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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1053 Introduced in House (IH)]

107th CONGRESS
  1st Session
                                H. R. 1053

    To amend the Equal Credit Opportunity Act and the Home Mortgage 
  Disclosure Act of 1975 to reduce the disparate impact of predatory 
             lending on minorities, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 15, 2001

 Mr. LaFalce (for himself, Mr. Gutierrez, Ms. Lee, Mrs. Jones of Ohio, 
Mr. Capuano, Mr. Clay, Mr. Hinchey, and Ms. Schakowsky) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL

 
    To amend the Equal Credit Opportunity Act and the Home Mortgage 
  Disclosure Act of 1975 to reduce the disparate impact of predatory 
             lending on minorities, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Equal Credit Enhancement and 
Neighborhood Protection Act of 2001''.

SEC. 2. COMBATING DISCRIMINATORY STEERING AND REVERSE REDLINING.

    (a) Discriminatory Steering and Reverse Redlining Prohibited.--
Section 701 of the Equal Credit Opportunity Act (15 U.S.C. 1691) is 
amended--
            (1) by striking ``(a) It shall be unlawful'' and inserting 
        ``(a) In General.--It shall be unlawful'';
            (2) by redesignating subsections (b), (c), (d), and (e) as 
        subsections (d), (e), (f), and (g), respectively; and
            (3) by inserting after subsection (a) the following new 
        subsections:
    ``(b) Most Favorable Credit Terms.--
            ``(1) In general.--It shall be unlawful for a creditor to 
        fail to extend credit to an applicant under the most favorable 
        terms available from the creditor, or an affiliate of the 
        creditor, for which the applicant qualifies.
            ``(2) Affiliate defined.--For purposes of this subsection, 
        the term `affiliate' has the same meaning given such term in 
        section 2(k) of the Bank Holding Company Act of 1956.
    ``(c) Targeting High-Cost Mortgages Prohibited.--
            ``(1) In general.--It shall be unlawful for any creditor to 
        adversely target an applicant or group of applicants on the 
        basis of race, color, religion, national origin, sex, marital 
        status or age, with respect to a high cost mortgage.
            ``(2) High cost mortgage defined.--
                    ``(A) In general.--For purposes of this title, the 
                term `high cost mortgage' means a consumer credit 
                transaction--
                            ``(i) that is secured by the consumer's 
                        principal dwelling, other than a reverse 
                        mortgage transaction; and
                            ``(ii) the terms of which are described in 
                        at least 1 of the following subclauses:
                                    ``(I) The transaction is secured by 
                                a first mortgage on the consumer's 
                                principal dwelling and the annual 
                                percentage rate on the credit, at the 
                                consummation of the transaction, will 
                                exceed by more than 6 percentage points 
                                the yield on Treasury securities having 
                                comparable periods of maturity on the 
                                15th day of the month immediately 
                                preceding the month in which the 
                                application for the extension of credit 
                                is received by the creditor;
                                    ``(II) The transaction is secured 
                                by a junior or subordinate mortgage on 
                                the consumer's principal dwelling and 
                                the annual percentage rate on the 
                                credit, at the consummation of the 
                                transaction, will exceed by more than 8 
                                percentage points the yield on Treasury 
                                securities having comparable periods of 
                                maturity on the 15th day of the month 
                                immediately preceding the month in 
                                which the application for the extension 
                                of credit is received by the creditor.
                                    ``(III) The total points and fees 
                                payable on the transaction will exceed 
                                the greater of 5 percent of the total 
                                loan amount or $1,000.
                    ``(B) Introductory rates not taken into account.--
                If the terms of any consumer credit transaction that is 
                secured by the consumer's principal dwelling offer, for 
                any initial or introductory period, an annual 
                percentage rate of interest which--
                            ``(i) is less than the annual percentage 
                        rate of interest which will apply after the end 
                        of such initial or introductory period; or
                            ``(ii) in the case of an annual percentage 
                        rate which varies in accordance with an index, 
                        which is less than the current annual 
                        percentage rate under the index which will 
                        apply after the end of such period,
                the annual percentage rate of interest that shall be 
                taken into account for purposes of subclauses (I) and 
                (II) of subparagraph (A)(ii) shall be the rate 
                described in clause (i) or (ii) of this subparagraph 
                rather than any rate in effect during the initial or 
                introductory period.
            ``(3) No negative implication.--No provision of this 
        subsection shall be construed as prohibiting a nonprofit entity 
        or government agency from promoting a program that enhances the 
        availability of mortgage credit on fair terms, as defined in 
        regulations that the Secretary shall prescribe, to underserved 
        persons and communities.''.
    (b) Enhanced General Damages for Reverse Redlining.--Section 706 of 
the Equal Credit Opportunity Act (15 U.S.C. 1691e) is amended--
            (1) by striking ``(a) Any creditor'' and inserting ``(a) 
        Actual Damages.--Any creditor'';
            (2) by striking ``(b) Any creditor'' and inserting ``(b) 
        General Damages.--
            ``(1) In general.--Any creditor''; and
            (3) by adding at the end of subsection (b) the following 
        new paragraph:
            ``(2) Punitive damages for reverse redlining.--Any 
        creditor, other than a government or governmental subdivision 
        or agency, who fails to comply with any requirement imposed 
        under subsection (b) or (c) of section 701 shall be liable--
                    ``(A) to the aggrieved applicant for punitive 
                damages in an amount not greater than $20,000, in 
                addition to any actual damages provided in subsection 
                (a) of this section; and
                    ``(B) except in the case of a class action the 
                total recovery under this paragraph shall not exceed 
                the greater of--
                            ``(i) the amount determined by multiplying 
                        the maximum amount of liability under 
                        subparagraph (A) for such failure to comply in 
                        an individual action by the number of members 
                        of the certified class; or
                            ``(ii) the amount equal to 2 percent of the 
                        net worth of the creditor.''.

