I 

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.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Responsible Lending Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows:

Sec. 1. Short title; table of contents. 
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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.

1 TITLE I—HIGH-COST 

2 MORTGAGES 

3 SEC. 101. DEFINITIONS RELATING TO HIGH-COST MORT4 GAGES. 

5 (a) HIGH-COST MORTGAGE DEFINED.—Section 

6 103(aa) of the Truth in Lending Act (15 U.S.C. 

7 1602(aa)(1)) is amended by striking all that precedes 

8 paragraph (2) and inserting the following: 

9 ‘‘(aa) HIGH-COST MORTGAGE DEFINED.—

10 ‘‘(1) IN GENERAL.—The term ‘high-cost mort11 gage’, and a mortgage referred to in this subsection, 
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1 means a consumer credit transaction that is secured 

2 by the consumer’s principal dwelling, other than a 

3 residential mortgage transaction, a reverse mortgage 

4 transaction, or a transaction under an open end 

5 credit plan, if any of the following apply with respect 

6 to such consumer credit transaction: 

7 ‘‘(A) The transaction is secured by a first 

8 mortgage on the consumer’s principal dwelling 

9 and the annual percentage rate on the credit, at 

10 the consummation of the transaction, will ex11 ceed by more than 8 percentage points the yield 

12 on Treasury securities having comparable peri13 ods of maturity on the fifteenth day of the 

14 month immediately preceding the month in 

15 which the application for the extension of credit 

16 is received by the creditor. 

17 ‘‘(B) The transaction is secured by a jun18 ior or subordinate mortgage on the consumer’s 

19 principal dwelling and the annual percentage 

20 rate on the credit, at the consummation of the 

21 transaction, will exceed by more than 10 per22 centage points the yield on Treasury securities 

23 having comparable periods of maturity on the 

24 fifteenth day of the month immediately pre25 ceding the month in which the application for 
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1 the extension of credit is received by the cred2 itor. 

3 ‘‘(C) The total loan amount exceeds 

4 $30,000 and total points and fees payable on 

5 the transaction will exceed 6 percent of the 

6 total loan amount. 

7 ‘‘(D) The total loan amount is $30,000 or 

8 less and total points and fees payable on the 

9 transaction will exceed 7 percent of the total 

10 loan amount.’’. 

11 (b) POINTS AND FEES DEFINED.—Section 103(aa) 

12 of the Truth in Lending Act (15 U.S.C. 1602(aa)) is 

13 amended—

14 (1) by striking paragraph (3); 

15 (2) by striking paragraph (4) and inserting the 

16 following new paragraph: 

17 ‘‘(3) DEFINITION OF POINTS AND FEES.—

18 ‘‘(A) IN GENERAL.—For purposes of sub19 paragraphs (C) and (D) of paragraph (1), the 

20 term ‘points and fees’ shall exclude prepayment 

21 fees, yield-spread premiums, and borrower cred22 its and shall include—

23 ‘‘(i) all items included in the finance 

24 charge, except interest and the time-price 

25 differential; 
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1 ‘‘(ii) all compensation paid directly to 

2 mortgage brokers by or on behalf of the 

3 consumer (other than borrower credits); 

4 and 

5 ‘‘(iii) each of the charges listed in sec6 tion 106(e) (except an escrow for future 

7 payment of taxes or insurance), unless—

8 ‘‘(I) the charge is reasonable and 

9 competitive; 

10 ‘‘(II) the creditor receives no di11 rect compensation; and 

12 ‘‘(III) the charge is paid to a 

13 third party; and 

14 ‘‘(iv) such other charges as the Board 

15 determines to be appropriate. 

16 ‘‘(B) BONA FIDE DISCOUNT POINTS EX17 CLUDABLE.—Not more than 2 bona fide loan 

18 discount points in connection with the loan 

19 transaction may be excluded from the amount 

20 of points and fees taken into account for pur21 poses of paragraph (1).

22 ‘‘(C) BONA FIDE DISCOUNT POINT DE23 FINED.—For purposes of subparagraph (B), 

24 the term ‘bona fide discount point’ means any 

25 loan discount point which is paid for the pur-
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1 pose of reducing, and which in fact results in 

2 a bona fide reduction of, the interest rate or 

3 time-price differential applicable to the loan if 

4 the amount of the interest rate reduction pur5 chased by the discount points is reasonably con6 sistent with established industry norms and 

7 practices for mortgage market transactions.’’; 

8 and 

9 (3) by redesignating paragraph (5) as para10 graph (4). 

11 (c) TECHNICAL AND CONFORMING AMENDMENT.—

12 Paragraph (2) of section 103(aa) of the Truth in Lending 

13 Act (15 U.S.C. 1602(aa)(2)) is amended by striking 

14 ‘‘specified in paragraph (1)(A)’’ and inserting ‘‘specified 

15 in subparagraph (A) or (B) of paragraph (1)’’. 

16 SEC. 102. AMENDMENTS TO EXISTING REQUIREMENTS FOR 

17 HIGH-COST MORTGAGES. 

18 (a) PREPAYMENT PENALTIES.—Section 129(c)(2)(C) 

19 of the Truth in Lending Act (15 U.S.C. 1639(c)(2)(C)) 

20 is amended by striking ‘‘5-year period’’ and inserting ‘‘4-

21 year period’’. 

22 (b) BALLOON PAYMENTS.—Section 129(e) of the 

23 Truth in Lending Act (15 U.S.C. 1639(e)) is amended—

24 (1) by striking ‘‘PAYMENTS.—A mortgage’’ and 

25 inserting ‘‘PAYMENTS.—
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1 ‘‘(1) IN GENERAL.—A mortgage’’; and 

2 (2) by adding at the end the following new 

3 paragraph: 

4 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

5 apply when the payment schedule is adjusted to ac6 count for the seasonal or irregular income of the ob7 ligor or if the purpose of the loan is a bridge loan 

8 made in connection with the acquisition or construc9 tion of a dwelling intended to become the obligor’s 

10 principal dwelling. 

11 ‘‘(3) NOTICE REQUIRED.—A creditor that offers 

12 a high-cost mortgage having a balloon payment term 

13 in accordance with paragraph (2) shall clearly dis14 close to the consumer that the loan contains such a 

15 term, the balloon payment amount that will be owed 

16 by the consumer, and that balloon payments are per17 missible under the circumstances described in para18 graph (2) but are not required for such types of 

19 mortgages.’’. 

20 (c) NEGATIVE AMORTIZATION.—Subsection (f) of 

21 section 129 of the Truth in Lending Act (15 U.S.C. 

22 1639(f)) is amended—

23 (1) by striking ‘‘AMORTIZATION.—A mortgage 

24 referred to in section 103 (aa)’’ and inserting ‘‘AM25 ORTIZATION.—
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1 ‘‘(1) IN GENERAL.—A high-cost mortgage’’; and 

2 (2) by adding at the end the following new 

3 paragraph: 

4 ‘‘(2) EXCEPTION FOR PERIOD OF FORBEAR5 ANCE.—Paragraph (1) shall not apply with respect 

6 to negative amortization resulting from periods of 

7 temporary forbearance allowed by the creditor.’’. 

8 (d) DISCLOSURE OF FINANCING OF POINTS OR

9 FEES.—Section 129 of the Truth in Lending Act (15 

10 U.S.C. 1639) is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(m) DISCLOSURE OF FINANCING OF POINTS OR

13 FEES.—If, in connection with the formation or con14 summation of a high-cost mortgage, any portion of the 

15 points, fees, or other charges payable to the creditor or 

16 any third party are included, directly or indirectly, in the 

17 principal amount of the loan or otherwise financed by the 

18 creditor, the creditor shall disclose that fact to the con19 sumer together with a statement that such treatment of 

20 any such point, fee, or charge is not legally required.’’. 

21 (e) PROHIBITION ON UNFAIR ARBITRATION RE22 QUIREMENTS.—Section 129 of the Truth in Lending Act 

23 (15 U.S.C. 1639) is amended by inserting after subsection 

24 (m) (as added by subsection (d) of this section) the fol25 lowing new subsection: 
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1 ‘‘(n) NO UNFAIR ARBITRATION CLAUSES.—

2 ‘‘(1) IN GENERAL.—A high-cost mortgage may 

3 not be subject to a mandatory arbitration clause 

4 that is oppressive, unfair, unconscionable, or sub5 stantially in derogation of the rights of consumers. 

6 ‘‘(2) SAFE HARBOR.—An arbitration clause 

7 that—

8 ‘‘(A) establishes the venue for the arbitra9 tion in the Federal judicial district or division 

10 in which the real property that is the security 

11 for the high-cost mortgage is located; 

12 ‘‘(B) complies with the standards set forth 

13 by a nationally recognized arbitration organiza14 tion, such as the Statement of Principles of the 

15 National Consumer Dispute Advisory Com16 mittee of the American Arbitration Association 

17 or any comparable standards of such other or18 ganization as may be approved by the Board of 

19 Governors of the Federal Reserve System, or 

20 any official or employee of the Board duly au21 thorized by the Board; and 

22 ‘‘(C) requires the creditor to bear the rea23 sonable costs of all parties to the arbitration, 

24 including the production of fact witnesses and 
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1 documents, during the first 2 days of such arbi2 tration, 

3 shall be presumed not to violate the proscriptions of 

4 paragraph (1).’’. 

