I 
109TH CONGRESS 
1ST SESSION H. R. 4471 
To amend the Home Ownership and Equity Protection Act of 1994 and 
other sections of the Truth in Lending Act, so as to enact the ‘‘Fair 
and Responsible Lending Act;’’ to provide for definitions; to provide 
for prohibited practices and limitations relating to high-cost home loans; 
to provide for prohibited practices and limitations relating to home loans; 
to provide for penalties and remedies and enforcement; to provide for 
corrections of certain unintentional violations; to provide for coordination 
with state laws; to provide for related matters; to provide for consumer 
counseling requirements; to expand housing counseling opportunities; and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 8, 2005 
Mr. CLAY introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To amend the Home Ownership and Equity Protection Act 
of 1994 and other sections of the Truth in Lending 
Act, so as to enact the ‘‘Fair and Responsible Lending 
Act;’’ to provide for definitions; to provide for prohibited 
practices and limitations relating to high-cost home 
loans; to provide for prohibited practices and limitations 
relating to home loans; to provide for penalties and rem-
edies and enforcement; to provide for corrections of cer-
tain unintentional violations; to provide for coordination 
with state laws; to provide for related matters; to provide
HR 4471 IH 
for consumer counseling requirements; to expand housing 
counseling opportunities; 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. 
This Act may be cited as the ‘‘Fair and Responsible 
Lending Act.’’. 
SEC. 2. TABLE OF CONTENTS. 
Sec. 1. Short title. 
Sec. 2. Table of contents. 
TITLE I—HIGH-COST HOME LOANS 
Sec. 101. Short title. 
Sec. 102. Definitions relating to high-cost home loans. 
Sec. 103. Amendments to requirements for high-cost home loans. 
Sec. 104. Amendments relating to dispute and error resolution. 
Sec. 105. Amendments to damages, rescission, liability, and rescission provi-
sions. 
Sec. 106. Coordination with State law. 
Sec. 107. Clarification of State enforcement authority. 
Sec. 108. Requirements for Home Loans. 
Sec. 109. Amendments to Disclosure Guidelines. 
Sec. 110. Regulations. 
Sec. 111. Effective dates. 
TITLE II—HOUSING COUNSELING 
Subtitle A—Consumer Counseling 
Sec. 201. Consumer counseling requirements. 
Subtitle B—Expanded Housing Counseling Opportunities 
Sec. 211. Short title. 
Sec. 212. Establishment of Office of Housing Counseling. 
Sec. 213. Counseling procedures. 
Sec. 214. Grants for housing counseling assistance. 
Sec. 215. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 216. Study of defaults and foreclosures. 
Sec. 217. Definitions for counseling-related programs. 
Sec. 218. Updating and simplification of mortgage information booklet. 
Sec. 219. Option for notice of foreclosure prevention counseling availability.
HR 4471 IH 
TITLE I—HIGH-COST LOANS 
SEC. 101. SHORT TITLE. 
This title may be cited as the ‘‘Uniform National 
Mortgage Lending Standards Act’’. 
SEC. 102. DEFINITIONS RELATING TO HIGH-COST HOME 
LOANS. 
(a) HIGH-COST HOME LOANS DEFINED.—Section 
103(aa) of the Truth in Lending Act (15 U.S.C. 
1602(aa)(1)) is amended— 
(1) by striking all that precedes paragraph (2) 
and inserting the following: 
‘‘(aa) HIGH-COST HOME LOAN DEFINED.— 
‘‘(1) IN GENERAL.—The term ‘high-cost home 
loan’ means a consumer credit transaction that is se-
cured by the consumer’s principal dwelling, other 
than a reverse mortgage transaction, if any of the 
following apply with respect to such consumer credit 
transaction: 
‘‘(A) The transaction is secured by a first 
mortgage on the consumer’s principal dwelling 
and the annual percentage rate on the credit, at 
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 im-
HR 4471 IH 
mediately preceding the month in which the ap-
plication for the extension of credit is received 
by the creditor. 
‘‘(B) The transaction is secured by a jun-
ior or subordinate mortgage on the consumer’s 
principal dwelling and the annual percentage 
rate on the credit, at consummation of the 
transaction, will exceed by more than 10 per-
centage 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 ex-
tension of credit is received by the creditor. 
‘‘(C) The total loan amount exceeds 
$50,000 and total points and fees payable on 
the transaction will exceed 5 percent of the 
total loan amount. 
‘‘(D) The total loan amount is $50,000 or 
less and total points and fees payable on the 
transaction will exceed 7 percent of the total 
loan amount. 
‘‘(E) For purposes of computing the an-
nual percentage rate for this subsection, intro-
ductory rate shall be not taken into account.’’; 
and
HR 4471 IH 
(2) in paragraph (2)(B)(i), by striking ‘‘that’’ 
and inserting ‘‘than’’. 
(b) POINTS AND FEES DEFINED.— 
(1) IN
GENERAL.—Section 103(aa) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)) is 
amended— 
(A) by striking paragraph (3); 
(B) by striking paragraph (4) and insert-
ing the following new paragraph: 
‘‘(3) POINTS AND FEES DEFINED.— 
‘‘(A) IN GENERAL.—For purposes of sub-
paragraphs (C) and (D) of paragraph (1), the 
term ‘points and fees’ includes— 
‘‘(i) all items included in the finance 
charge, except interest or the time-price 
differential; 
‘‘(ii) all compensation paid directly to 
mortgage brokers; 
‘‘(iii) all compensation paid indirectly 
by a creditor to mortgage brokers, pro-
vided, however, indirect compensation not 
in excess of 2 percent of the total loan 
amount may be excluded if the new loan 
does not refinance a previous loan that was 
consummated within the prior 12 months
HR 4471 IH 
and that was originated by the same cred-
itor; 
‘‘(iv) each of the charges listed in sec-
tion 106(e), except an escrow for future 
payment of taxes or insurance, unless— 
‘‘(I) the charge is bona fide, and 
reasonable; 
‘‘(II) the creditor receives no di-
rect compensation; and 
‘‘(III) the charge is paid to a 
third party that is not under the con-
trol of or controlled by the creditor; 
and 
‘‘(v) all prepayment fees or penalties 
that are incurred by the consumer on the 
previous loan if the new loan refinances a 
previous loan currently held by the same 
creditor or an affiliate of the creditor, un-
less the loan is held in a fiduciary or serv-
icing capacity only.’’. 
