I 

108TH CONGRESS 

2D SESSION H. R. 3938

To establish an Office of Housing Counseling to carry out the responsibilities 

of the Department of Housing and Urban Development regarding counseling on homeownership and rental housing issues, to establish a tollfree telephone number to provide referral to entities providing such 

counseling, and to make grants to such entities for providing such counseling, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 11, 2004

Mr. NEY (for himself, Ms. VELA ́ZQUEZ, and Mr. SCOTT of Georgia) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL

To establish an Office of Housing Counseling to carry out 

the responsibilities of the Department of Housing and 

Urban Development regarding counseling on homeownership and rental housing issues, to establish a toll-free 

telephone number to provide referral to entities providing 

such counseling, and to make grants to such entities 

for providing such counseling, and for other purposes.

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

2 This Act may be cited as the ‘‘Expanding Housing 

3 Opportunities Through Education and Counseling Act’’. 

4 SEC. 2. ESTABLISHMENT OF OFFICE OF HOUSING COUN5 SELING. 

6 Section 4 of the Department of Housing and Urban 

7 Development Act (42 U.S.C. 3533) is amended by adding 

8 at the end the following new subsection: 

9 ‘‘(g) OFFICE OF HOUSING COUNSELING.—

10 ‘‘(1) ESTABLISHMENT.—There is established, 

11 in the Office of the Secretary, the Office of Housing 

12 Counseling. 

13 ‘‘(2) DIRECTOR.—There is established the posi14 tion of Director of Housing Counseling. The Direc15 tor shall be the head of the Office of Housing Coun16 seling and shall be appointed by the Secretary. Such 

17 position shall be a career reserved position in the 

18 Senior Executive Service. 

19 ‘‘(3) FUNCTIONS.—

20 ‘‘(A) IN GENERAL.—The Director shall 

21 have ultimate responsibility within the Depart22 ment, except for the Secretary, for all activities 

23 and matters relating to homeownership coun24 seling and rental housing counseling, includ25 ing—
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1 ‘‘(i) research, grant administration, 

2 public outreach, and policy development re3 lating to such counseling; and 

4 ‘‘(ii) establishment, coordination, and 

5 administration of all regulations, require6 ments, standards, and performance meas7 ures under programs and laws adminis8 tered by the Department that relate to 

9 housing counseling, homeownership coun10 seling (including maintenance of homes), 

11 mortgage-related counseling (including 

12 home equity conversion mortgages and 

13 credit protection options to avoid fore14 closure), and rental housing counseling, in15 cluding the requirements, standards, and 

16 performance measures relating to housing 

17 counseling. 

18 ‘‘(B) SPECIFIC FUNCTIONS.—The Director 

19 shall carry out the functions assigned to the Di20 rector and the Office under this section and any 

21 other provisions of law. Such functions shall in22 clude establishing rules necessary—

23 ‘‘(i) for the counseling procedures 

24 under section 106(h)(1) of the Housing 
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1 and Urban Development Act of 1968 (12 

2 U.S.C. 1701x(h)(1)); 

3 ‘‘(ii) carrying out all other functions 

4 of the Secretary under section 106(h) of 

5 the Housing and Urban Development Act 

6 of 1968, including the establishment, oper7 ation, and publication of the availability of 

8 the toll-free telephone number under para9 graph (2) of such section; 

10 ‘‘(iii) carrying out section 5 of the 

11 Real Estate Settlement Procedures Act of 

12 1974 (12 U.S.C. 2604) for mortgage infor13 mation booklets prepared pursuant to such 

14 section; 

15 ‘‘(iv) carrying out the certification 

16 program under section 106(e) of the Hous17 ing and Urban Development Act of 1968 

18 (12 U.S.C. 1701x(e)); 

19 ‘‘(v) carrying out the assistance pro20 gram under section 106(a)(4) of the Hous21 ing and Urban Development Act of 1968, 

22 including criteria for selection of applica23 tions to receive assistance; 

24 ‘‘(vi) carrying out any functions re25 garding predatory and unscrupulous lend-
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1 ing practices relating to residential mort2 gage loans that the Secretary considers ap3 propriate, which shall include conducting 

4 the study under section 6 of the Expand5 ing Housing Opportunities Through Edu6 cation and Counseling Act; 

7 ‘‘(vii) providing for operation of the 

8 advisory committee established under para9 graph (4) of this subsection; and 

10 ‘‘(viii) collaborating with community11 based organizations with expertise in the 

12 field of housing counseling. 