5 (f) PROHIBITION ON EVASIONS THROUGH STRUC6 TURING TRANSACTIONS OR RECIPROCAL ARRANGE7 MENTS.—Section 129 of the Truth in Lending Act (15 

8 U.S.C. 1639) is amended by inserting after subsection (n) 

9 (as added by subsection (e) of this section) the following 

10 new subsection: 

11 ‘‘(o) PROHIBITION ON EVASIONS THROUGH STRUC12 TURING TRANSACTIONS OR RECIPROCAL ARRANGE13 MENTS.—

14 ‘‘(1) IN GENERAL.—No creditor, or any affiliate 

15 of a creditor, may take any action for the purpose 

16 of, or with the intent to, circumvent or evade any re17 quirement of this title with respect to high-cost 

18 mortgages, including—

19 ‘‘(A) entering into any reciprocal arrange20 ment; 

21 ‘‘(B) dividing any loan transaction into 

22 separate parts for the purpose and with the in23 tent of evading the provisions of this section; or 

24 ‘‘(C) structuring or restructuring a credit 

25 transaction as a business loan, as credit ex-
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1 tended under an open end consumer credit 

2 plan, or other form of credit for the purpose 

3 and with the intent of evading the provisions of 

4 this section when the loan would have been a 

5 high-cost mortgage if the loan had been struc6 tured as a consumer loan or as credit not ex7 tended under an open end consumer credit 

8 plan. 

9 ‘‘(2) RECIPROCAL ARRANGEMENT DEFINED.—

10 For purposes of this subsection, the term ‘reciprocal 

11 arrangement’ means any agreement, understanding, 

12 or other arrangement under which—

13 ‘‘(A) 1 creditor or affiliate of a creditor 

14 agrees to engage in a transaction with, or on 

15 behalf of, another creditor (or affiliate of such 

16 other creditor), in exchange for 

17 ‘‘(B) the agreement of the second creditor 

18 referred to in subparagraph (A), or any affiliate 

19 of such company, to engage in a transaction 

20 with, or on behalf of, the first creditor referred 

21 to in such subparagraph, or any affiliate of 

22 such company, 

23 for the purpose of evading any requirement or prohi24 bition under this title, or any other provision of any 
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1 Federal law or regulation relating to high-cost mort2 gages. 

3 ‘‘(3) REGULATIONS.—The Board shall prescribe 

4 such regulations as may be necessary to enforce the 

5 requirements of this subsection.’’. 

6 (g) NO ENCOURAGEMENT OF DEFAULT OR NON7 PAYMENT ON PRIOR EXISTING LOAN.—Section 129 of the 

8 Truth in Lending Act (15 U.S.C. 1639) is amended by 

9 inserting after subsection (o) (as added by subsection (f) 

10 of this section) the following new subsection: 

11 ‘‘(p) NO ENCOURAGEMENT OF DEFAULT OR

12 SKIPPED PAYMENT.—No creditor may recommend or en13 courage default or nonpayment (including nonpayment of 

14 any periodic payment) on an existing loan or other debt 

15 prior to and in connection with the closing or planned clos16 ing of a high-cost mortgage that refinances all or any por17 tion of such existing loan or debt.’’. 

18 (h) ABILITY TO REPAY.—Subsection (h) of section 

19 129 of the Truth in Lending Act (15 U.S.C. 1639(h)) is 

20 amended to read as follows: 

21 ‘‘(h) PROHIBITION ON EXTENDING CREDIT WITH22 OUT REGARD TO PAYMENT ABILITY OF CONSUMER.—

23 ‘‘(1) IN GENERAL.—A creditor shall not engage 

24 in a pattern or practice of extending credit to con25 sumers under high-cost mortgages based on the con-
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1 sumers’ collateral without regard to the consumers’ 

2 repayment ability, including the consumers’ current 

3 and expected income, current obligations, and em4 ployment. 

5 ‘‘(2) PRESUMPTION OF ABILITY.—Unless a 

6 creditor knows or has reason to know otherwise and 

7 except as provided in paragraphs (3) and (4), a 

8 creditor may presume that a consumer is able to 

9 make the scheduled payments to repay the high-cost 

10 mortgage, if, at the time the extension of credit is 

11 approved, the consumer’s total monthly payments 

12 due on outstanding obligations, including amounts 

13 owed under the high-cost mortgage, do not exceed 

14 53 percent of the consumer’s monthly gross income, 

15 as verified by the credit application, the consumer’s 

16 financial statement, a credit report, or any other 

17 reasonable means; except that if the consumer’s re18 payment ability is based substantially on fixed in19 come, then income verification shall include reason20 able documentation of such fixed income, in addition 

21 to any statement by the consumer. 

22 ‘‘(3) PRESUMPTION NOT APPLICABLE IN CASE

23 OF BALLOON PAYMENTS.—Paragraph (2) shall not 

24 apply in the case of any consumer who has an obli25 gation secured by real property (that would be taken 
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1 into account for purposes of such paragraph) for 

2 which the aggregate amount of the regular periodic 

3 payments would not fully amortize the obligation. 

4 ‘‘(4) VERIFICATION OF INCOME REQUIRED IN

5 CASE OF CONSUMER WITHOUT EARNED INCOME.—A 

6 creditor may not rely on a consumer’s statement of 

7 income for purposes of paragraph (2) if the con8 sumer has no earned income.’’. 

9 (i) PROHIBITION ON SINGLE PREMIUM CREDIT LIFE

10 INSURANCE.—Section 129 of the Truth in Lending Act 

11 (15 U.S.C. 1639) is amended by inserting after subsection 

12 (p) (as added by subsection (g) of this section) the fol13 lowing new subsection: 

14 ‘‘(q) PROHIBITION ON SINGLE PREMIUM CREDIT

15 LIFE INSURANCE.—No consumer credit transaction in16 volving a high-cost mortgage may include the offer or sale 

17 of any insurance policy, on a single premium basis, that 

18 insures, guarantees, or indemnifies the repayment of the 

19 outstanding balance of the loan against death, illness, ac20 cident, disability, or unemployment of the consumer.’’. 

21 (j) LIMITATIONS ON REFINANCING.—Section 129 of 

22 the Truth in Lending Act (15 U.S.C. 1639) is amended 

23 by inserting after subsection (q) (as added by subsection 

24 (i) of this section) the following new subsection: 

25 ‘‘(r) LIMITATIONS ON REFINANCING.—
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1 ‘‘(1) PROHIBITION DURING 1ST YEAR.—

2 ‘‘(A) IN GENERAL.—No creditor may refi3 nance a high-cost mortgage loan with another 

4 high-cost mortgage during the 1-year period be5 ginning on the date of consummation of the 

6 prior high-cost mortgage loan. 

7 ‘‘(B) ARRANGEMENTS PROHIBITED.—No 

8 mortgage broker may arrange for the refi9 nancing of a high-cost mortgage with another 

10 high-cost mortgage during the 1-year period be11 ginning on the date of consummation of the 

12 prior high-cost mortgage. 

13 ‘‘(2) EXCEPTION FOR LOWER INTEREST

14 LOAN.—Paragraph (1) shall not apply if the sched15 uled finance charge for the balance of the prior ex16 isting high-cost mortgage exceeds the scheduled fi17 nance charge for the subsequent high-cost mortgage

18 by an amount greater than the amount of the fees 

19 and charges imposed by the creditor for such subse20 quent mortgage. 

21 ‘‘(3) REFINANCING OF CERTAIN LOW-INTEREST

22 LOANS PROHIBITED FOR 10 YEARS.—A high-cost 

23 mortgage may not be made to refinance, and the 

24 proceeds of a high-cost mortgage may not be used 

25 to pay off, any below-market interest rate or sub-
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1 sidized loan made by any government agency, gov2 ernment-sponsored enterprise, or nonprofit corpora3 tion (other than a mutual bank, mutual savings as4 sociation, or credit union) during the 10-year period 

5 beginning when such low-interest loan was con6 summated, without either the express written con7 sent of the holder of the loan or certification from 

8 a person or organization certified under section 

9 106(e) of the Housing and Urban Development Act 

10 of 1968 that the consumer has obtained credit coun11 seling.’’. 

12 (k) REQUIREMENTS RELATING TO HOME IMPROVE13 MENT CONTRACTS.—Section 129(i) of the Truth in Lend14 ing Act (15 U.S.C. 1639(i)) is amended—

15 (1) by striking ‘‘IMPROVEMENT CONTRACTS.—

16 A creditor’’ and inserting ‘‘IMPROVEMENT CON17 TRACTS.—

18 ‘‘(1) IN GENERAL.—A creditor’’; and 

19 (2) by adding at the end the following new 

20 paragraph: 

21 ‘‘(2) NO PAYMENT IN FULL WITHOUT PROOF

22 OF COMPLETION OF THE WORK.—

23 ‘‘(A) IN GENERAL.—No creditor may use 

24 the proceeds of a high-cost mortgage to make 

25 a final payment or payment in full to a home 
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1 improvement contractor under a home improve2 ment contract without proof that the contractor 

3 has fully performed the obligations of the con4 tract. 

5 ‘‘(B) SIGNED STATEMENT OF CON6 SUMER.—A signed statement by the consumer 

7 who entered into the high-cost mortgage and 

8 home improvement contract referred to in sub9 paragraph (A) that the contractor has fully per10 formed the contract shall constitute proof for 

11 purposes of such subparagraph.’’. 

12 (l) ADDITIONAL SPECIFIC DISCLOSURES.—Section 

13 129(a)(1) of the Truth in Lending Act (15 U.S.C. 

14 1639(a)) is amended by adding at the end the following 

15 new subparagraphs: 

16 ‘‘(C) ‘The rate of interest and the amount 

17 of fees you pay on a loan may vary depending 

18 on which lender or broker you select.’

19 ‘‘(D) ‘The timing and amount of payments 

20 on debts you already are carrying contribute to 

21 the credit rating that is used to determine 

22 whether you may get a new loan and how much 

23 you will pay for that new loan. You should 

24 NOT accept any advice to ignore or delay mak25 ing any payments on loans you already have, 
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1 even if those loans will be paid off with the new 

2 loan.’

3 ‘‘(E) ‘You may get into serious financial 

4 difficulties if you use this loan to pay off old 

5 debts and then run up other new debts.’ ’’. 

