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 creditor 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 
consumer fails to make an installment payment and 
the consumer subsequently resumes making install-
ment payments but has not paid all past due install-
ments, the creditor 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 consumer in a refinancing transaction if the 
creditor or an affiliate of the creditor 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) PAYOFF STATEMENT.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting