IIB 
110TH CONGRESS 
1ST SESSION H. R. 3915 
IN THE SENATE OF THE UNITED STATES 
DECEMBER 3, 2007 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To amend the Truth in Lending Act to reform consumer 
mortgage practices and provide accountability for such 
practices, to establish licensing and registration require-
ments for residential mortgage originators, to provide 
certain minimum standards for consumer mortgage 
loans, and for other purposes. 
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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 
‘‘Mortgage Reform and Anti-Predatory Lending Act of 
2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—RESIDENTIAL MORTGAGE LOAN ORIGINATION 
Subtitle A—Licensing System for Residential Mortgage Loan Originators 
Sec. 101. Purposes and methods for establishing a mortgage licensing system 
and registry. 
Sec. 102. Definitions. 
Sec. 103. License or registration required. 
Sec. 104. State license and registration application and issuance. 
Sec. 105. Standards for State license renewal. 
Sec. 106. System of registration administration by Federal banking agencies. 
Sec. 107. Secretary of Housing and Urban Development backup authority to 
establish a loan originator licensing system. 
Sec. 108. Backup authority to establish a nationwide mortgage licensing and 
registry system. 
Sec. 109. Fees. 
Sec. 110. Background checks of loan originators. 
Sec. 111. Confidentiality of information. 
Sec. 112. Liability provisions. 
Sec. 113. Enforcement under HUD backup licensing system. 
Subtitle B—Residential Mortgage Loan Origination Standards 
Sec. 121. Definitions. 
Sec. 122. Residential mortgage loan origination. 
Sec. 123. Prohibition on steering incentives. 
Sec. 124. Liability. 
Sec. 125. Regulations. 
TITLE II—MINIMUM STANDARDS FOR MORTGAGES 
Sec. 201. Ability to repay. 
Sec. 202. Net tangible benefit for refinancing of residential mortgage loans. 
Sec. 203. Safe harbor and rebuttable presumption. 
Sec. 204. Liability. 
Sec. 205. Defense to foreclosure. 
Sec. 206. Additional standards and requirements. 
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Sec. 207. Rule of construction. 
Sec. 208. Effect on State laws. 
Sec. 209. Regulations. 
Sec. 210. Amendments to civil liability provisions. 
Sec. 211. Lender rights in the context of borrower deception. 
Sec. 212. Six-month notice required before reset of hybrid adjustable rate mort-
gages. 
Sec. 213. Required disclosures. 
Sec. 214. Disclosures required in monthly statements for residential mortgage 
loans. 
Sec. 215. Authorization of appropriations. 
Sec. 216. Effective date. 
Sec. 217. Report by the GAO. 
TITLE III—HIGH-COST MORTGAGES 
Sec. 301. Definitions relating to high-cost mortgages. 
Sec. 302. Amendments to existing requirements for certain mortgages. 
Sec. 303. Additional requirements for certain mortgages. 
Sec. 304. Amendment to provision governing correction of errors. 
Sec. 305. Regulations. 
Sec. 306. Effective date. 
TITLE IV—OFFICE OF HOUSING COUNSELING 
Sec. 401. Short title. 
Sec. 402. Establishment of Office of Housing Counseling. 
Sec. 403. Counseling procedures. 
Sec. 404. Grants for housing counseling assistance. 
Sec. 405. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 406. Study of defaults and foreclosures. 
Sec. 407. Definitions for counseling-related programs. 
Sec. 408. Updating and simplification of mortgage information booklet. 
TITLE V—MORTGAGE DISCLOSURES UNDER REAL ESTATE 
SETTLEMENT PROCEDURES ACT OF 1974 
Sec. 501. Universal mortgage disclosure in good faith estimate of settlement 
services costs. 
TITLE VI—MORTGAGE SERVICING 
Sec. 601. Escrow and impound accounts relating to certain consumer credit 
transactions. 
Sec. 602. Disclosure notice required for consumers who waive escrow services. 
Sec. 603. Real Estate Settlement Procedures Act of 1974 amendments. 
Sec. 604. Mortgage servicing studies required. 
Sec. 605. Escrows included in repayment analysis. 
TITLE VII—APPRAISAL ACTIVITIES 
Sec. 701. Property appraisal requirements. 
Sec. 702. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions. 
Sec. 703. Appraisal subcommittee of FIEC, appraiser independence, and ap-
proved appraiser education. 
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Sec. 704. Study required on improvements in appraisal process and compliance 
programs. 
Sec. 705. Consumer appraisal disclosure. 
TITLE I—RESIDENTIAL 
MORTGAGE LOAN ORIGINATION 
Subtitle A—Licensing System for 
Residential 
Mortgage 
Loan 
Originators 
SEC. 101. PURPOSES AND METHODS FOR ESTABLISHING A 
MORTGAGE LICENSING SYSTEM AND REG-
ISTRY. 
In order to increase uniformity, reduce regulatory 
burden, enhance consumer protection, and reduce fraud, 
the States, through the Conference of State Bank Super-
visors and the American Association of Residential Mort-
gage Regulators, are hereby encouraged to establish a Na-
tionwide Mortgage Licensing System and Registry for the 
residential mortgage industry that accomplishes all of the 
following objectives: 
(1) Provides uniform license applications and 
reporting requirements for State-licensed loan origi-
nators. 
(2) Provides a comprehensive licensing and su-
pervisory database. 
(3) Aggregates and improves the flow of infor-
mation to and between regulators. 
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trative or clerical tasks on behalf of a per-
son who is described in any such clause. 
(iv) does not include a person or enti-
ty that only performs real estate brokerage 
activities and is licensed or registered in 
accordance with applicable State law, un-
less the person or entity is compensated by 
a lender, a mortgage broker, or other loan 
originator or by any agent of such lender, 
mortgage broker, or other loan originator. 
(B) OTHER
DEFINITIONS
RELATING
TO 
LOAN ORIGINATOR.—For purposes of this sub-
section, an individual ‘‘assists a consumer in 
obtaining or applying to obtain a residential 
mortgage loan’’ by, among other things, advis-
ing on loan terms (including rates, fees, other 
costs), preparing loan packages, or collecting in-
formation on behalf of the consumer with re-
gard to a residential mortgage loan. 
(C) 
ADMINISTRATIVE
OR
CLERICAL 
TASKS.—The term ‘‘administrative or clerical 
tasks’’ means the receipt, collection, and dis-
tribution of information common for the proc-
essing or underwriting of a loan in the mort-
gage industry and communication with a con-
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sumer to obtain information necessary for the 
processing or underwriting of a residential 
mortgage loan. 
(D) REAL ESTATE BROKERAGE ACTIVITY 
DEFINED.—The term ‘‘real estate brokerage ac-
tivity’’ means any activity that involves offering 
or providing real estate brokerage services to 
the public, including— 
(i) acting as a real estate agent or 
real estate broker for a buyer, seller, les-
sor, or lessee of real property; 
(ii) listing or advertising real property 
for sale, purchase, lease, rental, or ex-
change; 
(iii) providing advice in connection 
with sale, purchase, lease, rental, or ex-
change of real property; 
(iv) bringing together parties inter-
ested in the sale, purchase, lease, rental, or 
exchange of real property; 
(v) negotiating, on behalf of any 
party, any portion of a contract relating to 
the sale, purchase, lease, rental, or ex-
change of real property (other than in con-
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nection with providing financing with re-
spect to any such transaction); 
(vi) engaging in any activity for which 
a person engaged in the activity is required 
to be registered or licensed as a real estate 
agent or real estate broker under any ap-
plicable law; and 
(vii) offering to engage in any activity, 
or act in any capacity, described in clause 
(i), (ii), (iii), (iv), (v), or (vi). 
(4) LOAN PROCESSOR OR UNDERWRITER.— 
(A) IN GENERAL.—The term ‘‘loan proc-
essor or underwriter’’ means an individual who 
performs clerical or support duties at the direc-
tion of and subject to the supervision and in-
struction of— 
(i) a State-licensed loan originator; or 
(ii) a registered loan originator. 
(B) CLERICAL OR SUPPORT DUTIES.—For 
purposes of subparagraph (A), the term ‘‘cler-
ical or support duties’’ may include— 
(i) the receipt, collection, distribution, 
and analysis of information common for 
the processing or underwriting of a resi-
dential mortgage loan; and 
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(ii) communicating with a consumer 
to obtain the information necessary for the 
processing or underwriting of a loan, to the 
extent that such communication does not 
include offering or negotiating loan rates 
or terms, or counseling consumers about 
residential mortgage loan rates or terms. 
(5) NATIONWIDE
MORTGAGE
LICENSING
SYS-
TEM AND REGISTRY.—The term ‘‘Nationwide Mort-
gage Licensing System and Registry’’ means a mort-
gage licensing system developed and maintained by 
the Conference of State Bank Supervisors and the 
American Association of Residential Mortgage Regu-
lators for the State licensing and registration of 
State-licensed loan originators and the registration 
of registered loan originators or any system estab-
lished by the Secretary under section 108. 
(6) REGISTERED LOAN ORIGINATOR.—The term 
‘‘registered loan originator’’ means any individual 
who— 
(A) meets the definition of loan originator 
and is an employee of a depository institution 
or a subsidiary of a depository institution; and 
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(B) is registered with, and maintains a 
unique identifier through, the Nationwide Mort-
gage Licensing System and Registry. 
(7) RESIDENTIAL MORTGAGE LOAN.—The term 
‘‘residential mortgage loan’’ means any loan pri-
marily for personal, family, or household use that is 
secured by a mortgage, deed of trust, or other equiv-
alent consensual security interest on a dwelling (as 
defined in section 103(v) of the Truth in Lending 
Act) or residential real estate upon which is con-
structed or intended to be constructed a dwelling (as 
so defined). 
(8) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(9) STATE-LICENSED LOAN ORIGINATOR.—The 
term ‘‘State-licensed loan originator’’ means any in-
dividual who— 
(A) is a loan originator; 
(B) is not an employee of a depository in-
stitution or any subsidiary of a depository insti-
tution; and 
(C) is licensed by a State or by the Sec-
retary under section 107 and registered as a 
loan originator with, and maintains a unique 
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identifier through, the Nationwide Mortgage Li-
censing System and Registry. 
(10) UNIQUE IDENTIFIER.—The term ‘‘unique 
identifier’’ means a number or other identifier 
that— 
(A) permanently identifies a loan origi-
nator; and 
(B) is assigned by protocols established by 
the Nationwide Mortgage Licensing System and 
Registry and the Federal banking agencies to 
facilitate electronic tracking of loan originators 
and uniform identification of, and public access 
to, the employment history of and the publicly 
adjudicated disciplinary and enforcement ac-
tions against loan originators. 
SEC. 103. LICENSE OR REGISTRATION REQUIRED. 
(a) IN GENERAL.—An individual may not engage in 
the business of a loan originator without first— 
(1) obtaining and maintaining— 
(A) a registration as a registered loan 
originator; or 
(B) a license and registration as a State- 
licensed loan originator; and 
(2) obtaining a unique identifier. 
(b) LOAN PROCESSORS AND UNDERWRITERS.— 
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(1) SUPERVISED LOAN PROCESSORS AND UN-
DERWRITERS.—A loan processor or underwriter who 
does not represent to the public, through advertising 
or other means of communicating or providing infor-
mation (including the use of business cards, sta-
tionery, brochures, signs, rate lists, or other pro-
motional items), that such individual can or will per-
form any of the activities of a loan originator shall 
not be required to be a State-licensed loan originator 
or a registered loan originator. 
(2) INDEPENDENT
CONTRACTORS.—A loan 
processor or underwriter may not work as an inde-
pendent contractor unless such processor or under-
writer is a State-licensed loan originator or a reg-
istered loan originator. 
SEC. 104. STATE LICENSE AND REGISTRATION APPLICA-
TION AND ISSUANCE. 
(a) BACKGROUND CHECKS.—In connection with an 
application to any State for licensing and registration as 
a State-licensed loan originator, the applicant shall, at a 
minimum, furnish to the Nationwide Mortgage Licensing 
System and Registry information concerning the appli-
cant’s identity, including— 
(1) fingerprints for submission to the Federal 
Bureau of Investigation, and any governmental 
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agency or entity authorized to receive such informa-
tion for a State and national criminal history back-
ground check; and 
(2) personal history and experience, including 
authorization for the System to obtain— 
(A) an independent credit report obtained 
from a consumer reporting agency described in 
section 603(p) of the Fair Credit Reporting 
Act; and 
(B) information related to any administra-
tive, civil or criminal findings by any govern-
mental jurisdiction. 