6 (m) CREDIT REPORTING REQUIREMENTS.—Section 

7 129 of the Truth in Lending Act (15 U.S.C. 1639) is 

8 amended by inserting after subsection (r) (as added by 

9 subsection (j) of this section) the following new subsection: 

10 ‘‘(s) CREDIT REPORTING REQUIREMENTS.—

11 ‘‘(1) PERIODIC FULL FILE REPORTING RE12 QUIRED.—A creditor with respect to a high-cost 

13 mortgage (or the assignee or servicer of such mort14 gage) shall furnish, at least once in each calendar 

15 quarter, a full file credit report with respect to all 

16 high-cost mortgages held or serviced by such cred17 itor, assignee, or servicer to a consumer reporting 

18 agency that compiles and maintains files on con19 sumers on a nationwide basis (as defined in section 

20 603(p) of the Fair Credit Reporting Act), except for 

21 information deleted in connection with the settle22 ment of a dispute or consumer complaint. 

23 ‘‘(2) RIGHT TO FREE CREDIT REPORTS IN CON24 NECTION WITH HIGH-COST MORTGAGES.—Any ac25 ceptance by a creditor of an application for a con-
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1 sumer credit transaction the terms of which would 

2 cause the transaction to be defined as a high-cost 

3 mortgage shall be treated as an adverse action with 

4 respect to the consumer for purposes of sections 

5 612(b) and 615(a) of the Fair Credit Reporting Act, 

6 except that, the creditor need not refer to such ac7 tion as adverse in any communication with the con8 sumer. 

9 ‘‘(3) FULL FILE CREDIT REPORT DEFINED.—

10 For purposes of this subsection, the term ‘full file 

11 credit report’ means a report given to a consumer 

12 reporting agency on a regular basis reflecting the 

13 status of every loan in the server’s portfolio as of the 

14 report date.’’. 

15 (n) NO CALL PROVISION.—Section 129 of the Truth 

16 in Lending Act (15 U.S.C. 1639) is amended by inserting 

17 after subsection (s) (as added by subsection (m) of this 

18 section) the following new subsection: 

19 ‘‘(t) NO CALL PROVISION.—

20 ‘‘(1) IN GENERAL.—A high-cost mortgage may 

21 not include terms under which the indebtedness may 

22 be accelerated by the creditor, in the creditor’s sole 

23 discretion. 
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1 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

2 apply when repayment of the loan has been acceler3 ated—

4 ‘‘(A) by default or pursuant to a due-on5 sale provision or some other provision of the 

6 loan documents unrelated to the payment 

7 schedule; or 

8 ‘‘(B) due to any action or omission by the 

9 consumer that adversely affects the creditor’s 

10 security interest in the residence or any rights 

11 of the creditor in such security.’’. 

12 (o) MODIFICATION AND DEFERRAL FEES PROHIB13 ITED.—Section 129 of the Truth in Lending Act (15 

14 U.S.C. 1639) is amended by inserting after subsection (t) 

15 (as added by subsection (n) of this section) the following 

16 new subsection:

17 ‘‘(u) MODIFICATION AND DEFERRAL FEES PROHIB18 ITED.—

19 ‘‘(1) IN GENERAL.—A creditor may not charge 

20 a consumer any fee to modify, renew, extend, or 

21 amend a high-cost mortgage, or to defer any pay22 ment due under the terms of such mortgage, unless 

23 the modification, renewal, extension, or amendment 

24 results in a lower annual percentage rate on the 

25 mortgage for the consumer and then only if the 
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1 amount of the fee is comparable to fees imposed for 

2 similar transactions in connection with consumer 

3 credit transactions that are secured by a consumer’s 

4 principal dwelling and are not high-cost mortgages. 

5 ‘‘(2) EXCEPTION FOR CERTAIN WORKOUTS.—

6 Paragraph (1) shall not apply in the case of an ex7 isting high-cost mortgage that is in default or more 

8 than 60 days delinquent, if the modification, re9 newal, extension, or amendment is part of the reso10 lution or workout of the default or delinquency.’’. 

11 (p) PROFITING ON FORECLOSURES PROHIBITED.—

12 Section 129 of the Truth in Lending Act (15 U.S.C. 1639) 

13 is amended by inserting after subsection (u) (as added by 

14 subsection (o) of this section) the following new sub15 section: 

16 ‘‘(v) LENDER PROFITS ON FORECLOSURES PROHIB17 ITED.—

18 ‘‘(1) IN GENERAL.—

19 ‘‘(A) CREDITOR, ASSIGNEE, OR AFFILIATE

20 REACQUIRES PROPERTY INTEREST AT FORE21 CLOSURE SALE.—If the creditor, any assignee 

22 of the creditor, or any affiliate of such creditor 

23 or assignee is the successful bidder at a judicial 

24 or nonjudicial foreclosure sale of a residence of 

25 a consumer that was the security for a high-
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1 cost mortgage, any profit realized by a creditor, 

2 any assignee of the creditor, or any affiliate of 

3 such creditor or assignee realized upon the sub4 sequent resale or other disposition of the prop5 erty that was the security for a high-cost mort6 gage shall be paid to the consumer. 

7 ‘‘(B) CREDITOR, ASSIGNEE, OR AFFILIATE

8 DOES NOT REACQUIRE PROPERTY INTEREST AT

9 FORECLOSURE SALE.—If the creditor, any as10 signee of the creditor, or any affiliate of such 

11 creditor or assignee is not the successful bidder 

12 at a judicial or nonjudicial foreclosure sale of a 

13 residence of a consumer that was the security 

14 for a high cost mortgage, any surplus realized 

15 in excess of the sum of—

16 ‘‘(i) the amount to which the creditor 

17 or assignee or affiliate or others have a 

18 right under the law of the State where the 

19 real property that was the security for a 

20 high-cost mortgage is located; and 

21 ‘‘(ii) the amounts referred to in sub22 paragraphs (A), (B), and (C) of paragraph 

23 (4), 

24 shall be paid to the consumer. 
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1 ‘‘(2) PROFIT DEFINED.—For purposes of this 

2 subsection, the term ‘profit’ means the amount 

3 which is equal to—

4 ‘‘(A) the amount paid to the creditor, any 

5 assignee of the creditor, or any affiliate of such 

6 creditor or assignee by a third party for the 

7 sale of the property to the third party, minus 

8 ‘‘(B) the amount to which the creditor or 

9 assignee has a right under the terms of the 

10 mortgage. 

11 ‘‘(3) SURPLUS DEFINED.—

12 ‘‘(A) IN GENERAL.—For the purposes of 

13 paragraph (1)(B), the term ‘surplus’ means the 

14 amount which is equal to—

15 ‘‘(i) the amount derived from the sale 

16 as determined by the law of the State 

17 where the real property that was the secu18 rity for a high-cost mortgage is located; 

19 minus 

20 ‘‘(ii) the amounts disbursed to others 

21 under the processes, priorities and proce22 dures for disbursement of surplus funds, 

23 and for determining the rights and prior24 ities between consumers and others who 

25 may have an interest in or claim to the 
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1 surplus funds, as determined by the law of 

2 the State where the real property that was 

3 the security for a high-cost mortgage is lo4 cated. 

5 ‘‘(B) APPLICABLE DEFINITION IF STATE

6 LAW DOES NOT PROVIDE FOR THE DETERMINA7 TIONS OF AMOUNTS DESCRIBED IN SUBPARA8 GRAPH (A).—If the law of the State where the 

9 real property that was the security for a high10 cost mortgage is located does not provide for 

11 the determination of the amounts described in 

12 clauses (i) and (ii) of subparagraph (A), the 

13 term ‘surplus’ means that portion of the 

14 amount derived from the sale that exceeds the 

15 sum of the amounts described in subparagraphs 

16 (A), (B), and (C) of paragraph (4). 

17 ‘‘(4) CREDITOR’S AMOUNT.—The amount to 

18 which the creditor or assignee has a right under the 

19 terms of the mortgage, for purposes of this sub20 section, includes—

21 ‘‘(A) all foreclosure expenses, including 

22 reasonable attorneys’ fees and expenses reason23 ably incurred to secure, market, and preserve 

24 the property through the date of the foreclosure 

25 sale, incurred by the creditor or assignee; 
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•HR 833 IH 

1 ‘‘(B) all amounts due the creditor or as2 signee under the terms of the agreement 

3 through the date of the judicial or nonjudicial 

4 foreclosure sale referred to in paragraph (1); 

5 ‘‘(C) all amounts paid by the creditor or 

6 assignee to other lien holders of record on the 

7 property; and 

8 ‘‘(D) all postforeclosure expenses, including 

9 reasonable attorneys’ fees, commissions, ad10 vances, and expenses reasonably incurred to se11 cure, market, preserve, improve and sell the 

12 property to a third party referred to in para13 graph (1), incurred by the creditor or as14 signee.’’. 

15 (q) INCREASED INTEREST RATE UPON DEFAULT

16 PROHIBITED.—Section 129 of the Truth in Lending Act

17 (15 U.S.C. 1639) is amended by inserting after subsection 

18 (v) (as added by subsection (p) of this section) the fol19 lowing new subsection: 

20 ‘‘(w) APPLICABILITY OF LIMITATIONS ON VARIABLE

21 RATE CHANGES.—In the case of a high-cost mortgage 

22 that is subject to a variable rate of interest based on an 

23 index or rate of interest which is publicly available and 

24 is not under the control of the creditor, subsection (d) 

25 shall not apply to changes in the rate of interest due to 
26

•HR 833 IH 

1 any change in such index, to the extent the change of in2 terest is not due in any part to a default by the consumer 

3 or a permissible acceleration by the creditor.’’. 

4 (r) PREPAYMENT OF PERIODIC PAYMENTS FROM

5 PROCEEDS PROHIBITED.—Section 129(g) of the Truth in 

6 Lending Act (15 U.S.C. 1639) is amended to read as fol7 lows: 

8 ‘‘(g) PREPAYMENT OF PERIODIC PAYMENTS FROM

9 PROCEEDS PROHIBITED.—No high-cost mortgage may in10 clude terms under which any periodic payments of interest 

11 or principal due under such mortgage may be paid in ad12 vance or otherwise deducted from the proceeds of the 

13 loan.’’. 

