I 
111TH CONGRESS 
1ST SESSION H. R. 2108 
To protect home buyers from predatory lending practices. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 27, 2009 
Ms. FUDGE introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To protect home buyers from predatory lending practices. 
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 ‘‘Predatory Mortgage 
Lending Practices Reduction Act’’. 
SEC. 2. CERTIFICATION REQUIREMENTS FOR MORTGAGE 
LENDERS AND BROKERS. 
(a) IN GENERAL.—The Real Estate Settlement Pro-
cedures Act of 1974 is amended by inserting after section 
12 (12 U.S.C. 2610) the following new section: 
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‘‘SEC. 13. CERTIFICATION REQUIREMENTS FOR MORTGAGE 
LENDERS AND BROKERS. 
‘‘(a) REQUIREMENT.—No person may, in connection 
with a subprime federally mortgage related loan, provide 
mortgage lending services or mortgage brokerage services 
unless such person is, at the time of the provision of such 
services, certified by the Secretary pursuant to this section 
as having been adequately trained with regard to subprime 
lending. 
‘‘(b) STANDARDS AND EXAMINATION.— 
‘‘(1) IN
GENERAL.—The Secretary shall, by 
regulation, establish requirements, standards, and 
procedures for testing and certifying persons pro-
viding mortgage lending services or mortgage bro-
kerage services in connection with a subprime, feder-
ally related mortgage loans. 
‘‘(2) EXAMINATION.—Such standards and pro-
cedures shall require, for certification under this sec-
tion, that the individual shall demonstrate, by writ-
ten examination, knowledge regarding the following 
areas: 
‘‘(A) FEDERAL
LAW.—The requirements 
and limitations under Federal laws regarding 
mortgage lending, including the Truth in Lend-
ing Act, the Fair Credit Reporting Act, the 
Equal Credit Opportunity Act, the Real Estate 
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Settlement Procedures Act of 1974, the Home 
Ownership and Equity Protection Act of 1994, 
the Home Mortgage Disclosure Act of 1975, 
and the Fair Housing Act. 
‘‘(B) SUBPRIME LENDING.—Legal and ap-
propriate practices, methods, conventions, and 
terms of subprime lending in all lending func-
tions, including advertising and marketing, con-
sumer education and counseling, origination, 
underwriting, closing, servicing, information 
technology, and internal control policies and 
procedures. 
‘‘(C) PREDATORY
LENDING.—Illegal and 
inappropriate practices, methods, practices, and 
terms of predatory lending. The Secretary shall, 
by regulation, define the term ‘predatory lend-
ing’ for purposes of this subsection. 
‘‘(D) LAW
REGARDING
COMPETENCY
TO 
CONTRACT.—Basic contract law regarding com-
petency and incapacity to contract. 
‘‘(c) DECERTIFICATION.—The Secretary shall estab-
lish standards and procedures for suspension and revoca-
tion of the certification under this section, which shall— 
‘‘(1) provide the individual subject to suspen-
sion or revocation an opportunity to be heard; and 
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‘‘(2) provide for suspension or revocation in 
such instances as the Secretary determines appro-
priate, which shall include an agency determination 
or a judgment by a court of competent jurisdiction 
that a certified individual has engaged in an act or 
practice that is unfair or deceptive under section 5 
of the Predatory Mortgage Lending Practices Re-
duction Act. 
‘‘(d) RENEWAL OF CERTIFICATION.—The Secretary 
shall provide that certification under this section shall be 
effective for a specified period of time, as determined by 
the Secretary. The Secretary shall establish standards and 
procedures for recertification of individuals whose certifi-
cations are expiring. The Secretary shall establish a proce-
dure for notifying certified individuals of the expiration 
of their certifications. 
‘‘(e) INFORMATION AND TRAINING.— 
‘‘(1) IN GENERAL.—The Secretary shall make 
available, for persons engaged in providing mortgage 
lending services and mortgage brokerage services, in-
formation and training in the areas described in sub-
section (b)(2). Such information and training shall 
be made available through classes, written materials, 
and the World Wide Web. 