(b) ISSUANCE OF LICENSE.—The minimum stand-
ards for licensing and registration as a State-licensed loan 
originator shall include the following: 
(1) The applicant has not had a loan originator 
or similar license revoked in any governmental juris-
diction during the 5-year period immediately pre-
ceding the filing of the present application. 
(2) The applicant has not been convicted, pled 
guilty or nolo contendere in a domestic, foreign, or 
military court of a felony during the 7-year period 
immediately preceding the filing of the present appli-
cation. 
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(3) The applicant has demonstrated financial 
responsibility, character, and general fitness such as 
to command the confidence of the community and to 
warrant a determination that the loan originator will 
operate honestly, fairly, and efficiently within the 
purposes of this subtitle. 
(4) The applicant has completed the pre-licens-
ing education requirement described in subsection 
(c). 
(5) The applicant has passed a written test that 
meets the test requirement described in subsection 
(d). 
(c) PRE-LICENSING EDUCATION OF LOAN ORIGINA-
TORS.— 
(1) MINIMUM EDUCATIONAL REQUIREMENTS.— 
In order to meet the pre-licensing education require-
ment referred to in subsection (b)(4), a person shall 
complete at least 20 hours of education approved in 
accordance with paragraph (2), which shall include 
at least 3 hours of Federal law and regulations and 
3 hours of ethics which shall include instruction on 
fraud, consumer protection and fair lending issues. 
(2) APPROVED
EDUCATIONAL
COURSES.—For 
purposes of paragraph (1), pre-licensing education 
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courses shall be reviewed, and published by the Na-
tionwide Mortgage Licensing System and Registry. 
(3) LIMITATION AND STANDARDS.— 
(A) LIMITATION.—To maintain the inde-
pendence of the approval process, the Nation-
wide Mortgage Licensing System and Registry 
shall not directly or indirectly offer pre-licen-
sure educational courses for loan originators. 
(B) STANDARDS.—In approving courses 
under this section, the Nationwide Mortgage Li-
censing System and Registry shall apply rea-
sonable standards in the review and approval of 
courses. 
(d) TESTING OF LOAN ORIGINATORS.— 
(1) IN GENERAL.—In order to meet the written 
test requirement referred to in subsection (b)(5), an 
individual shall pass, in accordance with the stand-
ards established under this subsection, a qualified 
written test developed by the Nationwide Mortgage 
Licensing System and Registry and administered by 
an approved test provider. 
(2) QUALIFIED TEST.—A written test shall not 
be treated as a qualified written test for purposes of 
paragraph (1) unless— 
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(A) the test consists of a minimum of 100 
questions; and 
(B) the test adequately measures the appli-
cant’s knowledge and comprehension in appro-
priate subject areas, including— 
(i) ethics; 
(ii) Federal law and regulation per-
taining to mortgage origination; 
(iii) State law and regulation per-
taining to mortgage origination; and 
(iv) Federal and State law and regula-
tion, including instruction on fraud, con-
sumer protection, and fair lending issues. 
(3) MINIMUM COMPETENCE.— 
(A) PASSING SCORE.—An individual shall 
not be considered to have passed a qualified 
written test unless the individual achieves a test 
score of not less than 75 percent correct an-
swers to questions. 
(B) INITIAL RETESTS.—An individual may 
retake a test 3 consecutive times with each con-
secutive taking occurring in less than 14 days 
after the preceding test. 
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(C) SUBSEQUENT RETESTS.—After 3 con-
secutive tests, an individual shall wait at least 
14 days before taking the test again. 
(D) RETEST AFTER LAPSE OF LICENSE.— 
A State-licensed loan originator who fails to 
maintain a valid license for a period of 5 years 
or longer shall retake the test, not taking into 
account any time during which such individual 
is a registered loan originator. 
SEC. 105. STANDARDS FOR STATE LICENSE RENEWAL. 
(a) IN GENERAL.—The minimum standards for li-
cense renewal for State-licensed loan originators shall in-
clude the following: 
(1) The loan originator continues to meet the 
minimum standards for license issuance. 
(2) The loan originator has satisfied the annual 
continuing education requirements described in sub-
section (b). 
(b) CONTINUING EDUCATION FOR STATE-LICENSED 
LOAN ORIGINATORS.— 
(1) IN GENERAL.—In order to meet the annual 
continuing education requirements referred to in 
subsection (a)(2), a State-licensed loan originator 
shall complete at least 8 hours of education ap-
proved in accordance with paragraph (2), which 
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shall include at least 3 hours of Federal law and 
regulations and 2 hours of ethics, including edu-
cation on fraud, consumer protection, and fair lend-
ing issues. 
(2) APPROVED
EDUCATIONAL
COURSES.—For 
purposes of paragraph (1), continuing education 
courses shall be reviewed, and published by the Na-
tionwide Mortgage Licensing System and Registry. 
(3) CALCULATION OF CONTINUING EDUCATION 
CREDITS.—A State-licensed loan originator— 
(A) may only receive credit for a con-
tinuing education course in the year in which 
the course is taken; and 
(B) may not take the same approved 
course in the same or successive years to meet 
the annual requirements for continuing edu-
cation. 
(4) INSTRUCTOR
CREDIT.—A State-licensed 
loan originator who is approved as an instructor of 
an approved continuing education course may receive 
credit for the originator’s own annual continuing 
education requirement at the rate of 2 hours credit 
for every 1 hour taught. 
(5) LIMITATION AND STANDARDS.— 
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(A) LIMITATION.—To maintain the inde-
pendence of the approval process, the Nation-
wide Mortgage Licensing System and Registry 
shall not directly or indirectly offer any con-
tinuing education courses for loan originators. 
(B) STANDARDS.—In approving courses 
under this section, the Nationwide Mortgage Li-
censing System and Registry shall apply rea-
sonable standards in the review and approval of 
courses. 
SEC. 106. SYSTEM OF REGISTRATION ADMINISTRATION BY 
FEDERAL BANKING AGENCIES. 
(a) DEVELOPMENT.— 
(1) IN GENERAL.—The Federal banking agen-
cies shall jointly develop and maintain a system for 
registering employees of depository institutions or 
subsidiaries of depository institutions as registered 
loan originators with the Nationwide Mortgage Li-
censing System and Registry. The system shall be 
implemented before the end of the 1-year period be-
ginning on the date of the enactment of this Act. 
(2) REGISTRATION
REQUIREMENTS.—In con-
nection with the registration of any loan originator 
who is an employee of a depository institution or a 
subsidiary of a depository institution with the Na-
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tionwide Mortgage Licensing System and Registry, 
the appropriate Federal banking agency shall, at a 
minimum, furnish or cause to be furnished to the 
Nationwide Mortgage Licensing System and Reg-
istry information concerning the employees’s iden-
tity, including— 
(A) fingerprints for submission to the Fed-
eral Bureau of Investigation, and any govern-
mental agency or entity authorized to receive 
such information for a State and national 
criminal history background check; and 
(B) personal history and experience, in-
cluding authorization for the Nationwide Mort-
gage Licensing System and Registry to obtain 
information related to any administrative, civil 
or criminal findings by any governmental juris-
diction. 
(b) COORDINATION.— 
(1) UNIQUE IDENTIFIER.—The Federal bank-
ing agencies, through the Financial Institutions Ex-
amination Council, shall coordinate with the Nation-
wide Mortgage Licensing System and Registry to es-
tablish protocols for assigning a unique identifier to 
each registered loan originator that will facilitate 
electronic tracking and uniform identification of, and 
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public access to, the employment history of and pub-
licly adjudicated disciplinary and enforcement ac-
tions against loan originators. 
(2) NATIONWIDE
MORTGAGE
LICENSING
SYS-
TEM AND REGISTRY DEVELOPMENT.—To facilitate 
the transfer of information required by subsection 
(a)(2), the Nationwide Mortgage Licensing System 
and Registry shall coordinate with the Federal bank-
ing agencies, through the Financial Institutions Ex-
amination Council, concerning the development and 
operation, by such System and Registry, of the reg-
istration functionality and data requirements for 
loan originators. 
(c) CONSIDERATION
OF
FACTORS
AND
PROCE-
DURES.—In establishing the registration procedures under 
subsection (a) and the protocols for assigning a unique 
identifier to a registered loan originator, the Federal bank-
ing agencies shall make such de minimis exceptions as 
may be appropriate to paragraphs (1)(A) and (2) of sec-
tion 103(a), shall make reasonable efforts to utilize exist-
ing information to minimize the burden of registering loan 
originators, and shall consider methods for automating the 
process to the greatest extent practicable consistent with 
the purposes of this subtitle. 
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SEC. 107. SECRETARY OF HOUSING AND URBAN DEVELOP-
MENT BACKUP AUTHORITY TO ESTABLISH A 
LOAN ORIGINATOR LICENSING SYSTEM. 
(a) BACK UP LICENSING SYSTEM.—If, by the end of 
the 1-year period, or the 2-year period in the case of a 
State whose legislature meets only biennially, beginning 
on the date of the enactment of this Act or at any time 
thereafter, the Secretary determines that a State does not 
have in place by law or regulation a system for licensing 
and registering loan originators that meets the require-
ments of sections 104 and 105 and subsection (d) or does 
not participate in the Nationwide Mortgage Licensing Sys-
tem and Registry, the Secretary shall provide for the es-
tablishment and maintenance of a system for the licensing 
and registration by the Secretary of loan originators oper-
ating in such State as State-licensed loan originators. 
(b) LICENSING
AND
REGISTRATION
REQUIRE-
MENTS.—The system established by the Secretary under 
subsection (a) for any State shall meet the requirements 
of sections 104 and 105 for State-licensed loan origina-
tors. 
(c) UNIQUE IDENTIFIER.—The Secretary shall co-
ordinate with the Nationwide Mortgage Licensing System 
and Registry to establish protocols for assigning a unique 
identifier to each loan originator licensed by the Secretary 
as a State-licensed loan originator that will facilitate elec-
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tronic tracking and uniform identification of, and public 
access to, the employment history of and the publicly adju-
dicated disciplinary and enforcement actions against loan 
originators. 
(d) STATE LICENSING LAW REQUIREMENTS.—For 
purposes of this section, the law in effect in a State meets 
the requirements of this subsection if the Secretary deter-
mines the law satisfies the following minimum require-
ments: 
(1) A State loan originator supervisory author-
ity is maintained to provide effective supervision and 
enforcement of such law, including the suspension, 
termination, or nonrenewal of a license for a viola-
tion of State or Federal law. 
(2) The State loan originator supervisory au-
thority ensures that all State-licensed loan origina-
tors operating in the State are registered with Na-
tionwide Mortgage Licensing System and Registry. 
(3) The State loan originator supervisory au-
thority is required to regularly report violations of 
such law, as well as enforcement actions and other 
relevant information, to the Nationwide Mortgage 
Licensing System and Registry. 
(e) TEMPORARY EXTENSION OF PERIOD.—The Sec-
retary may extend, by not more than 6 months, the 1- 
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SEC. 109. FEES. 
The Federal banking agencies, the Secretary, and the 
Nationwide Mortgage Licensing System and Registry may 
charge reasonable fees to cover the costs of maintaining 
and providing access to information from the Nationwide 
Mortgage Licensing System and Registry to the extent 
such fees are not charged to consumers for access such 
system and registry. 
SEC. 110. BACKGROUND CHECKS OF LOAN ORIGINATORS. 
(a) ACCESS
TO RECORDS.—Notwithstanding any 
other provision of law, in providing identification and 
processing functions, the Attorney General shall provide 
access to all criminal history information to the appro-
priate State officials responsible for regulating State-li-
censed loan originators to the extent criminal history 
background checks are required under the laws of the 
State for the licensing of such loan originators. 
(b) AGENT.—For the purposes of this section and in 
order to reduce the points of contact which the Federal 
Bureau of Investigation may have to maintain for pur-
poses of subsection (a), the Conference of State Bank Su-
pervisors or a wholly owned subsidiary may be used as 
a channeling agent of the States for requesting and dis-
tributing information between the Department of Justice 
and the appropriate State agencies. 
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SEC. 111. CONFIDENTIALITY OF INFORMATION. 
(a) SYSTEM CONFIDENTIALITY.—Except as other-
wise provided in this section, any requirement under Fed-
eral or State law regarding the privacy or confidentiality 
of any information or material provided to the Nationwide 
Mortgage Licensing System and Registry or a system es-
tablished by the Secretary under section 108, and any 
privilege arising under Federal or State law (including the 
rules of any Federal or State court) with respect to such 
information or material, shall continue to apply to such 
information or material after the information or material 
has been disclosed to the system. Such information and 
material may be shared with all State and Federal regu-
latory officials with mortgage industry oversight authority 
without the loss of privilege or the loss of confidentiality 
protections provided by Federal and State laws. 