14 (s) PAYOFF STATEMENTS.—Section 129 of the Truth 

15 in Lending Act (15 U.S.C. 1639) is amended by inserting 

16 after subsection (w) (as added by subsection (q) of this 

17 section) the following new subsection: 

18 ‘‘(x) PAYOFF STATEMENT.—

19 ‘‘(1) FEES.—

20 ‘‘(A) IN GENERAL.—Except as provided in 

21 subparagraph (B), no creditor or servicer may 

22 charge a fee for informing or transmitting to 

23 any person the balance due to pay off the out24 standing balance on a high-cost mortgage. 
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•HR 833 IH 

1 ‘‘(B) TRANSACTION FEE.—When payoff in2 formation referred to in subparagraph (A) is 

3 provided by facsimile transmission or by a cou4 rier service, a creditor or servicer may charge a 

5 processing fee not to exceed an amount that is 

6 comparable to fees imposed for similar services 

7 provided in connection with consumer credit 

8 transactions that are secured by the consumer’s 

9 principal dwelling and are not residential mort10 gage transactions or high-cost mortgages. 

11 ‘‘(C) MULTIPLE REQUESTS.—If a creditor 

12 or servicer has provided payoff information re13 ferred to in subparagraph (A) without charge, 

14 other than the transaction fee allowed by sub15 paragraph (B), on 4 occasions during a cal16 endar year, the creditor or servicer may there17 after charge a reasonable fee for providing such 

18 information during the remainder of the cal19 endar year. 

20 ‘‘(2) PROMPT DELIVERY.—Payoff balances shall 

21 be provided within a reasonable time but in any 

22 event no more than 5 business days after receiving 

23 a request by a consumer or a person authorized by 

24 the consumer to obtain such information.’’. 
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•HR 833 IH 

1 SEC. 103. AMENDMENTS TO LIABILITY PROVISIONS RELAT2 ING TO HIGH-COST MORTGAGES. 

3 (a) RIGHT TO CURE.—Section 130(b) of the Truth 

4 in Lending Act (15 U.S.C. 1640(b)) is amended—

5 (1) by striking ‘‘(b) A creditor or assignee’’ and 

6 inserting ‘‘(b) RIGHT TO CURE.—

7 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a 

8 creditor or assignee’’; and 

9 (2) by adding at the end the following new 

10 paragraph: 

11 ‘‘(2) HIGH-COST MORTGAGES.—In addition to 

12 the provisions of paragraph (1), a creditor or as13 signee shall have no liability under this section for 

14 any failure to comply with any requirement imposed 

15 under section 129 with respect to a high-cost mort16 gage, if within 60 days after discovering an error, 

17 and prior to the institution of an action under this 

18 section, the creditor or assignee notifies the con19 sumer of the error and makes appropriate restitu20 tion to the consumer or modifies the terms of the 

21 credit transaction in such a way that the transaction 

22 is no longer a high-cost mortgage within the mean23 ing of this title.’’. 

24 (b) COORDINATION OF CLASS ACTION DAMAGES

25 WITH ACTUAL DAMAGES.—Section 130 of the Truth in 
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•HR 833 IH 

1 Lending Act (15 U.S.C. 1640) is amended by adding at 

2 the end the following new subsection: 

3 ‘‘(j) CLASS ACTIONS RELATING TO HIGH-COST

4 MORTGAGES.—

5 ‘‘(1) COORDINATION OF CLASS ACTION DAM6 AGES WITH ACTUAL DAMAGES.—The maximum 

7 amount of general damages which may otherwise be 

8 imposed on any person under subsection (a)(2)(B) 

9 for violations of section 129 in a class action shall 

10 be reduced by the aggregate amount of actual dam11 ages for which such person is liable to members of 

12 the class under subsection (a)(1). 

13 ‘‘(2) PATTERN AND PRACTICE.—In determining 

14 the amount of any liability of any person under sub15 section (a)(2)(B) for violations of section 129 in a 

16 class action, the court shall consider the pattern and 

17 practices of the person giving rise to the violations.’’. 

18 (c) AMENDMENT RELATING TO LIABILITY OF AS19 SIGNEES.—

20 (1) IN GENERAL.—Paragraph (4) of section 

21 131(d) of the Truth in Lending Act (15 U.S.C. 

22 1641(d)) is amended by striking ‘‘mortgage referred 

23 to in section 103(aa)’’ and inserting ‘‘high-cost 

24 mortgage’’. 
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•HR 833 IH 

1 (2) RIGHTS UPON ASSIGNMENT OF HIGH-COST

2 MORTGAGES.—Section 131(d) of the Truth in Lend3 ing Act (15 U.S.C. 1641(d)) is amended—

4 (A) by redesignating paragraphs (2), (3), 

5 and (4) as paragraphs (5), (6), and (7), respec6 tively; and 

7 (B) striking paragraph (1) and inserting 

8 the following new paragraphs: 

9 ‘‘(1) IN GENERAL.—Any person who purchases 

10 or is otherwise assigned a high-cost mortgage shall 

11 be subject to an action under this title only if the 

12 violation for which such action or proceeding is 

13 brought is apparent on the face of the disclosure 

14 statement or the underlying promissory note. 

15 ‘‘(2) AFFIRMATIVE CLAIMS AND DEFENSES.—

16 Any person who purchases or is otherwise assigned 

17 a high-cost mortgage that was made, arranged, or 

18 assigned by a person financing home improvements

19 to the dwelling of a consumer shall be subject to 

20 all affirmative claims and defenses which the con21 sumer may have against the seller, home improve22 ment contractor, broker, or creditor with respect to 

23 such mortgage or home improvements. 

24 ‘‘(3) SAFE HARBOR.—A person who maintains 

25 and exercises procedures that are reasonably adapt-
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•HR 833 IH 

1 ed to prevent the acquisition of high-cost mortgages 

2 containing violations of this title, which procedures 

3 are consistent with established industry norms and 

4 practices for secondary mortgage market trans5 actions, shall not be liable for any such violations in 

6 connection with any loan acquired pursuant to such 

7 procedures. 

8 ‘‘(4) CLARIFICATION OF TERMS.—For purposes 

9 of this title, the terms ‘purchaser’, ‘assignee’, and 

10 ‘person who purchases or is otherwise assigned’ in11 cludes—

12 ‘‘(A) any person acting on behalf of the 

13 purchaser or assignee; and 

14 ‘‘(B) with regard to credit obligations se15 cured by consumers’ dwellings included in a 

16 pool for the purpose of issuing asset-backed se17 curities, the issuer of the asset-backed security, 

18 the depositor entity holding such pool, and any 

19 affiliate of such issuer or depository entity.’’. 

20 SEC. 104. COORDINATION WITH STATE LAW. 

21 (a) IN GENERAL.—Section 111 of the Truth in Lend22 ing Act (15 U.S.C. 1610) is amended—

23 (1) by adding at the end the following new sub24 section: 

25 ‘‘(f) HIGH-COST MORTGAGES.—
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•HR 833 IH 

1 ‘‘(1) IN GENERAL.—To the extent that any law 

2 of any State—

3 ‘‘(A) imposes any requirement, limitation, 

4 or prohibition on any mortgage lending activi5 ties in connection with an extension of con6 sumer credit secured by a lien against a con7 sumer’s dwelling in whole or in part because the 

8 actual or contingent costs and finance charges 

9 to the consumer associated with such extension 

10 of credit exceed any particular threshold for 

11 such costs, however such threshold may be de12 fined; or 

13 ‘‘(B) attempts to regulate such mortgage 

14 lending activities—

15 ‘‘(i) through limitations or prohibi16 tions in connection with contracts for other 

17 business with any such State or political 

18 subdivision thereof; 

19 ‘‘(ii) by making any conduct in con20 nection with any such activities subject to 

21 criminal penalties; or 

22 ‘‘(iii) by making activities regulated 

23 under real estate, foreclosure, or other 

24 laws of such State or political subdivision 
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•HR 833 IH 

1 contingent upon the manner in which 

2 mortgage lending activities are conducted, 

3 this title shall preempt such law, irrespective of 

4 whether such law affords greater protection, sub5 stantive or otherwise, to consumers. 

6 ‘‘(2) DEFINITIONS.—For purposes of this sub7 section, the following definitions shall apply: 

8 ‘‘(A) MORTGAGE LENDING ACTIVITIES.—

9 The term ‘mortgage lending activities’ includes 

10 any advertisement, solicitation, offer, negotia11 tion, application, processing, underwriting, orig12 inating, closing, funding, recording, assignment, 

13 securitization, servicing, collection, modification, 

14 satisfaction, or foreclosure (including the dis15 position of foreclosed property) for or of any ex16 tension of consumer credit secured by a lien 

17 against a consumer’s dwelling. 

18 ‘‘(B) LAW OF ANY STATE.—The term ‘law 

19 of any State’ includes any statute, rule, regula20 tion, or ordinance of any State or any political 

21 subdivision of any State. 

22 ‘‘(3) CLARIFICATION OF PREEMPTION.—Laws 

23 preempted under paragraph (1) of this subsection 

24 shall, without in any way limiting the effect of para25 graph (1) of this subsection, include—
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•HR 833 IH 

1 ‘‘(A) any law of any State that directly or 

2 indirectly limits a creditor’s ability to extend 

3 new credit to a consumer for the purpose of re4 financing an existing extension of consumer 

5 credit in whole or in part because the actual or 

6 contingent costs and finance charges to the con7 sumer associated with either the existing or the 

8 new extension of consumer credit are lower 

9 than or in excess of any particular threshold; or 

10 ‘‘(B) any law of any State that directly or 

11 indirectly limits the claims, defenses, or other 

12 remedies at law or equity available to a cred13 itor, its agent, or its direct or indirect assignee 

14 in connection with an extension of consumer 

15 credit secured by a lien against a consumer’s 

16 dwelling in whole or in part because the actual 

17 or contingent costs and finance charges to the

18 consumer associated with such extension of con19 sumer credit are in excess of any particular 

20 threshold. 