13 ‘‘(4) ADVISORY COMMITTEE.—

14 ‘‘(A) IN GENERAL.—The Secretary shall 

15 appoint an advisory committee to provide advice 

16 and oversight regarding the carrying out of the 

17 functions of the Director. 

18 ‘‘(B) MEMBERS.—Such advisory committee 

19 shall consist of not more than 12 individuals, 

20 and the membership of the committee shall 

21 equally represent all aspects of the mortgage 

22 and real estate industry, including consumers. 

23 ‘‘(C) TERMS.—Except as provided in sub24 paragraph (D), each member of the advisory 

25 committee shall be appointed for a term of 
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1 three years. Members may be reappointed at 

2 the discretion of the Secretary. 

3 ‘‘(D) TERMS OF INITIAL APPOINTEES.—As 

4 designated by the Secretary at the time of ap5 pointment, of the members first appointed to 

6 the advisory committee, four shall be appointed 

7 for a term of one year and four shall be ap8 pointed for a term of two years. 

9 ‘‘(E) PROHIBITION OF PAY; TRAVEL EX10 PENSES.—Members of the advisory committee 

11 shall serve without pay, but shall receive travel 

12 expenses, including per diem in lieu of subsist13 ence, in accordance with applicable provisions 

14 under subchapter I of chapter 57 of title 5, 

15 United States Code. 

16 ‘‘(5) SCOPE OF HOMEOWNERSHIP COUN17 SELING.—In carrying out the responsibilities of the 

18 Director, the Director shall ensure that homeowner19 ship counseling provided by, in connection with, or 

20 pursuant to any function, activity, or program of the 

21 Department addresses the entire process of home22 ownership, including the decision to purchase a 

23 home, the selection and purchase of a home, issues 

24 arising during or affecting the period of ownership 

25 of a home (including refinancing, default and fore-
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1 closure, and other financial decisions), and the sale 

2 or other disposition of a home.’’. 

3 SEC. 3. COUNSELING PROCEDURES. 

4 (a) IN GENERAL.—Section 106 of the Housing and 

5 Urban Development Act of 1968 (12 U.S.C. 1701x), as 

6 amended by the preceding provisions of this Act, is further 

7 amended by adding at the end the following new sub8 section: 

9 ‘‘(h) PROCEDURES AND ACTIVITIES.—

10 ‘‘(1) COUNSELING PROCEDURES.—

11 ‘‘(A) IN GENERAL.—The Secretary shall 

12 establish, coordinate, and monitor the adminis13 tration by the Department of Housing and 

14 Urban Development of the counseling proce15 dures for homeownership counseling and rental 

16 housing counseling provided in connection with 

17 any program of the Department, including all 

18 requirements, standards, and performance 

19 measures that relate to homeownership and 

20 rental housing counseling. 

21 ‘‘(B) HOMEOWNERSHIP COUNSELING.—

22 For purposes of this subsection and as used in 

23 the provisions referred to in this subparagraph, 

24 the term ‘homeownership counseling’ means 

25 counseling related to homeownership and resi-
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1 dential mortgage loans. Such term includes 

2 counseling related to homeownership and resi3 dential mortgage loans that is provided pursu4 ant to—

5 ‘‘(i) section 105(a)(20) of the Housing 

6 and Community Development Act of 1974 

7 (42 U.S.C. 5305(a)(20)); 

8 ‘‘(ii) in the United States Housing 

9 Act of 1937—

10 ‘‘(I) section 9(e) (42 U.S.C. 

11 1437g(e)); 

12 ‘‘(II) section 8(y)(1)(D) (42 

13 U.S.C. 1437f(y)(1)(D)); 

14 ‘‘(III) section 18(a)(4)(D) (42 

15 U.S.C. 1437p(a)(4)(D)); 

16 ‘‘(IV) section 23(c)(4) (42 U.S.C. 

17 1437u(c)(4)); 

18 ‘‘(V) section 32(e)(4) (42 U.S.C. 

