I 

111TH CONGRESS 

2D SESSION H. R. 5941 

To reduce fraud and abusive practices in the origination of residential mortgages by establishing a clearinghouse of mortgage application information. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 29, 2010 

Mr. TOWNS introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To reduce fraud and abusive practices in the origination 

of residential mortgages by establishing a clearinghouse 

of mortgage application information. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Anti-Redlining and 

5 Anti-Mortgage Fraud Act of 2010’’. 

6 SEC. 2. RESIDENTIAL MORTGAGE APPLICATION RECORDA7 TION REQUIREMENT. 

8 (a) RECORDATION REQUIREMENT.—It shall be un9 lawful for any person or entity to extend credit (including 


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1 in connection with a lease-purchase transaction), or to 

2 provide funds or collect any payments in connection with 

3 such an extension of credit, that is secured by a single4 family residence unless the originator has recorded the ap5 plicant’s application for such extension of credit with the 

6 clearinghouse established under subsection (b). The Sec7 retary of the Treasury shall, by regulation, require origi8 nators to record each application to enter into a trans9 action covered by this subsection with the clearinghouse 

10 established under subsection (b), at the time that applica11 tion is first received by the originator. 

12 (b) MORTGAGE APPLICATION RECORDATION SYS13 TEM.— 

14 (1) ESTABLISHMENT.—The Secretary of the 

15 Treasury, acting through the Director of FinCEN, 

16 shall establish a system in accordance with this sub17 section to record applications for extensions of credit 

18 that are subject to the requirement under subsection 

19 (a), which shall include the establishment of a clear20 inghouse (in this section referred to as the ‘‘clearing21 house’’) for recording all such applications. 

22 (2) CLEARINGHOUSE OPERATOR.—The clear23 inghouse shall be established and managed by a pri24 vate sector entity selected, in accordance with standVerDate Mar 15 2010 00:28 Jul 31, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H5941.IH H5941

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1 ards established by the Secretary, from applicants 

2 that— 

3 (A) demonstrate the capacity to operate 

4 the clearinghouse in accordance with this sec5 tion and provide technology sufficient to carry 

6 out all functions and activities of the clearing7 house; 

8 (B) meet such standards, as the Secretary 

9 shall establish, to ensure that the clearinghouse 

10 operator is independent of ownership of, by, or 

11 with, and affiliation of any kind with, any enti12 ty that is engaged in the business of origi13 nating, funding, guaranteeing, purchasing, sell14 ing, securitizing, or assuming any risk related 

15 to residential mortgages other than from the 

16 operation of the clearinghouse; and 

17 (C) are small business concerns, as such 

18 term is defined pursuant to section 3 of the 

19 Small Business Act (15 U.S.C. 632). 

20 (3) COSTS.— 

21 (A) RESPONSIBILITY.—All costs of the es22 tablishment and operation of the clearinghouse 

23 shall be borne by the clearinghouse operator. 

24 (B) FEES.— 


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1 (i) AUTHORITY.—The clearinghouse 

2 operator may assess and collect fees to 

3 cover the costs of the establishment and 

4 operation of the clearinghouse established 

5 under this subsection. 

6 (ii) LIMITATION.—Such fees may be 

7 assessed and collected only in such manner 

8 as may reasonably be expected to result in 

9 an aggregate amount of fees collected that 

10 does not exceed the aggregate amount of 

11 the costs for establishment and operation 

12 of the clearinghouse, plus a market rate of 

13 return on the investment in establishing 

14 and operating costs of the clearinghouse, 

15 as determined by the Secretary. 

16 (iii) PERSONS SUBJECT TO FEES.— 

17 Fees under this subparagraph shall be as18 sessed against and collected from origina19 tors, for each application for an extension 

20 of credit that is required to be recorded 

21 with the clearinghouse. 

22 (C) GUARANTEE.—The Secretary may 

23 guarantee repayment of principal and interest 

24 on a loan to the clearinghouse operator in an 

25 amount sufficient to cover the costs of estabVerDate Mar 15 2010 19:40 Jul 31, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5941.IH H5941

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1 lishing, and operating, the clearinghouse estab2 lished under this section and there is authorized 

3 to be appropriated such sums as may be nec4 essary for costs (as such term is defined in sec5 tion 502 of the Federal Credit Reform Act of 

6 1990 (2 U.S.C. 661a)) of such guarantee. 

7 (c) COLLECTION OF INFORMATION.—For each appli8 cation for an extension of credit recorded with the clear9 inghouse, the clearinghouse shall, through an internet10 based electronic system— 

11 (1) provide a unique identifier that shall be per12 manently assigned to the application; and 

13 (2) collect and maintain— 

14 (A) the name, social security number, and 

15 address of each applicant and co-applicant; 

16 (B) the address of the property or prop17 erties that provide security for the extension of 

18 credit for which the application is filed; 

19 (C) the identity of the legal entity receiving 

20 the application and the identity of the agent or 

21 employee of that entity actually taking the ap22 plication; 

23 (D) the identity of any entity or individual 

24 that enters any information into the clearing25 house system with respect to an application; 


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1 (E) identification of whether property se2 curing the extension of credit is a principal resi3 dence, an additional residence, or an investment 

4 property; 

5 (F) identification of whether the extension 

6 of credit was secured by a first or subsequent 

7 lien on property and whether it was made for 

8 purchase, refinance, a home equity loan or line 

9 of credit, construction finance, home equity con10 version, or lease-purchase, or such other cat11 egory as the Secretary may provide; 

12 (G) the name of each lender to which the 

13 application is submitted; 

14 (H) the name of each lender that accepts 

15 the application; 

16 (I) the date and type of transaction that 

17 results from the approval of the application or 

18 the date of termination of the application; and 

19 (J) such other information as the Sec20 retary may, by regulation, require that is con21 sistent with the fraud prevention and detection 

22 purposes of the clearinghouse. 

