```

[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 833 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 833

  To combat unfair and deceptive practices in the high-cost mortgage 
 market, establish a consumer mortgage protection board, and establish 
  licensing and minimum standards for mortgage brokers, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 13, 2003

Mr. Ney (for himself, Mr. Lucas of Kentucky, Mr. Gillmor, and Mr. Gary 
   G. Miller of California) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL

 
  To combat unfair and deceptive practices in the high-cost mortgage 
 market, establish a consumer mortgage protection board, and establish 
  licensing and minimum standards for mortgage brokers, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Responsible 
Lending Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                      TITLE I--HIGH-COST MORTGAGES

Sec. 101. Definitions relating to high-cost mortgages.
Sec. 102. Amendments to existing requirements for high-cost mortgages.
Sec. 103. Amendments to liability provisions relating to high-cost 
                            mortgages.
Sec. 104. Coordination with State law.
Sec. 105. Continuation of identifications under the Alternative 
                            Mortgage Transaction Parity Act of 1982.
Sec. 106. Effective date.
              TITLE II--CONSUMER MORTGAGE PROTECTION BOARD

Sec. 201. Establishment.
Sec. 202. Counseling procedures.
Sec. 203. Grants for housing counseling assistance.
Sec. 204. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 205. Updating and simplification of mortgage information booklet.
              TITLE III--REQUIREMENTS FOR MORTGAGE BROKERS

              Subtitle A--Licensing and Minimum Standards

Sec. 301. State regulation of mortgage brokers.
Sec. 302. Federal mortgage broker requirements.
Sec. 303. Definitions.
           Subtitle B--Database of Licensed Mortgage Brokers

Sec. 311. Establishment.
Sec. 312. Database.
Sec. 313. Fees.
Sec. 314. Confidentiality of information.
Sec. 315. Liability provisions.

                      TITLE I--HIGH-COST MORTGAGES

SEC. 101. 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)(1)) is amended by striking all that 
precedes paragraph (2) and inserting the following:
    ``(aa) High-Cost Mortgage Defined.--
            ``(1) 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 residential mortgage transaction, a 
        reverse mortgage transaction, or a transaction under an open 
        end credit plan, if any of the following apply with respect to 
        such consumer credit transaction:
                    ``(A) 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 8 percentage points the yield on Treasury 
                securities having comparable periods of maturity on the 
                fifteenth day of the month immediately preceding the 
                month in which the application for the extension of 
                credit is received by the creditor.
                    ``(B) 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 10 percentage points the yield on Treasury 
                securities having comparable periods of maturity on the 
                fifteenth day of the month immediately preceding the 
                month in which the application for the extension of 
                credit is received by the creditor.
                    ``(C) The total loan amount exceeds $30,000 and 
                total points and fees payable on the transaction will 
                exceed 6 percent of the total loan amount.
                    ``(D) The total loan amount is $30,000 or less and 
                total points and fees payable on the transaction will 
                exceed 7 percent of the total loan amount.''.
    (b) Points and Fees Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended--
            (1) by striking paragraph (3);
            (2) by striking paragraph (4) and inserting the following 
        new paragraph:
            ``(3) Definition of points and fees.--
                    ``(A) In general.--For purposes of subparagraphs 
                (C) and (D) of paragraph (1), the term `points and 
                fees' shall exclude prepayment fees, yield-spread 
                premiums, and borrower credits and shall include--
                            ``(i) all items included in the finance 
                        charge, except interest and the time-price 
                        differential;
                            ``(ii) all compensation paid directly to 
                        mortgage brokers by or on behalf of the 
                        consumer (other than borrower credits); and
                            ``(iii) each of the charges listed in 
                        section 106(e) (except an escrow for future 
                        payment of taxes or insurance), unless--
                                    ``(I) the charge is reasonable and 
                                competitive;
                                    ``(II) the creditor receives no 
                                direct compensation; and
                                    ``(III) the charge is paid to a 
                                third party; and
                            ``(iv) such other charges as the Board 
                        determines to be appropriate.
                    ``(B) Bona fide discount points excludable.--Not 
                more than 2 bona fide loan discount points in 
                connection with the loan transaction may be excluded 
                from the amount of points and fees taken into account 
                for purposes of paragraph (1).
                    ``(C) Bona fide discount point defined.--For 
                purposes of subparagraph (B), the term `bona fide 
                discount point' means any loan discount point which is 
                paid for the purpose of reducing, and which in fact 
                results in a bona fide reduction of, the interest rate 
                or time-price differential applicable to the loan if 
                the amount of the interest rate reduction purchased by 
                the discount points is reasonably consistent with 
                established industry norms and practices for mortgage 
                market transactions.''; and
            (3) by redesignating paragraph (5) as paragraph (4).
    (c) Technical and Conforming Amendment.--Paragraph (2) of section 
103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended 
by striking ``specified in paragraph (1)(A)'' and inserting ``specified 
in subparagraph (A) or (B) of paragraph (1)''.

SEC. 102. AMENDMENTS TO EXISTING REQUIREMENTS FOR HIGH-COST MORTGAGES.

    (a) Prepayment Penalties.--Section 129(c)(2)(C) of the Truth in 
Lending Act (15 U.S.C. 1639(c)(2)(C)) is amended by striking ``5-year 
period'' and inserting ``4-year period''.
    (b) Balloon Payments.--Section 129(e) of the Truth in Lending Act 
(15 U.S.C. 1639(e)) is amended--
            (1) by striking ``Payments.--A mortgage'' and inserting 
        ``Payments.--
            ``(1) In general.--A mortgage''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception.--Paragraph (1) shall not apply when the 
        payment schedule is adjusted to account for the seasonal or 
        irregular income of the obligor or if the purpose of the loan 
        is a bridge loan made in connection with the acquisition or 
        construction of a dwelling intended to become the obligor's 
        principal dwelling.
            ``(3) Notice required.--A creditor that offers a high-cost 
        mortgage having a balloon payment term in accordance with 
        paragraph (2) shall clearly disclose to the consumer that the 
        loan contains such a term, the balloon payment amount that will 
        be owed by the consumer, and that balloon payments are 
        permissible under the circumstances described in paragraph (2) 
        but are not required for such types of mortgages.''.
    (c) Negative Amortization.--Subsection (f) of section 129 of the 
Truth in Lending Act (15 U.S.C. 1639(f)) is amended--
            (1) by striking ``Amortization.--A mortgage referred to in 
        section 103 (aa)'' and inserting ``Amortization.--
            ``(1) In general.--A high-cost mortgage''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for period of forbearance.--Paragraph (1) 
        shall not apply with respect to negative amortization resulting 
        from periods of temporary forbearance allowed by the 
        creditor.''.
    (d) Disclosure of Financing of Points or Fees.--Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by adding at the end 
the following new subsection:
    ``(m) Disclosure of Financing of Points or Fees.--If, in connection 
with the formation or consummation of a high-cost mortgage, any portion 
of the points, fees, or other charges payable to the creditor or any 
third party are included, directly or indirectly, in the principal 
amount of the loan or otherwise financed by the creditor, the creditor 
shall disclose that fact to the consumer together with a statement that 
such treatment of any such point, fee, or charge is not legally 
required.''.