21 ‘‘(4) EXCLUSIONS.—Notwithstanding para22 graphs (1) and (2), the following laws are expressly 

23 excluded from the preemption set forth in paragraph 

24 (1): 
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•HR 833 IH 

1 ‘‘(A) Any law of any State, not otherwise 

2 preempted under Federal law, limiting the rate 

3 of interest reflected in the note or other instru4 ment evidencing an extension of consumer cred5 it secured by a lien against a consumer’s dwell6 ing, to the extent that such law does not re7 quire compliance with any law that is otherwise 

8 preempted under paragraphs (1) and (2) as a 

9 condition of contracting for, charging, or col10 lecting any rate of interest otherwise permitted 

11 by such law. 

12 ‘‘(B) Any law of any State requiring the li13 censing, registration, or authorization of any 

14 person engaged in mortgage lending activities, 

15 to the extent that such law does not condition 

16 the issuance of such a license, registration or 

17 other authorization, or the authority granted 

18 thereby, on compliance with any law that is oth19 erwise preempted under paragraphs (1) and 

20 (2). 

21 ‘‘(5) PROMPT DETERMINATION BY BOARD OF

22 GOVERNORS.—

23 ‘‘(A) IN GENERAL.—In response to a re24 quest from any person, the Board of Governors 

25 of the Federal Reserve System, or any official 
36

•HR 833 IH 

1 or employee of the Board of Governors of the 

2 Federal Reserve System duly authorized by the 

3 Board, shall—

4 ‘‘(i) promptly determine whether the 

5 specific law of any State identified in such 

6 request is preempted by operation of this 

7 subsection; and 

8 ‘‘(ii) cause such determination to be 

9 published in the Federal Register. 

10 ‘‘(B) EFFECT OF PUBLICATION.—Any de11 termination under subparagraph (A) that is 

12 published in the Federal Register shall have the 

13 force and effect of law as of the date of such 

14 publication.’’; 

15 (2) in subsection (a)(1), by striking the 1st sen16 tence and inserting ‘‘Except as provided in sub17 sections (e) and (f), no provision of chapter 1, 2 or 

18 3 shall be construed as annulling, altering, or affect19 ing the laws of any State relating to the disclosure 

20 of information in connection with credit trans21 actions, except to the extent that those laws are in22 consistent with the provisions of this title, and then 

23 only to the extent of the inconsistency.’’; and 
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•HR 833 IH 

1 (3) in subsection (b) by striking ‘‘section 129’’ 

2 the 1st place such term appears and inserting ‘‘sub3 section (f) and section 129’’; and 

4 (4) in subsection (d), by striking ‘‘sections 125, 

5 130, and 166’’ and inserting ‘‘subsection (f) and 

6 sections 125, 130, and 166’’. 

7 (b) CLARIFICATION OF PRIMARY ENFORCEMENT AU8 THORITY WITH RESPECT TO STATE-CHARTERED ENTI9 TIES.—Section 108 of the Truth in Lending Act (15 

10 U.S.C. 1607) is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(f) CLARIFICATION OF PRIMARY ENFORCEMENT

13 AUTHORITY WITH RESPECT TO STATE-CHARTERED EN14 TITIES.—In addition to the authority provided under sec15 tion 130(e), no provision of this title shall be construed 

16 as affecting the authority of any State to enforce the laws 

17 of such State, as the primary enforcement authority, with 

18 regard to any person domiciled in such State or chartered 

19 by such State.’’. 

20 SEC. 105. CONTINUATION OF IDENTIFICATIONS UNDER THE 

21 ALTERNATIVE MORTGAGE TRANSACTION 

22 PARITY ACT OF 1982. 

23 The Director of the Office of Thrift Supervision shall 

24 take no action under the Alternative Mortgage Trans25 action Parity Act of 1982 that would have the effect of 
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•HR 833 IH 

1 discontinuing the identification of regulations of the Direc2 tor relating to late fees and prepayment penalties as appli3 cable to State housing creditors and no regulation of the 

4 Director that was prescribed in final form before the en5 actment of this Act and that would discontinue such iden6 tification shall be effective on or after such date of enact7 ment, unless permitted by a subsequent Act of the Con8 gress. 

9 SEC. 106. EFFECTIVE DATE. 

10 (a) IN GENERAL.—This Act, and the amendments 

11 made by this Act, shall take effect at the end of the 1-

12 year period beginning on the date of the enactment of this 

13 Act. 

14 (b) SCOPE OF APPLICATION.—This Act, and the 

15 amendments made by this Act, shall apply with respect 

16 to applications for high-cost mortgages received on or 

17 after the effective date of this Act. 

18 (c) VOLUNTARY COMPLIANCE.—No creditor or as19 signee shall be subject to civil liability in any action 

20 brought under the Truth in Lending Act with respect to 

21 provisions of such Act that are amended by this Act, if 

22 the creditor or assignee voluntarily complies with the re23 quirements of such amendments during the 1-year period 

24 referred to in subsection (a).
39

•HR 833 IH 

1 TITLE II—CONSUMER MORT2 GAGE PROTECTION BOARD 

3 SEC. 201. ESTABLISHMENT. 

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

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

6 amended by adding at the end the following new sub7 section: 

8 ‘‘(g) CONSUMER MORTGAGE PROTECTION BOARD.—

9 ‘‘(1) ESTABLISHMENT.—There is established in 

10 the Department of Housing and Urban Development 

11 the Consumer Mortgage Protection Board (in this 

12 section referred to as the ‘Board’). 

13 ‘‘(2) FUNCTIONS.—The Board shall carry out 

14 the functions assigned to the Board under this sec15 tion and any other provisions of law. Such functions 

16 shall include establishing rules necessary—

17 ‘‘(A) for the counseling procedures under 

18 subsection (h)(1); 

19 ‘‘(B) under section 5 of the Real Estate 

20 Settlement Procedures Act of 1974 (12 U.S.C.

21 2604) for mortgage information booklets pre22 pared pursuant to such section; 

23 ‘‘(C) for the operation and administration 

24 of the Board; and 
40

•HR 833 IH 

1 ‘‘(D) for the establishment and mainte2 nance of the national database of mortgage bro3 kers under subtitle B of title II of the Respon4 sible Lending Act. 

5 ‘‘(3) MEMBERS.—The Board shall be composed 

6 of 15 members, who shall be appointed by the Sec7 retary, as follows: 

8 ‘‘(A) 4 members shall be individuals who 

9 represent consumers of settlement services. 

10 ‘‘(B) 3 members shall be individuals who 

11 represent originators of federally related mort12 gage loans (as such term is defined in section 

13 3 of the Real Estate Settlement Procedures Act 

14 of 1974 (12 U.S.C. 2602), including at least 2 

15 individuals who are associated with lenders that 

16 fund and close loans with their own funds and 

17 are capable of servicing such loans. 

18 ‘‘(C) 1 member shall be an individual who 

19 represents real estate sales professionals. 

20 ‘‘(D) 1 member shall be an individual who 

21 represents real estate appraisers. 

22 ‘‘(E) 1 member shall be an individual who 

23 represents private mortgage insurers. 

24 ‘‘(F) 1 member shall be an individual who 

25 represents title insurance providers. 
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•HR 833 IH 

1 ‘‘(G) 1 member shall be an individual who 

2 represents settlement service management com3 panies. 

4 ‘‘(H) 1 member shall be an individual who 

5 represents providers of electronic delivery mech6 anisms that facilitate home purchases and home 

7 financings. 

8 ‘‘(I) 1 member shall be an individual who 

9 is a practicing attorney specializing in residen10 tial mortgage finance or settlement services. 

11 ‘‘(J) 1 member shall be an individual who 

12 represents mortgage brokers (as such term is 

13 defined in section 303 of the Responsible Lend14 ing Act). 

15 ‘‘(4) TERMS AND VACANCIES.—Each member of 

16 the Board shall be appointed for a term of three 

17 years. Any member appointed to fill a vacancy oc18 curring before the expiration of the term for which 

19 the member’s predecessor was appointed shall be ap20 pointed only for the remainder of that term. A mem21 ber may serve after the expiration of that member’s 

22 term until a successor has taken office. A vacancy 

23 in the Board shall be filled in the manner in which 

24 the original appointment was made. 
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•HR 833 IH 

1 ‘‘(5) SERVICE WITHOUT PAY; TRAVEL EX2 PENSES.—Members of the Board shall serve without 

3 pay, but each member of the Board shall receive 

4 travel expenses, including per diem in lieu of subsist5 ence, in accordance with applicable provisions under 

6 subchapter I of chapter 57 of title 5, United States 

7 Code. 

8 ‘‘(6) STAFF.—Subject to the rules prescribed by 

9 the Board, the Board may appoint and fix the pay 

10 of personnel as the Board considers appropriate to 

11 carry out the Board’s functions. Such personnel may 

12 be appointed without regard to the provisions of title 

13 5, United States Code, governing appointments in 

14 the competitive service, and may be paid without re15 gard to the provisions of chapter 51 and subchapter 

16 III of chapter 53 of that title relating to classifica17 tion and General Schedule pay rates. The Board 

18 may provide reasonable additional compensation and 

19 benefits to employees of the Board if the same type 

20 of compensation or benefits are then being provided 

21 by any Federal bank regulatory agency or, if not 

22 then being provided, could be provided by such an 

23 agency under applicable provisions of law, rule, or 

24 regulation. 
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•HR 833 IH 

1 ‘‘(7) EXEMPTION FROM FEDERAL ADVISORY

2 COMMITTEE ACT PROVISIONS.—The provisions of the 

3 Federal Advisory Committee Act (5 U.S.C. App.) 

4 shall not apply to the Board.’’. 

5 (b) INITIAL APPOINTMENTS.—The Secretary of 

6 Housing and Urban Development shall appoint the initial 

7 members of the Consumer Mortgage Protection Board, 

8 pursuant to section 106(g) of the Housing and Urban De9 velopment Act of 1968 (12 U.S.C. 1701x(g)), not later 

10 than 20 days after the date of the enactment of this Act. 