(b) NONAPPLICABILITY
OF
CERTAIN
REQUIRE-
MENTS.—Information or material that is subject to a 
privilege or confidentiality under subsection (a) shall not 
be subject to— 
(1) disclosure under any Federal or State law 
governing the disclosure to the public of information 
held by an officer or an agency of the Federal Gov-
ernment or the respective State; or 
(2) subpoena or discovery, or admission into 
evidence, in any private civil action or administrative 
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process, unless with respect to any privilege held by 
the Nationwide Mortgage Licensing System and 
Registry or the Secretary with respect to such infor-
mation or material, the person to whom such infor-
mation or material pertains waives, in whole or in 
part, in the discretion of such person, that privilege. 
(c) COORDINATION WITH OTHER LAW.—Any State 
law, including any State open record law, relating to the 
disclosure of confidential supervisory information or any 
information or material described in subsection (a) that 
is inconsistent with subsection (a) shall be superseded by 
the requirements of such provision to the extent State law 
provides less confidentiality or a weaker privilege. 
(d) PUBLIC ACCESS TO INFORMATION.—This section 
shall not apply with respect to the information or material 
relating to the employment history of, and publicly adju-
dicated disciplinary and enforcement actions against, loan 
originators that is included in Nationwide Mortgage Li-
censing System and Registry for access by the public. 
SEC. 112. LIABILITY PROVISIONS. 
The Secretary, any State official or agency, any Fed-
eral banking agency, or any organization serving as the 
administrator of the Nationwide Mortgage Licensing Sys-
tem and Registry or a system established by the Secretary 
under section 108, or any officer or employee of any such 
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entity, shall not be subject to any civil action or proceeding 
for monetary damages by reason of the good-faith action 
or omission of any officer or employee of any such entity, 
while acting within the scope of office or employment, re-
lating to the collection, furnishing, or dissemination of in-
formation concerning persons who are loan originators or 
are applying for licensing or registration as loan origina-
tors. 
SEC. 113. ENFORCEMENT UNDER HUD BACKUP LICENSING 
SYSTEM. 
(a) SUMMONS AUTHORITY.—The Secretary may— 
(1) examine any books, papers, records, or 
other data of any loan originator operating in any 
State which is subject to a licensing system estab-
lished by the Secretary under section 107; and 
(2) summon any loan originator referred to in 
paragraph (1) or any person having possession, cus-
tody, or care of the reports and records relating to 
such loan originator, to appear before the Secretary 
or any delegate of the Secretary at a time and place 
named in the summons and to produce such books, 
papers, records, or other data, and to give testi-
mony, under oath, as may be relevant or material to 
an investigation of such loan originator for compli-
ance with the requirements of this subtitle. 
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(b) EXAMINATION AUTHORITY.— 
(1) IN GENERAL.—If the Secretary establishes 
a licensing system under section 107 for any State, 
the Secretary shall appoint examiners for the pur-
poses of administering such section. 
(2) POWER TO EXAMINE.—Any examiner ap-
pointed under paragraph (1) shall have power, on 
behalf of the Secretary, to make any examination of 
any loan originator operating in any State which is 
subject to a licensing system established by the Sec-
retary under section 107 whenever the Secretary de-
termines an examination of any loan originator is 
necessary to determine the compliance by the origi-
nator with this subtitle. 
(3) REPORT OF EXAMINATION.—Each examiner 
appointed under paragraph (1) shall make a full and 
detailed report of examination of any loan originator 
examined to the Secretary. 
(4) ADMINISTRATION OF OATHS AND AFFIRMA-
TIONS; EVIDENCE.—In connection with examinations 
of loan originators operating in any State which is 
subject to a licensing system established by the Sec-
retary under section 107, or with other types of in-
vestigations to determine compliance with applicable 
law and regulations, the Secretary and examiners 
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appointed by the Secretary may administer oaths 
and affirmations and examine and take and preserve 
testimony under oath as to any matter in respect to 
the affairs of any such loan originator. 
(5) ASSESSMENTS.—The cost of conducting any 
examination of any loan originator operating in any 
State which is subject to a licensing system estab-
lished by the Secretary under section 107 shall be 
assessed by the Secretary against the loan originator 
to meet the Secretary’s expenses in carrying out 
such examination. 
(c) CEASE AND DESIST PROCEEDING.— 
(1) AUTHORITY OF SECRETARY.—If the Sec-
retary finds, after notice and opportunity for hear-
ing, that any person is violating, has violated, or is 
about to violate any provision of this subtitle, or any 
regulation thereunder, with respect to a State which 
is subject to a licensing system established by the 
Secretary under section 107, the Secretary may pub-
lish such findings and enter an order requiring such 
person, and any other person that is, was, or would 
be a cause of the violation, due to an act or omission 
the person knew or should have known would con-
tribute to such violation, to cease and desist from 
committing or causing such violation and any future 
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the court shall have jurisdiction to enter such 
an order. A respondent served with a temporary 
cease-and-desist order entered without a prior 
hearing before the Secretary may not apply to 
the court except after hearing and decision by 
the Secretary on the respondent’s application 
under subparagraph (A). 
(C) NO AUTOMATIC STAY OF TEMPORARY 
ORDER.—The commencement of proceedings 
under subparagraph (B) shall not, unless spe-
cifically ordered by the court, operate as a stay 
of the Secretary’s order. 
(5) AUTHORITY OF THE SECRETARY TO PRO-
HIBIT PERSONS FROM SERVING AS LOAN ORIGINA-
TORS.—In any cease-and-desist proceeding under 
paragraph (1), the Secretary may issue an order to 
prohibit, conditionally or unconditionally, and per-
manently or for such period of time as the Secretary 
shall determine, any person who has violated this 
subtitle or regulations thereunder, from acting as a 
loan originator if the conduct of that person dem-
onstrates unfitness to serve as a loan originator. 
(d) AUTHORITY
OF
THE SECRETARY TO ASSESS 
MONEY PENALTIES.— 
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(1) IN GENERAL.—The Secretary may impose a 
civil penalty on a loan originator operating in any 
State which is subject to licensing system established 
by the Secretary under section 107 if the Secretary 
finds, on the record after notice and opportunity for 
hearing, that such loan originator has violated or 
failed to comply with any requirement of this sub-
title or any regulation prescribed by the Secretary 
under this subtitle or order issued under subsection 
(c). 
(2) MAXIMUM
AMOUNT
OF
PENALTY.—The 
maximum amount of penalty for each act or omis-
sion described in paragraph (1) shall be $5,000 for 
each day the violation continues. 
Subtitle B—Residential Mortgage 
Loan Origination Standards 
SEC. 121. DEFINITIONS. 
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) DEFINITIONS RELATING TO MORTGAGE ORIGI-
NATION AND RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) COMMISSION.—Unless otherwise specified, 
the term ‘Commission’ means the Federal Trade 
Commission. 
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‘‘(2) FEDERAL BANKING AGENCIES.—The term 
‘Federal banking agencies’ means the Board of Gov-
ernors of the Federal Reserve System, the Comp-
troller of the Currency, the Director of the Office of 
Thrift Supervision, the Federal Deposit Insurance 
Corporation, and the National Credit Union Admin-
istration Board. 
‘‘(3) 
MORTGAGE
ORIGINATOR.—The 
term 
‘mortgage originator’— 
‘‘(A) means any person who— 
‘‘(i) takes a residential mortgage loan 
application; 
‘‘(ii) assists a consumer in obtaining 
or applying to obtain a residential mort-
gage loan; or 
‘‘(iii) offers or negotiates terms of a 
residential mortgage loan, for direct or in-
direct compensation or gain, or in the ex-
pectation of direct or indirect compensa-
tion or gain; 
‘‘(B) includes any person who represents 
to the public, through advertising or other 
means of communicating or providing informa-
tion (including the use of business cards, sta-
tionery, brochures, signs, rate lists, or other 
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promotional items), that such person can or will 
provide any of the services or perform any of 
the activities described in subparagraph (A); 
and 
‘‘(C) does not include any person who is 
not otherwise described in subparagraph (A) or 
(B) and who performs purely administrative or 
clerical tasks on behalf of a person who is de-
scribed in any such subparagraph. 
‘‘(4) NATIONWIDE MORTGAGE LICENSING SYS-
TEM AND REGISTRY.—The term ‘Nationwide Mort-
gage Licensing System and Registry’ has the same 
meaning as in section 102(5) of the Mortgage Re-
form and Anti-Predatory Lending Act of 2007. 
‘‘(5) OTHER DEFINITIONS RELATING TO MORT-
GAGE
ORIGINATOR.—For purposes of this sub-
section, a person ‘assists a consumer in obtaining or 
applying to obtain a residential mortgage loan’ by, 
among other things, advising on residential mort-
gage loan terms (including rates, fees, and other 
costs), preparing residential mortgage loan packages, 
or collecting information on behalf of the consumer 
with regard to a residential mortgage loan. 
‘‘(6) RESIDENTIAL
MORTGAGE
LOAN.—The 
term ‘residential mortgage loan’ means any con-
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sumer credit transaction that is secured by a mort-
gage, deed of trust, or other equivalent consensual 
security interest on a dwelling or on residential real 
property that includes a dwelling, other than a con-
sumer credit transaction under an open end credit 
plan or a reverse mortgage. 
‘‘(7) SECRETARY.—The term ‘Secretary’, when 
used in connection with any transaction or person 
involved with a residential mortgage loan, means the 
Secretary of Housing and Urban Development. 
‘‘(8) SECURITIZATION
VEHICLE.—The term 
‘securitization vehicle’ means a trust, corporation, 
partnership, limited liability entity, or special pur-
pose entity that— 
‘‘(A) is the issuer, or is created by the 
issuer, of mortgage pass-through certificates, 
participation certificates, mortgage-backed secu-
rities, or other similar securities backed by a 
pool of assets that includes residential mortgage 
loans; and 
‘‘(B) holds such loans. 
‘‘(9) SECURITIZER.—The term ‘securitizer’ 
means the person that transfers, conveys, or assigns, 
or causes the transfer, conveyance, or assignment of, 
residential mortgage loans, including through a spe-
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cial purpose vehicle, to any securitization vehicle, ex-
cluding any trustee that holds such loans solely for 
the benefit of the securitization vehicle. 
‘‘(10) SERVICER.—The term ‘servicer’ has the 
same meaning as in section 6(i)(2) of the Real Es-
tate Settlement Procedures Act of 1974.’’. 
SEC. 122. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 
(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. Residential mortgage loan origination 
‘‘(a) DUTY OF CARE.— 
‘‘(1) STANDARD.—Subject to regulations pre-
scribed under this subsection, each mortgage origi-
nator shall, in addition to the duties imposed by oth-
erwise applicable provisions of State or Federal 
law— 
‘‘(A) be qualified and, when required, reg-
istered and licensed as a mortgage originator in 
accordance with applicable State or Federal law 
including subtitle A of title I of the Mortgage 
Reform and Anti-Predatory Lending Act of 
2007; 
‘‘(B) with respect to each consumer seek-
ing or inquiring about a residential mortgage 
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loan, diligently work to present the consumer 
with a range of residential mortgage loan prod-
ucts for which the consumer likely qualifies and 
which are appropriate to the consumer’s exist-
ing circumstances, based on information known 
by, or obtained in good faith by, the originator; 
‘‘(C) make full, complete, and timely dis-
closure to each such consumer of— 
‘‘(i) the comparative costs and bene-
fits of each residential mortgage loan prod-
uct offered, discussed, or referred to by the 
originator; 
‘‘(ii) the nature of the originator’s re-
lationship to the consumer (including the 
cost of the services to be provided by the 
originator and a statement that the mort-
gage originator is or is not acting as an 
agent for the consumer, as the case may 
be); and 
‘‘(iii) any relevant conflicts of interest; 
‘‘(D) certify to the creditor, with respect to 
any transaction involving a residential mortgage 
loan, that the mortgage originator has fulfilled 
all requirements applicable to the originator 
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under this section with respect to the trans-
action; and 
‘‘(E) include the unique identifier of the 
originator provided by the Nationwide Mortgage 
Licensing System and Registry on all loan doc-
uments. 