    (e) Prohibition on Unfair Arbitration Requirements.--Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after 
subsection (m) (as added by subsection (d) of this section) the 
following new subsection:
    ``(n) No Unfair Arbitration Clauses.--
            ``(1) In general.--A high-cost mortgage may not be subject 
        to a mandatory arbitration clause that is oppressive, unfair, 
        unconscionable, or substantially in derogation of the rights of 
        consumers.
            ``(2) Safe Harbor.--An arbitration clause that--
                    ``(A) establishes the venue for the arbitration in 
                the Federal judicial district or division in which the 
                real property that is the security for the high-cost 
                mortgage is located;
                    ``(B) complies with the standards set forth by a 
                nationally recognized arbitration organization, such as 
                the Statement of Principles of the National Consumer 
                Dispute Advisory Committee of the American Arbitration 
                Association or any comparable standards of such other 
                organization as may be approved by the Board of 
                Governors of the Federal Reserve System, or any 
                official or employee of the Board duly authorized by 
                the Board; and
                    ``(C) requires the creditor to bear the reasonable 
                costs of all parties to the arbitration, including the 
                production of fact witnesses and documents, during the 
                first 2 days of such arbitration,
        shall be presumed not to violate the proscriptions of paragraph 
        (1).''.
    (f) Prohibition on Evasions Through Structuring Transactions or 
Reciprocal Arrangements.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (n) (as added by 
subsection (e) of this section) the following new subsection:
    ``(o) Prohibition on Evasions Through Structuring Transactions or 
Reciprocal Arrangements.--
            ``(1) In general.--No creditor, or any affiliate of a 
        creditor, may take any action for the purpose of, or with the 
        intent to, circumvent or evade any requirement of this title 
        with respect to high-cost mortgages, including--
                    ``(A) entering into any reciprocal arrangement;
                    ``(B) dividing any loan transaction into separate 
                parts for the purpose and with the intent of evading 
                the provisions of this section; or
                    ``(C) structuring or restructuring a credit 
                transaction as a business loan, as credit extended 
                under an open end consumer credit plan, or other form 
                of credit for the purpose and with the intent of 
                evading the provisions of this section when the loan 
                would have been a high-cost mortgage if the loan had 
                been structured as a consumer loan or as credit not 
                extended under an open end consumer credit plan.
            ``(2) Reciprocal arrangement defined.--For purposes of this 
        subsection, the term `reciprocal arrangement' means any 
        agreement, understanding, or other arrangement under which--
                    ``(A) 1 creditor or affiliate of a creditor agrees 
                to engage in a transaction with, or on behalf of, 
                another creditor (or affiliate of such other creditor), 
                in exchange for
                    ``(B) the agreement of the second creditor referred 
                to in subparagraph (A), or any affiliate of such 
                company, to engage in a transaction with, or on behalf 
                of, the first creditor referred to in such 
                subparagraph, or any affiliate of such company,
        for the purpose of evading any requirement or prohibition under 
        this title, or any other provision of any Federal law or 
        regulation relating to high-cost mortgages.
            ``(3) Regulations.--The Board shall prescribe such 
        regulations as may be necessary to enforce the requirements of 
        this subsection.''.
    (g) No Encouragement of Default or Nonpayment on Prior Existing 
Loan.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (o) (as added by subsection (f) 
of this section) the following new subsection:
    ``(p) No Encouragement of Default or Skipped Payment.--No creditor 
may recommend or encourage default or nonpayment (including nonpayment 
of any periodic payment) 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.''.
    (h) Ability To Repay.--Subsection (h) of section 129 of the Truth 
in Lending Act (15 U.S.C. 1639(h)) is amended to read as follows:
    ``(h) Prohibition on Extending Credit Without Regard to Payment 
Ability of Consumer.--
            ``(1) In general.--A creditor shall not engage in a pattern 
        or practice of extending credit to consumers under high-cost 
        mortgages based on the consumers' collateral without regard to 
        the consumers' repayment ability, including the consumers' 
        current and expected income, current obligations, and 
        employment.
            ``(2) Presumption of ability.--Unless a creditor knows or 
        has reason to know otherwise and except as provided in 
        paragraphs (3) and (4), a creditor may presume that a consumer 
        is able to make the scheduled payments to repay the high-cost 
        mortgage, if, at the time the extension of credit is approved, 
        the consumer's total monthly payments due on outstanding 
        obligations, including amounts owed under the high-cost 
        mortgage, do not exceed 53 percent of the consumer's monthly 
        gross income, as verified by the credit application, the 
        consumer's financial statement, a credit report, or any other 
        reasonable means; except that if the consumer's repayment 
        ability is based substantially on fixed income, then income 
        verification shall include reasonable documentation of such 
        fixed income, in addition to any statement by the consumer.
            ``(3) Presumption not applicable in case of balloon 
        payments.--Paragraph (2) shall not apply in the case of any 
        consumer who has an obligation secured by real property (that 
        would be taken into account for purposes of such paragraph) for 
        which the aggregate amount of the regular periodic payments 
        would not fully amortize the obligation.
            ``(4) Verification of income required in case of consumer 
        without earned income.--A creditor may not rely on a consumer's 
        statement of income for purposes of paragraph (2) if the 
        consumer has no earned income.''.
    (i) Prohibition on Single Premium Credit Life Insurance.--Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by 
inserting after subsection (p) (as added by subsection (g) of this 
section) the following new subsection:
    ``(q) Prohibition on Single Premium Credit Life Insurance.--No 
consumer credit transaction involving a high-cost mortgage may include 
the offer or sale of any insurance policy, on a single premium basis, 
that insures, guarantees, or indemnifies the repayment of the 
outstanding balance of the loan against death, illness, accident, 
disability, or unemployment of the consumer.''.
    (j) Limitations on Refinancing.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(q) (as added by subsection (i) of this section) the following new 
subsection:
    ``(r) Limitations on Refinancing.--
            ``(1) Prohibition during 1st year.--
                    ``(A) In general.--No creditor may refinance a 
                high-cost mortgage loan with another high-cost mortgage 
                during the 1-year period beginning on the date of 
                consummation of the prior high-cost mortgage loan.
                    ``(B) Arrangements prohibited.--No mortgage broker 
                may arrange for the refinancing of a high-cost mortgage 
                with another high-cost mortgage during the 1-year 
                period beginning on the date of consummation of the 
                prior high-cost mortgage.
            ``(2) Exception for lower interest loan.--Paragraph (1) 
        shall not apply if the scheduled finance charge for the balance 
        of the prior existing high-cost mortgage exceeds the scheduled 
        finance charge for the subsequent high-cost mortgage by an 
amount greater than the amount of the fees and charges imposed by the 
creditor for such subsequent mortgage.
            ``(3) Refinancing of certain low-interest loans prohibited 
        for 10 years.--A high-cost mortgage may not be made to 
        refinance, and the proceeds of a high-cost mortgage may not be 
        used to pay off, any below-market interest rate or subsidized 
        loan made by any government agency, government-sponsored 
        enterprise, or nonprofit corporation (other than a mutual bank, 
        mutual savings association, or credit union) during the 10-year 
        period beginning when such low-interest loan was consummated, 
        without either the express written consent of the holder of the 
        loan or certification from a person or organization certified 
        under section 106(e) of the Housing and Urban Development Act 
        of 1968 that the consumer has obtained credit counseling.''.