19 1437z–4(e)(4)); 

20 ‘‘(VI) section 33(d)(2)(B) (42 

21 U.S.C. 1437z–5(d)(2)(B)); 

22 ‘‘(VII) sections 302(b)(6) and 

23 303(b)(7) (42 U.S.C. 1437aaa–

24 1(b)(6), 1437aaa–2(b)(7)); and 
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1 ‘‘(VIII) section 304(c)(4) (42 

2 U.S.C. 1437aaa–3(c)(4)); 

3 ‘‘(iii) section 302(a)(4) of the Amer4 ican Homeownership and Economic Oppor5 tunity Act of 2000 (42 U.S.C. 1437f note); 

6 ‘‘(iv) sections 233(b)(2) and 258(b) of 

7 the Cranston-Gonzalez National Affordable 

8 Housing Act (42 U.S.C. 12773(b)(2), 

9 12808(b)); 

10 ‘‘(v) this section and section 101(e) of 

11 the Housing and Urban Development Act 

12 of 1968 (12 U.S.C. 1701x, 1701w(e)); 

13 ‘‘(vi) section 220(d)(2)(G) of the Low14 Income Housing Preservation and Resident 

15 Homeownership Act of 1990 (12 U.S.C. 

16 4110(d)(2)(G)); 

17 ‘‘(vii) sections 422(b)(6), 423(b)(7), 

18 424(c)(4), 442(b)(6), and 443(b)(6) of the 

19 Cranston-Gonzalez National Affordable 

20 Housing Act (42 U.S.C. 12872(b)(6), 

21 12873(b)(7), 12874(c)(4), 12892(b)(6), 

22 and 12893(b)(6)); 

23 ‘‘(viii) section 491(b)(1)(F)(iii) of the 

24 McKinney-Vento Homeless Assistance Act 

25 (42 U.S.C. 11408(b)(1)(F)(iii)); 
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1 ‘‘(ix) sections 202(3) and 

2 810(b)(2)(A) of the Native American 

3 Housing and Self-Determination Act of 

4 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

5 ‘‘(x) in the National Housing Act—

6 ‘‘(I) in section 203 (12 U.S.C. 

7 1709), the penultimate undesignated 

8 paragraph of paragraph (2) of sub9 section (b), subsection (c)(2)(A), and 

10 subsection (r)(4); 

11 ‘‘(II) subsections (a) and (c)(3) 

12 of section 237 (12 U.S.C. 1715z–2); 

13 and 

14 ‘‘(III) subsections (d)(2)(B) and 

15 (m)(1) of section 255 (12 U.S.C. 

16 1715z–20); 

17 ‘‘(xi) section 502(h)(4)(B) of the 

18 Housing Act of 1949 (42 U.S.C. 

19 1472(h)(4)(B)); and 

20 ‘‘(xii) section 508 of the Housing and 

21 Urban Development Act of 1970 (12 

22 U.S.C. 1701z–7). 

23 ‘‘(C) RENTAL HOUSING COUNSELING.—

24 For purposes of this subsection, the term ‘rent25 al housing counseling’ means counseling related 
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1 to rental of residential property, which may in2 clude counseling regarding future homeowner3 ship opportunities and providing referrals for 

4 renters and prospective renters to entities pro5 viding counseling and shall include counseling 

6 related to such topics that is provided pursuant 

7 to—

8 ‘‘(i) section 105(a)(20) of the Housing 

9 and Community Development Act of 1974 

10 (42 U.S.C. 5305(a)(20)); 

11 ‘‘(ii) in the United States Housing 

12 Act of 1937—

13 ‘‘(I) section 9(e) (42 U.S.C. 

14 1437g(e)); 

15 ‘‘(II) section 18(a)(4)(D) (42 

16 U.S.C. 1437p(a)(4)(D)); 

17 ‘‘(III) section 23(c)(4) (42 

18 U.S.C. 1437u(c)(4)); 

19 ‘‘(IV) section 32(e)(4) (42 U.S.C. 

