HR 4471 IH 
(1) by striking ‘‘AMORTIZATION.—A mortgage 
referred to in section 103(aa) of this title’’ and in-
serting ‘‘AMORTIZATION.— 
‘‘(1) IN
GENERAL.—A high-cost home loan’’; 
and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) EXCEPTION
FOR
PERIOD
OF
FORBEAR-
ANCE.—Paragraph (1) shall not apply with respect 
to negative amortization resulting from periods of 
temporary forbearance allowed by the creditor.’’. 
(d) FINANCING OF POINTS OR FEES.—Section 129 
of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by adding at the end the following new subsection: 
‘‘(m) RESTRICTIONS ON FINANCING OF POINTS OR 
FEES.—No creditor may directly or indirectly finance, in 
connection with any high-cost home loan, any of the fol-
lowing: 
‘‘(1) Any prepayment fee or penalty payable by 
the consumer in a refinancing transaction if the 
creditor or an affiliate of the creditor is the holder 
of the note being refinanced in other than a fidu-
ciary or servicing capacity. 
‘‘(2) Any points or fees in excess of 3 percent 
of the total loan amount.’’.
HR 4471 IH 
(e) PROHIBITION ON EVASIONS.—Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by 
inserting after subsection (n) (as added by section 104(a) 
of this Act) the following new subsection: 
‘‘(o) PROHIBITION ON EVASIONS.—A creditor may 
not take any action in connection with a high-cost home 
loan with the intent of evading provisions of this title.’’. 
(f) NO ENCOURAGEMENT OF DEFAULT ON PRIOR 
EXISTING LOAN.—Section 129 of the Truth in Lending 
Act (15 U.S.C. 1639) is amended by inserting after sub-
section (o) (as added by subsection (e) of this section) the 
following new subsection: 
‘‘(p) NO ENCOURAGEMENT OF DEFAULT.—No cred-
itor shall recommend or encourage default on an existing 
loan or other debt prior to and in connection with the clos-
ing or planned closing of a high-cost home loan that refi-
nances all or any portion of such existing loan or debt.’’. 
(g) ABILITY TO REPAY.—Subsection (h) of section 
129 of the Truth in Lending Act (15 U.S.C. 1639(h)) is 
amended to read as follows: 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a high-cost home loan 
unless a reasonable creditor would believe at the 
time the loan is closed that the consumer or con-
sumers that are residing or will reside in the dwell-
HR 4471 IH 
ing subject to the loan will be able to make the 
scheduled payments associated with the loan, based 
upon a consideration of the consumers’ current and 
expected income, current obligations, employment 
status, and other financial resources, other than eq-
uity in the dwelling. 
‘‘(2) PRESUMPTION OF ABILITY.—For purposes 
of this subsection, there shall be a rebuttable pre-
sumption that a consumer is able to make the sched-
uled payments to repay the obligation if, at the time 
the extension of credit is approved, the consumer’s 
total monthly debts due on outstanding obligations, 
including amounts under the high-cost home loan, 
do not exceed 50 percent of his or her monthly gross 
income as verified by: (a) the consumer’s credit ap-
plication and a credit report; and (b) tax returns, 
payroll 
receipts, 
or 
other 
third-party 
income 
verification.’’. 
(h) LIMITATIONS ON REFINANCING.—Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (p) (as added by subsection 
(f) of this section) the following new subsection: 
‘‘(q) LIMITATIONS ON REFINANCING.—
HR 4471 IH 
‘‘(1) IN GENERAL.—No creditor shall knowingly 
or intentionally engage in the unfair act or practice 
of loan flipping. 
‘‘(2) FLIPPING DEFINED.—For purposes of this 
subsection, the term ‘loan flipping’ means the mak-
ing of a high-cost home loan to a consumer which 
refinances an existing home loan that was con-
summated within the prior 36 months when the new 
high-cost home loan does not have a reasonable tan-
gible net benefit to the consumer, considering all of 
the material circumstances known to the creditor, 
including but not limited to, the terms of both the 
new and the refinanced loans or credit, the cost of 
the new loan or credit, and the consumer’s known 
economic and non-economic circumstances, the con-
sumer’s stated purpose of and desire for the loan, 
and the benefits the consumer states that he or she 
will receive from the refinancing. 
‘‘(3) SAFE HARBORS.—A high-cost home loan 
shall be presumed to provide a reasonable tangible 
net benefit to the consumer if any of the following 
factors applies to the new loan: 
‘‘(A) The interest rate on the new fixed- 
rate high-cost home loan is lower than the in-
terest rate on the fixed-rate refinanced loan and
HR 4471 IH 
it will take 4 years or less for the consumer to 
recoup the costs of the points and fees, and 
other closing costs that are required to be paid 
by the consumer on the new high-cost home 
loan through savings resulting from the lower 
interest rate. 
‘‘(B) The creditor makes a good-faith de-
termination that the consumer’s monthly pay-
ment of principal and interest required to be 
paid on the new high-cost home loan is a min-
imum of 15 percent less than the consolidated 
total of all minimum monthly payments on the 
obligations being financed, and it will take 4 
years or less for the consumer to recoup the 
costs of the points and fees and other closing 
costs that are required to be paid by the con-
sumer on the new high-cost home loan through 
savings resulting from the total reduction in 
payments. 
‘‘(C) The consumer provides written con-
firmation to the creditor from an independent 
housing or credit counselor approved by the 
United States Department of Housing and 
Urban Development, or by any State housing 
authority, which states that the consumer has
HR 4471 IH 
received counseling regarding the advisability of 
refinancing the existing loan with the high-cost 
home loan being offered to the consumer by the 
creditor. 
‘‘(D) The refinancing is necessary under, 
or in response to, any order or judgment of a 
court of competent jurisdiction, or to avoid a 
filed foreclosure action. 
‘‘(4) RULE
OF
CONSTRUCTION.—No negative 
inference may be drawn from the absence of any fac-
tor or circumstance described in any subparagraph 
of paragraph (2) with regard to any high-cost home 
loan so as to create a presumption of a violation of 
this subsection with regard to such high-cost home 
loan by reason of such absence. 
‘‘(5) 
LIMITATION.—Notwithstanding 
section 
130 or any other provision of law, any suit instituted 
by a consumer who alleges that a creditor violated 
this section shall be brought only in an individual 
action, and the presiding judge may, in the judge’s 
discretion, allow reasonable attorneys’ fees to be 
taxed as a part of the court costs and payable by the 
losing party, upon a finding by the court that: 
‘‘(A) The party charged with the violation 
has willfully engaged in the act or practice, and