‘‘(2) CLARIFICATION OF EXTENT OF DUTY TO 
PRESENT RANGE OF PRODUCTS AND APPROPRIATE 
PRODUCTS.— 
‘‘(A) NO DUTY TO OFFER PRODUCTS FOR 
WHICH
ORIGINATOR
IS
NOT
AUTHORIZED
TO 
TAKE
AN
APPLICATION.—Paragraph (1)(B) 
shall not be construed as requiring— 
‘‘(i) a mortgage originator to present 
to any consumer any specific residential 
mortgage loan product that is offered by a 
creditor which does not accept consumer 
referrals from, or consumer applications 
submitted by or through, such originator; 
or 
‘‘(ii) a creditor to offer products that 
the creditor does not offer to the general 
public. 
‘‘(B) APPROPRIATE LOAN PRODUCT.—For 
purposes of paragraph (1)(B), a residential 
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mortgage loan shall be presumed to be appro-
priate for a consumer if— 
‘‘(i) the mortgage originator deter-
mines in good faith, based on then existing 
information and without undergoing a full 
underwriting process, that the consumer 
has a reasonable ability to repay and, in 
the case of a refinancing of an existing res-
idential mortgage loan, receives a net tan-
gible benefit, as determined in accordance 
with regulations prescribed under sub-
sections (a) and (b) of section 129B. 
‘‘(ii) the loan does not have predatory 
characteristics or effects (such as equity 
stripping and excessive fees and abusive 
terms) as determined in accordance with 
regulations prescribed under paragraph 
(4). 
‘‘(3) RULES OF CONSTRUCTION.—No provision 
of this subsection shall be construed as— 
‘‘(A) creating an agency or fiduciary rela-
tionship between a mortgage originator and a 
consumer if the originator does not hold himself 
or herself out as such an agent or fiduciary; or 
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‘‘(B) restricting a mortgage originator 
from holding himself or herself out as an agent 
or fiduciary of a consumer subject to any addi-
tional duty, requirement, or limitation applica-
ble to agents or fiduciaries under any Federal 
or State law. 
‘‘(4) REGULATIONS.— 
‘‘(A) IN GENERAL.—The Federal banking 
agencies, in consultation with the Secretary, the 
Chairman of the State Liaison Committee to 
the Financial Institutions Examination Council, 
and the Commission, shall jointly prescribe reg-
ulations to— 
‘‘(i) further define the duty estab-
lished under paragraph (1); 
‘‘(ii) implement the requirements of 
this subsection; 
‘‘(iii) establish the time period within 
which any disclosure required under para-
graph (1) shall be made to the consumer; 
and 
‘‘(iv) establish such other require-
ments for any mortgage originator as such 
regulatory agencies may determine to be 
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appropriate to meet the purposes of this 
subsection. 
‘‘(B) COMPLEMENTARY AND NONDUPLICA-
TIVE DISCLOSURES.—The agencies referred to 
in subparagraph (A) shall endeavor to make the 
required disclosures to consumers under this 
subsection complementary and nonduplicative 
with other disclosures for mortgage consumers 
to the extent such efforts— 
‘‘(i) are practicable; and 
‘‘(ii) do not reduce the value of any 
such disclosure to recipients of such disclo-
sures. 
‘‘(5) COMPLIANCE PROCEDURES REQUIRED.— 
The Federal banking agencies shall prescribe regula-
tions requiring depository institutions to establish 
and maintain procedures reasonably designed to as-
sure and monitor the compliance of such depository 
institutions, the subsidiaries of such institutions, 
and the employees of such institutions or subsidi-
aries with the requirements of this section and the 
registration procedures established under section 
106 of the Mortgage Reform and Anti-Predatory 
Lending Act of 2007.’’. 
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(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129 the fol-
lowing new item: 
‘‘129A. Residential mortgage loan origination.’’. 
SEC. 123. PROHIBITION ON STEERING INCENTIVES. 
Section 129A of the Truth in Lending Act (as added 
by section 122(a)) is amended by inserting after sub-
section (a) the following new subsection: 
‘‘(b) PROHIBITION ON STEERING INCENTIVES.— 
‘‘(1) AMOUNT OF ORIGINATOR COMPENSATION 
CANNOT
VARY
BASED
ON
TERMS.—No mortgage 
originator may receive from any person, and no per-
son may pay to any mortgage originator, directly or 
indirectly, any incentive compensation, including 
yield spread premium or any equivalent compensa-
tion or gain, that is based on, or varies with, the 
terms (other than the amount of principal) of any 
loan that is not a qualified mortgage (as defined in 
section 129B(c)(3)). 
‘‘(2) REGULATIONS.—The Federal banking 
agencies, in consultation with the Secretary and the 
Commission, shall jointly prescribe regulations to 
prohibit— 
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‘‘(A) mortgage originators from steering 
any consumer to a residential mortgage loan 
that— 
‘‘(i) the consumer lacks a reasonable 
ability to repay (in accordance with regula-
tions prescribed under section 129B(a)); 
‘‘(ii) in the case of a refinancing of a 
residential mortgage loan, does not provide 
the consumer with a net tangible benefit 
(in accordance with regulations prescribed 
under section 129B(b)); or 
‘‘(iii) has predatory characteristics or 
effects (such as equity stripping, excessive 
fees, or abusive terms); 
‘‘(B) mortgage originators from steering 
any consumer from a residential mortgage loan 
for which the consumer is qualified that is a 
qualified mortgage (as defined in section 
129B(c)(3)) to a residential mortgage loan that 
is not a qualified mortgage; and 
‘‘(C) abusive or unfair lending practices 
that promote disparities among consumers of 
equal credit worthiness but of different race, 
ethnicity, gender, or age. 
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‘‘(3) RULES OF CONSTRUCTION.—No provision 
of this subsection shall be construed as— 
‘‘(A) limiting or affecting the ability of a 
mortgage originator to sell residential mortgage 
loans to subsequent purchasers; 
‘‘(B) restricting a consumer’s ability to fi-
nance, including through rate or principal, any 
origination fees or costs permitted under this 
subsection, or the originator’s ability to receive 
such fees or costs (including compensation) 
from any person, so long as such fees or costs 
were fully and clearly disclosed to the consumer 
earlier in the application process as required by 
129A(a)(1)(C)(ii) and do not vary based on the 
terms of the loan or the consumer’s decision 
about whether to finance such fees or costs; or 
‘‘(C) prohibiting incentive payments to a 
mortgage originator based on the number of 
residential mortgage loans originated within a 
specified period of time.’’. 
SEC. 124. LIABILITY. 
Section 129A of the Truth in Lending Act is amend-
ed by inserting after subsection (b) (as added by section 
123) the following new subsection: 
‘‘(c) LIABILITY FOR VIOLATIONS.— 
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‘‘(1) IN GENERAL.—For purposes of providing 
a cause of action for any failure by a mortgage origi-
nator to comply with any requirement imposed 
under this section and any regulation prescribed 
under this section, subsections (a) and (b) of section 
130 shall be applied with respect to any such failure 
by substituting ‘mortgage originator’ for ‘creditor’ 
each place such term appears in each such sub-
section. 
‘‘(2) MAXIMUM.—The maximum amount of any 
liability of a mortgage originator under paragraph 
(1) to a consumer for any violation of this section 
shall not exceed an amount equal to 3 times the 
total amount of direct and indirect compensation or 
gain accruing to the mortgage originator in connec-
tion with the residential mortgage loan involved in 
the violation, plus the costs to the consumer of the 
action, including a reasonable attorney’s fee.’’. 
SEC. 125. REGULATIONS. 
The regulations required or authorized to be pre-
scribed under this title or the amendments made by this 
title— 
(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
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(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
TITLE II—MINIMUM STANDARDS 
FOR MORTGAGES 
SEC. 201. ABILITY TO REPAY. 
(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 129A (as added by section 122(a)) the fol-
lowing new section: 
‘‘§ 129B. Minimum standards for residential mortgage 
loans 
‘‘(a) ABILITY TO REPAY.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions prescribed jointly by the Federal banking agen-
cies, in consultation with the Commission, no cred-
itor may make a residential mortgage loan unless 
the creditor makes a reasonable and good faith de-
termination based on verified and documented infor-
mation that, at the time the loan is consummated, 
the consumer has a reasonable ability to repay the 
loan, according to its terms, and all applicable taxes, 
insurance, and assessments. 
‘‘(2) MULTIPLE LOANS.—If the creditor knows, 
or has reason to know, that 1 or more residential 
mortgage loans secured by the same dwelling will be 
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made to the same consumer, the creditor shall make 
a reasonable and good faith determination, based on 
verified and documented information, that the con-
sumer has a reasonable ability to repay the com-
bined payments of all loans on the same dwelling ac-
cording to the terms of those loans and all applicable 
taxes, insurance, and assessments. 
‘‘(3) BASIS
FOR
DETERMINATION.—A deter-
mination under this subsection of a consumer’s abil-
ity to repay a residential mortgage loan shall be 
based on consideration of the consumer’s credit his-
tory, current income, expected income the consumer 
is reasonably assured of receiving, current obliga-
tions, debt-to-income ratio, employment status, and 
other financial resources other than the consumer’s 
equity in the dwelling or real property that secures 
repayment of the loan. 
‘‘(4) NONSTANDARD LOANS.— 
‘‘(A) VARIABLE RATE LOANS THAT DEFER 
REPAYMENT
OF
ANY
PRINCIPAL
OR
INTER-
EST.—For purposes of determining, under this 
subsection, a consumer’s ability to repay a vari-
able rate residential mortgage loan that allows 
or requires the consumer to defer the repay-
ment of any principal or interest, the creditor 
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shall take into consideration a fully amortizing 
repayment schedule. 
‘‘(B) INTEREST-ONLY
LOANS.—For pur-
poses of determining, under this subsection, a 
consumer’s ability to repay a residential mort-
gage loan that permits or requires the payment 
of interest only, the creditor shall take into con-
sideration the payment amount required to am-
ortize the loan by its final maturity. 
‘‘(C) CALCULATION FOR NEGATIVE AMOR-
TIZATION.—In making any determination under 
this subsection, a creditor shall also take into 
consideration any balance increase that may ac-
crue from any negative amortization provision. 
‘‘(D) CALCULATION
PROCESS.—For pur-
poses of making any determination under this 
subsection, a creditor shall calculate the month-
ly payment amount for principal and interest on 
any residential mortgage loan by assuming— 
‘‘(i) the loan proceeds are fully dis-
bursed on the date of the consummation of 
the loan; 
‘‘(ii) the loan is to be repaid in sub-
stantially equal monthly amortizing pay-
ments for principal and interest over the 
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entire term of the loan with no balloon 
payment, unless the loan contract requires 
more rapid repayment (including balloon 
payment), in which case the contract’s re-
payment schedule shall be used in this cal-
culation; and 
‘‘(iii) the interest rate over the entire 
term of the loan is a fixed rate equal to the 
fully indexed rate at the time of the loan 
closing, without considering the introduc-
tory rate. 
‘‘(5) FULLY-INDEXED
RATE
DEFINED.—For 
purposes of this subsection, the term ‘fully indexed 
rate’ means the index rate prevailing on a residential 
mortgage loan at the time the loan is made plus the 
margin that will apply after the expiration of any in-
troductory interest rates.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129A (as 
added by section 122(b)) the following new item: 
‘‘129B. Minimum standards for residential mortgage loans.’’. 
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SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS. 
Section 129B of the Truth in Lending Act (as added 
by section 201(a)) is amended by inserting after sub-
section (a) the following new subsection: 
‘‘(b) NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions prescribed under paragraph (3), no creditor 
may extend credit in connection with any residential 
mortgage loan that involves a refinancing of a prior 
existing residential mortgage loan unless the creditor 
reasonably and in good faith determines, at the time 
the loan is consummated and on the basis of infor-
mation known by or obtained in good faith by the 
creditor, that the refinanced loan will provide a net 
tangible benefit to the consumer. 
‘‘(2) CERTAIN LOANS PROVIDING NO NET TAN-
GIBLE BENEFIT.—A residential mortgage loan that 
involves a refinancing of a prior existing residential 
mortgage loan shall not be considered to provide a 
net tangible benefit to the consumer if the costs of 
the refinanced loan, including points, fees and other 
charges, exceed the amount of any newly advanced 
principal without any corresponding changes in the 
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terms of the refinanced loan that are advantageous 
to the consumer. 
‘‘(3) NET
TANGIBLE
BENEFIT.—The Federal 
banking agencies shall jointly prescribe regulations 
defining the term ‘net tangible benefit’ for purposes 
of this subsection.’’. 
SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (b) (as added by section 
202) the following new subsection: 
‘‘(c) PRESUMPTION OF ABILITY TO REPAY AND NET 
TANGIBLE BENEFIT.— 
‘‘(1) IN GENERAL.—Any creditor with respect 
to any residential mortgage loan, and any assignee 
or securitizer of such loan, may presume that the 
loan has met the requirements of subsections (a) 
and (b), if the loan is a qualified mortgage or a 
qualified safe harbor mortgage. 