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‘‘(2) CONTRACTS.—The Secretary may enter 
into such agreements and contracts as the Secretary 
considers necessary to make information and train-
ing under this subsection available. 
‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.— 
For providing information and training under this 
subsection, there are authorized to be appropriated 
to the Secretary $2,000,000 for each of fiscal years 
2009 and 2010. 
‘‘(f) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) MORTGAGE BROKERAGE SERVICES.—The 
term ‘mortgage brokerage services’ means the bring-
ing together of a borrower and lender to obtain a 
federally related mortgage loan and the rendering of 
settlement services, by a person who is not an em-
ployee or exclusive agent of a lender. 
‘‘(2) MORTGAGE
LENDING
SERVICES.—The 
term ‘mortgage lending services’ means services re-
lating to the origination of a federally related mort-
gage loan, including the taking of loan applications, 
loan processing, and the underwriting and funding 
of a loan. 
‘‘(3) PRIME LENDING RATE.—The term ‘prime 
lending rate’ means, with respect to a lender, the 
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lowest interest rate charged by such lender to its 
most creditworthy customers. 
‘‘(4) SUBPRIME.— 
‘‘(A) IN GENERAL.—The term ‘subprime’ 
means, with respect to a federally related mort-
gage loan, that the borrower under the loan, or 
the loan terms, exhibit characteristics that indi-
cate that the loan is subject to a significantly 
higher risk of default than federally related 
mortgage loans made to borrowers at prime 
lending rates. 
‘‘(B) REGULATIONS.—The Secretary shall 
prescribe regulations to carry out this para-
graph, which shall specify characteristics re-
ferred to in subparagraph (A) that indicate a 
higher risk of default and shall establish cri-
teria based on such characteristics for deter-
mining whether a federally related mortgage 
loan is a subprime loan. Such characteristics 
shall include— 
‘‘(i) higher loan fees or penalties; 
‘‘(ii) higher interest rates; 
‘‘(iii) higher debt-to-income ratios; 
‘‘(iv) a history of loan delinquency; 
‘‘(v) higher loan-to-value ratios; 
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‘‘(vi) lower credit scores or other cred-
it ratings; 
‘‘(vii) more recent declaration of 
bankruptcy; 
‘‘(viii) lack of a credit history; and 
‘‘(ix) any other factors that the Sec-
retary considers appropriate.’’. 
(b) REGULATIONS.—Not later than 6 months after 
the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall issue regulations 
pursuant to section 19(a) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2617(a)) as may be 
necessary to carry out the amendment made by subsection 
(a) of this section. 
SEC. 3. LENDER REQUIREMENTS FOR HIGH COST MORT-
GAGES. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by adding at the end the following new 
subsections: 
‘‘(m) BEST PRACTICES PLAN.— 
‘‘(1) IN GENERAL.—Any creditor who extends 
credit in connection with a mortgage referred to in 
section 103(aa) shall establish and maintain a best 
practices plan, in accordance with regulations which 
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the Board shall prescribe, to ensure compliance with 
the requirements of this title. 
‘‘(2) REQUIREMENTS.—The best practices plan 
established under paragraph (1) by any creditor 
shall require the creditor, and any subcontractor or 
agent of the creditor to— 
‘‘(A) provide all employees of the creditor, 
subcontractor, or agent who are involved in any 
aspect of an extension of credit in connection 
with a mortgage referred to in section 103(aa), 
and any subcontractor or agent of such creditor 
so involved, with such training in the best prac-
tices plan of the creditor as the Board deter-
mines by regulation to be appropriate; and 
‘‘(B) periodically review and evaluate the 
performance of such employees, contractors, 
and agents under the best practices plan. 
