measures under programs and laws administered by the Department that relate to housing counseling, homeownership counseling (including maintenance of homes), mortgage-related counseling (including home equity conversion mortgages and credit protection options to avoid foreclosure), and rental housing counseling, including the requirements, standards, 

and performance measures relating to housing counseling. 

‘‘(B) SPECIFIC FUNCTIONS.—The Director shall carry out 

the functions assigned to the Director and the Office under 

this section and any other provisions of law. Such functions shall include establishing rules necessary for— 

‘‘(i) the counseling procedures under section 

106(g)(1) of the Housing and Urban Development Act 

of 1968 (12 U.S.C. 1701x(h)(1)); 


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‘‘(ii) carrying out all other functions of the Secretary 

under section 106(g) of the Housing and Urban Development Act of 1968, including the establishment, operation, and publication of the availability of the toll-free 

telephone number under paragraph (2) of such section; 

‘‘(iii) contributing to the preparation and distribution 

of home buying information booklets pursuant to section 5 of the Real Estate Settlement Procedures Act of 

1974 (12 U.S.C. 2604); 

‘‘(iv) carrying out the certification program under 

section 106(e) of the Housing and Urban Development 

Act of 1968 (12 U.S.C. 1701x(e)); 

‘‘(v) carrying out the assistance program under section 106(a)(4) of the Housing and Urban Development 

Act of 1968, including criteria for selection of applications to receive assistance; 

‘‘(vi) carrying out any functions regarding abusive, 

deceptive, or unscrupulous lending practices relating 

to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the 

study under section 6 of the Expand and Preserve 

Home Ownership Through Counseling Act; 

‘‘(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection; 

‘‘(viii) collaborating with community-based organizations with expertise in the field of housing counseling; 

and 

‘‘(ix) providing for the building of capacity to provide 

housing counseling services in areas that lack sufficient services, including underdeveloped areas that 

lack basic water and sewer systems, electricity services, and safe, sanitary housing. 

‘‘(4) ADVISORY COMMITTEE.— 

‘‘(A) IN GENERAL.—The Secretary shall appoint an advisory committee to provide advice regarding the carrying 

out of the functions of the Director. 

‘‘(B) MEMBERS.—Such advisory committee shall consist 

of not more than 12 individuals, and the membership of 

the committee shall equally represent the mortgage and 

real estate industry, including consumers and housing 

counseling agencies certified by the Secretary. 

‘‘(C) TERMS.—Except as provided in subparagraph (D), 

each member of the advisory committee shall be appointed 

for a term of 3 years. Members may be reappointed at the 

discretion of the Secretary. 

‘‘(D) TERMS OF INITIAL APPOINTEES.—As designated by 

the Secretary at the time of appointment, of the members 

first appointed to the advisory committee, 4 shall be appointed for a term of 1 year and 4 shall be appointed for 

a term of 2 years. 

‘‘(E) PROHIBITION OF PAY; TRAVEL EXPENSES.—Members 

of the advisory committee shall serve without pay, but 

shall receive travel expenses, including per diem in lieu of 

subsistence, in accordance with applicable provisions 


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54 

under subchapter I of chapter 57 of title 5, United States 

Code. 

‘‘(F) ADVISORY ROLE ONLY.—The advisory committee 

shall have no role in reviewing or awarding housing counseling grants. 

‘‘(5) SCOPE OF HOMEOWNERSHIP COUNSELING.—In carrying 

out the responsibilities of the Director, the Director shall ensure that homeownership counseling provided by, in connection 

with, or pursuant to any function, activity, or program of the 

Department addresses the entire process of homeownership, including the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period 

of ownership of a home (including refinancing, default and 

foreclosure, and other financial decisions), and the sale or other 

disposition of a home.’’. 

SEC. 9303. COUNSELING PROCEDURES. 

(a) IN GENERAL.—Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by adding at the 

end the following new subsection: 

‘‘(g) PROCEDURES AND ACTIVITIES.— 

‘‘(1) COUNSELING PROCEDURES.— 

‘‘(A) IN GENERAL.—The Secretary shall establish, coordinate, and monitor the administration by the Department 

of Housing and Urban Development of the counseling procedures for homeownership counseling and rental housing 

counseling provided in connection with any program of the 

Department, including all requirements, standards, and 

performance measures that relate to homeownership and 

rental housing counseling. 

‘‘(B) HOMEOWNERSHIP COUNSELING.—For purposes of 

this subsection and as used in the provisions referred to in 

this subparagraph, the term ‘homeownership counseling’ 

means counseling related to homeownership and residential mortgage loans. Such term includes counseling related 

to homeownership and residential mortgage loans that is 

provided pursuant to— 

‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20)); 

‘‘(ii) in the United States Housing Act of 1937— 

‘‘(I) section 9(e) (42 U.S.C. 1437g(e)); 

‘‘(II) section 8(y)(1)(D) (42 U.S.C. 1437f(y)(1)(D)); 

‘‘(III) section 18(a)(4)(D) (42 U.S.C. 

1437p(a)(4)(D)); 

‘‘(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4)); 

‘‘(V) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4)); 

‘‘(VI) section 33(d)(2)(B) (42 U.S.C. 1437z– 

5(d)(2)(B)); 

‘‘(VII) sections 302(b)(6) and 303(b)(7) (42 U.S.C. 

1437aaa–1(b)(6), 1437aaa–2(b)(7)); and 

‘‘(VIII) section 304(c)(4) (42 U.S.C. 1437aaa– 

3(c)(4)); 

‘‘(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (42 U.S.C. 

1437f note); 


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‘‘(iv) sections 233(b)(2) and 258(b) of the CranstonGonzalez National Affordable Housing Act (42 U.S.C. 

12773(b)(2), 12808(b)); 

‘‘(v) this section and section 101(e) of the Housing 

and Urban Development Act of 1968 (12 U.S.C. 1701x, 

1701w(e)); 

‘‘(vi) section 220(d)(2)(G) of the Low-Income Housing 

Preservation and Resident Homeownership Act of 

1990 (12 U.S.C. 4110(d)(2)(G)); 

‘‘(vii) sections 422(b)(6), 423(b)(7), 424(c)(4), 

442(b)(6), and 443(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12872(b)(6), 

12873(b)(7), 12874(c)(4), 12892(b)(6), and 12893(b)(6)); 

‘‘(viii) section 491(b)(1)(F)(iii) of the McKinney-Vento 

Homeless Assistance Act (42 U.S.C. 

11408(b)(1)(F)(iii)); 

‘‘(ix) sections 202(3) and 810(b)(2)(A) of the Native 

American Housing and Self-Determination Act of 1996 

(25 U.S.C. 4132(3), 4229(b)(2)(A)); 

‘‘(x) in the National Housing Act— 

‘‘(I) in section 203 (12 U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2) 

of subsection (b), subsection (c)(2)(A), and subsection (r)(4); 

‘‘(II) subsections (a) and (c)(3) of section 237 (12 

U.S.C. 1715z–2); and 

‘‘(III) subsections (d)(2)(B) and (m)(1) of section 

255 (12 U.S.C. 1715z–20); 

‘‘(xi) section 502(h)(4)(B) of the Housing Act of 1949 

(42 U.S.C. 1472(h)(4)(B)); 

‘‘(xii) section 508 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z–7); and 

‘‘(xiii) section 106 of the Energy Policy Act of 1992 

(42 U.S.C. 12712 note). 

‘‘(C) RENTAL HOUSING COUNSELING.—For purposes of this 

subsection, the term ‘rental housing counseling’ means 

counseling related to rental of residential property, which 

may include counseling regarding future homeownership 

opportunities and providing referrals for renters and prospective renters to entities providing counseling and shall 

include counseling related to such topics that is provided 

pursuant to— 

‘‘(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20)); 

‘‘(ii) in the United States Housing Act of 1937— 

‘‘(I) section 9(e) (42 U.S.C. 1437g(e)); 

‘‘(II) section 18(a)(4)(D) (42 U.S.C. 

1437p(a)(4)(D)); 

‘‘(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4)); 

‘‘(IV) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4)); 

‘‘(V) section 33(d)(2)(B) (42 U.S.C. 1437z– 

5(d)(2)(B)); and 

‘‘(VI) section 302(b)(6) (42 U.S.C. 1437aaa– 

1(b)(6)); 


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‘‘(iii) section 233(b)(2) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12773(b)(2)); 

‘‘(iv) section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x); 

‘‘(v) section 422(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12872(b)(6)); 

‘‘(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento 

Homeless Assistance Act (42 U.S.C. 

11408(b)(1)(F)(iii)); 

‘‘(vii) sections 202(3) and 810(b)(2)(A) of the Native 

American Housing and Self-Determination Act of 1996 

(25 U.S.C. 4132(3), 4229(b)(2)(A)); and 

‘‘(viii) the rental assistance program under section 8 

of the United States Housing Act of 1937 (42 U.S.C. 

1437f). 

‘‘(2) STANDARDS FOR MATERIALS.—The Secretary, in consultation with the advisory committee established under subsection 

(g)(4) of the Department of Housing and Urban Development 

Act, shall establish standards for materials and forms to be 

used, as appropriate, by organizations providing homeownership counseling services, including any recipients of assistance 

pursuant to subsection (a)(4). 

‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 

‘‘(A) CERTIFICATION.—The Secretary shall provide for the 

certification of various computer software programs for 

consumers to use in evaluating different residential mortgage loan proposals. The Secretary shall require, for such 

certification, that the mortgage software systems take into 

account— 

‘‘(i) the consumer’s financial situation and the cost of 

maintaining a home, including insurance, taxes, and 

utilities; 

‘‘(ii) the amount of time the consumer expects to remain in the home or expected time to maturity of the 

loan; and 

‘‘(iii) such other factors as the Secretary considers 

appropriate to assist the consumer in evaluating 

whether to pay points, to lock in an interest rate, to 

select an adjustable or fixed rate loan, to select a conventional or government-insured or guaranteed loan 

and to make other choices during the loan application 

process. 

If the Secretary determines that available existing software is inadequate to assist consumers during the residential mortgage loan application process, the Secretary shall 

arrange for the development by private sector software 

companies of new mortgage software systems that meet 

the Secretary’s specifications. 

‘‘(B) USE AND INITIAL AVAILABILITY.—Such certified computer software programs shall be used to supplement, not 

replace, housing counseling. The Secretary shall provide 

that such programs are initially used only in connection 

with the assistance of housing counselors certified pursuant to subsection (e). 


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‘‘(C) AVAILABILITY.—After a period of initial availability 

under subparagraph (B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make 

mortgage software systems certified pursuant to this paragraph widely available through the Internet and at public 

locations, including public libraries, senior-citizen centers, 

public housing sites, offices of public housing agencies that 

administer rental housing assistance vouchers, and housing counseling centers. 

‘‘(D) BUDGET COMPLIANCE.—This paragraph shall be effective only to the extent that amounts to carry out this 

paragraph are made available in advance in appropriations Acts. 

‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA CAMPAIGNS TO

PROMOTE HOUSING COUNSELING.— 

‘‘(A) IN GENERAL.—The Director of Housing Counseling 

shall develop, implement, and conduct national public 

service multimedia campaigns designed to make persons 

facing mortgage foreclosure, persons considering a 

subprime mortgage loan to purchase a home, elderly persons, persons who face language barriers, low-income persons, minorities, and other potentially vulnerable consumers aware that it is advisable, before seeking or maintaining a residential mortgage loan, to obtain homeownership counseling from an unbiased and reliable sources and 

that such homeownership counseling is available, including through programs sponsored by the Secretary of Housing and Urban Development. 

‘‘(B) CONTACT INFORMATION.—Each segment of the 

multimedia campaign under subparagraph (A) shall publicize the toll-free telephone number and website of the Department of Housing and Urban Development through 

which persons seeking housing counseling can locate a 

housing counseling agency in their State that is certified 

by the Secretary of Housing and Urban Development and 

can provide advice on buying a home, renting, defaults, 

foreclosures, credit issues, and reverse mortgages. 

‘‘(C) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Secretary, not to exceed 

$3,000,000 for fiscal years 2009, 2010, and 2011, for the 

development, implementation, and conduct of national 

public service multimedia campaigns under this paragraph. 

‘‘(D) FORECLOSURE RESCUE EDUCATION PROGRAMS.— 

‘‘(i) IN GENERAL.—Ten percent of any funds appropriated pursuant to the authorization under subparagraph (C) shall be used by the Director of Housing 

Counseling to conduct an education program in areas 

that have a high density of foreclosure. Such program 

shall involve direct mailings to persons living in such 

areas describing— 

‘‘(I) tips on avoiding foreclosure rescue scams; 

‘‘(II) tips on avoiding predatory lending mortgage agreements; 


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‘‘(III) tips on avoiding for-profit foreclosure counseling services; and 

‘‘(IV) local counseling resources that are approved by the Department of Housing and Urban 

Development. 