‘‘(2) REBUTTABLE
PRESUMPTION.—Any pre-
sumption established under paragraph (1) with re-
spect to any residential mortgage loan shall be re-
buttable only— 
‘‘(A) against the creditor of such loan; and 
‘‘(B) if such loan is a qualified safe harbor 
mortgage. 
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‘‘(3) DEFINITIONS.—For purposes of this sec-
tion the following definitions shall apply: 
‘‘(A) MOST RECENT CONVENTIONAL MORT-
GAGE RATE.—The term ‘most recent conven-
tional mortgage rate’ means the contract inter-
est rate on commitments for fixed-rate first 
mortgages most recently published in the Fed-
eral Reserve Statistical Release on selected in-
terest rates (daily or weekly), and commonly re-
ferred to as the H.15 release (or any successor 
publication), in the week preceding a date of de-
termination for purposes of applying this sub-
section. 
‘‘(B) QUALIFIED
MORTGAGE.—The term 
‘qualified mortgage’ means— 
‘‘(i) any residential mortgage loan 
that constitutes a first lien on the dwelling 
or real property securing the loan and ei-
ther— 
‘‘(I) has an annual percentage 
rate that does not equal or exceed the 
yield on securities issued by the Sec-
retary of the Treasury under chapter 
31 of title 31, United States Code, 
that bear comparable periods of matu-
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rate as may be established by regula-
tion under paragraph (6), by more 
than 375 basis points; 
‘‘(iii) a loan made or guaranteed by 
the Secretary of Veterans Affairs; and 
‘‘(iv) a mortgage insured under title 
II of the National Housing Act (12 U.S.C. 
1707 et seq.). 
‘‘(C) QUALIFIED
SAFE
HARBOR
MORT-
GAGE.—The term ‘qualified safe harbor mort-
gage’ means any residential mortgage loan— 
‘‘(i) for which the income and finan-
cial resources of the consumer are verified 
and documented; 
‘‘(ii) for which the residential mort-
gage loan underwriting process is based on 
the fully-indexed rate, and takes into ac-
count all applicable taxes, insurance, and 
assessments; 
‘‘(iii) which does not provide for a re-
payment schedule that results in negative 
amortization at any time; 
‘‘(iv) meets such other requirements 
as may be established by regulation; and 
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‘‘(v) for which any of the following 
factors apply with respect to such loan: 
‘‘(I) 
The 
periodic 
payment 
amount for principal and interest are 
fixed for a minimum of 5 years under 
the terms of the loan. 
‘‘(II) In the case of a variable 
rate loan, the annual percentage rate 
varies based on a margin that is less 
than 3 percent over a single generally 
accepted interest rate index that is 
the basis for determining the rate of 
interest for the mortgage. 
‘‘(III) The loan does not cause 
the consumer’s total monthly debts, 
including amounts under the loan, to 
exceed a percentage established by 
regulation of his or her monthly gross 
income or such other maximum per-
centage of such income as may be pre-
scribed by regulation under paragraph 
(6). 
‘‘(4) DETERMINATION
OF
COMPARISON
TO 
TREASURY SECURITIES.— 
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‘‘(A) IN
GENERAL.—Without regard to 
whether a residential mortgage loan is subject 
to or reportable under the Home Mortgage Dis-
closure Act of 1975 and subject to subpara-
graph (B), the difference between the annual 
percentage rate of such loan and the yield on 
securities issued by the Secretary of the Treas-
ury under chapter 31 of title 31, United States 
Code, having comparable periods of maturity 
shall be determined using the same procedures 
and methods of calculation applicable to loans 
that are subject to the reporting requirements 
under the Home Mortgage Disclosure Act of 
1975. 
‘‘(B) 
DATE
OF
DETERMINATION
OF 
YIELD.—The yield on the securities referred to 
in subparagraph (A) shall be determined, for 
purposes of such subparagraph and paragraph 
(3) with respect to any residential mortgage 
loan, as of the 15th day of the month preceding 
the month in which a completed application is 
submitted for such loan. 
‘‘(5) 
APR 
IN
CASE
OF
INTRODUCTORY 
OFFER.—For purposes of making a determination of 
whether a residential mortgage loan that provides 
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for a fixed interest rate for an introductory period 
and then resets or adjusts to a variable rate is a 
qualified mortgage, the determination of the annual 
percentage rate, as determined in accordance with 
regulations prescribed by the Board under section 
107, shall be based on the greater of the introduc-
tory rate and the fully indexed rate of interest. 
‘‘(6) REGULATIONS.— 
‘‘(A) IN GENERAL.—The Federal banking 
agencies shall jointly prescribe regulations to 
carry out the purposes of this subsection. 
‘‘(B) REVISION
OF
SAFE
HARBOR
CRI-
TERIA.—The Federal banking agencies may 
jointly prescribe regulations that revise, add to, 
or subtract from the criteria that define a quali-
fied mortgage and a qualified safe harbor mort-
gage to the extent necessary and appropriate to 
effectuate the purposes of this subsection, to 
prevent circumvention or evasion of this sub-
section, or to facilitate compliance with this 
subsection. 
‘‘(7) RULE OF CONSTRUCTION.—No provision 
of this subsection may be construed as implying that 
a residential mortgage loan may be presumed to vio-
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late subsection (a) or (b) if such loan is not a quali-
fied mortgage or a qualified safe harbor mortgage.’’. 
SEC. 204. LIABILITY. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (c) (as added by section 
203) the following new subsection: 
‘‘(d) LIABILITY FOR VIOLATIONS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) RESCISSION.—In addition to any 
other liability under this title for a violation by 
a creditor of subsection (a) or (b) (for example 
under section 130) and subject to the statute of 
limitations in paragraph (7), a civil action may 
be maintained against a creditor for a violation 
of subsection (a) or (b) with respect to a resi-
dential mortgage loan for the rescission of the 
loan, and such additional costs as the obligor 
may have incurred as a result of the violation 
and in connection with obtaining a rescission of 
the loan, including a reasonable attorney’s fee. 
‘‘(B) CURE.—A creditor shall not be liable 
for rescission under subparagraph (A) with re-
spect to a residential mortgage loan if, no later 
than 90 days after the receipt of notification 
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from the consumer that the loan violates sub-
section (a) or (b), the creditor provides a cure. 
‘‘(2) LIMITED ASSIGNEE AND SECURITIZER LI-
ABILITY.—Notwithstanding sections 125(e) and 131 
and except as provided in paragraph (3), a civil ac-
tion which may be maintained against a creditor 
with respect to a residential mortgage loan for a vio-
lation of subsection (a) or (b) may be maintained 
against any assignee or securitizer of such residen-
tial mortgage loan, who has acted in good faith, for 
the following liabilities only: 
‘‘(A) Rescission of the loan. 
‘‘(B) Such additional costs as the obligor 
may have incurred as a result of the violation 
and in connection with obtaining a rescission of 
the loan, including a reasonable attorney’s fee. 
‘‘(3) ASSIGNEE
AND
SECURITIZER
EXEMP-
TION.—No assignee or securitizer of a residential 
mortgage loan shall be liable under paragraph (2) 
with respect to such loan if— 
‘‘(A) no later than 90 days after the re-
ceipt of notification from the consumer that the 
loan violates subsection (a) or (b), the assignee 
or securitizer provides a cure so that the loan 
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satisfies the requirements of subsections (a) 
and (b); or 
‘‘(B) each of the following conditions are 
met: 
‘‘(i) The assignee or securitizer— 
‘‘(I) has a policy against buying 
residential mortgage loans other than 
qualified mortgages or qualified safe 
harbor mortgages (as defined in sub-
section (c)); 
‘‘(II) the policy is intended to 
verify seller or assignor compliance 
with the representations and warran-
ties required under clause (ii); and 
‘‘(III) in accordance with regula-
tions which the Federal banking agen-
cies and the Securities and Exchange 
Commission shall jointly prescribe, ex-
ercises reasonable due diligence to ad-
here to such policy in purchasing resi-
dential 
mortgage 
loans, 
including 
through adequate, thorough, and con-
sistently applied sampling procedures. 
‘‘(ii) The contract under which such 
assignee or securitizer acquired the resi-
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dential mortgage loan from a seller or as-
signor of the loan contains representations 
and warranties that the seller or as-
signor— 
‘‘(I) is not selling or assigning 
any residential mortgage loan which is 
not a qualified mortgage or a qualified 
safe harbor mortgage; or 
‘‘(II) is a beneficiary of a rep-
resentation and warranty from a pre-
vious seller or assignor to that effect, 
and the assignee or securitizer in good 
faith takes reasonable steps to obtain the 
benefit of such representation or warranty. 
‘‘(4) ABSENT PARTIES.— 
‘‘(A) 
ABSENT
CREDITOR.—Notwith-
standing the exemption provided in paragraph 
(3), if the creditor with respect to a residential 
mortgage loan made in violation of subsection 
(a) or (b) has ceased to exist as a matter of law 
or has filed for bankruptcy protection under 
title 11, United States Code, or has had a re-
ceiver or liquidating agent appointed, a con-
sumer may maintain a civil action against an 
assignee to cure, but not rescind, the residential 
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mortgage loan, plus the costs and reasonable 
attorney’s fees incurred in obtaining such rem-
edy. 
‘‘(B) ABSENT CREDITOR AND ASSIGNEE.— 
Notwithstanding the exemption provided in 
paragraph (3), if the creditor with respect to a 
residential mortgage loan made in violation of 
subsection (a) or (b) and each assignee of such 
loan have ceased to exist as a matter of law or 
have filed for bankruptcy protection under title 
11, United States Code, or have had receivers 
or liquidating agents appointed, the consumer 
may maintain the civil action referred to in sub-
paragraph (A) against the securitizer. 
‘‘(5) CURE
DEFINED.—For purposes of this 
subsection, the term ‘cure’ means, with respect to a 
residential mortgage loan that violates subsection (a) 
or (b), the modification or refinancing, at no cost to 
the consumer, of the loan to provide terms that 
would have satisfied the requirements of subsections 
(a) and (b) if the loan had contained such terms as 
of the origination of the loan and the payment of 
such additional costs as the obligor may have in-
curred as a result of the violation and in connection 
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with obtaining a cure of the loan, including a rea-
sonable attorney’s fee. 
‘‘(6) DISAGREEMENT OVER CURE.—If any cred-
itor, assignee, or securitizer and a consumer fail to 
reach agreement on a cure with respect to a residen-
tial mortgage loan that violates subsection (a) or (b), 
or the consumer fails to accept a cure proffered by 
a creditor, assignee, or securitizer— 
‘‘(A) the creditor, assignee, or securitizer 
may provide the cure; and 
‘‘(B) the consumer may challenge the ade-
quacy of the cure during the 6-month period be-
ginning when the cure is provided. 
If the consumer’s challenge, under this paragraph, 
of a cure is successful, the creditor, assignee, or 
securitizer shall be liable to the consumer for rescis-
sion of the loan and such additional costs under 
paragraph (2). 
‘‘(7) INABILITY TO PROVIDE OR OBTAIN RE-
SCISSION.—If a creditor, assignee, or securitizer 
cannot provide, or a consumer cannot obtain, rescis-
sion under paragraph (1) or (2), the liability of such 
creditor, assignee, or securitizer shall be met by pro-
viding the financial equivalent of a rescission, to-
gether with such additional costs as the obligor may 
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have incurred as a result of the violation and in con-
nection with obtaining a rescission of the loan, in-
cluding a reasonable attorney’s fee. 
‘‘(8) NO CLASS ACTIONS AGAINST ASSIGNEE OR 
SECURITIZER
UNDER
PARAGRAPH (2).—Only indi-
vidual actions may be brought against an assignee 
or securitizer of a residential mortgage loan for a 
violation of subsection (a) or (b). 
‘‘(9) STATUTE OF LIMITATIONS.—The liability 
of a creditor, assignee, or securitizer under this sub-
section shall apply in any original action against a 
creditor under paragraph (1) or an assignee or 
securitizer under paragraph (2) which is brought be-
fore— 
‘‘(A) in the case of any residential mort-
gage loan other than a loan to which subpara-
graph (B) applies, the end of the 3-year period 
beginning on the date the loan is consummated; 
or 
‘‘(B) in the case of a residential mortgage 
loan that provides for a fixed interest rate for 
an introductory period and then resets or ad-
justs to a variable rate or that provides for a 
nonamortizing payment schedule and then con-
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verts to an amortizing payment schedule, the 
earlier of— 
‘‘(i) the end of the 1-year period be-
ginning on the date of such reset, adjust-
ment, or conversion; or 
‘‘(ii) the end of the 6-year period be-
ginning on the date the loan is con-
summated. 