    (k) Requirements Relating to Home Improvement Contracts.--Section 
129(i) of the Truth in Lending Act (15 U.S.C. 1639(i)) is amended--
            (1) by striking ``Improvement Contracts.--A creditor'' and 
        inserting ``Improvement Contracts.--
            ``(1) In general.--A creditor''; and
            (2) by adding at the end the following new paragraph:
            ``(2) No payment in full without proof of completion of the 
        work.--
                    ``(A) In general.--No creditor may use the proceeds 
                of a high-cost mortgage to make a final payment or 
                payment in full to a home improvement contractor under 
                a home improvement contract without proof that the 
                contractor has fully performed the obligations of the 
                contract.
                    ``(B) Signed statement of consumer.--A signed 
                statement by the consumer who entered into the high-
                cost mortgage and home improvement contract referred to 
                in subparagraph (A) that the contractor has fully 
                performed the contract shall constitute proof for 
                purposes of such subparagraph.''.
    (l) Additional Specific Disclosures.--Section 129(a)(1) of the 
Truth in Lending Act (15 U.S.C. 1639(a)) is amended by adding at the 
end the following new subparagraphs:
                    ``(C) `The rate of interest and the amount of fees 
                you pay on a loan may vary depending on which lender or 
                broker you select.'
                    ``(D) `The timing and amount of payments on debts 
                you already are carrying contribute to the credit 
                rating that is used to determine whether you may get a 
                new loan and how much you will pay for that new loan. 
                You should NOT accept any advice to ignore or delay 
                making any payments on loans you already have, even if 
                those loans will be paid off with the new loan.'
                    ``(E) `You may get into serious financial 
                difficulties if you use this loan to pay off old debts 
                and then run up other new debts.'''.
    (m) Credit Reporting Requirements.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(r) (as added by subsection (j) of this section) the following new 
subsection:
    ``(s) Credit Reporting Requirements.--
            ``(1) Periodic full file reporting required.--A creditor 
        with respect to a high-cost mortgage (or the assignee or 
        servicer of such mortgage) shall furnish, at least once in each 
        calendar quarter, a full file credit report with respect to all 
        high-cost mortgages held or serviced by such creditor, 
        assignee, or servicer to a consumer reporting agency that 
        compiles and maintains files on consumers on a nationwide basis 
        (as defined in section 603(p) of the Fair Credit Reporting 
        Act), except for information deleted in connection with the 
        settlement of a dispute or consumer complaint.
            ``(2) Right to free credit reports in connection with high-
        cost mortgages.--Any acceptance by a creditor of an application 
        for a consumer credit transaction the terms of which would 
        cause the transaction to be defined as a high-cost mortgage 
        shall be treated as an adverse action with respect to the 
        consumer for purposes of sections 612(b) and 615(a) of the Fair 
        Credit Reporting Act, except that, the creditor need not refer 
        to such action as adverse in any communication with the 
        consumer.
            ``(3) Full file credit report defined.--For purposes of 
        this subsection, the term `full file credit report' means a 
        report given to a consumer reporting agency on a regular basis 
        reflecting the status of every loan in the server's portfolio 
        as of the report date.''.
    (n) No Call Provision.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (s) (as added by 
subsection (m) of this section) the following new subsection:
    ``(t) No Call Provision.--
            ``(1) In general.--A high-cost mortgage may not include 
        terms under which the indebtedness may be accelerated by the 
        creditor, in the creditor's sole discretion.
            ``(2) Exception.--Paragraph (1) shall not apply when 
        repayment of the loan has been accelerated--
                    ``(A) by default or pursuant to a due-on-sale 
                provision or some other provision of the loan documents 
                unrelated to the payment schedule; or
                    ``(B) due to any action or omission by the consumer 
                that adversely affects the creditor's security interest 
                in the residence or any rights of the creditor in such 
                security.''.
    (o) Modification and Deferral Fees 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 (n) of this section) the 
following new subsection:
    ``(u) Modification and Deferral Fees Prohibited.--
            ``(1) In general.--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) Exception for certain workouts.--Paragraph (1) shall 
        not apply in the case of an existing high-cost mortgage that is 
        in default or more than 60 days delinquent, if the 
        modification, renewal, extension, or amendment is part of the 
        resolution or workout of the default or delinquency.''.
    (p) Profiting on Foreclosures Prohibited.--Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting after 
subsection (u) (as added by subsection (o) of this section) the 
following new subsection:
    ``(v) Lender Profits on Foreclosures Prohibited.--
            ``(1) In general.--
                    ``(A) Creditor, assignee, or affiliate reacquires 
                property interest at foreclosure sale.--If the 
                creditor, any assignee of the creditor, or any 
                affiliate of such creditor or assignee is the 
                successful bidder at a judicial or nonjudicial 
                foreclosure sale of a residence of a consumer that was 
                the security for a high-cost mortgage, any profit 
                realized by a creditor, any assignee of the creditor, 
                or any affiliate of such creditor or assignee realized 
                upon the subsequent resale or other disposition of the 
                property that was the security for a high-cost mortgage 
                shall be paid to the consumer.
                    ``(B) Creditor, assignee, or affiliate does not 
                reacquire property interest at foreclosure sale.--If 
                the creditor, any assignee of the creditor, or any 
                affiliate of such creditor or assignee is not the 
                successful bidder at a judicial or nonjudicial 
                foreclosure sale of a residence of a consumer that was 
                the security for a high cost mortgage, any surplus 
                realized in excess of the sum of--
                            ``(i) the amount to which the creditor or 
                        assignee or affiliate or others have a right 
                        under the law of the State where the real 
                        property that was the security for a high-cost 
                        mortgage is located; and
                            ``(ii) the amounts referred to in 
                        subparagraphs (A), (B), and (C) of paragraph 
                        (4),
                shall be paid to the consumer.
            ``(2) Profit defined.--For purposes of this subsection, the 
        term `profit' means the amount which is equal to--
                    ``(A) the amount paid to the creditor, any assignee 
                of the creditor, or any affiliate of such creditor or 
                assignee by a third party for the sale of the property 
                to the third party, minus
                    ``(B) the amount to which the creditor or assignee 
                has a right under the terms of the mortgage.
            ``(3) Surplus defined.--
                    ``(A) In general.--For the purposes of paragraph 
                (1)(B), the term `surplus' means the amount which is 
                equal to--
                            ``(i) the amount derived from the sale as 
                        determined by the law of the State where the 
                        real property that was the security for a high-
                        cost mortgage is located; minus
                            ``(ii) the amounts disbursed to others 
                        under the processes, priorities and procedures 
                        for disbursement of surplus funds, and for 
                        determining the rights and priorities between 
                        consumers and others who may have an interest 
                        in or claim to the surplus funds, as determined 
                        by the law of the State where the real property 
                        that was the security for a high-cost mortgage 
                        is located.
                    ``(B) Applicable definition if state law does not 
                provide for the determinations of amounts described in 
                subparagraph (A).--If the law of the State where the 
                real property that was the security for a high-cost 
                mortgage is located does not provide for the 
                determination of the amounts described in clauses (i) 
                and (ii) of subparagraph (A), the term `surplus' means 
                that portion of the amount derived from the sale that 
                exceeds the sum of the amounts described in 
                subparagraphs (A), (B), and (C) of paragraph (4).
