I 
108TH CONGRESS 
2D SESSION 
H. R. 3974
To amend the Truth in Lending Act to impose restrictions and limitations 
on high-cost mortgages, to revise the permissible fees and charges on 
certain loans made, to prohibit unfair or deceptive practices by mortgage 
brokers and creditors, and to provide for public education and counseling 
about predatory lenders, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 16, 2004
Mr. MILLER of North Carolina (for himself and Mr. WATT) introduced the 
following bill; which was referred to the Committee on Financial Services 
A BILL 
To amend the Truth in Lending Act to impose restrictions 
and limitations on high-cost mortgages, to revise the 
permissible fees and charges on certain loans made, to 
prohibit unfair or deceptive practices by mortgage bro-
kers and creditors, and to provide for public education 
and counseling about predatory lenders, and for other 
purposes.
Be it enacted by the Senate and House of Representa-
tives 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 
‘‘Prohibit Predatory Lending Act’’.
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title; table of contents. 
Sec. 2. Definitions relating to high-cost mortgages. 
Sec. 3. Amendments to existing requirements for certain mortgages. 
Sec. 4. Additional requirements for certain mortgages. 
Sec. 5. Amendment to provision governing correction of errors. 
Sec. 6. Amendment relating to right of rescission. 
Sec. 7. Amendments to civil liability provisions. 
Sec. 8. Protections for all home loans. 
Sec. 9. Regulations.
SEC. 2. DEFINITIONS RELATING TO HIGH-COST MORT-
GAGES. 
(a) 
HIGH-COST
MORTGAGE
DEFINED.—Section 
103(aa) of the Truth in Lending Act (15 U.S.C. 
1602(aa)) is amended by striking all that precedes para-
graph (2) and inserting the following: 
‘‘(aa) HIGH-COST MORTGAGE.—
‘‘(1) DEFINITION.—
‘‘(A) IN
GENERAL.—The term ‘high-cost 
mortgage’, and a mortgage referred to in this 
subsection, means a consumer credit trans-
action that is secured by the consumer’s prin-
cipal dwelling, other than a reverse mortgage 
transaction, if—
‘‘(i) in the case of a loan secured—
‘‘(I) by a first mortgage on the 
consumer’s principal dwelling, the an-
nual percentage rate at consummation 
of the transaction will exceed by more
than 8 percentage points the yield on 
Treasury securities having comparable 
periods of maturity on the 15th day of 
the month immediately preceding the 
month in which the application for the 
extension of credit is received by the 
creditor; or 
‘‘(II) by a subordinate or junior 
mortgage on the consumer’s principal 
dwelling, the annual percentage rate 
at consummation of the transaction 
will exceed by more than 10 percent-
age points the yield on Treasury secu-
rities having comparable periods of 
maturity on the 15th day of the 
month 
immediately 
preceding 
the 
month in which the application for the 
extension of credit is received by the 
creditor; 
‘‘(ii) the total points and fees payable 
in connection with the loan exceed—
‘‘(I) in the case of a loan for 
$20,000 or more, 5 percent of the 
total loan amount; or
‘‘(II) in the case of a loan for 
less than $20,000, the lesser of 8 per-
cent of the total loan amount or 
$1,000; or 
‘‘(iii) the loan documents permit the 
lender to charge or collect prepayment fees 
or penalties more than 30 months after the 
loan closing or such fees or penalties ex-
ceed, in the aggregate, more than 2 per-
cent of the amount prepaid. 
‘‘(B) INTRODUCTORY RATES TAKEN INTO 
ACCOUNT.—For 
purposes 
of 
subparagraph 
(A)(i), the annual percentage rate of interest 
shall be determined based on the following in-
terest rate: 
‘‘(i) In the case of a fixed-rate loan in 
which the annual percentage rate will not 
vary during the term of the loan, the inter-
est rate in effect on the date of consumma-
tion of the transaction. 
‘‘(ii) In the case of a loan in which 
the rate of interest varies solely in accord-
ance with an index, the interest rate deter-
mined by adding the index rate in effect on 
the date of consummation of the trans-
action to the maximum margin permitted 
at any time during the loan agreement. 