SEC. 3. APPLICABILITY OF EQUAL CREDIT OPPORTUNITY ACT TO REQUESTS FOR 
              PREAPPROVALS.

    Section 702(b) of the Equal Credit Opportunity Act (15 U.S.C. 
1691a(b)) is amended by inserting the following before the period at 
the end: ``and includes any person who requests a written commitment 
from a creditor for a home purchase loan, even if the person requests a 
commitment to be issued subject to the identification of a suitable 
property or other condition''.

SEC. 4. PROHIBITION ON CERTAIN REGULATORY EXEMPTIONS UNDER THE HOME 
              MORTGAGE DISCLOSURE ACT OF 1977.

    Section 304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2803) is amended by adding at the end the following new subsection:
    ``(n) Prohibition on Regulatory Exemptions From Reporting 
Requirements.--Subject to subsection (i)--
            ``(1) no provision of this title may be construed as 
        authorizing the Board, the Secretary, or any other Federal 
        agency to exempt any depository institution from the 
        requirements of this title; and
            ``(2) any exemption from the requirements of this title 
        provided in any regulation, such as the exemption provided in 
        Appendix A to part 203 of the Code of Federal Regulations for 
        lending institutions described in section 303(2)(B) whose total 
        dollar amount of purchase loans originated in any year did not 
        exceed 10 percent of the total dollar amount of all loan 
        originations by such institution in such year, shall cease to 
        be effective as of the date of the enactment of the Equal 
        Credit Enhancement and Neighborhood Protection Act.''.

SEC. 5. ADDITIONAL DISCLOSURES UNDER THE HOME MORTGAGE DISCLOSURE ACT 
              OF 1977.

    (a) Reason for Denial.--Paragraph (4) of section 304(b) of the Home 
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)(4)) is amended by 
inserting ``(and the reasons for denial of a loan in the case of 
completed application, as appropriate)'' after ``completed 
applications''.
    (b) APR and Fees.--Section 304(b) of the Home Mortgage Disclosure 
Act of 1975 (12 U.S.C. 2803(b)) is amended--
            (1) by striking ``and'' at the end of paragraph (3);
            (2) by striking the period at the end of paragraph (4) and 
        inserting a semicolon; and
            (3) by adding at the end the following new paragraph:
            ``(5) annual percentage rate (as determined under section 
        107 of the Truth in Lending Act) of mortgage loans, along with 
        all costs of credit, which shall include all finance charges 
        (as determined under section 106 of the Truth in Lending Act), 
        costs of all insurance premiums paid within 90 days of a loan's 
        origination, fees and amounts imposed by third party closing 
        agents and all fees collected by mortgage brokers, and an 
        indication of whether a loan is subject to the Homeownership 
        Equity Protection Act of 1994, grouped according to census 
        tract, income level, racial characteristics and gender;''.
    (c) Debt-to-Income Ratio for Certain Loans.--Section 304(b) of the 
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by 
inserting after paragraph (5) (as added by subsection (b)(3) of this 
section) the following new paragraph:
            ``(6) for each mortgage loan, the ratio of the mortgagor's 
        debt to the mortgagor's income;''.
    (d) Manufactured Housing.--Section 304(b) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by inserting 
after paragraph (6) (as added by subsection (c) of this section) the 
following new paragraph:
            ``(7) for each mortgage loan, indication of whether 
        repayment of the loan is secured by a lien on a manufactured 
        home;''.
    (e) Loan-to-Value Ratio.--Section 304(b) of the Home Mortgage 
Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by inserting 
after paragraph (7) (as added by subsection (d) of this section) the 
following new paragraph:
            ``(8) for each mortgage loan, the ratio of the value of the 
        real estate (including a manufactured home, as appropriate) 
        that secures repayment of the loan to the principal amount of 
        the loan at the time of origination; and''
    (f) Race, Age, and Gender of All Applicants.--Section 304(b) of the 
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by 
inserting after paragraph (8) (as added by subsection (e) of this 
section) the following new paragraph:
            ``(9) for each completed application, including 
        applications taken by telephone or electronically, the racial 
        characteristics, age, and gender of each applicant.''
    (g) Involvement of Mortgage Brokers.--Section 304(b) of the Home 
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by 
inserting after paragraph (9) (as added by subsection (f) of this 
section) the following new paragraph:
            ``(9) the number and dollar amounts of mortgage loans and 
        loan applications (whether completed or not) with respect to 
        which a mortgage broker (as defined in regulations prescribed 
        under the Real Estate Settlement Procedures Act of 1974) was 
        involved at any stage of the loan process.''.
    (h) Technical and Conforming Amendments.--Section 304(h) of the 
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by 
striking ``subsection (b)(4)'' each place such term appears and 
inserting ``paragraph (4), (5), (6), (7), (8), (9), or (10) of 
subsection (b)''.