‘‘(ii) PROGRAM EMPHASIS.—In conducting the education program described under clause (i), the Director 

of Housing Counseling shall also place an emphasis on 

serving communities that have a high percentage of 

retirement communities or a high percentage of lowincome minority communities. 

‘‘(iii) TERMS DEFINED.—For purposes of this subparagraph: 

‘‘(I) HIGH DENSITY OF FORECLOSURES.—An area 

has a ‘high density of foreclosures’ if such area is 

one of the metropolitan statistical areas (as that 

term is defined by the Director of the Office of 

Management and Budget) with the highest home 

foreclosure rates. 

‘‘(II) HIGH PERCENTAGE OF RETIREMENT COMMUNITIES.—An area has a ‘high percentage of retirement communities’ if such area is one of the metropolitan statistical areas (as that term is defined 

by the Director of the Office of Management and 

Budget) with the highest percentage of residents 

aged 65 or older. 

‘‘(III) HIGH PERCENTAGE OF LOW-INCOME MINORITY COMMUNITIES.—An area has a ‘high percentage of low-income minority communities’ if such 

area contains a higher-than-normal percentage of 

residents who are both minorities and low-income, 

as defined by the Director of Housing Counseling. 

‘‘(5) EDUCATION PROGRAMS.—The Secretary shall provide advice and technical assistance to States, units of general local 

government, and nonprofit organizations regarding the establishment and operation of, including assistance with the development of content and materials for, educational programs to 

inform and educate consumers, particularly those most vulnerable with respect to residential mortgage loans (such as elderly 

persons, persons facing language barriers, low-income persons, 

minorities, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing, home equity 

loans, home repair loans, and where appropriate by region, any 

requirements and costs associated with obtaining flood or other 

disaster-specific insurance coverage.’’. 

(b) CONFORMING AMENDMENTS TO GRANT PROGRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZATIONS.—Section 106(c)(5)(A)(ii) 

of the Housing and Urban Development Act of 1968 (12 U.S.C. 

1701x(c)(5)(A)(ii)) is amended— 

(1) in subclause (III), by striking ‘‘and’’ at the end; 

(2) in subclause (IV) by striking the period at the end and 

inserting ‘‘; and’’; and 

(3) by inserting after subclause (IV) the following new subclause: 


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‘‘(V) notify the housing or mortgage applicant of 

the availability of mortgage software systems provided pursuant to subsection (g)(3).’’. 

SEC. 9304. GRANTS FOR HOUSING COUNSELING ASSISTANCE. 

Section 106(a) of the Housing and Urban Development Act of 

1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at the end the 

following new paragraph: 

‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING ASSISTANCE.— 

‘‘(A) IN GENERAL.—The Secretary shall make financial assistance available under this paragraph to HUD-approved housing 

counseling agencies and State housing finance agencies. 

‘‘(B) QUALIFIED ENTITIES.—The Secretary shall establish 

standards and guidelines for eligibility of organizations (including governmental and nonprofit organizations) to receive assistance under this paragraph, in accordance with subparagraph (D). 

‘‘(C) DISTRIBUTION.—Assistance made available under this 

paragraph shall be distributed in a manner that encourages efficient and successful counseling programs and that ensures 

adequate distribution of amounts for rural areas having traditionally low levels of access to such counseling services, including areas with insufficient access to the Internet. In distributing such assistance, the Secretary may give priority consideration to entities serving areas with the highest home foreclosure rates. 

‘‘(D) LIMITATION ON DISTRIBUTION OF ASSISTANCE.— 

‘‘(i) IN GENERAL.—None of the amounts made available 

under this paragraph shall be distributed to— 

‘‘(I) any organization which has been convicted for a 

violation under Federal law relating to an election for 

Federal office; or 

‘‘(II) any organization which employs applicable individuals. 

‘‘(ii) DEFINITION OF APPLICABLE INDIVIDUALS.—In this 

subparagraph, the term ‘applicable individual’ means an 

individual who— 

‘‘(I) is— 

‘‘(aa) employed by the organization in a permanent or temporary capacity; 

‘‘(bb) contracted or retained by the organization; 

or 

‘‘(cc) acting on behalf of, or with the express or 

apparent authority of, the organization; and 

‘‘(II) has been convicted for a violation under Federal law relating to an election for Federal office. 

‘‘(E) GRANTMAKING PROCESS.—In making assistance available 

under this paragraph, the Secretary shall consider appropriate 

ways of streamlining and improving the processes for grant application, review, approval, and award. 

‘‘(F) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated $45,000,000 for each of fiscal years 

2009 through 2012 for— 

‘‘(i) the operations of the Office of Housing Counseling of 

the Department of Housing and Urban Development; 


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‘‘(ii) the responsibilities of the Director of Housing Counseling under paragraphs (2) through (5) of subsection (g); 

and 

‘‘(iii) assistance pursuant to this paragraph for entities 

providing homeownership and rental counseling.’’. 

SEC. 9305. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS 

UNDER HUD PROGRAMS. 

Section 106(e) of the Housing and Urban Development Act of 

1968 (12 U.S.C. 1701x(e)) is amended— 

(1) by striking paragraph (1) and inserting the following new 

paragraph: 

‘‘(1) REQUIREMENT FOR ASSISTANCE.—An organization may 

not receive assistance for counseling activities under subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or 

under section 101(e), unless the organization, or the individuals through which the organization provides such counseling, 

has been certified by the Secretary under this subsection as 

competent to provide such counseling.’’; 

(2) in paragraph (2)— 

(A) by inserting ‘‘and for certifying organizations’’ before 

the period at the end of the first sentence; and 

(B) in the second sentence by striking ‘‘for certification’’ 

and inserting ‘‘, for certification of an organization, that 

each individual through which the organization provides 

counseling shall demonstrate, and, for certification of an 

individual,’’; 

(3) in paragraph (3), by inserting ‘‘organizations and’’ before 

‘‘individuals’’; 

(4) by redesignating paragraph (3) as paragraph (5); and 

(5) by inserting after paragraph (2) the following new paragraphs: 

‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—Any homeownership counseling or rental housing counseling (as such terms 

are defined in subsection (g)(1)) required under, or provided in 

connection with, any program administered by the Department 

of Housing and Urban Development shall be provided only by 

organizations or counselors certified by the Secretary under 

this subsection as competent to provide such counseling. 

‘‘(4) OUTREACH.—The Secretary shall take such actions as 

the Secretary considers appropriate to ensure that individuals 

and organizations providing homeownership or rental housing 

counseling are aware of the certification requirements and 

standards of this subsection and of the training and certification programs under subsection (f).’’. 

SEC. 9306. STUDY OF DEFAULTS AND FORECLOSURES. 

The Secretary of Housing and Urban Development shall conduct 

an extensive study of the root causes of default and foreclosure of 

home loans, using as much empirical data as are available. The 

study shall also examine the role of escrow accounts in helping 

prime and nonprime borrowers to avoid defaults and foreclosures, 

and the role of computer registries of mortgages, including those 

used for trading mortgage loans. Not later than 12 months after 

the date of the enactment of this Act, the Secretary shall submit 

to the Congress a preliminary report regarding the study. Not later 


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than 24 months after such date of enactment, the Secretary shall 

submit a final report regarding the results of the study, which shall 

include any recommended legislation relating to the study, and recommendations for best practices and for a process to identify populations that need counseling the most. 

SEC. 9307. DEFAULT AND FORECLOSURE DATABASE. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development, in consultation with the Federal agencies responsible 

for regulation of banking and financial institutions involved in residential mortgage lending and servicing, shall establish and maintain a database of information on foreclosures and defaults on 

mortgage loans for one- to four-unit residential properties and shall 

make such information publicly available. 

(b) CENSUS TRACT DATA.—Information in the database shall be 

collected, aggregated, and made available on a census tract basis. 

(c) REQUIREMENTS.—Information collected and made available 

through the database shall include— 

(1) the number and percentage of such mortgage loans that 

are delinquent by more than 30 days; 

(2) the number and percentage of such mortgage loans that 

are delinquent by more than 90 days; 

(3) the number and percentage of such properties that are 

real estate-owned; 

(4) number and percentage of such mortgage loans that are 

in the foreclosure process; 

(5) the number and percentage of such mortgage loans that 

have an outstanding principal obligation amount that is greater than the value of the property for which the loan was made; 

and 

(6) such other information as the Secretary considers appropriate. 

SEC. 9308. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS. 

Section 106 of the Housing and Urban Development Act of 1968 

(12 U.S.C. 1701x), as amended by the preceding provisions of this 

subtitle, is further amended by adding at the end the following new 

subsection: 

‘‘(h) DEFINITIONS.—For purposes of this section: 

‘‘(1) NONPROFIT ORGANIZATION.—The term ‘nonprofit organization’ has the meaning given such term in section 104(5) of 

the Cranston-Gonzalez National Affordable Housing Act (42 

U.S.C. 12704(5)), except that subparagraph (D) of such section 

shall not apply for purposes of this section. 

‘‘(2) STATE.—The term ‘State’ means each of the several 

States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Islands, 

Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession of the United 

States. 

‘‘(3) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘unit 

of general local government’ means any city, county, parish, 

town, township, borough, village, or other general purpose political subdivision of a State. 


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‘‘(4) HUD-APPROVED COUNSELING AGENCY.—The term ‘HUDapproved counseling agency’ means a private or public nonprofit organization that is— 

‘‘(A) exempt from taxation under section 501(c) of the Internal Revenue Code of 1986; and 

‘‘(B) certified by the Secretary to provide housing counseling services. 

‘‘(5) STATE HOUSING FINANCE AGENCY.—The term ‘State housing finance agency’ means any public body, agency, or instrumentality specifically created under State statute that is 

authorised to finance activities designed to provide housing 

and related facilities throughout an entire State through land 

acquisition, construction, or rehabilitation.’’. 

SEC. 9309. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS. 

Section 106 of the Housing and Urban Development Act of 1968 

(12 U.S.C. 1701x), as amended by the preceding provisions of this 

subtitle, is further amended by adding at the end the following: 

‘‘(i) ACCOUNTABILITY FOR RECIPIENTS OF COVERED ASSISTANCE.— ‘‘(1) TRACKING OF FUNDS.—The Secretary shall— 

‘‘(A) develop and maintain a system to ensure that any 

organization or entity that receives any covered assistance 

uses all amounts of covered assistance in accordance with 

this section or section 9115 of the Mortgage Reform and 

Anti-Predatory Lending Act, as applicable, the regulations 

issued under this section or such section 9115, as applicable, and any requirements or conditions under which such 

amounts were provided; and 

‘‘(B) require any organization or entity, as a condition of 

receipt of any covered assistance, to agree to comply with 

such requirements regarding covered assistance as the 

Secretary shall establish, which shall include— 

‘‘(i) appropriate periodic financial and grant activity 

reporting, record retention, and audit requirements for 

the duration of the covered assistance to the organization or entity to ensure compliance with the limitations and requirements of this section or section 9115 

of the Mortgage Reform and Anti-Predatory Lending 

Act, as applicable, the regulations under this section 

or such section 9115, as applicable, and any requirements or conditions under which such amounts were 

provided; and 

‘‘(ii) any other requirements that the Secretary determines are necessary to ensure appropriate administration and compliance. 

‘‘(2) MISUSE OF FUNDS.—If any organization or entity that receives any covered assistance is determined by the Secretary to 

have used any covered assistance in a manner that is materially in violation of this section or section 9115 of the Mortgage 

Reform and Anti-Predatory Lending Act, as applicable, the regulations issued under this section or such section 9115, as applicable, or any requirements or conditions under which such 

assistance was provided— 

‘‘(A) the Secretary shall require that, within 12 months 

after the determination of such misuse, the organization or 


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entity shall reimburse the Secretary for such misused 

amounts and return to the Secretary any such amounts 

that remain unused or uncommitted for use; and 

‘‘(B) such organization or entity shall be ineligible, at 

any time after such determination, to apply for or receive 

any further covered assistance. 

The remedies under this paragraph are in addition to any 

other remedies that may be available under law. 

‘‘(3) COVERED ASSISTANCE.—For purposes of this subsection, 

the term ‘covered assistance’ means any grant or other financial assistance provided under— 

‘‘(A) this section; or 

‘‘(B) section 9115 of the Mortgage Reform and Anti-Predatory Lending Act.’’. 

SEC. 9310. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET. 