‘‘(10) POOLS
AND
INVESTORS
IN
POOLS
EX-
CLUDED.—In the case of residential mortgage loans 
acquired or aggregated for the purpose of including 
such loans in a pool of assets held for the purpose 
of issuing or selling instruments representing inter-
ests in such pools including through a securitization 
vehicle, the terms ‘assignee’ and ‘securitizer’, as 
used in this section, do not include the securitization 
vehicle, the pools of such loans or any original or 
subsequent purchaser of any interest in the 
securitization vehicle or any instrument representing 
a direct or indirect interest in such pool.’’. 
SEC. 205. DEFENSE TO FORECLOSURE. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (d) (as added by section 
204) the following new subsection: 
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‘‘(e) DEFENSE TO FORECLOSURE.—Notwithstanding 
any other provision of law— 
‘‘(1) when the holder of a residential mortgage 
loan or anyone acting for such holder initiates a ju-
dicial or nonjudicial foreclosure— 
‘‘(A) a consumer who has the right to re-
scind under this section with respect to such 
loan against the creditor or any assignee or 
securitizer may assert such right as a defense 
to foreclosure or counterclaim to such fore-
closure against the holder, or 
‘‘(B) if the foreclosure proceeding begins 
after the end of the period during which a con-
sumer may bring an action for rescission under 
subsection (d) and the consumer would have 
had a valid basis for such an action if it had 
been brought before the end of such period, the 
consumer may seek actual damages incurred by 
reason of the violation which gave rise to the 
right of rescission, together with costs of the 
action, including a reasonable attorney’s fee 
against the creditor or any assignee or 
securitizer; and 
‘‘(2) such holder or anyone acting for such 
holder or any other applicable third party may sell, 
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transfer, convey, or assign a residential mortgage 
loan to a creditor, any assignee, or any securitizer, 
or their designees, to effect a rescission or cure.’’. 
SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS. 
(a) IN GENERAL.—Section 129B of the Truth in 
Lending Act is amended by inserting after subsection (e) 
(as added by section 205) the following new subsections: 
‘‘(f) PROHIBITION ON CERTAIN PREPAYMENT PEN-
ALTIES.— 
‘‘(1) PROHIBITED ON CERTAIN LOANS.—A resi-
dential mortgage loan that is not a qualified mort-
gage (as defined in subsection (c)) may not contain 
terms under which a consumer must pay a prepay-
ment penalty for paying all or part of the principal 
after the loan is consummated. 
‘‘(2) PHASED-OUT
PENALTIES
ON
QUALIFIED 
MORTGAGES.—A qualified mortgage (as defined in 
subsection (c)) may not contain terms under which 
a consumer must pay a prepayment penalty for pay-
ing all or part of the principal after the loan is con-
summated in excess of the following limitations: 
‘‘(A) During the 1-year period beginning 
on the date the loan is consummated, the pre-
payment penalty shall not exceed an amount 
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ment insurance premiums are reasonable and at no 
additional cost to the consumer, the creditor receives 
no direct or indirect compensation in connection 
with the unemployment insurance premiums, and 
the unemployment insurance premiums are paid pur-
suant to another insurance contract and not paid to 
an affiliate of the creditor. 
‘‘(h) ARBITRATION.— 
‘‘(1) IN
GENERAL.—No residential mortgage 
loan and no extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer, other than a reverse mortgage, 
may 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, any assignee, or any securitizer to 
agree to arbitration or any other nonjudicial proce-
dure as the method for resolving any controversy at 
any time after a dispute or claim under the trans-
action arises. 
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‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any residential mortgage 
loan or of any extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer (other than a reverse mort-
gage), and no other agreement between the con-
sumer and the creditor relating to the residential 
mortgage loan or extension of credit referred to in 
paragraph (1), shall be applied or interpreted so as 
to bar a consumer from bringing an action in an ap-
propriate district court of the United States, or any 
other court of competent jurisdiction, pursuant to 
section 130 or any other provision of law, for dam-
ages or other relief in connection with any alleged 
violation of this section, any other provision of this 
title, or any other Federal law. 
‘‘(i) DUTY OF SECURITIZER TO RETAIN ACCESS TO 
LOANS.—Any securitizer shall reserve the right and pre-
serve an ability, in any document or contract establishing 
any pool of assets that includes any residential mortgage 
loan— 
‘‘(1) to identify and obtain access to any such 
loan in the pool; and 
‘‘(2) to provide for and obtain a remedy under 
this title for the obligor under any such loan. 
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‘‘(j) EFFECT
OF FORECLOSURE
ON PREEXISTING 
LEASE.— 
‘‘(1) IN GENERAL.—In the case of any fore-
closure on any dwelling or residential real property 
securing an extension of credit made under a con-
tract entered into after the date of the enactment of 
the Mortgage Reform and Anti-Predatory Lending 
Act of 2007, any successor in interest in such prop-
erty pursuant to the foreclosure shall assume such 
interest subject to— 
‘‘(A) the provision, by the successor in in-
terest, of a notice to vacate to any bona fide 
tenant at least 90 days before the effective date 
of the notice to vacate; and 
‘‘(B) the rights of any bona fide tenant, as 
of the date of such notice of foreclosure— 
‘‘(i) under any bona fide lease entered 
into before the notice of foreclosure to oc-
cupy the premises until the end of the re-
maining term of the lease or the end of the 
6-month period beginning on the date of 
the notice of foreclosure, whichever occurs 
first, subject to the receipt by the tenant 
of the 90-day notice under subparagraph 
(A); or 
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‘‘(ii) without a lease or with a lease 
terminable at will under State law, subject 
to the receipt by the tenant of the 90-day 
notice under subparagraph (A). 
‘‘(2) BONA
FIDE
LEASE
OR
TENANCY.—For 
purposes of this section, a lease or tenancy shall be 
considered bona fide only if— 
‘‘(A) the mortgagor under the contract is 
not the tenant; 
‘‘(B) the lease or tenancy was the result of 
an arms-length transaction; or 
‘‘(C) the lease or tenancy requires the re-
ceipt of rent that is not substantially less than 
fair market rent for the property. 
‘‘(k) MORTGAGES
WITH
NEGATIVE
AMORTIZA-
TION.—No creditor may extend credit to a borrower in 
connection with a consumer credit transaction under an 
open or closed end consumer credit plan secured by a 
dwelling or residential real property that includes a dwell-
ing, other than a reverse mortgage, that provides or per-
mits a payment plan that may, at any time over the term 
of the extension of credit, result in negative amortization 
unless, before such transaction is consummated— 
‘‘(1) the creditor provides the consumer with a 
statement that— 
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‘‘(A) the pending transaction will or may, 
as the case may be, result in negative amortiza-
tion; 
‘‘(B) describes negative amortization in 
such manner as the Federal banking agencies 
shall prescribe; 
‘‘(C) negative amortization increases the 
outstanding principal balance of the account; 
and 
‘‘(D) negative amortization reduces the 
consumer’s equity in the dwelling or real prop-
erty; and 
‘‘(2) in the case of a first-time borrower with 
respect to a residential mortgage loan that is not a 
qualified mortgage, the first-time borrower provides 
the creditor with sufficient documentation to dem-
onstrate that the consumer received homeownership 
counseling from organizations or counselors certified 
by the Secretary of Housing and Urban Develop-
ment as competent to provide such counseling. 
‘‘(l) ANNUAL CONTACT INFORMATION.—At least 
once annually and whenever there is a change in owner-
ship of a residential mortgage loan, the servicer with re-
spect to a residential mortgage loan shall provide a written 
notice to the consumer identifying the name of the creditor 
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or any assignee or securitizer who should be contacted by 
the consumer for any reason concerning the consumer’s 
rights with respect to the loan.’’. 
(b) CONFORMING AMENDMENT RELATING TO EN-
FORCEMENT.—Section 108(a) of the Truth in Lending 
Act (15 U.S.C. 1607(a)) is amended by inserting after 
paragraph (6) the following new paragraph: 
‘‘(7) sections 21B and 21C of the Securities 
Exchange Act of 1934, in the case of a broker or 
dealer, other than a depository institution, by the 
Securities and Exchange Commission.’’. 
SEC. 207. RULE OF CONSTRUCTION. 
Except as otherwise expressly provided in section 
129A or 129B of the Truth in Lending Act (as added by 
this Act), no provision of such section 129A or 129B shall 
be construed as superseding, repealing, or affecting any 
duty, right, obligation, privilege, or remedy of any person 
under any other provision of the Truth in Lending Act 
or any other provision of Federal or State law. 
SEC. 208. EFFECT ON STATE LAWS. 
(a) IN GENERAL.—Section 129B(d) of the Truth in 
Lending Act (as added by section 204) shall supersede any 
State law or application thereof that provides additional 
remedies 
against 
any 
assignee, 
securitizer, 
or 
securitization vehicle, and the remedies described in such 
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section shall constitute the sole remedies against any as-
signee, securitizer, or securitization vehicle, for a violation 
of subsection (a) or (b) of section 129B of such Act or 
any other State law the terms of which address the specific 
subject matter of subsection (a) (determination of ability 
to repay) or (b) (requirement of a net tangible benefit) 
of such section 129B. 
(b) RULES OF CONSTRUCTION.—No provision of this 
section shall be construed as limiting— 
(1) the application of any State law against a 
creditor; 
(2) the availability of remedies based upon 
fraud, misrepresentation, deception, false adver-
tising, or civil rights laws— 
(A) against any assignee, securitizer, or 
securitization vehicle for its own conduct relat-
ing to the making of a residential mortgage 
loan to a consumer; or 
(B) against any assignee, securitizer, or 
securitization vehicle in the sale or purchase of 
residential mortgage loans or securities; or 
(3) the application of any other State law 
against any assignee, securitizer, or securitization 
vehicle except as specifically provided in subsection 
(a) of this section. 
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SEC. 209. REGULATIONS. 
Regulations required or authorized to be prescribed 
under this title or the amendments made by this title— 
(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a)(2) of 
the Truth in Lending Act (15 U.S.C. 1640(a)(2)) is 
amended— 
(1) by striking ‘‘$100’’ and inserting ‘‘$200’’; 
(2) 
by 
striking 
‘‘$1,000’’ 
and 
inserting 
‘‘$2,000’’; 
(3) by striking ‘‘$200’’ and inserting ‘‘$400’’; 
(4) 
by 
striking 
‘‘$2,000’’ 
and 
inserting 
‘‘$4,000’’; and 
(5) by striking ‘‘$500,000’’ and inserting 
‘‘$1,000,000’’. 
(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)) is amended— 
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(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. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER 
DECEPTION. 
Section 130 of the Truth in Lending Act is amended 
by adding at the end the following new subsection: 
‘‘(j) EXEMPTION FROM LIABILITY AND RESCISSION 
IN CASE OF BORROWER FRAUD OR DECEPTION.—In ad-
dition to any other remedy available by law or contract, 
no creditor, assignee, or securitizer shall be liable to an 
obligor under this section, nor shall it be subject to the 
right of rescission of any obligor under 129B, if such obli-
gor, or co-obligor, knowingly, or willfully and with actual 
knowledge furnished material information known to be 
false for the purpose of obtaining such residential mort-
gage loan.’’. 
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SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF 
HYBRID ADJUSTABLE RATE MORTGAGES. 
(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 128 the following new section: 
‘‘§ 128A. Reset of hybrid adjustable rate mortgages 
‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DE-
FINED.—For purposes of this section, the term ‘hybrid ad-
justable rate mortgage’ means a consumer credit trans-
action secured by the consumer’s principal residence with 
a fixed interest rate for an introductory period that ad-
justs or resets to a variable interest rate after such period. 
‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—Dur-
ing the 1-month period that ends 6 months before the date 
on which the interest rate in effect during the introductory 
period of a hybrid adjustable rate mortgage adjusts or 
resets to a variable interest rate, the creditor or servicer 
of such loan shall provide a written notice, separate and 
distinct from all other correspondence to the consumer, 
that includes the following: 
‘‘(1) Any index or formula used in making ad-
justments to or resetting the interest rate and a 
source of information about the index or formula. 
‘‘(2) An explanation of how the new interest 
rate and payment would be determined, including an 
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explanation of how the index was adjusted, such as 
by the addition of a margin. 
‘‘(3) A good faith estimate, based on accepted 
industry standards, of the creditor or servicer of the 
amount of the monthly payment that will apply after 
the date of the adjustment or reset, and the assump-
tions on which this estimate is based. 