SEC. 6. DISCLOSURE OF PARENT COMPANY.

    Section 304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2803) is amended by inserting after subsection (n) (as added by section 
4 of this Act) the following new subsection:
    ``(o) Obligation to Identify Parent.--
            ``(1) In general.--In each disclosure and submission 
        required by this title, each depository institution shall 
        clearly identify the company that controls the depository 
        institution and any affiliate of the depository institution 
        that makes mortgage loans or provides financing for such loans.
            ``(2) Control defined.--For purposes of this subsection, 
        the term `control' shall have the same meaning given such term 
        in section 2 of the Bank Holding Company Act of 1956.''.

SEC. 7. APPLICATION INCLUDES REQUESTS FOR PREAPPROVAL.

    Section 303(3) of the Home Mortgage Disclosure Act of 1975 (12 
U.S.C. 2802(3)) is amended by inserting ``and includes any request for 
a written commitment from a depository institution for a home purchase 
loan, even if the applicant requests a commitment to be issued subject 
to the identification of a suitable property or other condition'' 
before the semicolon at the end.

SEC. 8. SANCTIONS AGAINST MORTGAGE LENDERS NOT AFFILIATED WITH 
              DEPOSITORY INSTITUTIONS.

    Section 305 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2804) is amended--
            (1) in subsection (b)--
                    (A) by inserting ``and'' after the semicolon at the 
                end of paragraph (2);
                    (B) by striking ``; and'' at the end of paragraph 
                (3) and inserting a period; and
                    (C) by striking paragraph (4);
            (2) by redesignating subsection (c) as subsection (e); and
            (3) by inserting after subsection (b), the following new 
        subsection:
    ``(c) Powers of the Secretary of Housing and Urban Development.--
            ``(1) In general.--The Secretary of Housing and Urban 
        Development (hereafter in this subsection referred to as `the 
        Secretary') shall enforce compliance with the requirements 
        imposed under this title with regard to other lending 
        institutions not described in subsection (b).
            ``(2) Civil money penalties.--Pursuant to paragraph (1) of 
        this subsection, the Secretary may impose a civil money penalty 
        for failure to comply with the requirements of this Act.
            ``(3) Amount of penalty.--The amount of the penalty, as 
        determined by the Secretary, may not exceed $5,000 for each 
        violation, except that the maximum penalty for all violations 
        by any particular lending institution during any 1-year period 
        shall not exceed $1,000,000.
            ``(4) Violations for which penalty may be imposed.--A civil 
        money penalty may be imposed for the late submission of a 
        report, failure to submit a report, submission of an illegible 
        report, submission of an erroneous report, and failure to 
        submit corrections to a report that was illegible or erroneous.
            ``(5) Agency procedures.--
                    ``(A) Establishment.--The Secretary shall establish 
                standards and procedures governing the imposition of 
                civil money penalties under this section. These 
                standards and procedures shall provide for the 
                Secretary to make the determination to impose the 
                penalty or to use in administrative entity (such as the 
                Mortgagee Review Board, established pursuant to section 
                202(c) of the National Housing Act) to make the 
                determination, shall provide for the imposition of a 
                penalty only after the lending institution has been 
                given an opportunity for a hearing on a record, and may 
                provide for review by the Secretary of a determination 
                on order, or interlocutory ruling, arising from a 
                hearing.
                    ``(B) Final orders.--If no hearing is requested 
                within 15 days of receipt of the notice of opportunity 
                for hearing, the imposition of the penalty shall 
                constitute a final and unappealable determination. If 
                the Secretary reviews the determination or order, the 
                Secretary may affirm, modify, or reverse that 
                determination or order. If the Secretary does not 
                review the determination or order within 90 days of the 
                issuance of the determination or order, the 
                determination or order shall be final.
                    ``(C) Factors in determining amount of penalty.--In 
                determining the amount of a penalty under this 
                subsection, consideration shall be given to such 
                factors as the gravity of the offense, any history of 
                prior offenses, ability to pay the penalty, deterrence 
                of future violations, and such other factors as the 
                Secretary may determine to be appropriate.
                    ``(D) Reviewability of imposition of penalty.--The 
                Secretary's determination or order imposing a penalty 
                under this subsection shall not be subject to review, 
                except as provided in this subsection.