Section 5 of the Real Estate Settlement Procedures Act of 1974 

(12 U.S.C. 2604) is amended— 

(1) in the section heading, by striking ‘‘SPECIAL’’ and inserting ‘‘HOME BUYING’’; 

(2) by striking subsections (a) and (b) and inserting the following new subsections: 

‘‘(a) PREPARATION AND DISTRIBUTION.—The Director of the Consumer Financial Protection Agency (hereafter in this section referred to as the ‘Director’) shall prepare, at least once every 5 

years, a booklet to help consumers applying for federally related 

mortgage loans to understand the nature and costs of real estate 

settlement services. The Director shall prepare the booklet in various languages and cultural styles, as the Director determines to be 

appropriate, so that the booklet is understandable and accessible to 

homebuyers of different ethnic and cultural backgrounds. The Director shall distribute such booklets to all lenders that make federally related mortgage loans. The Director shall also distribute to 

such lenders lists, organized by location, of homeownership counselors certified under section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying 

with the requirement under subsection (c) of this section. 

‘‘(b) CONTENTS.—Each booklet shall be in such form and detail as 

the Director shall prescribe and, in addition to such other information as the Director may provide, shall include in plain and understandable language the following information: 

‘‘(1) A description and explanation of the nature and purpose 

of the costs incident to a real estate settlement or a federally 

related mortgage loan. The description and explanation shall 

provide general information about the mortgage process as well 

as specific information concerning, at a minimum— 

‘‘(A) balloon payments; 

‘‘(B) prepayment penalties; 

‘‘(C) the advantages of prepayment; and 

‘‘(D) the trade-off between closing costs and the interest 

rate over the life of the loan. 

‘‘(2) An explanation and sample of the uniform settlement 

statement required by section 4. 

‘‘(3) A list and explanation of lending practices, including 

those prohibited by the Truth in Lending Act or other applicaVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00063 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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ble Federal law, and of other unfair practices and unreasonable 

or unnecessary charges to be avoided by the prospective buyer 

with respect to a real estate settlement. 

‘‘(4) A list and explanation of questions a consumer obtaining 

a federally related mortgage loan should ask regarding the 

loan, including whether the consumer will have the ability to 

repay the loan, whether the consumer sufficiently shopped for 

the loan, whether the loan terms include prepayment penalties 

or balloon payments, and whether the loan will benefit the borrower. 

‘‘(5) An explanation of the right of rescission as to certain 

transactions provided by sections 125 and 129 of the Truth in 

Lending Act. 

‘‘(6) A brief explanation of the nature of a variable rate mortgage and a reference to the booklet entitled ‘Consumer Handbook on Adjustable Rate Mortgages’, published by the Director, 

or to any suitable substitute of such booklet that the Director 

may subsequently adopt pursuant to such section. 

‘‘(7) A brief explanation of the nature of a home equity line 

of credit and a reference to the pamphlet required to be provided under section 127A of the Truth in Lending Act. 

‘‘(8) Information about homeownership counseling services 

made available pursuant to section 106(a)(4) of the Housing 

and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a 

recommendation that the consumer use such services, and notification that a list of certified providers of homeownership 

counseling in the area, and their contact information, is available. 

‘‘(9) An explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate and the requirements under section 10 of this 

Act regarding such accounts. 

‘‘(10) An explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary 

services incidental to a real estate settlement. 

‘‘(11) An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction. 

‘‘(12) An explanation of the nature and purpose of real estate 

appraisals, including the difference between an appraisal and 

a home inspection. 

‘‘(13) Notice that the Office of Housing of the Department of 

Housing and Urban Development has made publicly available 

a brochure regarding loan fraud and a World Wide Web address and toll-free telephone number for obtaining the brochure. 

The booklet prepared pursuant to this section shall take into consideration differences in real estate settlement procedures that may 

exist among the several States and territories of the United States 

and among separate political subdivisions within the same State 

and territory.’’; 

(3) in subsection (c), by inserting at the end the following 

new sentence: ‘‘Each lender shall also include with the booklet 

a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 106(e) of the HousVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00064 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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ing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) 

and located in the area of the lender.’’; and 

(4) in subsection (d), by inserting after the period at the end 

of the first sentence the following: ‘‘The lender shall provide 

the HUD-issued booklet in the version that is most appropriate 

for the person receiving it.’’. 

SEC. 9311. HOME INSPECTION COUNSELING. 

(a) PUBLIC OUTREACH.— (1) IN GENERAL.—The Secretary of Housing and Urban Development (in this section referred to as the ‘‘Secretary’’) shall 

take such actions as may be necessary to inform potential 

homebuyers of the availability and importance of obtaining an 

independent home inspection. Such actions shall include— 

(A) publication of the HUD/FHA form HUD 92564–CN 

entitled ‘‘For Your Protection: Get a Home Inspection’’, in 

both English and Spanish languages; 

(B) publication of the HUD/FHA booklet entitled ‘‘For 

Your Protection: Get a Home Inspection’’, in both English 

and Spanish languages; 

(C) development and publication of a HUD booklet entitled ‘‘For Your Protection—Get a Home Inspection’’ that 

does not reference FHA-insured homes, in both English 

and Spanish languages; and 

(D) publication of the HUD document entitled ‘‘Ten Important Questions To Ask Your Home Inspector’’, in both 

English and Spanish languages. 

(2) AVAILABILITY.—The Secretary shall make the materials 

specified in paragraph (1) available for electronic access and, 

where appropriate, inform potential homebuyers of such availability through home purchase counseling public service announcements and toll-free telephone hotlines of the Department of Housing and Urban Development. The Secretary shall 

give special emphasis to reaching first-time and low-income 

homebuyers with these materials and efforts. 

(3) UPDATING.—The Secretary may periodically update and 

revise such materials, as the Secretary determines to be appropriate. 

(b) REQUIREMENT FOR FHA-APPROVED LENDERS.—Each mortgagee approved for participation in the mortgage insurance programs under title II of the National Housing Act shall provide prospective homebuyers, at first contact, whether upon pre-qualification, pre-approval, or initial application, the materials specified in 

subparagraphs (A), (B), and (D) of subsection (a)(1). 

(c) REQUIREMENTS FOR HUD-APPROVED COUNSELING AGENCIES.— 

Each counseling agency certified pursuant by the Secretary to provide housing counseling services shall provide each of their clients, 

as part of the home purchase counseling process, the materials 

specified in subparagraphs (C) and (D) of subsection (a)(1). 

(d) TRAINING.—Training provided the Department of Housing 

and Urban Development for housing counseling agencies, whether 

such training is provided directly by the Department or otherwise, 

shall include— 

(1) providing information on counseling potential homebuyers of the availability and importance of getting an independent home inspection; 


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(2) providing information about the home inspection process, 

including the reasons for specific inspections such as radon and 

lead-based paint testing; 

(3) providing information about advising potential homebuyers on how to locate and select a qualified home inspector; 

and 

(4) review of home inspection public outreach materials of 

the Department. 

SEC. 9312. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE 

SCAMS. 

(a) ASSISTANCE TO NRC.—Notwithstanding any other provision of 

law, of any amounts made available for any fiscal year pursuant 

to section 106(a)(4)(F) of the Housing and Urban Development Act 

of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by section 9304 of this 

title), 10 percent shall be used only for assistance to the Neighborhood Reinvestment Corporation for activities, in consultation with 

servicers of residential mortgage loans, to provide notice to borrowers under such loans who are delinquent with respect to payments due under such loans that makes such borrowers aware of 

the dangers of fraudulent activities associated with foreclosure. 

(b) NOTICE.—The Neighborhood Reinvestment Corporation, in 

consultation with servicers of residential mortgage loans, shall use 

the amounts provided pursuant to subsection (a) to carry out activities to inform borrowers under residential mortgage loans— 

(1) that the foreclosure process is complex and can be confusing; 

(2) that the borrower may be approached during the foreclosure process by persons regarding saving their home and 

they should use caution in any such dealings; 

(3) that there are Federal Government and nonprofit agencies that may provide information about the foreclosure process, including the Department of Housing and Urban Development; 

(4) that they should contact their lender immediately, contact the Department of Housing and Urban Development to 

find a housing counseling agency certified by the Department 

to assist in avoiding foreclosure, or visit the Department’s 

website regarding tips for avoiding foreclosure; and 

(5) of the telephone number of the loan servicer or successor, 

the telephone number of the Department of Housing and 

Urban Development housing counseling line, and the Uniform 

Resource Locators (URLs) for the Department of Housing and 

Urban Development websites for housing counseling and for 

tips for avoiding foreclosure. 

Subtitle E—Mortgage Servicing 

SEC. 9401. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN 

CONSUMER CREDIT TRANSACTIONS. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129C (as 

added by section 9101) the following new section: 


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‘‘SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN 

CONSUMER CREDIT TRANSACTIONS. 

‘‘(a) IN GENERAL.—Except as provided in subsection (b), (c), or 

(d), a creditor, in connection with the formation or consummation 

of a consumer credit transaction secured by a first lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, shall 

establish, before the consummation of such transaction, an escrow 

or impound account for the payment of taxes and hazard insurance, 

and, if applicable, flood insurance, mortgage insurance, ground 

rents, and any other required periodic payments or premiums with 

respect to the property or the loan terms, as provided in, and in 

accordance with, this section. 

‘‘(b) WHEN REQUIRED.—No impound, trust, or other type of account for the payment of property taxes, insurance premiums, or 

other purposes relating to the property may be required as a condition of a real property sale contract or a loan secured by a first 

deed of trust or mortgage on the principal dwelling of the consumer, other than a consumer credit transaction under an open 

end credit plan or a reverse mortgage, except when— 

‘‘(1) any such impound, trust, or other type of escrow or impound account for such purposes is required by Federal or 

State law; 

‘‘(2) a loan is made, guaranteed, or insured by a State or 

Federal governmental lending or insuring agency; 

‘‘(3) the transaction is secured by a first mortgage or lien on 

the consumer’s principal dwelling having an original principal 

obligation amount that— 

‘‘(A) does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date 

such interest rate set, pursuant to the sixth sentence of 

section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate for a 

comparable transaction by 1.5 or more percentage points; 

or 

‘‘(B) exceeds the amount of the maximum limitation on 

the original principal obligation of mortgage in effect for a 

residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 

305(a)(2) the Federal Home Loan Mortgage Corporation 

Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate 

will exceed the average prime offer rate for a comparable 

transaction by 2.5 or more percentage points; or 

‘‘(4) so required pursuant to regulation. 

‘‘(c) DURATION OF MANDATORY ESCROW OR IMPOUND ACCOUNT.— 

An escrow or impound account established pursuant to subsection 

(b), shall remain in existence for a minimum period of 5 years, beginning with the date of the consummation of the loan, and until 

such borrower has sufficient equity in the dwelling securing the 

consumer credit transaction so as to no longer be required to maintain private mortgage insurance, or such other period as may be 

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linquency, unless the underlying mortgage establishing the account 

is terminated. 

‘‘(d) LIMITED EXEMPTIONS FOR LOANS SECURED BY SHARES IN A

COOPERATIVE AND FOR CERTAIN CONDOMINIUM UNITS.—Escrow accounts need not be established for loans secured by shares in a cooperative. Insurance premiums need not be included in escrow accounts for loans secured by condominium units, where the condominium association has an obligation to the condominium unit 

owners to maintain a master policy insuring condominium units. 

‘‘(e) CLARIFICATION ON ESCROW ACCOUNTS FOR LOANS NOT MEET- ING STATUTORY TEST.—For mortgages not covered by the requirements of subsection (b), no provision of this section shall be construed as precluding the establishment of an impound, trust, or 

other type of account for the payment of property taxes, insurance 

premiums, or other purposes relating to the property— 

‘‘(1) on terms mutually agreeable to the parties to the loan; 

‘‘(2) at the discretion of the lender or servicer, as provided by 

the contract between the lender or servicer and the borrower; 

or 

‘‘(3) pursuant to the requirements for the escrowing of flood 

insurance payments for regulated lending institutions in section 102(d) of the Flood Disaster Protection Act of 1973. 

‘‘(f) ADMINISTRATION OF MANDATORY ESCROW OR IMPOUND AC- COUNTS.— 

‘‘(1) IN GENERAL.—Except as may otherwise be provided for 

in this title or in regulations prescribed by the Board, escrow 

or impound accounts established pursuant to subsection (b) 

shall be established in a federally insured depository institution. 