11 SEC. 202. COUNSELING PROCEDURES. 

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

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

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

15 amended by adding at the end the following new sub16 section: 

17 ‘‘(h) BOARD RESPONSIBILITIES.—

18 ‘‘(1) COUNSELING PROCEDURES.—

19 ‘‘(A) IN GENERAL.—Subject to the ap20 proval of the Secretary, the Board shall estab21 lish, coordinate, and monitor the administration 

22 by the Department of Housing and Urban De23 velopment of the counseling procedures for 

24 homeownership counseling and rental housing 

25 counseling provided in connection with any pro-
44

•HR 833 IH 

1 gram of the Department, including all require2 ments, standards, and performance measures 

3 that relate to homeownership counseling. 

4 ‘‘(B) HOMEOWNERSHIP COUNSELING.—

5 For purposes of this subsection, the term 

6 ‘homeownership counseling’ means counseling 

7 related to homeownership and residential mort8 gage loans, and includes counseling related to 

9 such topics that is provided pursuant to—

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

11 and Community Development Act of 1974 

12 (42 U.S.C. 42 5305(a)(20)); 

13 ‘‘(ii) in the United States Housing 

14 Act of 1937—

15 ‘‘(I) section 9(e) (42 U.S.C. 

16 1437g(e)); 

17 ‘‘(II) section 8(y)(1)(D) (42 

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

19 ‘‘(III) section 23(c)(4) (42 

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

21 ‘‘(IV) sections 302(b)(6) and 

22 303(b)(7) (42 U.S.C. 1437aaa–

23 1(b)(6), 1437aaa–2(b)(7)); and

24 ‘‘(V) section 304(c)(4) (42 

25 U.S.C. 1437aaa–3(c)(4)). 
45

•HR 833 IH 

1 ‘‘(iii) section 302(a)(4) of the Amer2 ican Homeownership and Economic Oppor3 tunity Act of 2000 (42 U.S.C. 1437f note); 

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

5 the Cranston-Gonzalez National Affordable 

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

7 12808(b)); 

8 ‘‘(v) sections 101(e) and 106 of the 

9 Housing and Urban Development Act of 

10 1968 (12 U.S.C. 1701w(e), 1701x); 

11 ‘‘(vi) section 220(d)(2)(G) of the Low12 Income Housing Preservation and Resident 

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

14 4110(d)(2)(G)); 

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

16 424(c)(4), 442(b)(6), and 443(b)(6) of the 

17 Cranston-Gonzalez National Affordable 

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

19 12873(b)(7), 12874(c)(4), 12892(b)(6), 

20 and 12893(b)(6)); 

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

22 McKinney-Vento Homeless Assistance Act 

23 (42 U.S.C. 11408(b)(1)(F)(iii)); 

24 ‘‘(ix) sections 202(3) and 

25 810(b)(2)(A) of the Native American 
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•HR 833 IH 

1 Housing and Self-Determination Act of 

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

3 ‘‘(x) in the National Housing Act—

4 ‘‘(I) in section 203 (12 U.S.C. 

5 1709), the penultimate undesignated 

6 paragraph of paragraph (2) of sub7 section (b), subsection (c)(2)(A), and 

8 subsection (r)(4); 

9 ‘‘(II) subsections (a) and (c)(3) 

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

11 and 

12 ‘‘(III) subsections (d)(2)(B) and 

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

14 1715z–20); 

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

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

17 1472(h)(4)(B)); and 

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

19 Urban Development Act of 1970 (12 

20 U.S.C. 1701z–7). 

21 ‘‘(C) RENTAL HOUSING COUNSELING.—

22 For purposes of this subsection, the term ‘rent23 al housing counseling’ means counseling related 

24 to rental of residential property, and includes 
47

•HR 833 IH 

1 counseling related to such topics that is pro2 vided pursuant to—

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

4 and Community Development Act of 1974 

5 (42 U.S.C. 42 5305(a)(20)); 

6 ‘‘(ii) in the United States Housing 

7 Act of 1937—

8 ‘‘(I) section 9(e) (42 U.S.C. 

9 1437g(e)); 

10 ‘‘(II) section 18(a)(4)(D) (42 

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

12 ‘‘(III) section 23(c)(4) (42 

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

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

15 1437z–4(e)(4)); 

16 ‘‘(V) section 33(d)(2)(B) (42 

17 U.S.C. 1437z–5(d)(2)(B)); and 

18 ‘‘(VI) section 302(b)(6) (42 

19 U.S.C. 1437aaa–1(b)(6)); 

20 ‘‘(iii) section 233(b)(2) of the Cran21 ston-Gonzalez National Affordable Housing 

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

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

24 Urban Development Act of 1968 (12 

25 U.S.C. 1701x); 
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•HR 833 IH 

1 ‘‘(vii) section 422(b)(6) of the Cran2 ston-Gonzalez National Affordable Housing 

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

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

5 McKinney-Vento Homeless Assistance Act 

6 (42 U.S.C. 11408(b)(1)(F)(iii)); and 

7 ‘‘(ix) sections 202(3) and 

8 810(b)(2)(A) of the Native American 

9 Housing and Self-Determination Act of 

10 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)). 

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

12 WEB SITE.—The Board shall establish and operate 

13 a toll-free telephone number and a World Wide Web 

14 site through which persons interested in homeowner15 ship counseling services may locate and obtain 

16 names and contact information of persons and orga17 nizations certified under section 106(e) of the Hous18 ing and Urban Development Act of 1968 to provide 

19 such services. 

20 ‘‘(3) UNIFORM MATERIALS.—The Board shall 

21 ensure the uniformity of materials and forms to be 

22 used, as appropriate, by organizations providing

23 homeownership counseling services, including any re24 cipients of assistance pursuant to subsection (a)(4). 

25 ‘‘(4) MORTGAGE SOFTWARE SYSTEMS.—
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•HR 833 IH 

1 ‘‘(A) CERTIFICATION.—The Board shall 

2 provide for the certification of various computer 

3 software programs for consumers to use in eval4 uating different residential mortgage loan pro5 posals. The Board shall require, for such certifi6 cation, that the mortgage software systems that 

7 take into account—

8 ‘‘(i) the consumer’s financial situa9 tion; 

10 ‘‘(ii) the amount of time the consumer 

11 expects to remain in the home or expected 

12 time to maturity of the loan; 

13 ‘‘(iii) such other factors as the Board 

14 considers appropriate to assist the con15 sumer in evaluating whether to pay points, 

16 to lock in an interest rate, to select an ad17 justable or fixed rate loan, to select a con18 ventional or government-insured or guar19 anteed loan and to make other choices dur20 ing the loan application process. 

21 If the Board determines that available existing 

22 software is inadequate to assist consumers dur23 ing the residential mortgage loan application 

24 process, the Board shall arrange for the devel25 opment by private sector software companies of 
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1 new mortgage software systems that meet the 

2 Board’s specifications. 

3 ‘‘(B) AVAILABILITY.—The Board shall 

4 take reasonable steps to make mortgage soft5 ware systems certified pursuant to this para6 graph widely available through the Internet and 

7 at public locations, including public libraries, 

8 senior-citizen centers, and homeownership coun9 seling centers. 

10 ‘‘(5) OUTREACH TO VULNERABLE POPU11 LATIONS.—The Board shall develop a media pro12 gram designed to make elderly persons, illiterate 

13 persons, low-income persons, and other potentially 

14 vulnerable consumers aware that it is advisable, be15 fore seeking a residential mortgage loan, to obtain 

16 homeownership counseling from an unbiased and re17 liable source and that such homeownership coun18 seling is available, including through programs of 

19 the Department of Housing and Urban Develop20 ment.’’. 

21 (b) CONFORMING AMENDMENTS TO GRANT PRO22 GRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZA23 TIONS.—Section 106(c)(5)(A)(ii) of the Housing and 

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

25 1701x(c)(5)(A)(ii)) is amended—
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1 (1) in subclause (II), by striking ‘‘and’’ at the 

2 end; 

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

4 the end and inserting ‘‘; and’’; and 

5 (3) by inserting after subclause (III) the fol6 lowing new subclause: 

7 ‘‘(IV) notify the homeowner or 

8 mortgage applicant of the availability 

9 of mortgage software systems pro10 vided pursuant to subsection (h)(4).’’. 

11 SEC. 203. GRANTS FOR HOUSING COUNSELING ASSIST12 ANCE. 

13 (a) AUTHORIZATION OF APPROPRIATIONS.—Section 

14 106(a) of the Housing and Urban Development Act of 

15 1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at 

16 the end the following new paragraph: 

17 ‘‘(4) HOMEOWNERSHIP COUNSELING ASSISTANCE.—

18 ‘‘(A) IN GENERAL.—The Secretary shall, 

19 through the Consumer Mortgage Protection Board 

20 established under subsection (g), make financial as21 sistance available under this paragraph to entities 

22 providing homeownership counseling (as such term 

23 is defined in subsection (h)(1)(B)). 

24 ‘‘(B) QUALIFIED ENTITIES.—The Consumer 

25 Mortgage Protection Board shall establish standards 
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1 and guidelines for eligibility of organizations (includ2 ing governmental and nonprofit organizations) to re3 ceive assistance under this paragraph. 

4 ‘‘(C) DISTRIBUTION.—Assistance made avail5 able under this paragraph shall be distributed in a 

6 manner that encourages efficient and successful 

7 counseling programs. 

8 ‘‘(D) AUTHORIZATION OF APPROPRIATIONS.—

9 There are authorized to be appropriated, to the Con10 sumer Mortgage Protection Board established under 

11 subsection (g), $50,000,000 for each of fiscal years 

12 2003 through 2007 for—

13 ‘‘(i) the operations of the Board; and 

14 ‘‘(ii) assistance under this paragraph 

15 (1)(iii) for entities providing homeownership 

16 counseling.’’. 