‘‘(iii) In the case of any other loan in 
which the rate may vary at any time dur-
ing the term of the loan for any reason, 
the interest charged on the loan at the 
maximum rate that may be charged during 
the term of the loan.’’. 
(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 
103(aa)(2) of the Truth in Lending Act (15 U.S.C. 
1602(aa)(2)) is amended by striking subparagraph (B) 
and inserting the following new subparagraph: 
‘‘(B) An increase or decrease under sub-
paragraph (A)—
‘‘(i) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(I) being less than 6 percentage 
points or greater than 10 percentage 
points; and 
‘‘(ii) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(II) being less than 8 percentage 
points or greater than 12 percentage 
points.’’. 
(c) POINTS AND FEES DEFINED.—
(1) IN
GENERAL.—Section 103(aa)(4) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is 
amended—
(A) by striking subparagraph (B) and in-
serting the following: 
‘‘(B) all compensation paid directly or indi-
rectly by a consumer or creditor to a mortgage 
broker from any source, including a mortgage 
broker that originates a loan in the name of the 
broker in a table-funded transaction;’’; 
(B) in subparagraph (C)(ii), by striking 
‘‘and’’ after the semicolon at the end; 
(C) by redesignating subparagraph (D) as 
subparagraph (G); and 
(D) by inserting after subparagraph (C) 
the following new subparagraphs: 
‘‘(D) premiums or other charges payable at 
or before closing for any credit life, credit dis-
ability, credit unemployment, or credit property 
insurance, or any other accident, loss-of-income, 
life or health insurance, or any payments di-
rectly or indirectly for any debt cancellation or 
suspension agreement or contract, except that 
insurance premiums or debt cancellation or sus-
pension fees calculated and paid in full on a
monthly basis shall not be considered financed 
by the creditor; 
‘‘(E) except as provided in subsection (cc), 
the maximum prepayment fees and penalties 
which may be charged or collected under the 
terms of the loan documents; 
‘‘(F) all prepayment fees or penalties that 
are incurred by the borrower if the loan refi-
nances a previous loan made or currently held 
by the same creditor or an affiliate of the cred-
itor; and’’. 
(2) CALCULATION OF POINTS AND FEES FOR 
OPEN-END LOANS.—Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended—
(A) by redesignating paragraph (5) as 
paragraph (6); and 
(B) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) CALCULATION OF POINTS AND FEES FOR 
OPEN-END LOANS.—In the case of open-end loans, 
points and fees shall be calculated, for purposes of 
this section and section 129, by adding the total 
points and fees known at or before closing, including 
the maximum prepayment penalties which may be 
charged or collected under the terms of the loan doc-
uments, plus the minimum additional fees the con-
sumer would be required to pay to draw down an 
amount equal to the total credit line.’’. 
(d) HIGH
COST
MORTGAGE
LENDER.—Section 
103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) 
is amended by striking the last sentence and inserting the 
following new sentence: ‘‘Any person who originates or 
brokers 2 or more mortgages referred to in subsection (aa) 
in any 12-month period, any person who originates 1 or 
more such mortgages through a mortgage broker in any 
12 month period, or, in connection with a table funding 
transaction of such a mortgage, and any person to whom 
the obligation is initially assigned at or after settlement 
shall be considered to be a creditor for purposes of this 
title.’’. 
(e) BONA FIDE DISCOUNT LOAN DISCOUNT POINTS 
AND
PREPAYMENT
PENALTIES.—Section 103 of the 
Truth in Lending Act (15 U.S.C. 1602) is amended by 
adding at the end the following new subsection: 
‘‘(cc) BONA FIDE DISCOUNT POINTS AND PREPAY-
MENT PENALTIES.—For the purposes of determining the 
amount of points and fees for purposes of subsection (aa), 
either the amounts described in paragraphs (1) or (4) of 
the following paragraphs, but not both, may be excluded:
‘‘(1) EXCLUSION
OF
BONA
FIDE
DISCOUNT 
POINTS.—The discount points described in 1 of the 
following subparagraphs shall be excluded from de-
termining the amounts of points and fees with re-
spect to a high-cost mortgage for purposes of sub-
section (aa): 
‘‘(A) Up to and including 2 bona fide dis-
count points payable by the borrower in connec-
tion with the mortgage, but only if the interest 
rate from which the mortgage’s interest rate 
will be discounted does not exceed by more than 
1 percentage point the required net yield for a 
90-day standard mandatory delivery commit-
ment for a reasonably comparable loan from ei-
ther the Federal National Mortgage Association 
or the Federal Home Loan Mortgage Corpora-
tion, whichever is greater. 