‘‘(n) GOOD FAITH RESOLUTION OF COMPLAINTS.— 
A creditor, and any agent or assignee of the creditor— 
‘‘(1) shall make a good faith effort to resolve 
any consumer complaint concerning improper or 
questionable lending practices with respect to a 
mortgage referred to in section 103(aa) before the 
end of the 60-day period beginning on the date the 
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complaint is received by the creditor, agent or as-
signee; and 
‘‘(2) may take no action, directly or indirectly, 
including seeking any remedy in law or equity, to 
collect the amount of any mortgage referred to in 
paragraph (1), or any part of such amount, or oth-
erwise enforce the mortgage against the consumer or 
the property securing the mortgage, during such 60- 
day period (and any time limit for bringing an ac-
tion to collect any such amount shall toll during 
such period and any civil action filed before the be-
ginning of such period in any court shall be sus-
pended during such period). 
‘‘(o) PROHIBITION ON CHARGES NOT PREVIOUSLY 
DISCLOSED.—A creditor, or an agent or assignee of a 
creditor, may not impose any charge or fee, or attempt 
to collect any charge or fee, in connection with a mortgage 
referred to in section 103(aa) that was not disclosed be-
fore the mortgage was executed, or impose or attempt to 
collect any charge or fee that was so disclosed in an 
amount in excess of the amount disclosed, unless the cred-
itor or assignee establishes, in accordance with regulations 
which the Board shall prescribe, that the charge or fee 
is reasonable and could not have reasonably been foreseen 
at the time the mortgage was executed. 
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‘‘(p) PLAIN DESCRIPTION
AND DISCLOSURE RE-
QUIREMENT.— 
‘‘(1) CHARGES
AND
FEES.—Notwithstanding 
any other provision of this title, all disclosures of 
charges and fees required under this title with re-
gard to a mortgage referred to in section 103(aa), 
shall be separately enumerated and clearly labeled, 
stated, and described, including charges described in 
clause (ii) or (iii) of section 128(a)(2)(A). 
‘‘(2) RESCISSION
AND
OTHER
RIGHTS.—The 
disclosure required under the penultimate sentence 
of section 125(a) in connection with a mortgage re-
ferred to in section 103(aa), together with a sum-
mary of the consumer’s rights, shall be provided to 
the consumer in clear and plain language not less 
than 24 hours before the mortgage is executed.’’. 
SEC. 4. UNFAIR AND DECEPTIVE ACTS AND PRACTICES. 
(a) PROHIBITION.—It shall be unlawful, in providing 
any mortgage lending services for a subprime federally re-
lated mortgage loan or any mortgage brokerage services 
for such a loan, to engage in any unfair or deceptive act 
or practice, which shall include, in the case of any ap-
praisal of a property offered as security for repayment of 
the loan that is conducted in connection with such loan— 
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services for such a loan, within the meaning of sub-
section (a). 
(c) COMPLIANCE ENFORCEMENT.—Any violation of 
a regulation issued under subsection (b)(2) shall be treat-
ed as a violation of a requirement imposed under the 
Truth in Lending Act and compliance with such regulation 
shall be enforceable under sections 108 and 130 of such 
Act. 
(d) DEFINITIONS.—For purposes of this section, the 
terms ‘‘mortgage brokerage services’’, ‘‘mortgage lending 
services’’, and ‘‘subprime’’ have the meanings given such 
terms in section 13(f) of the Real Estate Settlement Pro-
cedures Act of 1974 (12 U.S.C. 2611(f)). 
(e) PENALTIES.— 
(1) FIRST VIOLATION.—In addition to the en-
forcement provisions referred to in subsection (c), 
each person who violates this section shall forfeit 
and pay a civil penalty of not more than $10,000 for 
each day any such violation continues. 
(2) SUBSEQUENT VIOLATIONS.—In the case of 
any person on whom a civil penalty has been im-
posed under paragraph (1), paragraph (1) shall be 
applied by substituting ‘‘$20,000’’ for ‘‘$10,000’’ 
with respect to all subsequent violations. 
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(3) ASSESSMENT.—The agency referred to in 
subsection (a) or (c) of section 108 of the Truth in 
Lending Act with respect to any person described in 
paragraph (1) shall assess any penalty under this 
subsection to which such person is subject. 
SEC. 5. PROHIBITION ON CERTAIN ARBITRATION CLAUSES. 