17 SEC. 204. REQUIREMENTS TO USE HUD-CERTIFIED COUN18 SELORS UNDER HUD PROGRAMS. 

19 (a) BOARD RESPONSIBILITY.—Section 106(e) of the 

20 Housing and Urban Development Act of 1968 (12 U.S.C. 

21 1701x(e)) is amended—

22 (1) in paragraph (1), by striking ‘‘Secretary’’ 

23 and inserting ‘‘Consumer Mortgage Protection 

24 Board established under subsection (g)’’; and 
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1 (2) in paragraphs (2) and (3), by striking ‘‘Sec2 retary’’ each place such term appears and inserting 

3 ‘‘Board’’. 

4 (b) REQUIREMENT TO USE CERTIFIED COUN5 SELORS.—Section 106(e) of the Housing and Urban De6 velopment Act of 1968 (12 U.S.C. 1701x(e)) is amend7 ed—

8 (1) in paragraph (1)—

9 (A) by inserting ‘‘(a)(4),’’ after ‘‘(a)(2),’’; 

10 (B) by inserting ‘‘of this section, or under 

11 section 101(e)’’ after ‘‘or (d)’’; and 

12 (C) by striking ‘‘, to the extent prac13 ticable,’’ and inserting ‘‘only’’; 

14 (2) by redesignating paragraph (3) as para15 graph (4); and 

16 (3) by inserting after paragraph (2) the fol17 lowing new paragraph: 

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

19 Any homeownership counseling or rental housing 

20 counseling (as such terms are defined in subsection 

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

22 with, any program administered by the Department

23 of Housing and Urban Development shall be pro24 vided only by counselors certified by the Board 
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1 under this subsection as competent to provide such 

2 counseling.’’. 

3 SEC. 205. UPDATING AND SIMPLIFICATION OF MORTGAGE 

4 INFORMATION BOOKLET. 

5 Section 5 of the Real Estate Settlement Procedures 

6 Act of 1974 (12 U.S.C. 2604) is amended—

7 (1) in the section heading, by striking ‘‘SPE8 CIAL’’ and inserting ‘‘MORTGAGE’’; 

9 (2) by striking subsections (a) and (b) and in10 serting the following new subsections: 

11 ‘‘(a) PREPARATION AND DISTRIBUTION.—Subject to 

12 the approval of the Secretary, the Consumer Mortgage 

13 Protection Board established under section 106(g) of the 

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

15 1701x(g)) (in this section referred to as the ‘Board’) shall 

16 prepare a booklet to help consumers applying for federally 

17 related mortgage loans to understand the nature and costs 

18 of real estate settlement services. The Secretary shall dis19 tribute such booklets to all lenders that make federally re20 lated mortgage loans. 

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

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

23 to such other information as the Board may provide, shall 

24 include in plain and understandable language the following 

25 information: 
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1 ‘‘(1) A description and explanation of the na2 ture and purpose of the costs incident to a real es3 tate settlement or a federally related mortgage loan. 

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

6 as specific information concerning, at a minimum—

7 ‘‘(A) balloon payments; 

8 ‘‘(B) prepayment penalties; and 

9 ‘‘(C) the tradeoff between closing costs and 

10 the interest rate over the life of the loan. 

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

12 settlement statement required by section 4. 

13 ‘‘(3) A list and explanation of common unfair, 

14 deceptive, or fraudulent lending practices, including 

15 those prohibited by the Truth in Lending Act or 

16 other applicable Federal law, and of other unfair 

17 practices and unreasonable or unnecessary charges 

18 to be avoided by the prospective buyer with respect 

19 to a real estate settlement. 

20 ‘‘(4) A list and explanation of questions a con21 sumer obtaining a federally related mortgage loan 

22 should ask regarding the loan, including whether the 

23 consumer will have the ability to repay the loan, 

24 whether the consumer sufficiently shopped for the 

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

2 will benefit the borrower. 

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

4 to certain transactions provided by sections 125 and 

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

6 1639). 

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

9 entitled ‘‘Consumer Handbook on Adjustable Rate 

10 Mortgages’’, published by the Board of Governors of 

11 the Federal Reserve System pursuant to section 

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

14 that such Board of Governors may subsequently 

15 adopt pursuant to such section. 

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

17 home equity line of credit and a reference to the 

18 pamphlet required to be provided under section 

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

20 1637a(e)). 

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

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

24 Act of 1968 (12 U.S.C. 1701x(a)(4)) and a rec25 ommendation that the consumer use such services. 
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1 ‘‘(9) An explanation of the nature and purpose 

2 of escrow accounts when used in connection with 

3 loans secured by residential real estate and the re4 quirements under section 10 of this Act regarding 

5 such accounts. 

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

7 buyers of residential real estate in selecting persons 

8 to provide necessary services incident to a real estate 

9 settlement;. 

10 ‘‘(11) An explanation of a consumer’s respon11 sibilities, liabilities, and obligations in a mortgage 

12 transaction. 

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

14 of real estate appraisals, including the difference be15 tween an appraisal and a home inspection. 

16 The booklet prepared pursuant to this section shall take 

17 into consideration differences in real estate settlement pro18 cedures which may exist among the several States and ter19 ritories of the United States and among separate political 

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

21 (3) in subsection (c), by striking the last sen22 tence; and 

23 (4) in subsection (e), by striking ‘‘Secretary’’ 

24 and inserting ‘‘Board’’.
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1 TITLE III—REQUIREMENTS FOR 

2 MORTGAGE BROKERS 

3 Subtitle A—Licensing and 

4 Minimum Standards 

5 SEC. 301. STATE REGULATION OF MORTGAGE BROKERS. 

6 (a) IN GENERAL.—The Federal mortgage broker re7 quirements established pursuant to this title shall apply 

8 only with respect to States that, upon the expiration of 

9 the 3-year period beginning on the date of the enactment 

10 of this Act, have not enacted and do not have in effect 

11 uniform laws and regulations described in subsection (b). 

12 (b) UNIFORM STATE LAWS.—

13 (1) IN GENERAL.—Laws and regulations de14 scribed in this subsection are laws and regulations 

15 that—

16 (A) require licensing for mortgage brokers; 

17 (B) require, as a condition of issuance of 

18 a license, that an applicant comply with pre-li19 censing education requirements and submit a 

20 written application for a license, and that a 

21 criminal background check be performed on the 

22 applicant;

23 (C) establish minimum testing standards 

24 for mortgage brokers; 
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1 (D) establish continuing education require2 ments for mortgage brokers; 

3 (E) require the public agency or official in 

4 the State that is responsible for licensing of 

5 mortgage brokers to provide, directly or other6 wise to the national mortgage database estab7 lished under subtitle B, such information as 

8 may be necessary to ensure that such database 

9 is effective for the purposes for which it is es10 tablished; and 

11 (F) comply with such standards regarding 

12 uniformity of information submitted to the na13 tional database of mortgage brokers established 

14 under subtitle B as the Secretary of Housing 

15 and Urban Development considers necessary to 

16 facilitate the operation of the database. 

17 (2) EXEMPTIONS.—For purposes of this sub18 section, the term ‘‘mortgage broker’’ has the mean19 ing provided in section 303(3), except that the laws 

20 and regulations of a State may exempt from treat21 ment as mortgage brokers the following persons: 

22 (A) Any bank, savings bank, savings and 

23 loan association, or credit union organized 

24 under the laws of a State or the United States, 

25 or a subsidiary or affiliate of a bank, savings 
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1 bank, savings and loan association, or credit 

2 union. 

3 (B) Any budget or debt counseling service, 

4 as defined by the Secretary, that is a nonprofit 

5 organization exempt from taxation under sec6 tion 501(c)(3) of the Internal Revenue Code of 

7 1986 (26 U.S.C. 501(c)(3)); 

8 (C) Any consumer reporting agency that is 

9 in substantial compliance with the Fair Credit 

10 Reporting Act (15 U.S.C. 1681 et seq.). 

11 (D) Any political subdivision, or any gov12 ernmental or other public entity, corporation, or 

13 agency, in or of the United States or any State. 

14 (E) Any college or university, or entity 

15 that is controlled by a college or university, as 

16 determined by the Secretary. 

17 (F) Any person who—

18 (i) makes, service, buys, or sells mort19 gage loans; 

20 (ii) underwrites the loans; and 

21 (iii)(I) has been approved by the Sec22 retary of Housing and Urban Development 

23 as a nonsupervised mortgagee with partici24 pation in the direct endorsement program, 
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1 but not including a mortgagee approved as 

2 a loan correspondent; 

3 (II) has been approved by the Federal 

4 National Mortgage Association as a seller/

5 servicer; 

6 (III) has been approved by the Fed7 eral Home Loan Mortgage Corporation as 

8 a seller/servicer; 

9 (IV) has been approved by the Sec10 retary of Veterans Affairs as a nonsuper11 vised automatic lender, but not including a 

12 person approved by the Secretary as a non13 supervised lender, an agent of a nonsuper14 vised automatic lender, or an agent of a 

15 nonsupervised lender; or 

16 (V) is a creditor (as defined in section 

17 103(f) of the Truth in Lending Act) who 

18 makes or invests in residential real estate 

19 loans aggregating more than $1,000,000 

20 per year, and irrespective of whether such 

21 creditor is licensed or supervised by an 

22 agency of a State. 

23 (G) Any person created solely for the pur24 pose of packaging and selling, as a unit of sale 

25 as investment securities, mortgage loans that 
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1 are secured by an interest in real estate, if the 

2 person does not service the loans. 

3 (c) DETERMINATION.—

4 (1) HUD DETERMINATION.—At the end of the 

5 3-year period beginning on the date of the enact6 ment of this Act, the Secretary of Housing and 

7 Urban Development shall determine, in consultation 

8 with the Board of Governors of the Federal Reserve 

9 System, whether the uniformity necessary to comply 

10 with subsection (a) has been achieved. 

11 (2) JUDICIAL REVIEW.—The appropriate 

12 United States district court shall have exclusive ju13 risdiction over any challenge to the determination 

14 pursuant to paragraph (1) and such court shall 

15 apply the standards set forth in section 706 of title 

16 5, United States Code, when reviewing any such 

17 challenge. 