‘‘(4) A list of alternatives consumers may pur-
sue before the date of adjustment or reset, and de-
scriptions of the actions consumers must take to 
pursue these alternatives, including— 
‘‘(A) refinancing; 
‘‘(B) renegotiation of loan terms; 
‘‘(C) payment forbearances; and 
‘‘(D) pre-foreclosure sales. 
‘‘(5) The names, addresses, telephone numbers, 
and Internet addresses of counseling agencies or 
programs reasonably available to the consumer that 
have been certified or approved and made publicly 
available by the Secretary of Housing and Urban 
Development or a State housing finance authority 
(as defined in section 1301 of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989). 
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‘‘(6) The address, telephone number, and Inter-
net address for the State housing finance authority 
(as so defined) for the State in which the consumer 
resides.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 128 the fol-
lowing new item: 
‘‘128A. Reset of hybrid adjustable rate mortgages.’’. 
SEC. 213. REQUIRED DISCLOSURES. 
(a) ADDITIONAL INFORMATION.—Section 128(a) of 
Truth in Lending Act (15 U.S.C. 1638(a)) is amended 
by adding at the end the following new paragraphs: 
‘‘(16) In the case of an extension of credit that 
is secured by the dwelling of a consumer, under 
which the annual rate of interest is variable, or with 
respect to which the regular payments may other-
wise be variable, in addition to the other disclosures 
required under this subsection, the disclosures pro-
vided under this subsection shall state the maximum 
amount of the regular required payments on the 
loan, based on the maximum interest rate allowed, 
introduced with the following language in con-
spicuous type size and format: ‘Your payment can 
go as high as $ll’, the blank to be filled in with 
the maximum possible payment amount. 
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‘‘(17) In the case of a residential mortgage loan 
for which an escrow or impound account will be es-
tablished for the payment of all applicable taxes, in-
surance, and assessments, the following statement: 
‘Your payments will be increased to cover taxes and 
insurance. In the first year, you will pay an addi-
tional $ll [insert the amount of the monthly pay-
ment to the account] every month to cover the costs 
of taxes and insurance.’. 
‘‘(18) In the case of a variable rate residential 
mortgage loan for which an escrow or impound ac-
count will be established for the payment of all ap-
plicable taxes, insurance, and assessments— 
‘‘(A) the amount of initial monthly pay-
ment due under the loan for the payment of 
principal and interest, and the amount of such 
initial monthly payment including the monthly 
payment deposited in the account for the pay-
ment of all applicable taxes, insurance, and as-
sessments; and 
‘‘(B) the amount of the fully indexed 
monthly payment due under the loan for the 
payment of principal and interest, and the 
amount of such fully indexed monthly payment 
including the monthly payment deposited in the 
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account for the payment of all applicable taxes, 
insurance, and assessments. 
‘‘(19) In the case of a residential mortgage 
loan, the aggregate amount of settlement charges for 
all settlement services provided in connection with 
the loan, the amount of charges that are included in 
the loan and the amount of such charges the bor-
rower must pay at closing, the approximate amount 
of the wholesale rate of funds in connection with the 
loan, and the aggregate amount of other fees or re-
quired payments in connection with the loan. 
‘‘(20) In the case of a residential mortgage 
loan, the aggregate amount of fees paid to the mort-
gage originator in connection with the loan, the 
amount of such fees paid directly by the consumer, 
and any additional amount received by the originator 
from the creditor based on the interest rate of the 
loan.’’. 
(b) TIMING.—Section 128(b) of the Truth in Lending 
Act (15 U.S.C. 1638(b)) is amended by adding at the end 
the following new paragraph: 
‘‘(4) RESIDENTIAL
MORTGAGE
LOAN
DISCLO-
SURES.—In the case of a residential mortgage loan, 
the information required to be disclosed under sub-
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section (a) with respect to such loan shall be dis-
closed before the earlier of— 
‘‘(A) the time required under the first sen-
tence of paragraph (1); or 
‘‘(B) the end of the 3-day period beginning 
on the date the application for the loan from a 
consumer is received by the creditor.’’. 
(c) ENHANCED MORTGAGE LOAN DISCLOSURES.— 
Section 128(b)(2) of the Truth in Lending Act (15 U.S.C. 
1638(b)(2)) is amended— 
(1) by striking ‘‘(2) In the’’ and inserting the 
following: 
‘‘(2) MORTGAGE DISCLOSURES.— 
‘‘(A) IN GENERAL.—In the’’; 
(2) by striking ‘‘a residential mortgage trans-
action, as defined in section 103(w)’’ and inserting 
‘‘any extension of credit that is secured by the dwell-
ing of a consumer’’; 
(3) by striking ‘‘shall be made in accordance’’ 
and all that follows through ‘‘extended, or’’; 
(4) by striking ‘‘If the’’ and all that follows 
through the end of the paragraph and inserting the 
following new subparagraphs: 
‘‘(B) STATEMENT AND TIMING OF DISCLO-
SURES.—In the case of an extension of credit 
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that is secured by the dwelling of a consumer, 
in addition to the other disclosures required by 
subsection (a), the disclosures provided under 
this paragraph shall state in conspicuous type 
size and format, the following: ‘You are not re-
quired to complete this agreement merely be-
cause you have received these disclosures or 
signed a loan application.’. 
‘‘(i) state in conspicuous type size and 
format, the following: ‘You are not re-
quired to complete this agreement merely 
because you have received these disclosures 
or signed a loan application.’; and 
‘‘(ii) be furnished to the borrower not 
later than 7 business days before the date 
of consummation of the transaction, sub-
ject to subparagraph (D). 
‘‘(C) 
VARIABLE
RATES
OR
PAYMENT 
SCHEDULES.—In the case of an extension of 
credit that is secured by the dwelling of a con-
sumer, under which the annual rate of interest 
is variable, or with respect to which the regular 
payments may otherwise be variable, in addition 
to the other disclosures required by subsection 
(a), the disclosures provided under this para-
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graph shall label the payment schedule as fol-
lows: ‘Payment Schedule: Payments Will Vary 
Based on Interest Rate Changes.’. 
‘‘(D) UPDATING
APR.—In any case in 
which the disclosure statement provided 7 busi-
ness days before the date of consummation of 
the transaction contains an annual percentage 
rate of interest that is no longer accurate, as 
determined under section 107(c), the creditor 
shall furnish an additional, corrected statement 
to the borrower, not later than 3 business days 
before the date of consummation of the trans-
action.’’. 
SEC. 214. DISCLOSURES REQUIRED IN MONTHLY STATE-
MENTS 
FOR 
RESIDENTIAL 
MORTGAGE 
LOANS. 
Section 128 of the Truth in Lending Act (15 U.S.C. 
1638) is amended by adding at the end the following new 
subsection: 
‘‘(e) PERIODIC
STATEMENTS
FOR
RESIDENTIAL 
MORTGAGE LOANS.— 
‘‘(1) IN GENERAL.—The creditor, assignee, or 
servicer with respect to any residential mortgage 
loan shall transmit to the obligor, for each billing 
cycle, a statement setting forth each of the following 
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items, to the extent applicable, in a conspicuous and 
prominent manner: 
‘‘(A) The amount of the principal obliga-
tion under the mortgage. 
‘‘(B) The current interest rate in effect for 
the loan. 
‘‘(C) The date on which the interest rate 
may next reset or adjust. 
‘‘(D) The amount of any prepayment fee 
to be charged, if any. 
‘‘(E) A description of any late payment 
fees. 
‘‘(F) A telephone number and electronic 
mail address that may be used by the obligor to 
obtain information regarding the mortgage. 
‘‘(G) Such other information as the Board 
may prescribe in regulations. 
‘‘(2) DEVELOPMENT AND USE OF STANDARD 
FORM.—The Federal banking agencies shall jointly 
develop and prescribe a standard form for the disclo-
sure required under this subsection, taking into ac-
count that the statements required may be trans-
mitted in writing or electronically.’’. 
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SEC. 215. AUTHORIZATION OF APPROPRIATIONS. 
For fiscal years 2008, 2009, 2010, 2011, and 2012, 
there are authorized to be appropriated to the Attorney 
General a total of— 
(1) $31,250,000 to support the employment of 
30 additional agents of the Federal Bureau of Inves-
tigation and 2 additional dedicated prosecutors at 
the Department of Justice to coordinate prosecution 
of mortgage fraud efforts with the offices of the 
United States Attorneys; and 
(2) $750,000 to support the operations of inter-
agency task forces of the Federal Bureau of Inves-
tigation in the areas with the 15 highest concentra-
tions of mortgage fraud. 
SEC. 216. EFFECTIVE DATE. 
The amendments made by this title shall apply to 
transactions consummated on or after the effective date 
of the regulations specified in section 209. 
SEC. 217. REPORT BY THE GAO. 
(a) REPORT REQUIRED.—The Comptroller General 
shall conduct a study to determine the effects the enact-
ment of this Act will have on the availability and afford-
ability of credit for homebuyers and mortgage lending, in-
cluding the effect— 
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(1) on the mortgage market for mortgages that 
are not within the safe harbor provided in the 
amendments made by this title; 
(2) on the ability of prospective homebuyers to 
obtain financing; 
(3) on the ability of homeowners facing resets 
or adjustments to refinance—for example, do they 
have fewer refinancing options due to the unavail-
ability of certain loan products that were available 
before the enactment of this Act; 
(4) on minorities’ ability to access affordable 
credit compared with other prospective borrowers; 
(5) on home sales and construction; 
(6) of extending the rescission right, if any, on 
adjustable rate loans and its impact on litigation; 
(7) of State foreclosure laws and, if any, an in-
vestor’s ability to transfer a property after fore-
closure; 
(8) of expanding the existing provisions of the 
Home Ownership and Equity Protection Act of 
1994; 
(9) of prohibiting prepayment penalties on 
high-cost mortgages; and 
(10) of establishing counseling services under 
the Department of Housing and Urban Development 
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and offered through the Office of Housing Coun-
seling. 
(b) REPORT.—Before the end of the 1-year period be-
ginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress 
containing the findings and conclusions of the Comptroller 
General with respect to the study conducted pursuant to 
subsection (a). 
TITLE III—HIGH-COST 
MORTGAGES 
SEC. 301. 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— 
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‘‘(i) in the case of a credit transaction 
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 (10 percentage 
points, if the dwelling is personal 
property and the transaction is for 
less than $50,000) 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 
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‘‘(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 
originator that originates a loan in the name of 
the originator in a table-funded transaction;’’; 
(B) in subparagraph (C)(ii), by inserting 
‘‘except where applied to the charges set forth 
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in section 106(e)(1) where a creditor may re-
ceive indirect compensation solely as a result of 
obtaining distributions of profits from an affili-
ated entity based on its ownership interest in 
compliance with section 8(c)(4) of the Real Es-
tate Settlement Procedures Act of 1974’’ before 
the semicolon at the end; 
(C) in subparagraph (C)(iii), by striking ‘‘; 
and’’ and inserting ‘‘, except as provided for in 
clause (ii);’’; 
(D) by redesignating subparagraph (D) as 
subparagraph (G); and 
(E) 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; 
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‘‘(E) except as provided in subsection (cc), 
the maximum prepayment fees and penalties 
which may be charged or collected under the 
terms of the credit transaction; 
‘‘(F) all prepayment fees or penalties that 
are incurred by the consumer 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
CONSUMER
CREDIT
PLANS.—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 CONSUMER CREDIT PLANS.—In the case 
of open-end consumer credit plans, 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 col-
lected under the terms of the credit transaction, plus 
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101 
HR 3915 RFS
the minimum additional fees the consumer 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, 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 
inserting after subsection (cc) (as added by section 121) 
the following new subsection: 
‘‘(dd) 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 paragraph (1) or (4) of 
the following paragraphs, but not both, may be excluded: 
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‘‘(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 consumer in con-
nection with the mortgage, but only if the inter-
est 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 point pay-
able by the consumer 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- 
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103 
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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 
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HR 3915 RFS
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.’’. 
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SEC. 302. 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 
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106 
HR 3915 RFS
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 mortgages.’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) PROHIBITION
ON
EXTENDING
CREDIT 
WITHOUT REGARD TO PAYMENT ABILITY OF CON-
SUMER.— 
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HR 3915 RFS
‘‘(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 mortgage is closed that the 
consumer or consumers that are residing or will 
reside in the residence subject to the mortgage 
will be able to make the scheduled payments as-
sociated with the mortgage, based upon a con-
sideration of current and expected income, cur-
rent obligations, employment status, and other 
financial resources, other than equity in the res-
idence. 