‘‘(2) ADMINISTRATION.—Except as provided in this section or 

regulations prescribed under this section, an escrow or impound account subject to this section shall be administered in 

accordance with— 

‘‘(A) the Real Estate Settlement Procedures Act of 1974 

and regulations prescribed under such Act; 

‘‘(B) the Flood Disaster Protection Act of 1973 and regulations prescribed under such Act; and 

‘‘(C) the law of the State, if applicable, where the real 

property securing the consumer credit transaction is located. 

‘‘(3) APPLICABILITY OF PAYMENT OF INTEREST.—If prescribed 

by applicable State or Federal law, each creditor shall pay interest to the consumer on the amount held in any impound, 

trust, or escrow account that is subject to this section in the 

manner as prescribed by that applicable State or Federal law. 

‘‘(4) PENALTY COORDINATION WITH RESPA.—Any action or 

omission on the part of any person which constitutes a violation of the Real Estate Settlement Procedures Act of 1974 or 

any regulation prescribed under such Act for which the person 

has paid any fine, civil money penalty, or other damages shall 

not give rise to any additional fine, civil money penalty, or 

other damages under this section, unless the action or omission 

also constitutes a direct violation of this section. 

‘‘(g) DISCLOSURES RELATING TO MANDATORY ESCROW OR IMPOUND

ACCOUNT.—In the case of any impound, trust, or escrow account 


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that is subject to this section, the creditor shall disclose by written 

notice to the consumer at least 3 business days before the consummation of the consumer credit transaction giving rise to such 

account or in accordance with timeframes established in prescribed 

regulations the following information: 

‘‘(1) The fact that an escrow or impound account will be established at consummation of the transaction. 

‘‘(2) The amount required at closing to initially fund the escrow or impound account. 

‘‘(3) The amount, in the initial year after the consummation 

of the transaction, of the estimated taxes and hazard insurance, including flood insurance, if applicable, and any other required periodic payments or premiums that reflects, as appropriate, either the taxable assessed value of the real property 

securing the transaction, including the value of any improvements on the property or to be constructed on the property 

(whether or not such construction will be financed from the 

proceeds of the transaction) or the replacement costs of the 

property. 

‘‘(4) The estimated monthly amount payable to be escrowed 

for taxes, hazard insurance (including flood insurance, if applicable) and any other required periodic payments or premiums. 

‘‘(5) The fact that, if the consumer chooses to terminate the 

account at the appropriate time in the future, the consumer 

will become responsible for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other 

required periodic payments or premiums on the property unless a new escrow or impound account is established. 

‘‘(6) Such other information as the Federal banking agencies 

jointly determine necessary for the protection of the consumer. 

‘‘(h) DEFINITIONS.—For purposes of this section, the following 

definitions shall apply: 

‘‘(1) FLOOD INSURANCE.—The term ‘flood insurance’ means 

flood insurance coverage provided under the national flood insurance program pursuant to the National Flood Insurance Act 

of 1968. 

‘‘(2) HAZARD INSURANCE.—The term ‘hazard insurance’ shall 

have the same meaning as provided for ‘hazard insurance’, 

‘casualty insurance’, ‘homeowner’s insurance’, or other similar 

term under the law of the State where the real property securing the consumer credit transaction is located.’’. 

(b) IMPLEMENTATION.— 

(1) REGULATIONS.—The Board of Governors of the Federal 

Reserve System, the Comptroller of the Currency, the Director 

of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration 

Board, (hereafter in this title referred to as the ‘‘Federal banking agencies’’) and the Federal Trade Commission shall prescribe, in final form, such regulations as determined to be necessary to implement the amendments made by subsection (a) 

before the end of the 180-day period beginning on the date of 

the enactment of this Act. 

(2) EFFECTIVE DATE.—The amendments made by subsection 

(a) shall only apply to covered mortgage loans consummated 


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after the end of the 1-year period beginning on the date of the 

publication of final regulations in the Federal Register. 

(c) CLERICAL AMENDMENT.—The table of sections for chapter 2 of 

the Truth in Lending Act is amended by inserting after the item 

relating to section 129C (as added by section 9101) the following 

new item: 

‘‘129D. Escrow or impound accounts relating to certain consumer credit transactions.’’. 

SEC. 9402. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO 

WAIVE ESCROW SERVICES. 

(a) IN GENERAL.—Section 129D of the Truth in Lending Act (as 

added by section 9401) is amended by adding at the end the following new subsection: 

‘‘(i) DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE

ESCROW SERVICES.— ‘‘(1) IN GENERAL.—If— 

‘‘(A) an impound, trust, or other type of account for the 

payment of property taxes, insurance premiums, or other 

purposes relating to real property securing a consumer 

credit transaction is not established in connection with the 

transaction; or 

‘‘(B) a consumer chooses, and provides written notice to 

the creditor or servicer of such choice, at any time after 

such an account is established in connection with any such 

transaction and in accordance with any statute, regulation, 

or contractual agreement, to close such account, 

the creditor or servicer shall provide a timely and clearly written disclosure to the consumer that advises the consumer of 

the responsibilities of the consumer and implications for the 

consumer in the absence of any such account. 

‘‘(2) DISCLOSURE REQUIREMENTS.—Any disclosure provided to 

a consumer under paragraph (1) shall include the following: 

‘‘(A) Information concerning any applicable fees or costs 

associated with either the non-establishment of any such 

account at the time of the transaction, or any subsequent 

closure of any such account. 

‘‘(B) A clear and prominent notice that the consumer is 

responsible for personally and directly paying the nonescrowed items, in addition to paying the mortgage loan 

payment, in the absence of any such account, and the fact 

that the costs for taxes, insurance, and related fees can be 

substantial. 

‘‘(C) A clear explanation of the consequences of any failure to pay non-escrowed items, including the possible requirement for the forced placement of insurance by the 

creditor or servicer and the potentially higher cost (including any potential commission payments to the servicer) or 

reduced coverage for the consumer in the event of any 

such creditor-placed insurance. 

‘‘(D) Such other information as the Federal banking 

agencies jointly determine necessary for the protection of 

the consumer.’’. 

(b) IMPLEMENTATION.— 

(1) REGULATIONS.—The Federal banking agencies and the 

Federal Trade Commission shall prescribe, in final form, such 


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regulations as such agencies determine to be necessary to implement the amendments made by subsection (a) before the 

end of the 180-day period beginning on the date of the enactment of this Act. 

(2) EFFECTIVE DATE.—The amendments made by subsection 

(a) shall only apply in accordance with the regulations established in paragraph (1) and beginning on the date occurring 

180-days after the date of the publication of final regulations 

in the Federal Register. 

SEC. 9403. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 

AMENDMENTS. 

(a) SERVICER PROHIBITIONS.—Section 6 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end the following new subsections: 

‘‘(k) SERVICER PROHIBITIONS.— ‘‘(1) IN GENERAL.—A servicer of a federally related mortgage 

shall not— 

‘‘(A) obtain force-placed hazard insurance unless there is 

a reasonable basis to believe the borrower has failed to 

comply with the loan contract’s requirements to maintain 

property insurance; 

‘‘(B) charge fees for responding to valid qualified written 

requests (as defined in regulations which the Secretary 

shall prescribe) under this section; 

‘‘(C) fail to take timely action to respond to a borrower’s 

requests to correct errors relating to allocation of payments, final balances for purposes of paying off the loan, 

or avoiding foreclosure, or other standard servicer’s duties; 

‘‘(D) fail to respond within 10 business days to a request 

from a borrower to provide the identity, address, and other 

relevant contact information about the owner assignee of 

the loan; or 

‘‘(E) fail to comply with any other obligation found by 

the Secretary, by regulation, to be appropriate to carry out 

the consumer protection purposes of this Act. 

‘‘(2) FORCE-PLACED INSURANCE DEFINED.—For purposes of 

this subsection and subsections (l) and (m), the term ‘forceplaced insurance’ means hazard insurance coverage obtained 

by a servicer of a federally related mortgage when the borrower has failed to maintain or renew hazard insurance on 

such property as required of the borrower under the terms of 

the mortgage. 

‘‘(l) REQUIREMENTS FOR FORCE-PLACED INSURANCE.—A servicer of 

a federally related mortgage shall not be construed as having a 

reasonable basis for obtaining force-placed insurance unless the requirements of this subsection have been met. 

‘‘(1) WRITTEN NOTICES TO BORROWER.—A servicer may not 

impose any charge on any borrower for force-placed insurance 

with respect to any property securing a federally related mortgage unless— 

‘‘(A) the servicer has sent, by first-class mail, a written 

notice to the borrower containing— 

‘‘(i) a reminder of the borrower’s obligation to maintain hazard insurance on the property securing the 

federally related mortgage; 


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‘‘(ii) a statement that the servicer does not have evidence of insurance coverage of such property; 

‘‘(iii) a clear and conspicuous statement of the procedures by which the borrower may demonstrate that 

the borrower already has insurance coverage; and 

‘‘(iv) a statement that the servicer may obtain such 

coverage at the borrower’s expense if the borrower 

does not provide such demonstration of the borrower’s 

existing coverage in a timely manner; 

‘‘(B) the servicer has sent, by first-class mail, a second 

written notice, at least 30 days after the mailing of the notice under subparagraph (A) that contains all the information described in each clause of such subparagraph; and 

‘‘(C) the servicer has not received from the borrower any 

demonstration of hazard insurance coverage for the property securing the mortgage by the end of the 15-day period 

beginning on the date the notice under subparagraph (B) 

was sent by the servicer. 

‘‘(2) SUFFICIENCY OF DEMONSTRATION.—A servicer of a federally related mortgage shall accept any reasonable form of written confirmation from a borrower of existing insurance coverage, which shall include the existing insurance policy number along with the identity of, and contact information for, the 

insurance company or agent. 

‘‘(3) TERMINATION OF FORCE-PLACED INSURANCE.—Within 15 

days of the receipt by a servicer of confirmation of a borrower’s 

existing insurance coverage, the servicer shall— 

‘‘(A) terminate the force-placed insurance; and 

‘‘(B) refund to the consumer all force-placed insurance 

premiums paid by the borrower during any period during 

which the borrower’s insurance coverage and the forceplaced insurance coverage were each in effect, and any related fees charged to the consumer’s account with respect 

to the force-placed insurance during such period. 

‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD DISASTER PROTECTION ACT.—No provision of this section shall be construed 

as prohibiting a servicer from providing simultaneous or concurrent notice of a lack of flood insurance pursuant to section 

102(e) of the Flood Disaster Protection Act of 1973. 

‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE CHARGES.—All 

charges for force-placed insurance premiums shall be bona fide and 

reasonable in amount.’’. 

(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is 

amended— 

(1) in paragraphs (1)(B) and (2)(B), by striking ‘‘$1,000’’ each 

place such term appears and inserting ‘‘$2,000’’; and 

(2) in paragraph (2)(B)(i), by striking ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 

(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is 

amended— 

(1) in paragraph (1)(A), by striking ‘‘20 days’’ and inserting 

‘‘5 days’’; 


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(2) in paragraph (2), by striking ‘‘60 days’’ and inserting ‘‘30 

days’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(4) LIMITED EXTENSION OF RESPONSE TIME.—The 30-day period described in paragraph (2) may be extended for not more 

than 15 days if, before the end of such 30-day period, the 

servicer notifies the borrower of the extension and the reasons 

for the delay in responding.’’. 

(d) PROMPT REFUND OF ESCROW ACCOUNTS UPON PAYOFF.—Section 6(g) of the Real Estate Settlement Procedures Act of 1974 (12 

U.S.C. 2605(g)) is amended by adding at the end the following new 

sentence: ‘‘Any balance in any such account that is within the 

servicer’s control at the time the loan is paid off shall be promptly 

returned to the borrower within 20 business days or credited to a 

similar account for a new mortgage loan to the borrower with the 

same lender.’’. 

SEC. 9404. TRUTH IN LENDING ACT AMENDMENTS. 

(a) REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAY- MENTS.—Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et 

seq.) is amended by inserting after section 129E (as added by section 9502) the following new section (and by amending the table of 

contents accordingly): 

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

PAYMENTS. 

‘‘(a) IN GENERAL.—In connection with a consumer credit transaction secured by a consumer’s principal dwelling, no servicer shall 

fail to credit a payment to the consumer’s loan account as of the 

date of receipt, except when a delay in crediting does not result in 

any charge to the consumer or in the reporting of negative information to a consumer reporting agency, except as required in subsection (b). 

‘‘(b) EXCEPTION.—If a servicer specifies in writing requirements 

for the consumer to follow in making payments, but accepts a payment that does not conform to the requirements, the servicer shall 

credit the payment as of 5 days after receipt.’’. 

(b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 of such Act is 

further amended by inserting after section 129F (as added by subsection (a)) the following new section (and by amending the table 

of contents accordingly): 

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

‘‘A creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 

business days, after the receipt of a written request for such balance from or on behalf of the borrower.’’. 