‘‘(B) Unless 2 bona fide discount points 
have been excluded under subparagraph (A), up 
to and including 1 bona fide discount points 
payable by the borrower in connection with the 
mortgage, but only if the interest rate from 
which the mortgage’s interest rate will be dis-
counted does not exceed by more than 2 per-
centage points the required net yield for a 90-
day standard mandatory delivery commitment 
for a reasonably comparable loan from either 
the Federal National Mortgage Association or 
the Federal Home Loan Mortgage Corporation, 
whichever is greater. 
‘‘(2) DEFINITION.—For purposes of paragraph 
(1), the term ‘bona fide discount points’ means loan 
discount points which are knowingly paid by the con-
sumer for the purpose of reducing, and which in fact 
result in a bona fide reduction of, the interest rate 
or time-price differential applicable to the mortgage. 
‘‘(3) EXCEPTION FOR INTEREST RATE REDUC-
TIONS
INCONSISTENT
WITH
INDUSTRY
NORMS.— 
Paragraph (1) shall not apply to discount points 
used to purchase an interest rate reduction unless 
the amount of the interest rate reduction purchased 
is reasonably consistent with established industry 
norms and practices for secondary mortgage market 
transactions. 
‘‘(4) ALLOWANCE OF CONVENTIONAL PREPAY-
MENT PENALTY.—Subsection (aa)(1)(4)(E) shall not 
apply so as to include a prepayment penalty or fee 
that is authorized by law other than this title and 
may be imposed pursuant to the terms of a high-cost
mortgage (or other consumer credit transaction se-
cured by the consumer’s principal dwelling) if—
‘‘(A) the annual percentage rate applicable 
with respect to such mortgage or transaction 
(as determined for purposes of subsection 
(aa)(1)(A)(i))—
‘‘(i) in the case of a first mortgage on 
the consumer’s principal dwelling, does not 
exceed by more than 2 percentage points 
the yield on Treasury securities having 
comparable periods of maturity on the 
15th day of the month immediately pre-
ceding the month in which the application 
for the extension of credit is received by 
the creditor; or 
‘‘(ii) in the case of a subordinate or 
junior mortgage on the consumer’s prin-
cipal dwelling, does not exceed by more 
than 4 percentage points the yield on such 
Treasury securities; and 
‘‘(B) the total amount of any prepayment 
fees or penalties permitted under the terms of 
the high-cost mortgage or transaction does not 
exceed 2 percent of the amount prepaid.’’.
SEC. 3. AMENDMENTS TO EXISTING REQUIREMENTS FOR 
CERTAIN MORTGAGES. 
(a) PREPAYMENT PENALTY PROVISIONS.—Section 
129(c)(2) of the Truth in Lending Act (15 U.S.C. 
1639(c)(2)) is amended—
(1) by striking ‘‘and’’ after the semicolon at the 
end of subparagraph (C); 
(2) by redesignating subparagraph (D) as sub-
paragraph (E); and 
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) the amount of the principal obliga-
tion of the mortgage exceeds the maximum 
principal obligation limitation (for the applica-
ble size residence) under section 203(b)(2) of 
the National Housing Act for the area in which 
the residence subject to the mortgage is located; 
and’’. 
(b) NO BALLOON PAYMENTS.—Section 129(e) of the 
Truth in Lending Act (15 U.S.C. 1639(e)) is amended to 
read as follows: 
‘‘(e) NO BALLOON PAYMENTS.—No high-cost mort-
gage may contain a scheduled payment that is more than 
twice as large as the average of earlier scheduled pay-
ments. This subsection shall not apply when the payment
schedule is adjusted to the seasonal or irregular income 
of the consumer.’’. 