20 1437z–4(e)(4)); 

21 ‘‘(V) section 33(d)(2)(B) (42 

22 U.S.C. 1437z–5(d)(2)(B)); and 

23 ‘‘(VI) section 302(b)(6) (42 

24 U.S.C. 1437aaa–1(b)(6)); 
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1 ‘‘(iii) section 233(b)(2) of the Cran2 ston-Gonzalez National Affordable Housing 

3 Act (42 U.S.C. 12773(b)(2)); 

4 ‘‘(iv) section 106 of the Housing and 

5 Urban Development Act of 1968 (12 

6 U.S.C. 1701x); 

7 ‘‘(v) section 422(b)(6) of the Cran8 ston-Gonzalez National Affordable Housing 

9 Act (42 U.S.C. 12872(b)(6)); 

10 ‘‘(vi) section 491(b)(1)(F)(iii) of the 

11 McKinney-Vento Homeless Assistance Act 

12 (42 U.S.C. 11408(b)(1)(F)(iii)); 

13 ‘‘(vii) sections 202(3) and 

14 810(b)(2)(A) of the Native American 

15 Housing and Self-Determination Act of 

16 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

17 and 

18 ‘‘(viii) the rental assistance program 

19 under section 8 of the United States Hous20 ing Act of 1937 (42 U.S.C. 1437f). 

21 ‘‘(2) TOLL-FREE TELEPHONE NUMBER AND

22 WEB SITE.—The Secretary shall provide for the es23 tablishment, operation, and publication of a lan24 guage-appropriate toll-free telephone number and a 

25 World Wide Web site through which persons inter-
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1 ested in homeownership or rental housing counseling 

2 services may locate and obtain names and contact 

3 information of persons and organizations certified 

4 under section 106(e) of the Housing and Urban De5 velopment Act of 1968 to provide such services. 

6 ‘‘(3) STANDARDS FOR MATERIALS.—The Sec7 retary, in conjunction with the advisory committee 

8 established under subsection (g)(4), shall establish 

9 standards for materials and forms to be used, as ap10 propriate, by organizations providing homeownership 

11 counseling services, including any recipients of as12 sistance pursuant to subsection (a)(4). 

13 ‘‘(4) MORTGAGE SOFTWARE SYSTEMS.—

14 ‘‘(A) CERTIFICATION.—The Secretary shall 

15 provide for the certification of various computer 

16 software programs for consumers to use in eval17 uating different residential mortgage loan pro18 posals. The Secretary shall require, for such 

19 certification, that the mortgage software sys20 tems that take into account—

21 ‘‘(i) the consumer’s financial situation 

22 and the cost of maintaining a home, in23 cluding insurance, taxes, and utilities; 
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1 ‘‘(ii) the amount of time the consumer 

2 expects to remain in the home or expected 

3 time to maturity of the loan; 

4 ‘‘(iii) such other factors as the Sec5 retary considers appropriate to assist the 

6 consumer in evaluating whether to pay 

7 points, to lock in an interest rate, to select 

8 an adjustable or fixed rate loan, to select 

9 a conventional or government-insured or 

10 guaranteed loan and to make other choices 

11 during the loan application process. 

12 If the Secretary determines that available exist13 ing software is inadequate to assist consumers 

14 during the residential mortgage loan application 

15 process, the Secretary shall arrange for the de16 velopment by private sector software companies 

17 of new mortgage software systems that meet 

18 the Secretary’s specifications. 

19 ‘‘(B) USE AND INITIAL AVAILABILITY.—

20 Such certified computer software programs 

21 shall be used to supplement, not replace, hous22 ing counseling. The Secretary shall provide that 

23 such programs are initially used only in connec24 tion with the assistance of housing counselors 

25 certified pursuant to subsection (e). 
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1 ‘‘(C) AVAILABILITY.—After a period of ini2 tial availability under subparagraph (B) as the 

3 Secretary considers appropriate, the Secretary 

4 shall take reasonable steps to make mortgage 

5 software systems certified pursuant to this 

6 paragraph widely available through the Internet 

7 and at public locations, including public librar8 ies, senior-citizen centers, public housing sites, 

9 offices of public housing agencies that admin10 ister rental housing assistance vouchers, and 

11 housing counseling centers. 

12 ‘‘(5) OUTREACH TO VULNERABLE POPU13 LATIONS.—The Secretary shall develop a multimedia 

14 outreach program designed to make elderly persons, 

15 persons who face language barriers, low-income per16 sons, and other potentially vulnerable consumers 

17 aware that it is advisable, before seeking a residen18 tial mortgage loan, to obtain homeownership coun19 seling from an unbiased and reliable source and that 

20 such homeownership counseling is available, includ21 ing through programs of the Department of Housing 

22 and Urban Development. 