SEC. 9405. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 

Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is 

amended by adding at the end the following new paragraph: 

‘‘(4) REPAYMENT ANALYSIS REQUIRED TO INCLUDE ESCROW

PAYMENTS.— 

‘‘(A) IN GENERAL.—In the case of any consumer credit 

transaction secured by a first mortgage or lien on the principal dwelling of the consumer, other than a consumer 

credit transaction under an open end credit plan or a reverse mortgage, for which an impound, trust, or other type 


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of account has been or will be established in connection 

with the transaction for the payment of property taxes, 

hazard and flood (if any) insurance premiums, or other 

periodic payments or premiums with respect to the property, the information required to be provided under subsection (a) with respect to the number, amount, and due 

dates or period of payments scheduled to repay the total 

of payments shall take into account the amount of any 

monthly payment to such account for each such repayment 

in accordance with section 10(a)(2) of the Real Estate Settlement Procedures Act of 1974. 

‘‘(B) ASSESSMENT VALUE.—The amount taken into account under subparagraph (A) for the payment of property 

taxes, hazard and flood (if any) insurance premiums, or 

other periodic payments or premiums with respect to the 

property shall reflect the taxable assessed value of the real 

property securing the transaction after the consummation 

of the transaction, including the value of any improvements on the property or to be constructed on the property 

(whether or not such construction will be financed from 

the proceeds of the transaction), if known, and the replacement costs of the property for hazard insurance, in the initial year after the transaction.’’. 

Subtitle F—Appraisal Activities 

SEC. 9501. PROPERTY APPRAISAL REQUIREMENTS. 

Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) 

is amended by inserting after 129G (as added by section 9404(b)) 

the following new section: 

‘‘SEC. 129H PROPERTY APPRAISAL REQUIREMENTS. 

‘‘(a) IN GENERAL.—A creditor may not extend credit in the form 

of a subprime mortgage to any consumer without first obtaining a 

written appraisal of the property to be mortgaged prepared in accordance with the requirements of this section. 

‘‘(b) APPRAISAL REQUIREMENTS.— 

‘‘(1) PHYSICAL PROPERTY VISIT.—An appraisal of property to 

be secured by a subprime mortgage does not meet the requirement of this section unless it is performed by a qualified appraiser who conducts a physical property visit of the interior 

of the mortgaged property. 

‘‘(2) SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES.— 

‘‘(A) IN GENERAL.—If the purpose of a subprime mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the purchase or acquisition of such property by that person at a 

price that was lower than the current sale price of the 

property, the creditor shall obtain a second appraisal from 

a different qualified appraiser. The second appraisal shall 

include an analysis of the difference in sale prices, changes 

in market conditions, and any improvements made to the 

property between the date of the previous sale and the current sale. 


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‘‘(B) NO COST TO APPLICANT.—The cost of any second appraisal required under subparagraph (A) may not be 

charged to the applicant. 

‘‘(3) QUALIFIED APPRAISER DEFINED.—For purposes of this 

section, the term ‘qualified appraiser’ means a person who— 

‘‘(A) is, at a minimum, certified or licensed by the State 

in which the property to be appraised is located; and 

‘‘(B) performs each appraisal in conformity with the Uniform Standards of Professional Appraisal Practice and title 

XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and the regulations prescribed 

under such title, as in effect on the date of the appraisal. 

‘‘(c) FREE COPY OF APPRAISAL.—A creditor shall provide 1 copy of 

each appraisal conducted in accordance with this section in connection with a subprime mortgage to the applicant without charge, 

and at least 3 days prior to the transaction closing date. 

‘‘(d) CONSUMER NOTIFICATION.—At the time of the initial mortgage application, the applicant shall be provided with a statement 

by the creditor that any appraisal prepared for the mortgage is for 

the sole use of the creditor, and that the applicant may choose to 

have a separate appraisal conducted at their own expense. 

‘‘(e) VIOLATIONS.—In addition to any other liability to any person 

under this title, a creditor found to have willfully failed to obtain 

an appraisal as required in this section shall be liable to the applicant or borrower for the sum of $2,000. 

‘‘(f) SUBPRIME MORTGAGE DEFINED.—For purposes of this section, 

the term ‘subprime mortgage’ means a residential mortgage loan 

secured by a principal dwelling with an annual percentage rate 

that exceeds the average prime offer rate for a comparable transaction, as of the date the interest rate is set— 

‘‘(1) by 1.5 or more percentage points, in the case of a first 

lien residential mortgage loan having an original principal obligation amount that does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the 

date of such interest rate set, pursuant to the sixth sentence 

of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); 

‘‘(2) by 2.5 or more percentage points, in the case of a first 

lien residential mortgage loan having an original principal obligation amount that exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect 

for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 

305(a)(2) the Federal Home Loan Mortgage Corporation Act 

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

‘‘(3) by 3.5 or more percentage points for a subordinate lien 

residential mortgage loan.’’. 

SEC. 9502. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING 

TO CERTAIN CONSUMER CREDIT TRANSACTIONS. 

(a) IN GENERAL.—Chapter 2 of the Truth in Lending Act (15 

U.S.C. 1631 et seq.) is amended by inserting after section 129D (as 

added by section 9401(a)) the following new section: 


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‘‘SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING 

TO CERTAIN CONSUMER CREDIT TRANSACTIONS. 

‘‘(a) IN GENERAL.—It shall be unlawful, in extending credit or in 

providing any services for a consumer credit transaction secured by 

the principal dwelling of the consumer, to engage in any unfair or 

deceptive act or practice as described in or pursuant to regulations 

prescribed under this section. 

‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of subsection (a), 

unfair and deceptive practices shall include— 

‘‘(1) any appraisal of a property offered as security for repayment of the consumer credit transaction that is conducted in 

connection with such transaction in which a person with an interest in the underlying transaction compensates, coerces, extorts, colludes, instructs, induces, bribes, or intimidates a person conducting or involved in an appraisal, or attempts, to 

compensate, coerce, extort, collude, instruct, induce, bribe, or 

intimidate such a person, for the purpose of causing the appraised value assigned, under the appraisal, to the property to 

be based on any factor other than the independent judgment 

of the appraiser; 

‘‘(2) mischaracterizing, or suborning any mischaracterization 

of, the appraised value of the property securing the extension 

of the credit; 

‘‘(3) seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing 

of the transaction; and 

‘‘(4) withholding or threatening to withhold timely payment 

for an appraisal report or for appraisal services rendered. 

‘‘(c) EXCEPTIONS.—The requirements of subsection (b) shall not be 

construed as prohibiting a mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, 

employee of an appraisal management company, consumer, or any 

other person with an interest in a real estate transaction from asking an appraiser to provide 1 or more of the following services: 

‘‘(1) Consider additional, appropriate property information, 

including the consideration of additional comparable properties 

to make or support an appraisal. 

‘‘(2) Provide further detail, substantiation, or explanation for 

the appraiser’s value conclusion. 

‘‘(3) Correct errors in the appraisal report. 

‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.—No certified or licensed appraiser conducting, and no appraisal management company procuring or facilitating, an appraisal in connection with a 

consumer credit transaction secured by the principal dwelling of a 

consumer may have a direct or indirect interest, financial or otherwise, in the property or transaction involving the appraisal. 

‘‘(e) MANDATORY REPORTING.—Any mortgage lender, mortgage 

broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, or 

any other person involved in a real estate transaction involving an 

appraisal in connection with a consumer credit transaction secured 

by the principal dwelling of a consumer who has a reasonable basis 

to believe an appraiser is failing to comply with the Uniform 

Standards of Professional Appraisal Practice, is violating applicable 

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duct, shall refer the matter to the applicable State appraiser certifying and licensing agency. 

‘‘(f) NO EXTENSION OF CREDIT.—In connection with a consumer 

credit transaction secured by a consumer’s principal dwelling, a 

creditor who knows, at or before loan consummation, of a violation 

of the appraisal independence standards established in subsections 

(b) or (d) shall not extend credit based on such appraisal unless the 

creditor documents that the creditor has acted with reasonable diligence to determine that the appraisal does not materially misstate 

or misrepresent the value of such dwelling. 

‘‘(g) RULEMAKING PROCEEDINGS.—The Board, the Comptroller of 

the Currency, the Director of the Office of Thrift Supervision, the 

Federal Deposit Insurance Corporation, the National Credit Union 

Administration Board, and the Federal Trade Commission— 

‘‘(1) shall, for purposes of this section, jointly prescribe regulations no later than 180 days after the date of the enactment 

of this section, and where such regulations have an effective 

date of no later than 1 year after the date of the enactment 

of this section, defining with specificity acts or practices which 

are unfair or deceptive in the provision of mortgage lending 

services for a consumer credit transaction secured by the principal dwelling of the consumer or mortgage brokerage services 

for such a transaction and defining any terms in this section 

or such regulations; and 

‘‘(2) may jointly issue interpretive guidelines and general 

statements of policy with respect to unfair or deceptive acts or 

practices in the provision of mortgage lending services for a 

consumer credit transaction secured by the principal dwelling 

of the consumer and mortgage brokerage services for such a 

transaction, within the meaning of subsections (a), (b), (c), (d), 

(e), and (f). 

‘‘(h) PENALTIES.— 

‘‘(1) FIRST VIOLATION.—In addition to the enforcement provisions referred to in section 130, each person who violates this 

section shall forfeit and pay a civil penalty of not more than 

$10,000 for each day any such violation continues. 

‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of any person on 

whom a civil penalty has been imposed under paragraph (1), 

paragraph (1) shall be applied by substituting ‘$20,000’ for 

‘$10,000’ with respect to all subsequent violations. 

‘‘(3) ASSESSMENT.—The agency referred to in subsection (a) 

or (c) of section 108 with respect to any person described in 

paragraph (1) shall assess any penalty under this subsection to 

which such person is subject.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 2 of 

the Truth in Lending Act is amended by inserting after the item 

relating to section 129D (as added by section 9401(c)) the following 

new item: 

‘‘129E. Unfair and deceptive practices and acts relating to certain consumer credit 

transactions.’’. 


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SEC. 9503. 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. 

(a) CONSUMER PROTECTION MISSION.— 

(1) PURPOSES.—Section 1101 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331) 

is amended by inserting ‘‘and to provide the Appraisal Subcommittee with a consumer protection mandate’’ before the period at the end. 

(2) FUNCTIONS OF APPRAISAL SUBCOMMITTEE.—Section 

1103(a) of the Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended— 

(A) by striking ‘‘and’’ at the end of paragraph (3); and 

(B) by amending paragraph (4) to read as follows: 

‘‘(4) monitor the efforts of, and requirements established by, 

States and the Federal financial institutions regulatory agencies to protect consumers from improper appraisal practices 

and the predations of unlicensed appraisers in consumer credit 

transactions that are secured by a consumer’s principal dwelling; and’’. 

(3) THRESHOLD LEVELS.—Section 1112(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3341(b)) is amended by inserting before the period the 

following: ‘‘, and that such threshold level provides reasonable 

protection for consumers who purchase 1–4 unit single-family 

residences. In determining whether a threshold level provides 

reasonable protection for consumers, each Federal financial institutions regulatory agency shall consult with consumer 

groups and convene a public hearing’’. 

(b) ANNUAL REPORT OF APPRAISAL SUBCOMMITTEE.—Section 

1103(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3332(a)) is amended at the end 

by inserting the following new paragraph: 

‘‘(5) transmit an annual report to the Congress not later than 

January 31 of each year that describes the manner in which 

each function assigned to the Appraisal Subcommittee has 

been carried out during the preceding year. The report shall 

also detail the activities of the Appraisal Subcommittee, including the results of all audits of State appraiser regulatory agencies, and provide an accounting of disapproved actions and 

warnings taken in the previous year, including a description of 

the conditions causing the disapproval and actions taken to 

achieve compliance.’’. 

(c) OPEN MEETINGS.—Section 1104(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3333(b)) is amended by inserting ‘‘in public session after notice in 

the Federal Register’’ after ‘‘shall meet’’. 

(d) REGULATIONS.—Section 1106 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is 

amended— 

(1) by inserting ‘‘prescribe regulations after notice and opportunity for comment,’’ after ‘‘hold hearings’’; and 


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(2) at the end by inserting ‘‘Any regulations prescribed by 

the Appraisal Subcommittee shall (unless otherwise provided 

in this title) be limited to the following functions: temporary 

practice, national registry, information sharing, and enforcement. For purposes of prescribing regulations, the Appraisal 

Subcommittee shall establish an advisory committee of industry participants, including appraisers, lenders, consumer advocates, and government agencies, and hold meetings as necessary to support the development of regulations.’’. 