            ``(6) Judicial review of agency determination.--
                    ``(A) In general.--After exhausting all 
                administrative remedies established by the Secretary 
                under this subsection, a lending institution against 
                whom the Secretary has imposed a civil money penalty 
                under this subsection may obtain a review of the 
                penalty as may be addressed in the notice of 
                determination to impose a penalty in the appropriate 
                court of appeals of the United States, by filing in 
                such court, within 20 days after the entry of such 
                order or determination, a written petition praying that 
                the Secretary's determination or order be modified or 
                set aside in whole or in part.
                    ``(B) Objections not raised in hearing.--
                            ``(i) In general.--The court shall not 
                        consider any objection that was not raised in 
                        the hearing conducted pursuant to this 
                        subsection unless a demonstration is made of 
                        extraordinary circumstances causing the failure 
                        to raise the objection.
                            ``(ii) Remand of new evidence.--If any 
                        party demonstrates to the satisfaction of the 
                        court that additional evidence not presented at 
                        the hearing is material and that there were 
                        reasonable grounds for the failure to present 
                        such evidence at the hearing, the court shall 
                        remand the matter to the Secretary for 
                        consideration of the additional evidence.
                    ``(C) Scope of review.--The decisions, findings, 
                and determinations of the Secretary shall be reviewed 
                pursuant to section 706 of title 5, United States Code.
                    ``(D) Order to pay penalty.--Notwithstanding any 
                other provision of law, in any such review, the court 
                shall have the power to order payment of the penalty 
                imposed by the Secretary.
            ``(7) Action to collect penalty.--
                    ``(A) Action by attorney general.--If a lending 
                institution fails to comply with the Secretary's 
                determination or order imposing a civil money penalty 
                under this subsection, after the determination or order 
                is no longer subject to review as provided by this 
                subsection, the Secretary may request the Attorney 
                General to bring an action in an appropriate United 
                States district court to obtain a monetary judgment 
                against the lending institution.
                    ``(B) Scope of review.--In such an action, the 
                validity and appropriateness of the Secretary's 
                determination or order imposing the penalty shall not 
                be subject to review.
                    ``(C) Recovery of costs of federal action.--The 
                money judgment may, in the court's discretion, include 
                the attorneys fees and other expenses incurred by the 
                United States in connection with the action.
            ``(8) Settlement by secretary.--The Secretary may 
        compromise, modify, or remit any civil money penalty which may 
        be imposed under this subsection.
            ``(9) Regulations.--The Secretary shall issue such 
        regulations as the Secretary deems appropriate to implement 
        this subsection.
            ``(10) Retention and use of penalties.--Notwithstanding any 
        other provisions of law, all civil money penalties collected 
        under this subsection shall be deposited in a revolving fund 
        established by the Secretary, to be available without fiscal 
        year limitation for enforcement of the requirements of this 
        title and for data improvement activities of the Secretary in 
        connection with the reporting requirements of this title.''.

SEC. 9. ALTERNATIVE ENFORCEMENT BY STATES.

    Section 305 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 
2804) is amended by inserting after subsection (c) (as added by section 
8 of this Act) the following new subsection:
    ``(d) Alternative Enforcement by States.--
            ``(1) State request for enforcement action.--A State may 
        request in writing that the Secretary take an action permitted 
        under subsection (c) to enforce compliance with the Act by a 
        depository institution doing business within such State.
            ``(2) State enforcement action.--If the Secretary fails to 
        initiate any action requested by a State in accordance with 
        paragraph (1) within 30 days of receipt of such a request, the 
        State shall have the authority to bring an action against such 
        depository institution to impose any penalty permitted under 
        subsection (c).
            ``(3) Venue.--An enforcement action under paragraph (2) may 
        be brought in any United States district court in which such 
        depository institution does business within the State.''.
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