23 ‘‘(6) EDUCATION PROGRAMS.—The Secretary 

24 shall provide advice and technical assistance to 

25 States, units of general local government, and non-
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1 profit organizations regarding the establishment and 

2 operation of, including assistance with the develop3 ment of content and materials for, educational pro4 grams to inform and educate consumers, particularly 

5 those most vulnerable with respect to residential 

6 mortgage loans (such as elderly persons, persons 

7 facing language barriers, low-income persons, and 

8 other potentially vulnerable consumers), regarding 

9 home mortgages, mortgage refinancing, home equity 

10 loans, and home repair loans.’’. 

11 (b) CONFORMING AMENDMENTS TO GRANT PRO12 GRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZA13 TIONS.—Section 106(c)(5)(A)(ii) of the Housing and 

14 Urban Development Act of 1968 (12 U.S.C. 

15 1701x(c)(5)(A)(ii)) is amended—

16 (1) in subclause (II), by striking ‘‘and’’ at the 

17 end; 

18 (2) in subclause (III) by striking the period at 

19 the end and inserting ‘‘; and’’; and 

20 (3) by inserting after subclause (III) the fol21 lowing new subclause: 

22 ‘‘(IV) notify the Housing or 

23 mortgage applicant of the availability 

24 of mortgage software systems pro25 vided pursuant to subsection (h)(4).’’. 
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1 SEC. 4. GRANTS FOR HOUSING COUNSELING ASSISTANCE. 

2 Section 106(a) of the Housing and Urban Develop3 ment Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended 

4 by adding at the end the following new paragraph: 

5 ‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING

6 ASSISTANCE.—

7 ‘‘(A) IN GENERAL.—The Secretary shall make 

8 financial assistance available under this paragraph 

9 to States, units of general local governments, non10 profit organizations and other entities providing 

11 homeownership or rental counseling (as such terms 

12 are defined in subsection (h)(1)). 

13 ‘‘(B) QUALIFIED ENTITIES.—The Secretary 

14 shall establish standards and guidelines for eligibility 

15 of organizations (including governmental and non16 profit organizations) to receive assistance under this 

17 paragraph. 

18 ‘‘(C) DISTRIBUTION.—Assistance made avail19 able under this paragraph shall be distributed in a 

20 manner that encourages efficient and successful 

21 counseling programs. 

22 ‘‘(D) AUTHORIZATION OF APPROPRIATIONS.—

23 There are authorized to be appropriated 

24 $45,000,000 for each of fiscal years 2004 through 

25 2007 for—
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1 ‘‘(i) the operations of the Office of Hous2 ing Counseling of the Department of Housing 

3 and Urban Development; 

4 ‘‘(ii) the responsibilities of the Secretary 

5 under paragraphs (2) through (6) of subsection 

6 (h); and 

7 ‘‘(ii) assistance pursuant to this paragraph 

8 for entities providing homeownership and rental 

9 counseling.’’. 

10 SEC. 5. REQUIREMENTS TO USE HUD-CERTIFIED COUN11 SELORS UNDER HUD PROGRAMS. 

12 Section 106(e) of the Housing and Urban Develop13 ment Act of 1968 (12 U.S.C. 1701x(e)) is amended—

14 (1) by striking paragraph (1) and inserting the 

15 following new paragraph: 

16 ‘‘(1) REQUIREMENT FOR ASSISTANCE.—An or17 ganization may not receive assistance for counseling 

18 activities under subsection (a)(1)(iii), (a)(2), (a)(4), 

19 (c), or (d) of this section, or under section 101(e), 

20 unless the organization, or the individuals through 

21 which the organization provides such counseling, has 

22 been certified by the Secretary under this subsection 

23 as competent to provide such counseling.’’; 

24 (2) in paragraph (2)—
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1 (A) by inserting ‘‘and for certifying organi2 zations’’ before the period at the end of the 

3 first sentence; and 

4 (B) in the second sentence by striking ‘‘for 

5 certification’’ and inserting ‘‘, for certification 

6 of an organization, that each individual through 

7 which the organization provides counseling shall 

8 demonstrate, and, for certification of an indi9 vidual,’’; 

10 (3) in paragraph (3), by inserting ‘‘organiza11 tions and’’ before ‘‘individuals’’; 

12 (4) by redesignating paragraph (3) as para13 graph (5); and 

14 (5) by inserting after paragraph (2) the fol15 lowing new paragraphs: 