23 (d) USE AND PROTECTION OF INFORMATION.— 

24 (1) IN GENERAL.—All information collected by 

25 the clearinghouse shall be the property of the SecVerDate Mar 15 2010 00:28 Jul 31, 2010 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5941.IH H5941

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1 retary and access to and use of the information shall 

2 be limited as prescribed in this section and regula3 tions issued under this section by the Secretary. 

4 (2) DISCLOSURES TO APPLICANTS.—The Sec5 retary shall require each originator accepting appli6 cations for extensions of credit subject to the re7 quirement under subsection (a) to provide to each 

8 applicant, at the time of application, a written dis9 closure, in such form and containing such informa10 tion as the Secretary shall require, sufficient to in11 form the applicant of the existence and purpose of 

12 the clearinghouse, the information regarding the ap13 plication to be collected by the clearinghouse, who 

14 has access to such information collected by the clear15 inghouse, and the manner in which the information 

16 may be used. 

17 (3) ACCESS.—Access to information collected 

18 by the clearinghouse shall be limited as follows: 

19 (A) An individual or entity that accepts 

20 applications for extensions of credit shall have 

21 access solely to information that was submitted 

22 to the clearinghouse by that individual or enti23 ty. 

24 (B) An entity that considers an extension 

25 of credit based upon an application shall have 


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1 access solely to information associated with ap2 plications submitted to such entity and to other 

3 currently or recently active applications involv4 ing the same applicants or co-applicants or the 

5 same property or properties. 

6 (C) A prospective purchaser or guarantor 

7 of any instrument related to an extension of 

8 credit for which application information was 

9 collected by the clearinghouse shall have access 

10 to the same information as the entity that ex11 tended the credit. 

12 (D) The Secretary and any other Federal 

13 and State regulatory or law enforcement agen14 cies shall have access to all data collected by 

15 the clearinghouse to the extent and in the man16 ner prescribed by the Secretary for the purpose 

17 of investigating fraudulent, discriminatory, or 

18 predatory activities and other activities that are 

19 potential violations of Federal or State law. 

20 (4) PROTECTION OF INFORMATION.—The Sec21 retary shall, by regulation pursuant to subsection 

22 (e), provide for the operation of the clearinghouse 

23 and establish guidelines and procedures necessary to 

24 ensure that the clearinghouse operates in a secure 

25 manner that protects the information collected from 


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1 unauthorized access or misuse by any individual or 

2 entity. 

3 (e) DEFINITIONS.—For purposes of this section, the 

4 following definitions shall apply: 

5 (1) APPLICATION.—The term ‘‘application’’ 

6 means, any writing whether or not in paper or elec7 tronic form and whether or not signed by the appli8 cant, that— 

9 (A) is prepared or received by an origi10 nator; 

11 (B) is submitted or is intended to be sub12 mitted for consideration by any creditor for an 

13 extension of credit to be secured by a single14 family residence; and 

15 (C) identifies the applicant and the secu16 rity property. 

17 (2) CREDIT; EXTENSION OF CREDIT.—The 

18 terms ‘‘credit’’ and ‘‘extension of credit’’ mean the 

19 provision of time for payment pursuant to contrac20 tual terms, including lease-purchase contracts, home 

21 equity lines of credit, and home equity conversion 

22 transactions. 

23 (3) FINCEN.—The term ‘‘FinCEN’’ means the 

24 Financial Crimes Enforcement Network of the De25 partment of the Treasury. 


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1 (4) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of the Treasury, acting through the 

3 Director of FinCEN. 

4 (5) SINGLE FAMILY RESIDENCE.—The term 

5 ‘‘single-family residence’’ means residential real 

6 property that contains one to four dwelling units, or 

7 individual units of condominiums or cooperatives. 

8 (6) ORIGINATOR.—The term ‘‘originator’’ 

9 means any entity that is in the business of receiving 

10 applications for extensions of credit. 

11 (f) REGULATIONS.—The Secretary shall issue any 

12 regulations necessary to carry out this section. 

13 (g) EFFECTIVE DATE.—The provisions of this sec14 tion shall take effect with respect to extensions of credit 

15 entered into on and after January 1, 2011. 

16 (h) CONFORMING AMENDMENT.—Paragraph (2) of 

17 section 310 of title 31, United States Code, is amended— 

18 (1) by redesignating subparagraph (J) as sub19 paragraph (K); and 

20 (2) by inserting after subparagraph (I) the fol21 lowing new subparagraph: 

22 ‘‘(J) Carry out the responsibilities of the Sec23 retary under section 2 of the Anti-Redlining and 

24 Anti-Mortgage Fraud Act of 2010 (relating to resi25 dential mortgage application recordation requireVerDate Mar 15 2010 00:28 Jul 31, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H5941.IH H5941

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1 ment and establishment of a clearinghouse for such 

2 recording).’’. 

Æ 


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