            ``(4) Creditor's amount.--The amount to which the creditor 
        or assignee has a right under the terms of the mortgage, for 
        purposes of this subsection, includes--
                    ``(A) all foreclosure expenses, including 
                reasonable attorneys' fees and expenses reasonably 
                incurred to secure, market, and preserve the property 
                through the date of the foreclosure sale, incurred by 
                the creditor or assignee;
                    ``(B) all amounts due the creditor or assignee 
                under the terms of the agreement through the date of 
                the judicial or nonjudicial foreclosure sale referred 
                to in paragraph (1);
                    ``(C) all amounts paid by the creditor or assignee 
                to other lien holders of record on the property; and
                    ``(D) all postforeclosure expenses, including 
                reasonable attorneys' fees, commissions, advances, and 
                expenses reasonably incurred to secure, market, 
                preserve, improve and sell the property to a third 
                party referred to in paragraph (1), incurred by the 
                creditor or assignee.''.
    (q) Increased Interest Rate Upon Default Prohibited.--Section 129 
of the Truth in Lending Act  (15 U.S.C. 1639) is amended by inserting 
after subsection (v) (as added by subsection (p) of this section) the 
following new subsection:
    ``(w) Applicability of Limitations on Variable Rate Changes.--In 
the case of a high-cost mortgage that is subject to a variable rate of 
interest based on an index or rate of interest which is publicly 
available and is not under the control of the creditor, subsection (d) 
shall not apply to changes in the rate of interest due to any change in 
such index, to the extent the change of interest is not due in any part 
to a default by the consumer or a permissible acceleration by the 
creditor.''.
    (r) Prepayment of Periodic Payments From Proceeds Prohibited.--
Section 129(g) of the Truth in Lending Act (15 U.S.C. 1639) is amended 
to read as follows:
    ``(g) Prepayment of Periodic Payments From Proceeds Prohibited.--No 
high-cost mortgage may include terms under which any periodic payments 
of interest or principal due under such mortgage may be paid in advance 
or otherwise deducted from the proceeds of the loan.''.
    (s) Payoff Statements.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (w) (as added by 
subsection (q) of this section) the following new subsection:
    ``(x) 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.
                    ``(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 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 residential mortgage 
                transactions or high-cost mortgages.
                    ``(C) 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 a reasonable time but in any event no more than 5 
        business days after receiving a request by a consumer or a 
        person authorized by the consumer to obtain such 
        information.''.

SEC. 103. AMENDMENTS TO LIABILITY PROVISIONS RELATING TO HIGH-COST 
              MORTGAGES.

    (a) Right to Cure.--Section 130(b) of the Truth in Lending Act (15 
U.S.C. 1640(b)) is amended--
            (1) by striking ``(b) A creditor or assignee'' and 
        inserting ``(b) Right to Cure.--
            ``(1) In general.--Subject to paragraph (2), a creditor or 
        assignee''; and
            (2) by adding at the end the following new paragraph:
            ``(2) High-cost mortgages.--In addition to the provisions 
        of paragraph (1), a creditor or assignee shall have no 
        liability under this section for any failure to comply with any 
        requirement imposed under section 129 with respect to a high-
        cost mortgage, if within 60 days after discovering an error, 
        and prior to the institution of an action under this section, 
        the creditor or assignee notifies the consumer of the error and 
        makes appropriate restitution to the consumer or modifies the 
        terms of the credit transaction in such a way that the 
        transaction is no longer a high-cost mortgage within the 
        meaning of this title.''.
    (b) Coordination of Class Action Damages With Actual Damages.--
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended by 
adding at the end the following new subsection:
    ``(j) Class Actions Relating to High-Cost Mortgages.--
            ``(1) Coordination of class action damages with actual 
        damages.--The maximum amount of general damages which may 
        otherwise be imposed on any person under subsection (a)(2)(B) 
        for violations of section 129 in a class action shall be 
        reduced by the aggregate amount of actual damages for which 
        such person is liable to members of the class under subsection 
        (a)(1).
            ``(2) Pattern and practice.--In determining the amount of 
        any liability of any person under subsection (a)(2)(B) for 
        violations of section 129 in a class action, the court shall 
        consider the pattern and practices of the person giving rise to 
        the violations.''.
    (c) Amendment Relating to Liability of Assignees.--
            (1) In general.--Paragraph (4) of section 131(d) of the 
        Truth in Lending Act (15 U.S.C. 1641(d)) is amended by striking 
        ``mortgage referred to in section 103(aa)'' and inserting 
        ``high-cost mortgage''.
            (2) Rights Upon Assignment of High-Cost Mortgages.--Section 
        131(d) of the Truth in Lending Act (15 U.S.C. 1641(d)) is 
        amended--
                    (A) by redesignating paragraphs (2), (3), and (4) 
                as paragraphs (5), (6), and (7), respectively; and
                    (B) striking paragraph (1) and inserting the 
                following new paragraphs:
            ``(1) In general.--Any person who purchases or is otherwise 
        assigned a high-cost mortgage shall be subject to an action 
        under this title only if the violation for which such action or 
        proceeding is brought is apparent on the face of the disclosure 
        statement or the underlying promissory note.
            ``(2) Affirmative claims and defenses.--Any person who 
        purchases or is otherwise assigned a high-cost mortgage that 
        was made, arranged, or assigned by a person financing home 
        improvements  to the dwelling of a consumer shall be subject to 
all affirmative claims and defenses which the consumer may have against 
the seller, home improvement contractor, broker, or creditor with 
respect to such mortgage or home improvements.
            ``(3) Safe harbor.--A person who maintains and exercises 
        procedures that are reasonably adapted to prevent the 
        acquisition of high-cost mortgages containing violations of 
        this title, which procedures are consistent with established 
        industry norms and practices for secondary mortgage market 
        transactions, shall not be liable for any such violations in 
        connection with any loan acquired pursuant to such procedures.
            ``(4) Clarification of terms.--For purposes of this title, 
        the terms `purchaser', `assignee', and `person who purchases or 
        is otherwise assigned' includes--
                    ``(A) any person acting on behalf of the purchaser 
                or assignee; and
                    ``(B) with regard to credit obligations secured by 
                consumers' dwellings included in a pool for the purpose 
                of issuing asset-backed securities, the issuer of the 
                asset-backed security, the depositor entity holding 
                such pool, and any affiliate of such issuer or 
                depository entity.''.

SEC. 104. COORDINATION WITH STATE LAW.

    (a) In General.--Section 111 of the Truth in Lending Act (15 U.S.C. 
1610) is amended--
            (1) by adding at the end the following new subsection:
    ``(f) High-Cost Mortgages.--
            ``(1) In general.--To the extent that any law of any 
        State--
                    ``(A) imposes any requirement, limitation, or 
                prohibition on any mortgage lending activities in 
                connection with an extension of consumer credit secured 
                by a lien against a consumer's dwelling in whole or in 
                part because the actual or contingent costs and finance 
                charges to the consumer associated with such extension 
                of credit exceed any particular threshold for such 
                costs, however such threshold may be defined; or
                    ``(B) attempts to regulate such mortgage lending 
                activities--
                            ``(i) through limitations or prohibitions 
                        in connection with contracts for other business 
                        with any such State or political subdivision 
                        thereof;
                            ``(ii) by making any conduct in connection 
                        with any such activities subject to criminal 
                        penalties; or
                            ``(iii) by making activities regulated 
                        under real estate, foreclosure, or other laws 
                        of such State or political subdivision 
                        contingent upon the manner in which mortgage 
                        lending activities are conducted,
        this title shall preempt such law, irrespective of whether such 
        law affords greater protection, substantive or otherwise, to 
        consumers.
            ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Mortgage lending activities.--The term 
                `mortgage lending activities' includes any 
                advertisement, solicitation, offer, negotiation, 
                application, processing, underwriting, originating, 
                closing, funding, recording, assignment, 
                securitization, servicing, collection, modification, 
                satisfaction, or foreclosure (including the disposition 
                of foreclosed property) for or of any extension of 
                consumer credit secured by a lien against a consumer's 
                dwelling.
                    ``(B) Law of any state.--The term `law of any 
                State' includes any statute, rule, regulation, or 
                ordinance of any State or any political subdivision of 
                any State.
            ``(3) Clarification of preemption.--Laws preempted under 
        paragraph (1) of this subsection shall, without in any way 
        limiting the effect of paragraph (1) of this subsection, 
        include--
                    ``(A) any law of any State that directly or 
                indirectly limits a creditor's ability to extend new 
                credit to a consumer for the purpose of refinancing an 
                existing extension of consumer credit in whole or in 
                part because the actual or contingent costs and finance 
                charges to the consumer associated with either the 
                existing or the new extension of consumer credit are 
                lower than or in excess of any particular threshold; or
                    ``(B) any law of any State that directly or 
                indirectly limits the claims, defenses, or other 
                remedies at law or equity available to a creditor, its 
                agent, or its direct or indirect assignee in connection 
                with an extension of consumer credit secured by a lien 
                against a consumer's dwelling in whole or in part 
                because the actual or contingent costs and finance 
                charges to the consumer associated with such extension 
of consumer credit are in excess of any particular threshold.
            ``(4) Exclusions.--Notwithstanding paragraphs (1) and (2), 
        the following laws are expressly excluded from the preemption 
        set forth in paragraph (1):
                    ``(A) Any law of any State, not otherwise preempted 
                under Federal law, limiting the rate of interest 
                reflected in the note or other instrument evidencing an 
                extension of consumer credit secured by a lien against 
                a consumer's dwelling, to the extent that such law does 
                not require compliance with any law that is otherwise 
                preempted under paragraphs (1) and (2) as a condition 
                of contracting for, charging, or collecting any rate of 
                interest otherwise permitted by such law.
                    ``(B) Any law of any State requiring the licensing, 
                registration, or authorization of any person engaged in 
                mortgage lending activities, to the extent that such 
                law does not condition the issuance of such a license, 
                registration or other authorization, or the authority 
                granted thereby, on compliance with any law that is 
                otherwise preempted under paragraphs (1) and (2).
            ``(5) Prompt determination by board of governors.--
                    ``(A) In general.--In response to a request from 
                any person, the Board of Governors of the Federal 
                Reserve System, or any official or employee of the 
                Board of Governors of the Federal Reserve System duly 
                authorized by the Board, shall--
                            ``(i) promptly determine whether the 
                        specific law of any State identified in such 
                        request is preempted by operation of this 
                        subsection; and
                            ``(ii) cause such determination to be 
                        published in the Federal Register.
                    ``(B) Effect of publication.--Any determination 
                under subparagraph (A) that is published in the Federal 
                Register shall have the force and effect of law as of 
                the date of such publication.'';
            (2) in subsection (a)(1), by striking the 1st sentence and 
        inserting ``Except as provided in subsections (e) and (f), no 
        provision of chapter 1, 2 or 3 shall be construed as annulling, 
        altering, or affecting the laws of any State relating to the 
        disclosure of information in connection with credit 
        transactions, except to the extent that those laws are 
        inconsistent with the provisions of this title, and then only 
        to the extent of the inconsistency.''; and
            (3) in subsection (b) by striking ``section 129'' the 1st 
        place such term appears and inserting ``subsection (f) and 
        section 129''; and
            (4) in subsection (d), by striking ``sections 125, 130, and 
        166'' and inserting ``subsection (f) and sections 125, 130, and 
        166''.
    (b) Clarification of Primary Enforcement Authority With Respect to 
State-Chartered Entities.--Section 108 of the Truth in Lending Act (15 
U.S.C. 1607) is amended by adding at the end the following new 
subsection:
    ``(f) Clarification of Primary Enforcement Authority With Respect 
to State-Chartered Entities.--In addition to the authority provided 
under section 130(e), no provision of this title shall be construed as 
affecting the authority of any State to enforce the laws of such State, 
as the primary enforcement authority, with regard to any person 
domiciled in such State or chartered by such State.''.

SEC. 105. CONTINUATION OF IDENTIFICATIONS UNDER THE ALTERNATIVE 
              MORTGAGE TRANSACTION PARITY ACT OF 1982.

    The Director of the Office of Thrift Supervision shall take no 
action under the Alternative Mortgage Transaction Parity Act of 1982 
that would have the effect of discontinuing the identification of 
regulations of the Director relating to late fees and prepayment 
penalties as applicable to State housing creditors and no regulation of 
the Director that was prescribed in final form before the enactment of 
this Act and that would discontinue such identification shall be 
effective on or after such date of enactment, unless permitted by a 
subsequent Act of the Congress.

SEC. 106. EFFECTIVE DATE.

    (a) In General.--This Act, and the amendments made by this Act, 
shall take effect at the end of the 1-year period beginning on the date 
of the enactment of this Act.
    (b) Scope of Application.--This Act, and the amendments made by 
this Act, shall apply with respect to applications for high-cost 
mortgages received on or after the effective date of this Act.
    (c) Voluntary Compliance.--No creditor or assignee shall be subject 
to civil liability in any action brought under the Truth in Lending Act 
with respect to provisions of such Act that are amended by this Act, if 
the creditor or assignee voluntarily complies with the requirements of 
such amendments during the 1-year period referred to in subsection (a).

              TITLE II--CONSUMER MORTGAGE PROTECTION BOARD

SEC. 201. ESTABLISHMENT.

    (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) Consumer Mortgage Protection Board.--
            ``(1) Establishment.--There is established in the 
        Department of Housing and Urban Development the Consumer 
        Mortgage Protection Board (in this section referred to as the 
        `Board').
            ``(2) Functions.--The Board shall carry out the functions 
        assigned to the Board under this section and any other 
        provisions of law. Such functions shall include establishing 
        rules necessary--
                    ``(A) for the counseling procedures under 
                subsection (h)(1);
                    ``(B) under section 5 of the Real Estate Settlement 
                Procedures Act of 1974 (12 U.S.C.  2604) for mortgage 
information booklets prepared pursuant to such section;
                    ``(C) for the operation and administration of the 
                Board; and
                    ``(D) for the establishment and maintenance of the 
                national database of mortgage brokers under subtitle B 
                of title II of the Responsible Lending Act.
            ``(3) Members.--The Board shall be composed of 15 members, 
        who shall be appointed by the Secretary, as follows:
                    ``(A) 4 members shall be individuals who represent 
                consumers of settlement services.
                    ``(B) 3 members shall be individuals who represent 
                originators of federally related mortgage loans (as 
                such term is defined in section 3 of the Real Estate 
                Settlement Procedures Act of 1974 (12 U.S.C. 2602), 
                including at least 2 individuals who are associated 
                with lenders that fund and close loans with their own 
                funds and are capable of servicing such loans.
                    ``(C) 1 member shall be an individual who 
                represents real estate sales professionals.
                    ``(D) 1 member shall be an individual who 
                represents real estate appraisers.