(e) APPRAISALS AND APPRAISAL REVIEWS.—Section 1113 of the Financial Institutions Reform, Recovery, and Enforcement Act of 

1989 (12 U.S.C. 3342) is amended— 

(1) by striking ‘‘In determining’’ and inserting ‘‘(a) IN GENERAL.—In determining’’; 

(2) in subsection (a) (as designated by paragraph (1)), by inserting before the period the following: ‘‘, where a complex 1- 

to-4 unit single family residential appraisal means an appraisal for which the property to be appraised, the form of 

ownership, the property characteristics, or the market conditions are atypical’’; and 

(3) by adding at the end the following new subsection: 

‘‘(b) APPRAISALS AND APPRAISAL REVIEWS.—All appraisals performed at a property within a State shall be prepared by appraisers licensed or certified in the State where the property is located. 

All appraisal reviews, including appraisal reviews by a lender, appraisal management company, or other third party organization, 

shall be performed by an appraiser who is duly licensed or certified 

by a State appraisal board.’’. 

(f) APPRAISAL MANAGEMENT SERVICES.— 

(1) SUPERVISION OF THIRD PARTY PROVIDERS OF APPRAISAL

MANAGEMENT SERVICES.—Section 1103(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3332(a)) (as previously amended by this section) is further amended— 

(A) by amending paragraph (1) to read as follows: 

‘‘(1) monitor the requirements established by States— 

‘‘(A) for the certification and licensing of individuals who 

are qualified to perform appraisals in connection with federally related transactions, including a code of professional 

responsibility; and 

‘‘(B) for the registration and supervision of the operations and activities of an appraisal management company;’’; and 

(B) by adding at the end the following new paragraph: 

‘‘(7) maintain a national registry of appraisal management 

companies that either are registered with and subject to supervision of a State appraiser certifying and licensing agency or 

are operating subsidiaries of a Federally regulated financial institution.’’. 

(2) APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.—Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is 

amended by adding at the end the following new section (and 

amending the table of contents accordingly): 


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

‘‘(a) IN GENERAL.—The Appraiser Qualifications Board of the Appraisal Foundation shall establish minimum qualifications to be 

applied by a State in the registration of appraisal management 

companies. Such qualifications shall include a requirement that 

such companies— 

‘‘(1) register with and be subject to supervision by a State appraiser certifying and licensing agency in each State in which 

such company operates; 

‘‘(2) verify that only licensed or certified appraisers are used 

for federally related transactions; 

‘‘(3) require that appraisals coordinated by an appraisal 

management company comply with the Uniform Standards of 

Professional Appraisal Practice; and 

‘‘(4) require that appraisals are conducted independently and 

free from inappropriate influence and coercion pursuant to the 

appraisal independence standards established under section 

129E of the Truth in Lending Act. 

‘‘(b) EXCEPTION FOR FEDERALLY REGULATED FINANCIAL INSTITUTIONS.—The requirements of subsection (a) shall not apply to an 

appraisal management company that is a subsidiary owned and 

controlled by a financial institution and regulated by a federal financial institution regulatory agency. In such case, the appropriate 

federal financial institutions regulatory agency shall, at a minimum, develop regulations affecting the operations of the appraisal 

management company to— 

‘‘(1) verify that only licensed or certified appraisers are used 

for federally related transactions; 

‘‘(2) require that appraisals coordinated by an institution or 

subsidiary providing appraisal management services comply 

with the Uniform Standards of Professional Appraisal Practice; 

and 

‘‘(3) require that appraisals are conducted independently and 

free from inappropriate influence and coercion pursuant to the 

appraisal independence standards established under section 

129E of the Truth in Lending Act. 

‘‘(c) REGISTRATION LIMITATIONS.—An appraisal management company shall not be registered by a State if such company, in whole 

or in part, directly or indirectly, is owned by any person who has 

had an appraiser license or certificate refused, denied, cancelled, 

surrendered in lieu of revocation, or revoked in any State. Additionally, each person that owns more than 10 percent of an appraisal management company shall be of good moral character, as 

determined by the State appraiser certifying and licensing agency, 

and shall submit to a background investigation carried out by the 

State appraiser certifying and licensing agency. 

‘‘(d) REGULATIONS.—The Appraisal Subcommittee shall promulgate regulations to implement the minimum qualifications developed by the Appraiser Qualifications Board under this section, as 

such qualifications relate to the State appraiser certifying and licensing agencies. The Appraisal Subcommittee shall also promulgate regulations for the reporting of the activities of appraisal management companies in determining the payment of the annual registry fee. 


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‘‘(e) EFFECTIVE DATE.— ‘‘(1) IN GENERAL.—No appraisal management company may 

perform services related to a federally related transaction in a 

State after the date that is 36 months after the date of the enactment of this section unless such company is registered with 

such State or subject to oversight by a federal financial institutions regulatory agency. 

‘‘(2) EXTENSION OF EFFECTIVE DATE.—Subject to the approval 

of the Council, the Appraisal Subcommittee may extend by an 

additional 12 months the requirements for the registration and 

supervision of appraisal management companies if it makes a 

written finding that a State has made substantial progress in 

establishing a State appraisal management company registration and supervision system that appears to conform with the 

provisions of this title.’’. 

(3) STATE APPRAISER CERTIFYING AND LICENSING AGENCY AU- THORITY.—Section 1117 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is 

amended by adding at the end the following: ‘‘The duties of 

such agency may additionally include the registration and supervision of appraisal management companies.’’. 

(4) APPRAISAL MANAGEMENT COMPANY DEFINITION.—Section 

1121 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350) is amended by adding 

at the end the following: 

‘‘(11) APPRAISAL MANAGEMENT COMPANY.—The term ‘appraisal management company’ means, in connection with valuing properties collateralizing mortgage loans or mortgages incorporated into a securitization, any external third party authorized either by a creditor of a consumer credit transaction 

secured by a consumer’s principal dwelling or by an underwriter of or other principal in the secondary mortgage markets, 

that oversees a network or panel of more than 15 certified or 

licensed appraisers in a State or 25 or more nationally within 

a given year— 

‘‘(A) to recruit, select, and retain appraisers; 

‘‘(B) to contract with licensed and certified appraisers to 

perform appraisal assignments; 

‘‘(C) to manage the process of having an appraisal performed, including providing administrative duties such as 

receiving appraisal orders and appraisal reports, submitting completed appraisal reports to creditors and underwriters, collecting fees from creditors and underwriters for 

services provided, and reimbursing appraisers for services 

performed; or 

‘‘(D) to review and verify the work of appraisers.’’. 

(g) STATE AGENCY REPORTING REQUIREMENT.—Section 1109(a) of 

the Financial Institutions Reform, Recovery, and Enforcement Act 

of 1989 (12 U.S.C. 3338(a)) is amended— 

(1) by striking ‘‘and’’ after the semicolon in paragraph (1); 

(2) by redesignating paragraph (2) as paragraph (4); and 

(3) by inserting after paragraph (1) the following new paragraphs: 

‘‘(2) transmit reports on sanctions, disciplinary actions, license and certification revocations, and license and certifiVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00081 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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cation suspensions on a timely basis to the national registry of 

the Appraisal Subcommittee; 

‘‘(3) transmit reports on a timely basis of supervisory activities involving appraisal management companies or other thirdparty providers of appraisals and appraisal management services, including investigations initiated and disciplinary actions 

taken; and’’. 

(h) REGISTRY FEES MODIFIED.— (1) IN GENERAL.—Section 1109(a) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3338(a)) is amended— 

(A) by amending paragraph (4) (as modified by section 

9503(g)) to read as follows: 

‘‘(4) collect— 

‘‘(A) from such individuals who perform or seek to perform appraisals in federally related transactions, an annual registry fee of not more than $40, such fees to be 

transmitted by the State agencies to the Council on an annual basis; and 

‘‘(B) from an appraisal management company that either 

has registered with a State appraiser certifying and licensing agency in accordance with this title or operates as a 

subsidiary of a federally regulated financial institution, an 

annual registry fee of— 

‘‘(i) in the case of such a company that has been in existence for more than a year, $25 multiplied by the 

number of appraisers working for or contracting with 

such company in such State during the previous year, 

but where such $25 amount may be adjusted, up to a 

maximum of $50, at the discretion of the Appraisal 

Subcommittee, if necessary to carry out the Subcommittee’s functions under this title; and 

‘‘(ii) in the case of such a company that has not been in existence for more than a year, $25 multiplied by 

an appropriate number to be determined by the Appraisal Subcommittee, and where such number will be 

used for determining the fee of all such companies 

that were not in existence for more than a year, but 

where such $25 amount may be adjusted, up to a maximum of $50, at the discretion of the Appraisal Subcommittee, if necessary to carry out the Subcommittee’s functions under this title.’’; and 

(B) by amending the matter following paragraph (4), as 

redesignated, to read as follows: 

‘‘Subject to the approval of the Council, the Appraisal Subcommittee may adjust the dollar amount of registry fees under 

paragraph (4)(A), up to a maximum of $80 per annum, as necessary 

to carry out its functions under this title. The Appraisal Subcommittee shall consider at least once every 5 years whether to adjust the dollar amount of the registry fees to account for inflation. 

In implementing any change in registry fees, the Appraisal Subcommittee shall provide flexibility to the States for multi-year certifications and licenses already in place, as well as a transition period to implement the changes in registry fees. In establishing the 

amount of the annual registry fee for an appraisal management 


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company, the Appraisal Subcommittee shall have the discretion to 

impose a minimum annual registry fee for an appraisal management company to protect against the under reporting of the number of appraisers working for or contracted by the appraisal management company.’’. 

(2) INCREMENTAL REVENUES.—Incremental revenues collected 

pursuant to the increases required by this subsection shall be 

placed in a separate account at the United States Treasury, entitled the ‘‘Appraisal Subcommittee Account’’. 

(i) GRANTS AND REPORTS.—Section 1109(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3348(b)) is amended— 

(1) by striking ‘‘and’’ after the semicolon in paragraph (3); 

(2) by striking the period at the end of paragraph (4) and inserting a semicolon; 

(3) by adding at the end the following new paragraphs: 

‘‘(5) to make grants to State appraiser certifying and licensing agencies to support the efforts of such agencies to comply 

with this title, including— 

‘‘(A) the complaint process, complaint investigations, and 

appraiser enforcement activities of such agencies; and 

‘‘(B) the submission of data on State licensed and certified appraisers and appraisal management companies to 

the National appraisal registry, including information affirming that the appraiser or appraisal management company meets the required qualification criteria and formal 

and informal disciplinary actions; and 

‘‘(6) to report to all State appraiser certifying and licensing 

agencies when a license or certification is surrendered, revoked, or suspended.’’. 

Obligations authorized under this subsection may not exceed 75 

percent of the fiscal year total of incremental increase in fees collected and deposited in the ‘‘Appraisal Subcommittee Account’’ pursuant to subsection (h). 

(j) CRITERIA.—Section 1116 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended— 

(1) in subsection (c), by inserting ‘‘whose criteria for the licensing of a real estate appraiser currently meet or exceed the 

minimum criteria issued by the Appraisal Qualifications Board 

of The Appraisal Foundation for the licensing of real estate appraisers’’ before the period at the end; and 

(2) by striking subsection (e) and inserting the following new 

subsection: 

‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.—Any requirements 

established for individuals in the position of ‘Trainee Appraiser’ 

and ‘Supervisory Appraiser’ shall meet or exceed the minimum 

qualification requirements of the Appraiser Qualifications Board of 

The Appraisal Foundation. The Appraisal Subcommittee shall have 

the authority to enforce these requirements.’’. 

(k) MONITORING OF STATE APPRAISER CERTIFYING AND LICENSING

AGENCIES.—Section 1118 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347) is amended— 

(1) by amending subsection (a) to read as follows: 


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‘‘(a) IN GENERAL.—The Appraisal Subcommittee shall monitor 

each State appraiser certifying and licensing agency for the purposes of determining whether such agency— 

‘‘(1) has policies, practices, funding, staffing, and procedures 

that are consistent with this title; 

‘‘(2) processes complaints and completes investigations in a 

reasonable time period; 

‘‘(3) appropriately disciplines sanctioned appraisers and appraisal management companies; 

‘‘(4) maintains an effective regulatory program; and 

‘‘(5) reports complaints and disciplinary actions on a timely 

basis to the national registries on appraisers and appraisal 

management companies maintained by the Appraisal Subcommittee. 