16 ‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—

17 Any homeownership counseling or rental housing 

18 counseling (as such terms are defined in subsection 

19 (h)(1)) required under, or provided in connection 

20 with, any program administered by the Department 

21 of Housing and Urban Development shall be pro22 vided only by organizations or counselors certified by 

23 the Secretary under this subsection as competent to 

24 provide such counseling. 
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1 ‘‘(4) OUTREACH.—The Secretary shall take 

2 such actions as the Secretary considers appropriate 

3 to ensure that individuals and organizations pro4 viding homeownership or rental housing counseling 

5 are aware of the certification requirements and 

6 standards of this subsection and of the training and 

7 certification programs under subsection (f).’’. 

8 SEC. 6. STUDY OF DEFAULTS AND FORECLOSURES. 

9 The Secretary of Housing and Urban Development 

10 shall conduct an extensive study of the root causes of de11 fault and foreclosure of home loans, using as much empir12 ical data as are available. Not later than 12 months after 

13 the Director of Housing Counseling of the Department of 

14 Housing and Urban Development is first appointed, the 

15 Secretary shall submit to the Congress a preliminary re16 port regarding the study. Not later than 24 months after 

17 such date of appointment, the Secretary shall submit a 

18 final report regarding the results of the study, which shall 

19 include any recommended legislation relating to the study 

20 and recommendations for best practices and for a process 

21 to identify populations that need counseling the most. 

22 SEC. 7. DEFINITIONS FOR COUNSELING-RELATED PRO23 GRAMS. 

24 Section 106 of the Housing and Urban Development 

25 Act of 1968 (12 U.S.C. 1701x), as amended by the pre-
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1 ceding provisions of this Act, is further amended by add2 ing at the end the following new subsection: 

3 ‘‘(i) DEFINITIONS.—For purposes of this section: 

4 ‘‘(1) NONPROFIT ORGANIZATION.—The term 

5 ‘nonprofit organization’ has the meaning given such 

6 term in section 104(5) of the Cranston-Gonzalez Na7 tional Affordable Housing Act (42 U.S.C. 

8 12704(5)), except that subparagraph (D) of such 

9 section shall not apply for purposes of this section. 

10 ‘‘(2) STATE.—The term ‘State’ means each of 

11 the several States, the Commonwealth of Puerto 

12 Rico, the District of Columbia, the Commonwealth 

13 of the Northern Mariana Islands, Guam, the Virgin 

14 Islands, American Samoa, the Trust Territories of 

15 the Pacific, or any other possession of the United 

16 States. 

17 ‘‘(3) UNIT OF GENERAL LOCAL GOVERN18 MENT.—The term ‘unit of general local government’ 

19 means any city, town, township, parish, village, or 

20 other general purpose political subdivision of a 

21 State.’’. 

22 SEC. 8. UPDATING AND SIMPLIFICATION OF MORTGAGE IN23 FORMATION BOOKLET. 

24 Section 5 of the Real Estate Settlement Procedures 

25 Act of 1974 (12 U.S.C. 2604) is amended—
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1 (1) in the section heading, by striking ‘‘special’’ 

2 and inserting ‘‘mortgage’’; 

3 (2) by striking subsections (a) and (b) and in4 serting the following new subsections: 

5 ‘‘(a) PREPARATION AND DISTRIBUTION.—The Sec6 retary shall prepare a booklet to help consumers applying 

7 for federally related mortgage loans to understand the na8 ture and costs of real estate settlement services. The Sec9 retary shall prepare the booklet in various languages and 

10 cultural styles, as the Secretary determines to be appro11 priate, so that the booklet is understandable and accessible 

12 to homebuyers of different ethnic and cultural back13 grounds. The Secretary shall distribute such booklets to 

14 all lenders that make federally related mortgage loans. 

15 The Secretary shall also distribute to such lenders lists, 

16 organized by location, of homeownership counselors cer17 tified under section 106(e) of the Housing and Urban De18 velopment Act of 1968 (12 U.S.C. 1701x(e)) for use in 

19 complying with the requirement under subsection (c) of 

20 this section. 

21 ‘‘(b) CONTENTS.—Each booklet shall be in such form 

22 and detail as the Secretary shall prescribe and, in addition 

23 to such other information as the Secretary may provide, 

24 shall include in plain and understandable language the fol25 lowing information: 
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1 ‘‘(1) A description and explanation of the na2 ture and purpose of the costs incident to a real es3 tate settlement or a federally related mortgage loan. 