                    ``(E) 1 member shall be an individual who 
                represents private mortgage insurers.
                    ``(F) 1 member shall be an individual who 
                represents title insurance providers.
                    ``(G) 1 member shall be an individual who 
                represents settlement service management companies.
                    ``(H) 1 member shall be an individual who 
                represents providers of electronic delivery mechanisms 
                that facilitate home purchases and home financings.
                    ``(I) 1 member shall be an individual who is a 
                practicing attorney specializing in residential 
                mortgage finance or settlement services.
                    ``(J) 1 member shall be an individual who 
                represents mortgage brokers (as such term is defined in 
                section 303 of the Responsible Lending Act).
            ``(4) Terms and vacancies.--Each member of the Board shall 
        be appointed for a term of three years. Any member appointed to 
        fill a vacancy occurring before the expiration of the term for 
        which the member's predecessor was appointed shall be appointed 
        only for the remainder of that term. A member may serve after 
        the expiration of that member's term until a successor has 
        taken office. A vacancy in the Board shall be filled in the 
        manner in which the original appointment was made.
            ``(5) Service without pay; travel expenses.--Members of the 
        Board shall serve without pay, but each member of the Board 
        shall receive travel expenses, including per diem in lieu of 
        subsistence, in accordance with applicable provisions under 
        subchapter I of chapter 57 of title 5, United States Code.
            ``(6) Staff.--Subject to the rules prescribed by the Board, 
        the Board may appoint and fix the pay of personnel as the Board 
        considers appropriate to carry out the Board's functions. Such 
        personnel may be appointed without regard to the provisions of 
        title 5, United States Code, governing appointments in the 
        competitive service, and may be paid without regard to the 
        provisions of chapter 51 and subchapter III of chapter 53 of 
        that title relating to classification and General Schedule pay 
        rates. The Board may provide reasonable additional compensation 
        and benefits to employees of the Board if the same type of 
        compensation or benefits are then being provided by any Federal 
        bank regulatory agency or, if not then being provided, could be 
        provided by such an agency under applicable provisions of law, 
        rule, or regulation.
            ``(7) Exemption from federal advisory committee act 
        provisions.--The provisions of the Federal Advisory Committee 
        Act (5 U.S.C. App.) shall not apply to the Board.''.
    (b) Initial Appointments.--The Secretary of Housing and Urban 
Development shall appoint the initial members of the Consumer Mortgage 
Protection Board, pursuant to section 106(g) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(g)), not later than 20 days 
after the date of the enactment of this Act.

SEC. 202. COUNSELING PROCEDURES.

    (a) In General.--Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x), as amended by the preceding provisions 
of this Act, is further amended by adding at the end the following new 
subsection:
    ``(h) Board Responsibilities.--
            ``(1) Counseling procedures.--
                    ``(A) In general.--Subject to the approval of the 
                Secretary, the Board 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 
                counseling.
                    ``(B) Homeownership counseling.--For purposes of 
                this subsection, the term `homeownership counseling' 
                means counseling related to homeownership and 
                residential mortgage loans, and includes 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. 42 
                        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 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(IV) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                    ``(V) 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);
                            ``(iv) sections 233(b)(2) and 258(b) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12773(b)(2), 12808(b));
                            ``(v) sections 101(e) and 106 of the 
                        Housing and Urban Development Act of 1968 (12 
                        U.S.C. 1701w(e), 1701x);
                            ``(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)); and
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7).
                    ``(C) Rental housing counseling.--For purposes of 
                this subsection, the term `rental housing counseling' 
                means counseling related to rental of residential 
                property, and includes 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. 42 
                        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));
                            ``(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);
                            ``(vii) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(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)); and
                            ``(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)).
            ``(2) Toll-free telephone number and web site.--The Board 
        shall establish and operate a toll-free telephone number and a 
        World Wide Web site through which persons interested in 
        homeownership counseling services may locate and obtain names 
        and contact information of persons and organizations certified 
        under section 106(e) of the Housing and Urban Development Act 
        of 1968 to provide such services.
            ``(3) Uniform materials.--The Board shall ensure the 
        uniformity of materials and forms to be used, as appropriate, 
        by organizations providing homeownership counseling services, 
including any recipients of assistance pursuant to subsection (a)(4).
            ``(4) Mortgage software systems.--
                    ``(A) Certification.--The Board shall provide for 
                the certification of various computer software programs 
                for consumers to use in evaluating different 
                residential mortgage loan proposals. The Board shall 
                require, for such certification, that the mortgage 
                software systems that take into account--
                            ``(i) the consumer's financial situation;
                            ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan;
                            ``(iii) such other factors as the Board 
                        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 Board determines that available existing 
                software is inadequate to assist consumers during the 
                residential mortgage loan application process, the 
                Board shall arrange for the development by private 
                sector software companies of new mortgage software 
                systems that meet the Board's specifications.
                    ``(B) Availability.--The Board 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, and 
                homeownership counseling centers.
            ``(5) Outreach to vulnerable populations.--The Board shall 
        develop a media program designed to make elderly persons, 
        illiterate persons, low-income persons, and other potentially 
        vulnerable consumers aware that it is advisable, before seeking 
        a residential mortgage loan, to obtain homeownership counseling 
        from an unbiased and reliable source and that such 
        homeownership counseling is available, including through 
        programs of the Department of Housing and Urban Development.''.
    (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 (II), by striking ``and'' at the end;
            (2) in subclause (III) by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after subclause (III) the following new 
        subclause:
                                    ``(IV) notify the homeowner or 
                                mortgage applicant of the availability 
                                of mortgage software systems provided 
                                pursuant to subsection (h)(4).''.

SEC. 203. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

    (a) Authorization of Appropriations.--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 Counseling Assistance.--
            ``(A) In general.--The Secretary shall, through the 
        Consumer Mortgage Protection Board established under subsection 
        (g), make financial assistance available under this paragraph 
        to entities providing homeownership counseling (as such term is 
        defined in subsection (h)(1)(B)).
            ``(B) Qualified entities.--The Consumer Mortgage Protection 
        Board shall establish standards and guidelines for eligibility 
        of organizations (including governmental and nonprofit 
        organizations) to receive assistance under this paragraph.
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
            ``(D) Authorization of appropriations.--There are 
        authorized to be appropriated, to the Consumer Mortgage 
        Protection Board established under subsection (g), $50,000,000 
        for each of fiscal years 2003 through 2007 for--
                    ``(i) the operations of the Board; and
                    ``(ii) assistance under this paragraph (1)(iii) for 
                entities providing homeownership counseling.''.

SEC. 204. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD 
              PROGRAMS.

    (a) Board Responsibility.--Section 106(e) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(e)) is amended--
            (1) in paragraph (1), by striking ``Secretary'' and 
        inserting ``Consumer Mortgage Protection Board established 
        under subsection (g)''; and
            (2) in paragraphs (2) and (3), by striking ``Secretary'' 
        each place such term appears and inserting ``Board''.
    (b) Requirement to Use Certified Counselors.--Section 106(e) of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) is 
amended--
            (1) in paragraph (1)--
                    (A) by inserting ``(a)(4),'' after ``(a)(2),'';
                    (B) by inserting ``of this section, or under 
                section 101(e)'' after ``or (d)''; and
                    (C) by striking ``, to the extent practicable,'' 
                and inserting ``only'';
            (2) by redesignating paragraph (3) as paragraph (4); and
            (3) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Requirement under hud programs.--Any homeownership 
        counseling or rental housing counseling (as such terms are 
        defined in subsection (h)(1)) required under, or provided in 
        connection with, any program administered by the Department  of 
Housing and Urban Development shall be provided only by counselors 
certified by the Board under this subsection as competent to provide 
such counseling.''.