18 (d) CONTINUED APPLICATION.—If, at any time, the 

19 Secretary determines that a State no longer has in effect 

20 laws and regulations described in subsection (a) or the 

21 uniformity necessary to comply with subsection (a) no 

22 longer exists with respect to a State, the Federal mortgage 

23 broker requirements shall take effect with respect to such 

24 State 2 years after the date on which such determination

25 was made, unless the State has in effect such laws or regu-
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1 lations, or the uniformity necessary to comply with sub2 section (a) is satisfied, before the expiration of such 2-

3 year period. 

4 (e) MONITORING.—The Secretary shall monitor the 

5 laws and regulations of the States governing the matters 

6 referred to in subsection (a) for purposes of making deter7 minations under subsection (d). 

8 SEC. 302. FEDERAL MORTGAGE BROKER REQUIREMENTS. 

9 (a) IN GENERAL.—Not later than 3 years after the 

10 date of the enactment of this Act, the Secretary of Hous11 ing and Urban Development shall, by regulation and in 

12 consultation with the Board of Governors of the Federal 

13 Reserve System, establish Federal mortgage broker re14 quirements under this section that meet the requirements 

15 set forth in subparagraphs (A) through (F) of section 

16 301(b)(1). 

17 (b) RULEMAKING.—The regulations required under 

18 subsection (a) shall be issued after notice and opportunity 

19 for public comment pursuant to the provisions of section 

20 553 of title 5, United States Code (notwithstanding sub21 sections (a)(2), (b)(B), and (d)(3) of such section). 

22 SEC. 303. DEFINITIONS. 

23 For purposes of this title, the following definitions 

24 shall apply: 
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1 (1) BUYER.—the term ‘‘buyer’’ means an indi2 vidual who is solicited to purchase, or who pur3 chases, the services of a mortgage broker for pur4 poses other than obtaining a business loan. 

5 (2) MORTGAGE.—The term ‘‘mortgage’’ means 

6 any indebtedness secured by a deed of trust, security 

7 deed, or other lien on real property. 

8 (3) MORTGAGE BROKER.—

9 (A) IN GENERAL.—The term ‘‘mortgage 

10 broker’’ means a person that—

11 (i) holds such person out as being able 

12 to assist a buyer in obtaining a mortgage 

13 and charges or receives, from the buyer or 

14 lender for the mortgage, money or other 

15 valuable consideration readily convertible 

16 into money for providing such assistance; 

17 or 

18 (ii) is engaged in table-funding mort19 gage loans that are first lien mortgage 

20 loans. 

21 (B) SOLICITATION OF INFORMATION.—

22 Such term includes any person that solicits fi23 nancial and mortgage information from the 

24 public, provides such information to a mortgage 

25 broker, as defined in subparagraph (A), and 
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1 charges or receives from the mortgage broker 

2 money or other valuable consideration readily 

3 convertible into money for providing the infor4 mation; 

5 (C) EXCEPTIONS.—Such term does not in6 clude the persons referred to in subparagraphs 

7 (A) through (H) of section 301(b)(2). 

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

9 the Secretary of Housing and Urban Development. 

10 (5) TABLE-FUNDING MORTGAGE LOAN.—The 

11 term ‘‘table-funding mortgage loan’’ means a mort12 gage loan transaction in which the mortgage is ini13 tially payable to the mortgage broker, the mortgage 

14 broker does not use the mortgage broker’s own 

15 funds to fund the transaction, and, by the terms of 

16 the mortgage or other agreement, the mortgage is 

17 simultaneously assigned to another person. 

18 Subtitle B—Database of Licensed 

19 Mortgage Brokers 

20 SEC. 311. ESTABLISHMENT. 

21 (a) IN GENERAL.—The Consumer Mortgage Protec22 tion Board established under section 106(g) of the Hous23 ing and Urban Development Act of 1968 (12 U.S.C. 

24 1701x(g)) (in this subtitle referred to as the ‘‘Board’’) 
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1 shall provide for the establishment and maintenance of a 

2 national database of mortgage brokers. 

3 (b) ADMINISTRATION.—The Board may maintain 

4 and administrate the database established under this sub5 title or may enter into a contract with a private regulatory 

6 organization to maintain and administrate the database. 

7 The Board shall consult with the American Association 

8 of Residential Mortgage Regulators, the Conference of 

9 State Bank Supervisors, and other appropriate organiza10 tions in determining the information to be maintained in 

11 the database and, if the Board provides for any other or12 ganization to maintain and administrate the database, in 

13 selecting such organization. 

14 (c) COMPETITIVELY PROCURED CONTRACT.—The 

15 Secretary shall enter into any contract for administration 

16 of the database using competitive procedures (as such 

17 term is defined in section 4 of the Office of Federal Pro18 curement Policy Act). 

19 (d) PERFORMANCE REVIEW.—The Secretary—

20 (1) shall periodically review the performance of 

21 the Board, or such other organization, in serving as 

22 administrator of the database; and 

23 (2) may replace any such other organization 

24 with another qualified organization, pursuant to 

25 competitive procedures if the Secretary determines
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1 in writing that the organization serving as adminis2 trator is not fulfilling the terms of the contract or 

3 upon the expiration of the contract. 

4 SEC. 312. DATABASE. 

5 The national database of mortgage brokers main6 tained pursuant to this title shall—

7 (1) include a listing of each person licensed 

8 under State law or regulation or under Federal 

9 mortgage broker requirements under section 302 to 

10 act as a mortgage broker; 

11 (2) make available to the public information re12 garding complaints made, and final disciplinary and 

13 enforcement actions taken, against each licensed 

14 mortgage broker; 

15 (3) make available to the Secretary of Housing 

16 and Urban Development and to each public agency 

17 or official in a State responsible for licensing or test18 ing under the laws or regulations referred to in sec19 tion 301(b) such information regarding mortgage 

20 brokers as the Board, by regulation, considers ap21 propriate for the Secretary and such agencies and 

22 officials to carry out their functions regarding regu23 lation, licensing, or testing of mortgage brokers, in24 cluding information regarding employment history 

25 and criminal background of mortgage brokers; 
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1 (4) make available to persons employing or 

2 using the services of mortgage brokers such informa3 tion regarding mortgage brokers as the Board, by 

4 regulation, considers appropriate; and 

5 (5) provide for the maintenance of such other 

6 information as the Board considers appropriate. 

7 SEC. 313. FEES. 

8 The Board may provide for the national database of 

9 mortgage brokers to charge reasonable fees to cover costs 

10 of maintaining and providing access to information from 

11 the database. 

12 SEC. 314. CONFIDENTIALITY OF INFORMATION. 

13 (a) IN GENERAL.—

14 (1) DATABASE.—Except as otherwise provided 

15 in this section, any requirement under Federal or 

16 State law regarding the privacy or confidentiality of 

17 any information or material in the possession of the 

18 Board or any other organization serving as the ad19 ministrator of the database, and any privilege aris20 ing under Federal or State law (including the rules 

21 of any Federal or State court) with respect to such 

22 information or material, shall continue to apply to 

23 such information or material after the information 

24 or material has been disclosed to the database. 
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1 (2) NONAPPLICABILITY OF CERTAIN REQUIRE2 MENTS.—Information or material that is subject to 

3 a privilege or confidentiality under any other para4 graph of this subsection shall not be subject to—

5 (A) disclosure under any Federal or State 

6 law governing the disclosure to the public of in7 formation held by an officer or an agency of the 

8 Federal Government or the respective State; or 

9 (B) subpoena or discovery, or admission 

10 into evidence, in any private civil action or ad11 ministrative process, 

12 unless with respect to any privilege held by the 

13 Board with respect to such information or material, 

14 the participant waives, in whole or in part, in the 

15 discretion of the participant, such privilege. 

16 (b) PREEMPTION OF STATE LAW.—Any State law, 

17 including any State open record law, relating to the disclo18 sure of confidential supervisory information or any infor19 mation or material described in subsection (a) that is in20 consistent with subsection (a) shall be superseded by the 

21 requirements of such provision to the extent State law pro22 vides less confidentiality or a weaker privilege. 

23 SEC. 315. LIABILITY PROVISIONS. 

24 (a) NO LIABILITY FOR GOOD FAITH DISCLO25 SURES.—Any State official or agency, or employee thereof, 
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1 shall not be subject to any civil action or proceeding for 

2 monetary damages by reason of the good faith action or 

3 omission of any officer or employee, while acting within 

4 the scope of office or employment, relating to collecting, 

5 furnishing, or disseminating of information concerning 

6 persons who are mortgage brokers or are applying for li7 censing as mortgage brokers, whether directly or through 

8 the national database established under this subtitle. 

9 (b) CRIMINAL LIABILITY FOR INTENTIONAL UNLAW10 FUL DISCLOSURES.—

11 (1) IN GENERAL.—It shall be unlawful to will12 fully disclose to any person any information con13 cerning any person who is a mortgage broker or is 

14 applying for licensing as a mortgage broker knowing 

15 the disclosure to be in violation of any provision of 

16 this title—

17 (A) requiring the confidentiality of such in18 formation; or 

19 (B) establishing a privilege from disclosure 

20 for such information that has not been waived 

21 by the Board and the person who is a mortgage 

22 broker or is applying for licensing as a mort23 gage broker. 

24 (2) PENALTY.—Notwithstanding section 3571 

25 of title 18, United States Code, any person who vio-
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1 lates paragraph (1) shall be fined an amount not to 

2 exceed the greater of $100,000 or the amount of the 

3 actual damages sustained by any person as a result 

4 of such violation, or imprisoned not more than 5 

5 years, or both. 

6 (c) FULL, CONTINUED PROTECTION UNDER THE SO7 CALLED ‘‘FEDERAL TORT CLAIMS ACT’’.—No provision 

8 of this Act shall be construed as reducing or limiting any 

9 protection provided for any Federal agency, or any officer 

10 or employee of any Federal agency, under section 2679 

11 of title 28, United States Code.

Æ