The Appraisal Subcommittee shall have the authority to remove a 

State licensed or certified appraiser or a registered appraisal management company from a national registry on an interim basis 

pending State agency action on licensing, certification, registration, 

and disciplinary proceedings. The Appraisal Subcommittee and all 

agencies, instrumentalities, and Federally recognized entities 

under this title shall not recognize appraiser certifications and licenses from States whose appraisal policies, practices, funding, 

staffing, or procedures are found to be inconsistent with this title. 

The Appraisal Subcommittee shall have the authority to impose 

sanctions, as described in this section, against a State agency that 

fails to have an effective appraiser regulatory program. In determining whether such a program is effective, the Appraisal Subcommittee shall include an analyses of the licensing and certification of appraisers, the registration of appraisal management 

companies, the issuance of temporary licenses and certifications for 

appraisers, the receiving and tracking of submitted complaints 

against appraisers and appraisal management companies, the investigation of complaints, and enforcement actions against appraisers and appraisal management companies. The Appraisal Subcommittee shall have the authority to impose interim actions and 

suspensions against a State agency as an alternative to, or in advance of, the derecognition of a State agency.’’. 

(2) in subsection (b)(2), by inserting after ‘‘authority’’ the following: ‘‘or sufficient funding’’. 

(l) RECIPROCITY.—Subsection (b) of section 1122 of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3351(b)) is amended to read as follows: 

‘‘(b) RECIPROCITY.—A State appraiser certifying or licensing agency shall issue a reciprocal certification or license for an individual 

from another State when— 

‘‘(1) the appraiser licensing and certification program of such 

other State is in compliance with the provisions of this title; 

and 

‘‘(2) the appraiser holds a valid certification from a State 

whose requirements for certification or licensing meet or exceed the licensure standards established by the State where an 

individual seeks appraisal licensure.’’. 

(m) CONSIDERATION OF PROFESSIONAL APPRAISAL DESIGNA- TIONS.—Section 1122(d) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351(d)) is amendVerDate Nov 24 2008 04:50 Dec 09, 2009 Jkt 089008 PO 00000 Frm 00084 Fmt 6659 Sfmt 6602 E:\HR\OC\HR365.XXX HR365

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ed by striking ‘‘shall not exclude’’ and all that follows through the 

end of the subsection and inserting the following: ‘‘may include 

education achieved, experience, sample appraisals, and references 

from prior clients. Membership in a nationally recognized professional appraisal organization may be a criteria considered, though 

lack of membership therein shall not be the sole bar against consideration for an assignment under these criteria.’’. 

(n) APPRAISER INDEPENDENCE.—Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3351) is amended by adding at the end the following new 

subsection: 

‘‘(g) APPRAISER INDEPENDENCE MONITORING.—The Appraisal 

Subcommittee shall monitor each State appraiser certifying and licensing agency for the purpose of determining whether such agency’s policies, practices, and procedures are consistent with the purposes of maintaining appraiser independence and whether such 

State has adopted and maintains effective laws, regulations, and 

policies aimed at maintaining appraiser independence.’’. 

(o) APPRAISER EDUCATION.—Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3351) is amended by inserting after subsection (g) (as added by 

subsection (l) of this section) the following new subsection: 

‘‘(h) APPROVED EDUCATION.—The Appraisal Subcommittee shall 

encourage the States to accept courses approved by the Appraiser 

Qualification Board’s Course Approval Program.’’. 

(p) APPRAISAL COMPLAINT HOTLINE.—Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 3351), as amended by this section, is further amended 

by adding at the end the following new subsection: 

‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.—If, 1 year after 

the date of the enactment of this subsection, the Appraisal Subcommittee determines that no national hotline exists to receive 

complaints of non-compliance with appraisal independence standards and Uniform Standards of Professional Appraisal Practice, including complaints from appraisers, individuals, or other entities 

concerning the improper influencing or attempted improper influencing of appraisers or the appraisal process, the Appraisal Subcommittee shall establish and operate such a national hotline, 

which shall include a toll-free telephone number and an email address. If the Appraisal Subcommittee operates such a national hotline, the Appraisal Subcommittee shall refer complaints for further 

action to appropriate governmental bodies, including a State appraiser certifying and licensing agency, a financial institution regulator, or other appropriate legal authorities. For complaints referred to State appraiser certifying and licensing agencies or to 

Federal regulators, the Appraisal Subcommittee shall have the authority to follow up such complaint referrals in order to determine 

the status of the resolution of the complaint.’’. 

(q) AUTOMATED VALUATION MODELS.—Title XI of the Financial 

Institutions Reform, Recovery, and Enforcement Act of 1989 (12 

U.S.C. 3331 et seq.), as amended by this section, is further amended by adding at the end the following new section (and amending 

the table of contents accordingly): 


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

‘‘(a) IN GENERAL.—Automated valuation models shall adhere to 

quality control standards designed to— 

‘‘(1) ensure a high level of confidence in the estimates produced by automated valuation models; 

‘‘(2) protect against the manipulation of data; 

‘‘(3) seek to avoid conflicts of interest; and 

‘‘(4) require random sample testing and reviews, where such 

testing and reviews are performed by an appraiser who is licensed or certified in the State where the testing and reviews 

take place. 

‘‘(b) ADOPTION OF REGULATIONS.—The Appraisal Subcommittee 

and its member agencies, in consultation with the Appraisal Standards Board of the Appraisal Foundation and other interested parties, shall promulgate regulations to implement the quality control 

standards required under this section. 

‘‘(c) ENFORCEMENT.—Compliance with regulations issued under 

this subsection shall be enforced by— 

‘‘(1) with respect to a financial institution, or subsidiary 

owned and controlled by a financial institution and regulated 

by a Federal financial institution regulatory agency, the Federal financial institution regulatory agency that acts as the primary Federal supervisor of such financial institution or subsidiary; and 

‘‘(2) with respect to other persons, the Appraisal Subcommittee. 

‘‘(d) AUTOMATED VALUATION MODEL DEFINED.—For purposes of 

this section, the term ‘automated valuation model’ means any computerized model used by mortgage originators and secondary market issuers to determine the collateral worth of a mortgage secured 

by a consumer’s principal dwelling.’’. 

(r) BROKER PRICE OPINIONS.—Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 

3331 et seq.), as amended by this section, is further amended by 

adding at the end the following new section (and amending the 

table of contents accordingly): 

‘‘SEC. 1126. BROKER PRICE OPINIONS. 

‘‘(a) GENERAL PROHIBITION.—In conjunction with the purchase of 

a consumer’s principal dwelling, broker price opinions may not be 

used as the primary basis to determine the value of a piece of property for the purpose of a loan origination of a residential mortgage 

loan secured by such piece of property. 

‘‘(b) BROKER PRICE OPINION DEFINED.—For purposes of this section, the term ‘broker price opinion’ means an estimate prepared by 

a real estate broker, agent, or sales person that details the probable selling price of a particular piece of real estate property and 

provides a varying level of detail about the property’s condition, 

market, and neighborhood, and information on comparable sales, 

but does not include an automated valuation model, as defined in 

section 1125(c).’’. 

(s) AMENDMENTS TO APPRAISAL SUBCOMMITTEE.—Section 1011 of 

the Federal Financial Institutions Examination Council Act of 1978 

(12 U.S.C. 3310) is amended— 


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(1) in the first sentence, by adding before the period the following: ‘‘and the Federal Housing Finance Agency’’; and 

(2) by inserting at the end the following: ‘‘At all times at 

least one member of the Appraisal Subcommittee shall have 

demonstrated knowledge and competence through licensure, 

certification, or professional designation within the appraisal 

profession.’’. 

(t) TECHNICAL CORRECTIONS.— (1) Section 1119(a)(2) of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) 

is amended by striking ‘‘council,’’ and inserting ‘‘Council,’’. 

(2) Section 1121(6) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is 

amended by striking ‘‘Corporations,’’ and inserting ‘‘Corporation,’’. 

(3) Section 1121(8) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is 

amended by striking ‘‘council’’ and inserting ‘‘Council’’. 

(4) Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is amended— 

(A) in subsection (a)(1) by moving the left margin of subparagraphs (A), (B), and (C) 2 ems to the right; and 

(B) in subsection (c)— 

(i) by striking ‘‘Federal Financial Institutions Examination Council’’ and inserting ‘‘Financial Institutions 

Examination Council’’; and 

(ii) by striking ‘‘the council’s functions’’ and inserting 

‘‘the Council’s functions’’. 

SEC. 9504. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL 

PROCESS AND COMPLIANCE PROGRAMS. 

(a) STUDY.—The Comptroller General shall conduct a comprehensive study on possible improvements in the appraisal process generally, and specifically on the consistency in and the effectiveness 

of, and possible improvements in, State compliance efforts and programs in accordance with title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. In addition, this 

study shall examine the existing exemptions to the use of certified 

appraisers issued by Federal financial institutions regulatory agencies. The study shall also review the threshold level established by 

Federal regulators for compliance under title XI and whether there 

is a need to revise them to reflect the addition of consumer protection to the purposes and functions of the Appraisal Subcommittee. 

The study shall additionally examine the quality of different types 

of mortgage collateral valuations produced by broker price opinions, 

automated valuation models, licensed appraisals, and certified appraisals, among others, and the quality of appraisals provided 

through different distribution channels, including appraisal management companies, independent appraisal operations within a 

mortgage originator, and fee-for-service appraisals. The study shall 

also include an analysis and statistical breakdown of enforcement 

actions taken during the last 10 years against different types of appraisers, including certified, licensed, supervisory, and trainee appraisers. Furthermore, the study shall examine the benefits and 

costs, as well as the advantages and disadvantages, of establishing 


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a national repository to collect data related to real estate property 

collateral valuations performed in the United States. 

(b) REPORT.—Before the end of the 18-month period beginning on 

the date of the enactment of this Act, the Comptroller General 

shall submit a report on the study under subsection (a) to the Committee on Financial Services of the House of Representatives and 

the Committee on Banking, Housing, and Urban Affairs of the Senate, together with such recommendations for administrative or legislative action, at the Federal or State level, as the Comptroller 

General may determine to be appropriate. 

(c) ADDITIONAL STUDY REQUIRED.—The Comptroller General 

shall conduct an additional study to determine the effects that the 

changes to the seller-guide appraisal requirements of Fannie Mae 

and Freddie Mac contained in the Home Valuation Code of Conduct 

have on small business, like mortgage brokers and independent appraisers, and consumers, including the effect on the— 

(1) quality and costs of appraisals; 

(2) length of time for obtaining appraisals; 

(3) impact on consumer protection, especially regarding 

maintaining appraisal independence, abating appraisal inflation, and mitigating acts of appraisal fraud; 

(4) structure of the appraisal industry, especially regarding 

appraisal management companies, fee-for-service appraisers, 

and the regulation of appraisal management companies by the 

states; and 

(5) impact on mortgage brokers and other small business 

professionals in the financial services industry. 

(d) ADDITIONAL REPORT.—Before the end of the 6-month period 

beginning on the date of the enactment of this Act, the Comptroller 

General shall submit an additional report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate containing the findings and conclusions of the Comptroller General 

with respect to the study conducted pursuant to subsection (c). 

Such additional report shall take into consideration the Small 

Business Administration’s views on how small businesses are affected by the Home Valuation Code of Conduct. 

SEC. 9505. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT. 

Subsection (e) of section 701 of the Equal Credit Opportunity Act 

(U.S.C. 1691) is amended to read as follows: 

‘‘(e) COPIES FURNISHED TO APPLICANTS.— 

‘‘(1) IN GENERAL.—Each creditor shall furnish to an applicant 

a copy of any and all written appraisals and valuations developed in connection with the applicant’s application for a loan 

that is secured or would have been secured by a first lien on 

a dwelling promptly upon completion, but in no case later than 

3 days prior to the closing of the loan, whether the creditor 

grants or denies the applicant’s request for credit or the application is incomplete or withdrawn. 

‘‘(2) WAIVER.—The applicant may waive the 3 day requirement provided for in paragraph (1), except where otherwise required in law. 

‘‘(3) REIMBURSEMENT.—The applicant may be required to pay 

a reasonable fee to reimburse the creditor for the cost of the 

appraisal, except where otherwise required in law. 


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‘‘(4) FREE COPY.—Notwithstanding paragraph (3), the creditor shall provide a copy of each written appraisal or valuation 

at no additional cost to the applicant. 

‘‘(5) NOTIFICATION TO APPLICANTS.—At the time of application, the creditor shall notify an applicant in writing of the 

right to receive a copy of each written appraisal and valuation 

under this subsection. 

‘‘(6) REGULATIONS.—The Board shall prescribe regulations to 

implement this subsection within 1 year of the date of the enactment of this subsection. 