SEC. 205. 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 ``mortgage'';
            (2) by striking subsections (a) and (b) and inserting the 
        following new subsections:
    ``(a) Preparation and Distribution.--Subject to the approval of the 
Secretary, the Consumer Mortgage Protection Board established under 
section 106(g) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(g)) (in this section referred to as the `Board') shall 
prepare a booklet to help consumers applying for federally related 
mortgage loans to understand the nature and costs of real estate 
settlement services. The Secretary shall distribute such booklets to 
all lenders that make federally related mortgage loans.
    ``(b) Contents.--Each booklet shall be in such form and detail as 
the Board shall prescribe and, in addition to such other information as 
the Board 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; and
                    ``(C) the tradeoff 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 common unfair, deceptive, 
        or fraudulent lending practices, including those prohibited by 
        the Truth in Lending Act or other applicable 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 (15 U.S.C. 1635, 1639).
            ``(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 Board 
        of Governors of the Federal Reserve System pursuant to section 
        226.19(b)(1) of title 12, Code of Federal Regulations, or to 
        any suitable substitute of such booklet that such Board of 
        Governors 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 (15 
        U.S.C. 1637a(e)).
            ``(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)) and a 
        recommendation that the consumer use such services.
            ``(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 incident 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.
The booklet prepared pursuant to this section shall take into 
consideration differences in real estate settlement procedures which 
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 striking the last sentence; and
            (4) in subsection (e), by striking ``Secretary'' and 
        inserting ``Board''.

              TITLE III--REQUIREMENTS FOR MORTGAGE BROKERS

              Subtitle A--Licensing and Minimum Standards

SEC. 301. STATE REGULATION OF MORTGAGE BROKERS.

    (a) In General.--The Federal mortgage broker requirements 
established pursuant to this title shall apply only with respect to 
States that, upon the expiration of the 3-year period beginning on the 
date of the enactment of this Act, have not enacted and do not have in 
effect uniform laws and regulations described in subsection (b).
    (b) Uniform State Laws.--
            (1) In general.--Laws and regulations described in this 
        subsection are laws and regulations that--
                    (A) require licensing for mortgage brokers;
                    (B) require, as a condition of issuance of a 
                license, that an applicant comply with pre-licensing 
                education requirements and submit a written application 
                for a license, and that a criminal background check be 
                performed on the applicant;
                    (C) establish minimum testing standards for 
                mortgage brokers;
                    (D) establish continuing education requirements for 
                mortgage brokers;
                    (E) require the public agency or official in the 
                State that is responsible for licensing of mortgage 
                brokers to provide, directly or otherwise to the 
                national mortgage database established under subtitle 
                B, such information as may be necessary to ensure that 
                such database is effective for the purposes for which 
                it is established; and
                    (F) comply with such standards regarding uniformity 
                of information submitted to the national database of 
                mortgage brokers established under subtitle B as the 
                Secretary of Housing and Urban Development considers 
                necessary to facilitate the operation of the database.
            (2) Exemptions.--For purposes of this subsection, the term 
        ``mortgage broker'' has the meaning provided in section 303(3), 
        except that the laws and regulations of a State may exempt from 
        treatment as mortgage brokers the following persons:
                    (A) Any bank, savings bank, savings and loan 
                association, or credit union organized under the laws 
                of a State or the United States, or a subsidiary or 
                affiliate of a bank, savings bank, savings and loan 
                association, or credit union.
                    (B) Any budget or debt counseling service, as 
                defined by the Secretary, that is a nonprofit 
                organization exempt from taxation under section 
                501(c)(3) of the Internal Revenue Code of 1986 (26 
                U.S.C. 501(c)(3));
                    (C) Any consumer reporting agency that is in 
                substantial compliance with the Fair Credit Reporting 
                Act (15 U.S.C. 1681 et seq.).
                    (D) Any political subdivision, or any governmental 
                or other public entity, corporation, or agency, in or 
                of the United States or any State.
                    (E) Any college or university, or entity that is 
                controlled by a college or university, as determined by 
                the Secretary.
                    (F) Any person who--
                            (i) makes, service, buys, or sells mortgage 
                        loans;
                            (ii) underwrites the loans; and
                            (iii)(I) has been approved by the Secretary 
                        of Housing and Urban Development as a 
                        nonsupervised mortgagee with participation in 
                        the direct endorsement program, but not 
                        including a mortgagee approved as a loan 
                        correspondent;
                            (II) has been approved by the Federal 
                        National Mortgage Association as a seller/
                        servicer;
                            (III) has been approved by the Federal Home 
                        Loan Mortgage Corporation as a seller/servicer;
                            (IV) has been approved by the Secretary of 
                        Veterans Affairs as a nonsupervised automatic 
                        lender, but not including a person approved by 
                        the Secretary as a nonsupervised lender, an 
                        agent of a nonsupervised automatic lender, or 
                        an agent of a nonsupervised lender; or
                            (V) is a creditor (as defined in section 
                        103(f) of the Truth in Lending Act) who makes 
                        or invests in residential real estate loans 
                        aggregating more than $1,000,000 per year, and 
                        irrespective of whether such creditor is 
                        licensed or supervised by an agency of a State.
                    (G) Any person created solely for the purpose of 
                packaging and selling, as a unit of sale as investment 
                securities, mortgage loans that are secured by an 
                interest in real estate, if the person does not service 
                the loans.
    (c) Determination.--
            (1) HUD determination.--At the end of the 3-year period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall determine, in 
        consultation with the Board of Governors of the Federal Reserve 
        System, whether the uniformity necessary to comply with 
        subsection (a) has been achieved.
            (2) Judicial review.--The appropriate United States 
        district court shall have exclusive jurisdiction over any 
        challenge to the determination pursuant to paragraph (1) and 
        such court shall apply the standards set forth in section 706 
        of title 5, United States Code, when reviewing any such 
        challenge.
    (d) Continued Application.--If, at any time, the Secretary 
determines that a State no longer has in effect laws and regulations 
described in subsection (a) or the uniformity necessary to comply with 
subsection (a) no longer exists with respect to a State, the Federal 
mortgage broker requirements shall take effect with respect to such 
State 2 years after the date on which such determination  was made, 
unless the State has in effect such laws or regulations, or the 
uniformity necessary to comply with subsection (a) is satisfied, before 
the expiration of such 2-year period.
    (e) Monitoring.--The Secretary shall monitor the laws and 
regulations of the States governing the matters referred to in 
subsection (a) for purposes of making determinations under subsection 
(d).

SEC. 302. FEDERAL MORTGAGE BROKER REQUIREMENTS.

    (a) In General.--Not later than 3 years after the date of the 
enactment of this Act, the Secretary of Housing and Urban Development 
shall, by regulation and in consultation with the Board of Governors of 
the Federal Reserve System, establish Federal mortgage broker 
requirements under this section that meet the requirements set forth in 
subparagraphs (A) through (F) of section 301(b)(1).