4 The description and explanation shall provide gen5 eral information about the mortgage process as well 

6 as specific information concerning, at a minimum—

7 ‘‘(A) balloon payments; 

8 ‘‘(B) prepayment penalties; and 

9 ‘‘(C) the trade-off between closing costs 

10 and the interest rate over the life of the loan. 

11 ‘‘(2) An explanation and sample of the uniform 

12 settlement statement required by section 4. 

13 ‘‘(3) A list and explanation of lending practices, 

14 including those prohibited by the Truth in Lending 

15 Act or other applicable Federal law, and of other un16 fair practices and unreasonable or unnecessary 

17 charges to be avoided by the prospective buyer with 

18 respect to a real estate settlement. 

19 ‘‘(4) A list and explanation of questions a con20 sumer obtaining a federally related mortgage loan 

21 should ask regarding the loan, including whether the 

22 consumer will have the ability to repay the loan, 

23 whether the consumer sufficiently shopped for the 

24 loan, whether the loan terms include prepayment 
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1 penalties or balloon payments, and whether the loan 

2 will benefit the borrower. 

3 ‘‘(5) An explanation of the right of rescission as 

4 to certain transactions provided by sections 125 and 

5 129 of the Truth in Lending Act (15 U.S.C. 1635, 

6 1639). 

7 ‘‘(6) A brief explanation of the nature of a vari8 able rate mortgage and a reference to the booklet 

9 entitled ‘Consumer Handbook on Adjustable Rate 

10 Mortgages’, published by the Board of Governors of 

11 the Federal Reserve System pursuant to section 

12 226.19(b)(1) of title 12, Code of Federal Regula13 tions, or to any suitable substitute of such booklet 

14 that such Board of Governors may subsequently 

15 adopt pursuant to such section. 

16 ‘‘(7) A brief explanation of the nature of a 

17 home equity line of credit and a reference to the 

18 pamphlet required to be provided under section 

19 127A of the Truth in Lending Act (15 U.S.C. 

20 1637a(e)). 

21 ‘‘(8) Information about homeownership coun22 seling services made available pursuant to section 

23 106(a)(4) of the Housing and Urban Development 

24 Act of 1968 (12 U.S.C. 1701x(a)(4)), a rec25 ommendation that the consumer use such services, 
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1 and notification that a list of certified providers of 

2 homeownership counseling in the area, and their 

3 contact information, is provided with the booklet. 

4 ‘‘(9) An explanation of the nature and purpose 

5 of escrow accounts when used in connection with 

6 loans secured by residential real estate and the re7 quirements under section 10 of this Act regarding 

8 such accounts. 

9 ‘‘(10) An explanation of the choices available to 

10 buyers of residential real estate in selecting persons 

11 to provide necessary services incident to a real estate 

12 settlement. 

13 ‘‘(11) An explanation of a consumer’s respon14 sibilities, liabilities, and obligations in a mortgage 

15 transaction. 

16 ‘‘(12) An explanation of the nature and purpose 

17 of real estate appraisals, including the difference be18 tween an appraisal and a home inspection. 

19 ‘‘(13) Notice that the Office of Housing of the 

20 Department of Housing and Urban Development has 

21 made publicly available a brochure regarding loan 

22 fraud and a World Wide Web address for obtaining 

23 the brochure. 

24 The booklet prepared pursuant to this section shall take 

25 into consideration differences in real estate settlement pro-
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1 cedures which may exist among the several States and ter2 ritories of the United States and among separate political 

3 subdivisions within the same State and territory.’’; 

4 (3) in subsection (c), by striking the last sen5 tence and inserting the following new sentence: 

6 ‘‘Each lender shall also include with the booklet a 

7 list of homeownership counselors who are certified 

8 pursuant to section 106(e) of the Housing and 

9 Urban Development Act of 1968 (12 U.S.C. 

10 1701x(e)) and located in the area of the lender.’’; 

11 and 

12 (4) in subsection (d), by inserting after the pe13 riod at the end of the first sentence the following: 

14 ‘‘The lender shall provide the booklet in the version 

15 that is most language- and culturally-appropriate for 

16 the person receiving it.’’.

Æ