(c) NO LENDING WITHOUT DUE REGARD TO ABIL-
ITY TO REPAY.—Section 129(h) of the Truth in Lending 
Act (15 U.S.C. 1639(h)) is amended—
(1) by striking ‘‘PAYMENT ABILITY OF CON-
SUMER.—A creditor shall not’’ and inserting ‘‘PAY-
MENT ABILITY OF CONSUMER.—
‘‘(1) PATTERN OR PRACTICE.—
‘‘(A) IN GENERAL.—A creditor shall not’’; 
(2) by inserting after subparagraph (A) (as so 
designated by paragraph (1) of this subsection) the 
following new subparagraph: 
‘‘(B) 
PRESUMPTION
OF
VIOLATION.—
There shall be a presumption that a creditor 
has violated this subsection if the creditor en-
gages in a pattern or practice of making high-
cost mortgages without verifying or docu-
menting the repayment ability of consumers 
with respect to such loans.’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) PROHIBITION
ON
EXTENDING
CREDIT 
WITHOUT REGARD TO PAYMENT ABILITY OF CON-
SUMER.—
‘‘(A) IN
GENERAL.—A creditor may not 
extend credit to a consumer under a high-cost 
mortgage unless a reasonable creditor would be-
lieve at the time the loan is closed that the con-
sumer or consumers that are residing or will re-
side in the residence subject to the mortgage 
will be able to make the scheduled payments as-
sociated with the loan, based upon a consider-
ation of current and expected income, current 
obligations, employment status, and other fi-
nancial resources, other than equity in the resi-
dence. 
‘‘(B) PRESUMPTION
OF
ABILITY.—For 
purposes of this subsection, there shall be a re-
buttable presumption that a consumer is able to 
make the scheduled payments to repay the obli-
gation if, at the time the loan is consummated, 
the consumer’s total monthly debts, including 
amounts under the loan, do not exceed 50 per-
cent of his or her monthly gross income as 
verified by tax returns, payroll receipts, or other 
third-party income verification.’’.
SEC. 4. ADDITIONAL REQUIREMENTS FOR CERTAIN MORT-
GAGES. 
(a) ADDITIONAL
REQUIREMENTS
FOR
CERTAIN 
MORTGAGES.—Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended—
(1) by redesignating subsections (j), (k) and (l) 
as subsections (n), (o) and (p) respectively; and 
(2) by inserting after subsection (i) the fol-
lowing new subsections: 
‘‘(j) RECOMMENDED DEFAULT.—No creditor shall 
recommend or encourage default 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. 
‘‘(k) LATE FEES.—
‘‘(1) IN GENERAL.—No lender may impose a 
late payment charge or fee in connection with a 
high-cost mortgage—
‘‘(A) in an amount in excess of 4 percent 
of the amount of the payment past due; 
‘‘(B) unless the loan documents specifically 
authorize the charge or fee; 
‘‘(C) before the end of the 15-day period 
beginning on the date the payment is due, or in 
the case of a loan on which interest on each in-
stallment is paid in advance, before the end of
the 30-day period beginning on the date the 
payment is due; or 
‘‘(D) more than once with respect to a sin-
gle late payment. 
‘‘(2) COORDINATION WITH SUBSEQUENT LATE 
FEES.—If a payment is otherwise a full payment for 
the applicable period and is paid on its due date or 
within an applicable grace period, and the only delin-
quency or insufficiency of payment is attributable to 
any late fee or delinquency charge assessed on any 
earlier payment, no late fee or delinquency charge 
may be imposed on such payment. 
‘‘(3) FAILURE
TO
MAKE
INSTALLMENT
PAY-
MENT.—If, in the case of a loan agreement the 
terms of which provide that any payment shall first 
be applied to any past due principal balance, the 
borrower fails to make an installment payment and 
the borrower subsequently resumes making install-
ment payments but has not paid all past due install-
ments, the lender may impose a separate late pay-
ment charge or fee for any principal due (without 
deduction due to late fees or related fees) until the 
default is cured. 