(a) IN GENERAL.—The Consumer Credit Protection 
Act (15 U.S.C. 1601 et seq.) is amended by adding at 
the end the following new title: 
‘‘TITLE X—DISPUTE 
RESOLUTION 
‘‘SEC. 1001. SHORT TITLE. 
‘‘This title may be cited as the ‘Consumer Fairness 
Act’. 
‘‘SEC. 1002. DEFINITIONS. 
‘‘For purposes of this title, the following definitions 
shall apply: 
‘‘(1) CONSUMER.—The term ‘consumer’ means 
any individual. 
‘‘(2) CONSUMER
TRANSACTION.—The term 
‘consumer transaction’ means the sale or rental of 
goods or services, the extension of credit, or the pro-
vision of any other financial product or service, to an 
individual in a transaction entered into primarily for 
personal, family, or household purposes, including 
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any consumer credit transaction that is secured by 
the consumer’s principal dwelling. 
‘‘(3) CONSUMER
CONTRACT.—The term ‘con-
sumer contract’ means any written, standardized 
form contract between the parties to a consumer 
transaction. 
‘‘SEC. 1003. PROHIBITION ON ARBITRATION CLAUSES IM-
POSED ON CONSUMERS WITHOUT THEIR 
CONSENT. 
‘‘(a) IN GENERAL.—A written provision in any con-
sumer transaction or consumer contract which requires 
binding arbitration to resolve any controversy arising out 
of such transaction or contract, or the refusal to perform 
the whole or any part of the transaction shall not be en-
forceable. 
‘‘(b) 
POST-CONTROVERSY
AGREEMENTS.—Sub-
section (a) shall not apply with respect to a written agree-
ment to determine by binding arbitration an existing con-
troversy arising out of a consumer transaction or con-
sumer contract if the written agreement has been entered 
into by the parties to the consumer transaction or con-
sumer contract after the controversy has arisen. 
‘‘(c) COORDINATION WITH OTHER LAW.—No provi-
sion of this section shall be construed as annulling, alter-
ing, affecting, or superseding any Federal law, or the laws 
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of any State, relating to arbitration in connection with 
consumer transactions or consumer contracts, except to 
the extent that those laws are inconsistent with the provi-
sions of this section, and then only to the extent of the 
inconsistency.’’. 
(b) APPLICABILITY.—The amendments made by this 
section shall apply to all consumer transactions and con-
sumer contracts entered into on, or after the date of the 
enactment of this Act and to all controversies pending or 
filed on, or arising after, the date of the enactment of this 
Act. 
SEC. 6. GRANTS TO COMMUNITY DEVELOPMENT CORPORA-
TIONS 
FOR 
PREDATORY 
LENDING 
EDU-
CATION. 
(a) IN GENERAL.—The Community Development 
Banking and Financial Institutions Act of 1994 (12 
U.S.C. 4701 et seq.) is amended by adding at the end 
the following new section: 
‘‘SEC. 122. GRANTS TO COMMUNITY DEVELOPMENT COR-
PORATIONS FOR PREDATORY LENDING EDU-
CATION. 
‘‘(a) IN GENERAL.—To the extent amounts are made 
available under subsection (d), the Fund may make grants 
to nonprofit community development corporations to pro-
vide education and training to borrowers, potential bor-
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rowers, and community groups regarding illegal and inap-
propriate practices, methods, practices, and terms of pred-
atory lending. 
‘‘(b) SELECTION.—The selection of community devel-
opment corporations to receive grants under this section 
shall be at the discretion of the Fund and in accordance 
with criteria established by the Fund. 
‘‘(c) GRANT AMOUNTS.—The Fund may establish a 
limitation on the amount received by any single commu-
nity development corporation from grants under this sec-
tion for any single fiscal year. 
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to the Fund for grants 
under this section $2,000,000 for each of fiscal years 2009 
and 2010.’’. 
(b) AMENDMENT TO TABLE OF CONTENTS.—The 
table of contents in section 1(b) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 
(12 U.S.C. 4701 note) is amended by inserting after the 
item relating to section 121 the following new item: 
‘‘Sec. 122. Grants to community development corporations for predatory lend-
ing education.’’. 
Æ 
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