‘‘(7) VALUATION DEFINED.—For purposes of this subsection, 

the term ‘valuation’ shall include any estimate of the value of 

a dwelling developed in connection with a creditor’s decision to 

provide credit, including those values developed pursuant to a 

policy of a government sponsored enterprise or by an automated valuation model, a broker price opinion, or other methodology or mechanism.’’. 

SEC. 9506. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 

AMENDMENT RELATING TO CERTAIN APPRAISAL FEES. 

Section 4 of the Real Estate Settlement Procedures Act of 1974 

is amended by adding at the end the following new subsection: 

‘‘(c) The standard form described in subsection (a) shall include, 

in the case of an appraisal coordinated by an appraisal management company (as such term is defined in section 1121(11) of the 

Financial Institutions Reform, Recovery, and Enforcement Act of 

1989 (12 U.S.C. 3350(11))), a clear disclosure of— 

‘‘(1) the fee paid directly to the appraiser by such company; 

and 

‘‘(2) the administration fee charged by such company.’’. 

Subtitle G—Sense of Congress Regarding 

the Importance of Government Sponsored Enterprises Reform 

SEC. 9601. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF 

GOVERNMENT-SPONSORED ENTERPRISES REFORM TO 

ENHANCE THE PROTECTION, LIMITATION, AND REGULATION OF THE TERMS OF RESIDENTIAL MORTGAGE CREDIT. 

(a) FINDINGS.—The Congress finds as follows: 

(1) The Government-sponsored enterprises, Federal National 

Mortgage Association (Fannie Mae) and the Federal Home 

Loan Mortgage Corporation (Freddie Mac), were chartered by 

Congress to ensure a reliable and affordable supply of mortgage funding, but enjoy a dual legal status as privately owned 

corporations with Government mandated affordable housing 

goals. 

(2) In 1996, the Department of Housing and Urban Development required that 42 percent of Fannie Mae’s and Freddie 

Mac’s mortgage financing should go to borrowers with income 

levels below the median for a given area. 

(3) In 2004, the Department of Housing and Urban Development revised those goals, increasing them to 56 percent of 

their overall mortgage purchases by 2008, and additionally 


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mandated that 12 percent of all mortgage purchases by Fannie 

Mae and Freddie Mac be ‘‘special affordable’’ loans made to 

borrowers with incomes less than 60 percent of an area’s median income, a target that ultimately increased to 28 percent 

for 2008. 

(4) To help fulfill those mandated affordable housing goals, 

in 1995 the Department of Housing and Urban Development 

authorized Fannie Mae and Freddie Mac to purchase subprime 

securities that included loans made to low-income borrowers. 

(5) After this authorization to purchase subprime securities, 

subprime and near-prime loans increased from 9 percent of 

securitized mortgages in 2001 to 40 percent in 2006, while the 

market share of conventional mortgages dropped from 78.8 

percent in 2003 to 50.1 percent by 2007 with a corresponding 

increase in subprime and Alt-A loans from 10.1 percent to 32.7 

percent over the same period. 

(6) In 2004 alone, Fannie Mae and Freddie Mac purchased 

$175,000,000,000 in subprime mortgage securities, which accounted for 44 percent of the market that year, and from 2005 

through 2007, Fannie Mae and Freddie Mac purchased approximately $1,000,000,000,000 in subprime and Alt-A loans, 

while Fannie Mae’s acquisitions of mortgages with less than 10 

percent down payments almost tripled. 

(7) According to data from the Federal Housing Finance 

Agency (FHFA) for the fourth quarter of 2008, Fannie Mae and 

Freddie Mac own or guarantee 75 percent of all newly originated mortgages, and Fannie Mae and Freddie Mac currently 

own 13.3 percent of outstanding mortgage debt in the United 

States and have issued mortgage-backed securities for 31.0 

percent of the residential debt market, a combined total of 44.3 

percent of outstanding mortgage debt in the United States. 

(8) On September 7, 2008, the FHFA placed Fannie Mae and 

Freddie Mac into conservatorship, with the Treasury Department subsequently agreeing to purchase at least 

$200,000,000,000 of preferred stock from each enterprise in exchange for warrants for the purchase of 79.9 percent of each 

enterprise’s common stock. 

(9) The conservatorship for Fannie Mae and Freddie Mac has 

potentially exposed taxpayers to upwards of $5,300,000,000,000 

worth of risk. 

(10) The hybrid public-private status of Fannie Mae and 

Freddie Mac is untenable and must be resolved to assure that 

consumers are offered and receive residential mortgage loans 

on terms that reasonably reflect their ability to repay the loans 

and that are understandable and not unfair, deceptive, or abusive. 

(b) SENSE OF THE CONGRESS.—It is the sense of the Congress 

that efforts to enhance by the protection, limitation, and regulation 

of the terms of residential mortgage credit and the practices related 

to such credit would be incomplete without enactment of meaningful structural reforms of Fannie Mae and Freddie Mac. 


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Subtitle H—Reports 

SEC. 9701. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE FORECLOSURE RESCUE SCAMS AND 

LOAN MODIFICATION FRAUD. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study of the current inter-agency efforts of the Secretary 

of the Treasury, the Secretary of Housing and Urban Development, 

the Attorney General, and the Federal Trade Commission to crackdown on mortgage foreclosure rescue scams and loan modification 

fraud in order to advise the Congress to the risks and 

vulnerabilities of emerging schemes in the loan modification arena. 

(b) REPORT.— 

(1) IN GENERAL.—The Comptroller General shall submit a report to the Congress on the study conducted under subsection 

(a) containing such recommendations for legislative and administrative actions as the Comptroller General may determine to 

be appropriate in addition to the recommendations required 

under paragraph (2). 

(2) SPECIFIC TOPICS.—The report made under paragraph (1) 

shall include— 

(A) an evaluation of the effectiveness of the inter-agency 

task force current efforts to combat mortgage foreclosure 

rescue scams and loan modification fraud scams; 

(B) specific recommendations on agency or legislative action that are essential to properly protect homeowners 

from mortgage foreclosure rescue scams and loan modification fraud scams; and 

(C) the adequacy of financial resources that the Federal 

Government is allocating to— 

(i) crackdown on loan modification and foreclosure 

rescue scams; and 

(ii) the education of homeowners about fraudulent 

scams relating to loan modification and foreclosure 

rescues. 

Subtitle I—Multifamily Mortgage 

Resolution 

SEC. 9801. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM. 

(a) ESTABLISHMENT.—The Secretary of Housing and Urban Development shall develop a program under this subsection to ensure 

the protection of current and future tenants and at-risk multifamily properties, where feasible, based on criteria that may include— 

(1) creating sustainable financing of such properties, that 

may take into consideration such factors as— 

(A) the rental income generated by such properties; and 

(B) the preservation of adequate operating reserves; 

(2) maintaining the level of Federal, State, and city subsidies 

in effect as of the date of the enactment of this Act; 

(3) providing funds for rehabilitation; and 


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(4) facilitating the transfer of such properties, when appropriate and with the agreement of owners, to responsible new 

owners and ensuring affordability of such properties. 

(b) COORDINATION.—The Secretary of Housing and Urban Development may, in carrying out the program developed under this section, coordinate with the Secretary of the Treasury, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal 

Reserve System, the Federal Housing Finance Agency, and any 

other Federal Government agency that the Secretary considers appropriate.. 

(c) DEFINITION.—For purposes of this section, the term ‘‘multifamily properties’’ means a residential structure that consists of 5 

or more dwelling units. 

Subtitle J—Study of Effect of Drywall 

Presence on Foreclosures 

SEC. 9901. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES. 

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

in consultation with the Secretary of the Treasury, shall conduct a 

study of the effect on residential mortgage loan foreclosures of— 

(1) the presence in residential structures subject to such 

mortgage loans of drywall that was imported from China during the period beginning with 2004 and ending at the end of 

2007; and 

(2) the availability of property insurance for residential 

structures in which such drywall is present. 

(b) REPORT.—Not later than the expiration of the 120-day period 

beginning on the date of the enactment of this Act, the Secretary 

of Housing and Urban Development shall submit to the Congress 

a report on the study conducted under subsection (a) containing its 

findings, conclusions, and recommendations. 

Insert at the end of the table of contents the following: 

TITLE VII—MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT 

Sec. 9000. Short title; designation as enumerated consumer law. 

Subtitle A—Residential Mortgage Loan Origination Standards 

Sec. 9001. Definitions. 

Sec. 9002. Residential mortgage loan origination. 

Sec. 9003. Prohibition on steering incentives. 

Sec. 9004. Liability. 

Sec. 9005. Regulations. 

Sec. 9006. Study of shared appreciation mortgages. 

Subtitle B—Minimum Standards for Mortgages 

Sec. 9101. Ability to repay. 

Sec. 9102. Net tangible benefit for refinancing of residential mortgage loans. 

Sec. 9103. Safe harbor and rebuttable presumption. 

Sec. 9104. Liability. 

Sec. 9105. Defense to foreclosure. 

Sec. 9106. Additional standards and requirements. 

Sec. 9107. Rule of construction. 

Sec. 9108. Effect on State laws. 

Sec. 9109. Regulations. 

Sec. 9110. Amendments to civil liability provisions. 

Sec. 9111. Lender rights in the context of borrower deception. 


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Sec. 9112. Six-month notice required before reset of hybrid adjustable rate mortgages. 

Sec. 9113. Required disclosures. 

Sec. 9114. Disclosures required in monthly statements for residential mortgage 

loans. 

Sec. 9115. Legal assistance for foreclosure-related issues. 

Sec. 9116. Effective date. 

Sec. 9117. Report by the GAO. 

Sec. 9118. State Attorney General enforcement authority. 

Subtitle C—High-Cost Mortgages 

Sec. 9201. Definitions relating to high-cost mortgages. 

Sec. 9202. Amendments to existing requirements for certain mortgages. 

Sec. 9203. Additional requirements for certain mortgages. 

Sec. 9204. Regulations. 

Sec. 9205. Effective date. 

Subtitle D—Office of Housing Counseling 

Sec. 9301. Short title. 

Sec. 9302. Establishment of Office of Housing Counseling. 

Sec. 9303. Counseling procedures. 

Sec. 9304. Grants for housing counseling assistance. 

Sec. 9305. Requirements to use HUD-certified counselors under HUD programs. 

Sec. 9306. Study of defaults and foreclosures. 

Sec. 9307. Default and foreclosure database. 

Sec. 9308. Definitions for counseling-related programs. 

Sec. 9309. Accountability and transparency for grant recipients. 

Sec. 9310. Updating and simplification of mortgage information booklet. 

Sec. 9311. Home inspection counseling. 

Sec. 9312. Warnings to homeowners of foreclosure rescue scams. 

Subtitle E—Mortgage Servicing 

Sec. 9401. Escrow and impound accounts relating to certain consumer credit transactions. 

Sec. 9402. Disclosure notice required for consumers who waive escrow services. 

Sec. 9403. Real Estate Settlement Procedures Act of 1974 amendments. 

Sec. 9404. Truth in Lending Act amendments. 

Sec. 9405. Escrows included in repayment analysis. 

Subtitle F—Appraisal Activities 

Sec. 9501. Property appraisal requirements. 

Sec. 9502. Unfair and deceptive practices and acts relating to certain consumer 

credit transactions. 

Sec. 9503. 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. 9504. Study required on improvements in appraisal process and compliance 

programs. 

Sec. 9505. Equal Credit Opportunity Act amendment. 

Sec. 9506. Real Estate Settlement Procedures Act of 1974 amendment relating to 

certain appraisal fees. 

Subtitle G—Sense of Congress Regarding the Importance of Government Sponsored 

Enterprises Reform 

Sec. 9601. 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. 

Subtitle H—Reports 

Sec. 9701. GAO study report on government efforts to combat mortgage foreclosure 

rescue scams and loan modification fraud. 

Subtitle I—Multifamily Mortgage Resolution 

Sec. 9801. Multifamily mortgage resolution program. 

Subtitle J—Study of Effect of Drywall Presence on Foreclosures 

Sec. 9901. Study of effect of drywall presence on foreclosures. 


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Add at the end of title I the following new section: 

SEC. l. REDUCING TARP FUNDS TO OFFSET COSTS. 

Section 115(a)(3) of the Emergency Economic Stabilization Act of 

2008 (12 U.S.C. 5225(a)(3)) is amended by striking 

‘‘$700,000,000,000, as such amount is reduced by $1,259,000,000,, 

as such amount is reduced by $1,244,000,000, outstanding at any 

one time’’ and inserting ‘‘$700,000,000,000, as such amount is reduced by $22,059,000,000, outstanding at any one time’’. 

Æ 


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