‘‘(l) ACCELERATION OF DEBT.—No high-cost mort-
gage may contain a provision which permits the creditor,
in its sole discretion, to accelerate the indebtedness. This 
provision shall not apply when repayment of the loan has 
been accelerated by default, pursuant to a due-on-sale pro-
vision, or pursuant to a material violation of some other 
provision of the loan documents unrelated to the payment 
schedule. 
‘‘(m) RESTRICTION
ON FINANCING POINTS
AND 
FEES.—No creditor may directly or indirectly finance, in 
connection with any high-cost mortgage, any of the fol-
lowing: 
‘‘(1) Any prepayment fee or penalty payable by 
the borrower in a refinancing transaction if the lend-
er or an affiliate of the lender is the noteholder of 
the note being refinanced. 
‘‘(2) Any points or fees.’’. 
(b) PROHIBITIONS ON EVASIONS.—Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639 is amended 
by inserting after subsection (p) (as so redesignated by 
subsection (a)(1) of this section) the following new sub-
section: 
‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF 
TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 
creditor may not take any action in connection with a 
high-cost mortgage—
‘‘(1) to structure a loan transaction as an open-
end credit plan or another form of loan for the pur-
pose and with the intent of evading the provisions of 
this title; or 
‘‘(2) to divide any loan transaction into sepa-
rate parts for the purpose and with the intent of 
evading provisions of this title.’’. 
(c) MODIFICATION
OR DEFERRAL FEES.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (q) (as added by 
subsection (b) of this section) the following new sub-
section: 
‘‘(r) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—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 mort-
gage, 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 simi-
lar transactions in connection with consumer credit trans-
actions that are secured by a consumer’s principal dwell-
ing and are not high-cost mortgages.’’. 
(d) ARBITRATION AND FORUM SHOPPING.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is
amended by inserting after subsection (r) (as added by 
subsection (c) of this section) the following: 
‘‘(s) ARBITRATION.—
‘‘(1) IN GENERAL.—A high-cost mortgage may 
not include terms which require arbitration or any 
other nonjudicial procedure as the method for resolv-
ing any controversy or settling any claims arising 
out of the transaction. 
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Sub-
ject to paragraph (3), paragraph (1) shall not be 
construed as limiting the right of the consumer and 
the creditor to agree to arbitration or any other non-
judicial procedure as the method for resolving any 
controversy at any time after a dispute or claim 
under the transaction arises. 
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any high-cost mortgage or 
any agreement between the consumer and the cred-
itor shall be applied or interpreted so as to bar a 
consumer from bringing an action in an appropriate 
district court of the United States, or any other 
court of competent jurisdiction, pursuant to section 
130 or any other provision of law, for damages or 
other relief in connection with any alleged violation
of this section, any other provision of this title, or 
any other Federal law.’’. 
(e) PAYOFF STATEMENT.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (s) (as added by subsection (d) of this 
section) the following new subsection: 
‘‘(t) 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 out-
standing balance on a high-cost mortgage. 
‘‘(B) TRANSACTION FEE.—When payoff in-
formation referred to in subparagraph (A) is 
provided by facsimile transmission or by a cou-
rier service, a creditor or servicer may charge a 
processing fee to cover the cost of such trans-
mission or service in an amount 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 high-cost mortgages.
‘‘(C) FEE DISCLOSURE.—Prior to charging 
a transaction fee as provided in subparagraph 
(B), a creditor or servicer shall disclose that 
payoff balances are available for free pursuant 
to subparagraph (A). 
‘‘(D) MULTIPLE REQUESTS.—If a creditor 
or servicer has provided payoff information re-
ferred to in subparagraph (A) without charge, 
other than the transaction fee allowed by sub-
paragraph (B), on 4 occasions during a cal-
endar year, the creditor or servicer may there-
after charge a reasonable fee for providing such 
information during the remainder of the cal-
endar 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.’’. 