    (b) Rulemaking.--The regulations required under subsection (a) 
shall be issued after notice and opportunity for public comment 
pursuant to the provisions of section 553 of title 5, United States 
Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such 
section).

SEC. 303. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Buyer.--the term ``buyer'' means an individual who is 
        solicited to purchase, or who purchases, the services of a 
        mortgage broker for purposes other than obtaining a business 
        loan.
            (2) Mortgage.--The term ``mortgage'' means any indebtedness 
        secured by a deed of trust, security deed, or other lien on 
        real property.
            (3) Mortgage broker.--
                    (A) In general.--The term ``mortgage broker'' means 
                a person that--
                            (i) holds such person out as being able to 
                        assist a buyer in obtaining a mortgage and 
                        charges or receives, from the buyer or lender 
                        for the mortgage, money or other valuable 
                        consideration readily convertible into money 
                        for providing such assistance; or
                            (ii) is engaged in table-funding mortgage 
                        loans that are first lien mortgage loans.
                    (B) Solicitation of information.--Such term 
                includes any person that solicits financial and 
                mortgage information from the public, provides such 
                information to a mortgage broker, as defined in 
                subparagraph (A), and charges or receives from the 
                mortgage broker money or other valuable consideration 
                readily convertible into money for providing the 
                information;
                    (C) Exceptions.--Such term does not include the 
                persons referred to in subparagraphs (A) through (H) of 
                section 301(b)(2).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (5) Table-funding mortgage loan.--The term ``table-funding 
        mortgage loan'' means a mortgage loan transaction in which the 
        mortgage is initially payable to the mortgage broker, the 
        mortgage broker does not use the mortgage broker's own funds to 
        fund the transaction, and, by the terms of the mortgage or 
        other agreement, the mortgage is simultaneously assigned to 
        another person.

           Subtitle B--Database of Licensed Mortgage Brokers

SEC. 311. ESTABLISHMENT.

    (a) In General.--The Consumer Mortgage Protection Board established 
under section 106(g) of the Housing and Urban Development Act of 1968 
(12 U.S.C. 1701x(g)) (in this subtitle referred to as the ``Board'') 
shall provide for the establishment and maintenance of a national 
database of mortgage brokers.
    (b) Administration.--The Board may maintain and administrate the 
database established under this subtitle or may enter into a contract 
with a private regulatory organization to maintain and administrate the 
database. The Board shall consult with the American Association of 
Residential Mortgage Regulators, the Conference of State Bank 
Supervisors, and other appropriate organizations in determining the 
information to be maintained in the database and, if the Board provides 
for any other organization to maintain and administrate the database, 
in selecting such organization.
    (c) Competitively Procured Contract.--The Secretary shall enter 
into any contract for administration of the database using competitive 
procedures (as such term is defined in section 4 of the Office of 
Federal Procurement Policy Act).
    (d) Performance Review.--The Secretary--
            (1) shall periodically review the performance of the Board, 
        or such other organization, in serving as administrator of the 
        database; and
            (2) may replace any such other organization with another 
        qualified organization, pursuant to competitive procedures if 
        the Secretary determines in writing that the organization 
serving as administrator is not fulfilling the terms of the contract or 
upon the expiration of the contract.

SEC. 312. DATABASE.

    The national database of mortgage brokers maintained pursuant to 
this title shall--
            (1) include a listing of each person licensed under State 
        law or regulation or under Federal mortgage broker requirements 
        under section 302 to act as a mortgage broker;
            (2) make available to the public information regarding 
        complaints made, and final disciplinary and enforcement actions 
        taken, against each licensed mortgage broker;
            (3) make available to the Secretary of Housing and Urban 
        Development and to each public agency or official in a State 
        responsible for licensing or testing under the laws or 
        regulations referred to in section 301(b) such information 
        regarding mortgage brokers as the Board, by regulation, 
        considers appropriate for the Secretary and such agencies and 
        officials to carry out their functions regarding regulation, 
        licensing, or testing of mortgage brokers, including 
        information regarding employment history and criminal 
        background of mortgage brokers;
            (4) make available to persons employing or using the 
        services of mortgage brokers such information regarding 
        mortgage brokers as the Board, by regulation, considers 
        appropriate; and
            (5) provide for the maintenance of such other information 
        as the Board considers appropriate.

SEC. 313. FEES.

    The Board may provide for the national database of mortgage brokers 
to charge reasonable fees to cover costs of maintaining and providing 
access to information from the database.

SEC. 314. CONFIDENTIALITY OF INFORMATION.

    (a) In General.--
            (1) Database.--Except as otherwise provided in this 
        section, any requirement under Federal or State law regarding 
        the privacy or confidentiality of any information or material 
        in the possession of the Board or any other organization 
        serving as the administrator of the database, and any privilege 
        arising under Federal or State law (including the rules of any 
        Federal or State court) with respect to such information or 
        material, shall continue to apply to such information or 
        material after the information or material has been disclosed 
        to the database.
            (2) Nonapplicability of certain requirements.--Information 
        or material that is subject to a privilege or confidentiality 
        under any other paragraph of this subsection shall not be 
        subject to--
                    (A) disclosure under any Federal or State law 
                governing the disclosure to the public of information 
                held by an officer or an agency of the Federal 
                Government or the respective State; or
                    (B) subpoena or discovery, or admission into 
                evidence, in any private civil action or administrative 
                process,
        unless with respect to any privilege held by the Board with 
        respect to such information or material, the participant 
        waives, in whole or in part, in the discretion of the 
        participant, such privilege.
    (b) Preemption of State Law.--Any State law, including any State 
open record law, relating to the disclosure of confidential supervisory 
information or any information or material described in subsection (a) 
that is inconsistent with subsection (a) shall be superseded by the 
requirements of such provision to the extent State law provides less 
confidentiality or a weaker privilege.

SEC. 315. LIABILITY PROVISIONS.

    (a) No Liability for Good Faith Disclosures.--Any State official or 
agency, or employee thereof, shall not be subject to any civil action 
or proceeding for monetary damages by reason of the good faith action 
or omission of any officer or employee, while acting within the scope 
of office or employment, relating to collecting, furnishing, or 
disseminating of information concerning persons who are mortgage 
brokers or are applying for licensing as mortgage brokers, whether 
directly or through the national database established under this 
subtitle.
    (b) Criminal Liability for Intentional Unlawful Disclosures.--
            (1) In general.--It shall be unlawful to willfully disclose 
        to any person any information concerning any person who is a 
        mortgage broker or is applying for licensing as a mortgage 
        broker knowing the disclosure to be in violation of any 
        provision of this title--
                    (A) requiring the confidentiality of such 
                information; or
                    (B) establishing a privilege from disclosure for 
                such information that has not been waived by the Board 
                and the person who is a mortgage broker or is applying 
                for licensing as a mortgage broker.
            (2) Penalty.--Notwithstanding section 3571 of title 18, 
        United States Code, any person who violates paragraph (1) shall 
        be fined an amount not to exceed the greater of $100,000 or the 
        amount of the actual damages sustained by any person as a 
        result of such violation, or imprisoned not more than 5 years, 
        or both.
    (c) Full, Continued Protection Under the So-Called ``Federal Tort 
Claims Act''.--No provision of this Act shall be construed as reducing 
or limiting any protection provided for any Federal agency, or any 
officer or employee of any Federal agency, under section 2679 of title 
28, United States Code.
                                 <all>
```