(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
HR 4471 IH 
(B) by inserting after paragraph (3), as 
amended by paragraph (1) above, the following 
new paragraph: 
‘‘(4) 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, plus the 
minimum additional fees the consumer would be re-
quired to pay to draw down an amount equal to the 
total credit line.’’. 
(3) EXCLUSION
OF
BONA
FIDE
DISCOUNT 
POINTS.—Section 103(aa) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)) is amended by inserting 
after paragraph (4), as amended by paragraph (2) 
above, the following new paragraph: 
‘‘(5) EXCLUSION
OF
BONA
FIDE
DISCOUNT 
POINTS.— 
‘‘(A) IN GENERAL.—Not more than 2 bona 
fide loan discount points shall be excluded from 
determining the amounts of points and fees 
with respect to a high-cost home loan for pur-
poses of subsection (aa), but only if the interest 
rate from which the loan’s interest rate will be 
discounted does not exceed by more than 3 per-
HR 4471 IH 
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. 
‘‘(B) DEFINITION.—For purposes of para-
graph (1), the term ‘bona fide discount points’ 
means loan discount points which are knowingly 
paid by the consumer to a creditor for the pur-
pose of reducing, and which in fact result in a 
bona fide reduction of, the interest rate or time- 
price differential applicable to the loan. 
‘‘(C) EXCEPTION FOR INTEREST RATE RE-
DUCTIONS
INCONSISTENT
WITH
INDUSTRY 
NORMS.—Paragraph (1) shall not apply to dis-
count 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.’’. 
(c) HOME LOAN DEFINED.—Section 103 of the 
Truth in Lending Act (15 U.S.C. 1602) is amended by 
adding at the end the following subsection:
HR 4471 IH 
‘‘(cc) the term ‘home loan’ means any consumer cred-
it transaction that is secured by a dwelling that is, or upon 
the consummation of the transaction is intended to be, oc-
cupied by the consumer as his principal dwelling.’’. 
(d) TECHNICAL AND CONFORMING AMENDMENT.— 
(1) Paragraph (2) of section 103(aa) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is 
amended by striking ‘‘specified in paragraph (1)(A)’’ 
and inserting ‘‘specified in subparagraph (A) or (B) 
of paragraph (1)’’. 
(2) Subchapter I of chapter 41 of title 15 of the 
United States Code is amended by striking ‘‘a mort-
gage referred to in this subsection’’ and ‘‘a mortgage 
referred to in section 129(aa)’’ each place such term 
appears and inserting ‘‘a high-cost home loan’’ in lieu 
thereof. 
(3) The title of section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by strik-
ing ‘‘Requirements for Certain Mortgages’’ and in-
serting ‘‘Requirements for High-Cost Home Loans’’. 
SEC. 103. AMENDMENTS TO REQUIREMENTS FOR HIGH- 
COST HOME LOANS. 
(a) PREPAYMENT PENALTIES.—Subsection (c) of 
section 129 of the Truth in Lending Act (15 U.S.C. 
1639(c)) is amended to read as follows:
HR 4471 IH 
‘‘(c) [Repealed]’’. 
(b) BALLOON PAYMENTS.—Subsection (e) of section 
129 of the Truth in Lending Act (15 U.S.C. 1639(e)) is 
amended— 
(1) by striking ‘‘PAYMENTS.—A mortgage re-
ferred to in section 103(aa) of this title’’ and insert-
ing ‘‘PAYMENTS.— 
‘‘(1) IN GENERAL.—A high-cost home loan’’; 
(2) by striking ‘‘having a term of less than 5 
years’’; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(2) EXCEPTION.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
not apply— 
‘‘(i) when the payment schedule is ad-
justed to account for the seasonal or irreg-
ular income of the consumer; 
‘‘(ii) if the purpose of the loan is a 
bridge loan; or 
‘‘(iii) if the unamortized amount is 
the result of the creditor’s deferral of the 
consumer’s delinquent payments and fees 
relating to delinquent payments.
HR 4471 IH 
‘‘(B) BRIDGE LOAN DEFINED.—For pur-
poses of this subsection, the term ‘bridge loan’ 
means a loan that— 
‘‘(i) has a period to maturity of 12 
months or less; and 
‘‘(ii) is made in connection with the 
acquisition or construction of a dwelling. 
‘‘(3) NOTICE REQUIRED.—A creditor that offers 
a high-cost home loan having a balloon payment 
term that, in accordance with paragraph (2), is not 
subject to paragraph (1) shall clearly disclose to the 
consumer that— 
‘‘(A) the loan contains such a term; 
‘‘(B) the balloon payment amount that will 
be owed by the consumer on the loan maturity 
date will be equal to the initial principal loan 
amount, plus interest and costs that may be 
due, minus any principal payments that may 
have been made over the term of the loan; and 
‘‘(C) balloon payments are permissible 
under the circumstances described in paragraph 
(2).’’. 
(c) NEGATIVE AMORTIZATION.—Subsection (f) of 
section 129 of the Truth in Lending Act (15 U.S.C. 
1639(f)) is amended—