(f) PRE-LOAN
COUNSELING
REQUIRED.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (t) (as added by 
subsection (e) of this section) the following new sub-
section: 
‘‘(u) PRE-LOAN COUNSELING.—
‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a high-cost mortgage 
without first receiving certification from a counselor 
that is approved by the Secretary of Housing and 
Urban Development, or at the discretion of the Sec-
retary, a state housing finance authority, that the 
borrower has received counseling on the advisability 
of the loan transaction. Such counselor shall not be 
employed by the creditor or an affiliate of the cred-
itor or be affiliated with the creditor. 
‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUN-
SELING.—No counselor may certify that a borrower 
has received counseling on the advisability of the 
loan transaction unless the counselor can verify that 
the consumer has received each statement required 
(in connection with such loan) by section 129 of this 
title or by the Real Estate Settlement Procedures 
Act of 1974 with respect to the transaction. 
‘‘(3) REGULATIONS.—The Secretary of Housing 
and Urban Development may prescribe such regula-
tions as the Secretary determines to be appropriate 
to carry out the requirements of paragraph (1).’’.
SEC. 5. AMENDMENT TO PROVISION GOVERNING CORREC-
TION OF ERRORS. 
(a) AMENDMENT TO PROVISION GOVERNING COR-
RECTION OF ERRORS.—Section 130(b) of the Truth in 
Lending Act (15 U.S.C. 1640(b)) is amended to read as 
follows: 
‘‘(b) CORRECTION OF ERRORS.—A creditor has no li-
ability under this section or section 108 or 112 for any 
failure to comply with any requirement imposed under this 
chapter or chapter 5, if—
‘‘(1) within 30 days of the loan closing and 
prior to the institution of any action, the borrower 
is notified of or discovers the violation, appropriate 
restitution is made, and whatever adjustments are 
necessary are made to the loan to either, at the 
choice of the borrower—
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) change the terms of the loan in a 
manner beneficial to the borrower so that the 
loan will no longer be a high-cost mortgage; or 
‘‘(2) within 60 days of the lender’s discovery or 
receipt of notification of an unintentional violation 
or bona fide error as described in subsection (c) and 
prior to the institution of any action, the borrower 
is notified of the compliance failure, appropriate res-
titution is made, and whatever adjustments are nec-
essary are made to the loan to either, at the choice 
of the borrower—
‘‘(A) make the loan satisfy the require-
ments of this chapter or 
‘‘(B) change the terms of the loan in a 
manner beneficial so that the loan will no 
longer be a high-cost mortgage.’’. 
SEC. 6. AMENDMENT RELATING TO RIGHT OF RESCISSION. 
Section 130(e) of the Truth in Lending Act (15 
U.S.C. 1640(e)) is amended by inserting after the second 
sentence the following new sentence: ‘‘This subsection also 
shall not bar a person from asserting a right to rescission 
under section 125, in an action to collect the debt or as 
a defense to a judicial or nonjudicial foreclosure after the 
expiration of the time periods for affirmative actions set 
forth in this section and section 125.’’. 
SEC. 7. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a) of 
the Truth in Lending Act (15 U.S.C. 1640(a)) is amend-
ed, in the matter preceding paragraph (1), by striking ‘‘an 
amount equal to the sum’’ and inserting ‘‘an amount equal 
to twice the sum’’.
(b) STATUTE OF LIMITATIONS EXTENDED FOR SEC-
TION 129 VIOLATIONS.—Section 130(e) of the Truth in 
Lending Act (15 U.S.C. 1640(e)) (as amended by section 
6 of this Act) is amended—
(1) in the first sentence, by striking ‘‘Any ac-
tion’’ and inserting ‘‘Except as provided in the sub-
sequent sentence, any action’’; and 
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘Any action under this section 
with respect to any violation of section 129 may be 
brought in any United States district court, or in 
any other court of competent jurisdiction, before the 
end of the 3-year period beginning on the date of the 
occurrence of the violation.’’. 
SEC. 8. PROTECTIONS FOR ALL HOME LOANS. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after section 129 the following new section: 
‘‘§ 129A Protections for all home loans 
‘‘(a) FLIPPING.—
‘‘(1) IN GENERAL.—No creditor may knowingly 
or intentionally engage in the unfair act or practice 
of flipping. 
‘‘(2) FLIPPING DEFINED.—For purposes of this 
subsection, the term ‘flipping’ means the making of