‘‘(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 high-cost mortgage is 
consummated, the consumer’s total monthly 
debts, including amounts under the mortgage, 
do not exceed 50 percent of his or her monthly 
gross income as verified by tax returns, payroll 
receipts, 
or 
other 
third-party 
income 
verification.’’. 
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SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN 
MORTGAGES. 
(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 
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HR 3915 RFS
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, 
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HR 3915 RFS
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)) the following new subsection: 
‘‘(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-
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HR 3915 RFS
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 
after subsection (r) (as added by subsection (c) of this 
section) the following new subsection: 
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HR 3915 RFS
‘‘(s) 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-
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HR 3915 RFS
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 5 business days after receiving a 
request by a consumer or a person authorized by the 
consumer to obtain such information.’’. 
(e) PRE-LOAN COUNSELING REQUIRED.—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 sub-
section: 
‘‘(t) 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 
consumer has received counseling on the advisability 
of the mortgage. Such counselor shall not be em-
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HR 3915 RFS
ployed by the creditor or an affiliate of the creditor 
or be affiliated with the creditor. 
‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUN-
SELING.—No counselor may certify that a consumer 
has received counseling on the advisability of the 
high-cost mortgage unless the counselor can verify 
that the consumer has received each statement re-
quired (in connection with such loan) by this section 
or 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).’’. 
(f) FLIPPING PROHIBITED.—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)) 
the following new subsection: 
‘‘(u) FLIPPING.— 
‘‘(1) IN GENERAL.—No creditor may knowingly 
or intentionally engage in the unfair act or practice 
of flipping in connection with a high-cost mortgage. 
‘‘(2) FLIPPING DEFINED.—For purposes of this 
subsection, the term ‘flipping’ means the making of 
a loan or extension of credit in the form a high-cost 
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mortgage to a consumer which refinances an existing 
mortgage when the new loan or extension of credit 
does not have reasonable, net tangible benefit (as de-
termined in accordance with regulations prescribed 
under section 129B(b)) to the consumer considering 
all of the circumstances, including the terms of both 
the new and the refinanced loans or credit, the cost 
of the new loan or credit, and the consumer’s cir-
cumstances.’’. 
SEC. 304. 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 consumer 
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 consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
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116 
HR 3915 RFS
‘‘(B) in the case of a high-cost mortgage, 
change the terms of the loan in a manner bene-
ficial to the consumer so that the loan will no 
longer be a high-cost mortgage; or 
‘‘(2) within 60 days of the creditor’s discovery 
or receipt of notification of an unintentional viola-
tion or bona fide error as described in subsection (c) 
and prior to the institution of any action, the con-
sumer is notified of the compliance failure, appro-
priate restitution is made, and whatever adjustments 
are necessary are made to the loan to either, at the 
choice of the consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) in the case of a high-cost mortgage, 
change the terms of the loan in a manner bene-
ficial so that the loan will no longer be a high- 
cost mortgage.’’. 
SEC. 305. REGULATIONS. 
(a) IN GENERAL.—The Board of Governors of the 
Federal Reserve System shall publish regulations imple-
menting this title and the amendments made by this title 
in final form before the end of the 6-month period begin-
ning on the date of the enactment of this Act. 
(b) CONSUMER MORTGAGE EDUCATION.— 
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HR 3915 RFS
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System may prescribe regula-
tions requiring or encouraging creditors to provide 
consumer mortgage education to prospective cus-
tomers or direct such customers to qualified con-
sumer mortgage education or counseling programs 
in the vicinity of the residence of the consumer. 
(2) COORDINATION WITH STATE LAW.—No re-
quirement established by the Board of Governors of 
the Federal Reserve System pursuant to paragraph 
(1) shall be construed as affecting or superseding 
any requirement under the law of any State with re-
spect to consumer mortgage counseling or education. 
SEC. 306. EFFECTIVE DATE. 
The amendments made by this title shall take effect 
at the end of the 6-month period beginning on the date 
of the enactment of this Act and shall apply to mortgages 
referred to in section 103(aa) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)) consummated after the end of 
such period. 
TITLE IV—OFFICE OF HOUSING 
COUNSELING 
SEC. 401. SHORT TITLE. 
This title may be cited as the ‘‘Expand and Preserve 
Home Ownership Through Counseling Act’’. 
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HR 3915 RFS
SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUN-
SELING. 
Section 4 of the Department of Housing and Urban 
Development Act (42 U.S.C. 3533) is amended by adding 
at the end the following new subsection: 
‘‘(g) OFFICE OF HOUSING COUNSELING.— 
‘‘(1) ESTABLISHMENT.—There is established, 
in the Office of the Secretary, the Office of Housing 
Counseling. 
‘‘(2) DIRECTOR.—There is established the posi-
tion of Director of Housing Counseling. The Direc-
tor shall be the head of the Office of Housing Coun-
seling and shall be appointed by the Secretary. Such 
position shall be a career-reserved position in the 
Senior Executive Service. 
‘‘(3) FUNCTIONS.— 
‘‘(A) IN
GENERAL.—The Director shall 
have ultimate responsibility within the Depart-
ment, except for the Secretary, for all activities 
and matters relating to homeownership coun-
seling and rental housing counseling, includ-
ing— 
‘‘(i) research, grant administration, 
public outreach, and policy development re-
lating to such counseling; and 
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HR 3915 RFS
‘‘(ii) establishment, coordination, and 
administration of all regulations, require-
ments, standards, and performance meas-
ures under programs and laws adminis-
tered by the Department that relate to 
housing counseling, homeownership coun-
seling (including maintenance of homes), 
mortgage-related 
counseling 
(including 
home equity conversion mortgages and 
credit protection options to avoid fore-
closure), and rental housing counseling, in-
cluding the requirements, standards, and 
performance measures relating to housing 
counseling. 
‘‘(B) SPECIFIC FUNCTIONS.—The Director 
shall carry out the functions assigned to the Di-
rector and the Office under this section and any 
other provisions of law. Such functions shall in-
clude establishing rules necessary for— 
‘‘(i) the counseling procedures under 
section 106(g)(1) of the Housing and 
Urban Development Act of 1968 (12 
U.S.C. 1701x(h)(1)); 
‘‘(ii) carrying out all other functions 
of the Secretary under section 106(g) of 
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120 
HR 3915 RFS
the Housing and Urban Development Act 
of 1968, including the establishment, oper-
ation, and publication of the availability of 
the toll-free telephone number under para-
graph (2) of such section; 
‘‘(iii) carrying out section 5 of the 
Real Estate Settlement Procedures Act of 
1974 (12 U.S.C. 2604) for home buying 
information booklets prepared pursuant to 
such section; 
‘‘(iv) carrying out the certification 
program under section 106(e) of the Hous-
ing and Urban Development Act of 1968 
(12 U.S.C. 1701x(e)); 
‘‘(v) carrying out the assistance pro-
gram under section 106(a)(4) of the Hous-
ing and Urban Development Act of 1968, 
including criteria for selection of applica-
tions to receive assistance; 
‘‘(vi) carrying out any functions re-
garding abusive, deceptive, or unscrupulous 
lending practices relating to residential 
mortgage loans that the Secretary con-
siders appropriate, which shall include con-
ducting the study under section 6 of the 
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121 
HR 3915 RFS
Expand and Preserve Home Ownership 
Through Counseling Act; 
‘‘(vii) providing for operation of the 
advisory committee established under para-
graph (4) of this subsection; 
‘‘(viii) collaborating with community- 
based organizations with expertise in the 
field of housing counseling; and 
‘‘(ix) providing for the building of ca-
pacity to provide housing counseling serv-
ices in areas that lack sufficient services. 
‘‘(4) ADVISORY COMMITTEE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
appoint an advisory committee to provide advice 
regarding the carrying out of the functions of 
the Director. 
‘‘(B) MEMBERS.—Such advisory committee 
shall consist of not more than 12 individuals, 
and the membership of the committee shall 
equally represent all aspects of the mortgage 
and real estate industry, including consumers. 
‘‘(C) TERMS.—Except as provided in sub-
paragraph (D), each member of the advisory 
committee shall be appointed for a term of 3 
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122 
HR 3915 RFS
years. Members may be reappointed at the dis-
cretion of the Secretary. 
‘‘(D) TERMS OF INITIAL APPOINTEES.—As 
designated by the Secretary at the time of ap-
pointment, of the members first appointed to 
the advisory committee, 4 shall be appointed for 
a term of 1 year and 4 shall be appointed for 
a term of 2 years. 
‘‘(E) PROHIBITION OF PAY; TRAVEL EX-
PENSES.—Members of the advisory committee 
shall serve without pay, but shall receive travel 
expenses, including per diem in lieu of subsist-
ence, in accordance with applicable provisions 
under subchapter I of chapter 57 of title 5, 
United States Code. 
‘‘(F) ADVISORY
ROLE
ONLY.—The advi-
sory committee shall have no role in reviewing 
or awarding housing counseling grants. 
‘‘(5) 
SCOPE
OF
HOMEOWNERSHIP
COUN-
SELING.—In carrying out the responsibilities of the 
Director, the Director shall ensure that homeowner-
ship counseling provided by, in connection with, or 
pursuant to any function, activity, or program of the 
Department addresses the entire process of home-
ownership, including the decision to purchase a 
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123 
HR 3915 RFS
home, the selection and purchase of a home, issues 
arising during or affecting the period of ownership 
of a home (including refinancing, default and fore-
closure, and other financial decisions), and the sale 
or other disposition of a home.’’. 
SEC. 403. COUNSELING PROCEDURES. 
(a) IN GENERAL.—Section 106 of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x) is 
amended by adding at the end the following new sub-
section: 
‘‘(g) PROCEDURES AND ACTIVITIES.— 
‘‘(1) COUNSELING PROCEDURES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish, coordinate, and monitor the adminis-
tration by the Department of Housing and 
Urban Development of the counseling proce-
dures for homeownership counseling and rental 
housing counseling provided in connection with 
any program of the Department, including all 
requirements, 
standards, 
and 
performance 
measures that relate to homeownership and 
rental housing counseling. 
‘‘(B) HOMEOWNERSHIP
COUNSELING.— 
For purposes of this subsection and as used in 
the provisions referred to in this subparagraph, 
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124 
HR 3915 RFS
the term ‘homeownership counseling’ means 
counseling related to homeownership and resi-
dential mortgage loans. Such term includes 
counseling related to homeownership and resi-
dential mortgage loans that is provided pursu-
ant to— 
‘‘(i) section 105(a)(20) of the Housing 
and Community Development Act of 1974 
(42 U.S.C. 5305(a)(20)); 
‘‘(ii) in the United States Housing 
Act of 1937— 
‘‘(I) section 9(e) (42 U.S.C. 
1437g(e)); 
‘‘(II) 
section 
8(y)(1)(D) 
(42 
U.S.C. 1437f(y)(1)(D)); 
‘‘(III) section 18(a)(4)(D) (42 
U.S.C. 1437p(a)(4)(D)); 
‘‘(IV) section 23(c)(4) (42 U.S.C. 
1437u(c)(4)); 
‘‘(V) section 32(e)(4) (42 U.S.C. 
1437z–4(e)(4)); 
‘‘(VI) section 33(d)(2)(B) (42 
U.S.C. 1437z–5(d)(2)(B)); 
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HR 3915 RFS
‘‘(VII) sections 302(b)(6) and 
303(b)(7) 
(42 
U.S.C. 
1437aaa– 
1(b)(6), 1437aaa–2(b)(7)); and 
‘‘(VIII) section 304(c)(4) (42 
U.S.C. 1437aaa–3(c)(4)); 
‘‘(iii) section 302(a)(4) of the Amer-
ican Homeownership and Economic Oppor-
tunity Act of 2000 (42 U.S.C. 1437f note); 
‘‘(iv) sections 233(b)(2) and 258(b) of 
the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12773(b)(2), 
12808(b)); 
‘‘(v) this section and section 101(e) of 
the Housing and Urban Development Act 
of 1968 (12 U.S.C. 1701x, 1701w(e)); 
‘‘(vi) section 220(d)(2)(G) of the Low- 
Income Housing Preservation and Resident 
Homeownership Act of 1990 (12 U.S.C. 
4110(d)(2)(G)); 
‘‘(vii) sections 422(b)(6), 423(b)(7), 
424(c)(4), 442(b)(6), and 443(b)(6) of the 
Cranston-Gonzalez 
National 
Affordable 
Housing Act (42 U.S.C. 12872(b)(6), 
12873(b)(7), 
12874(c)(4), 
12892(b)(6), 
and 12893(b)(6)); 
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126 
HR 3915 RFS
‘‘(viii) section 491(b)(1)(F)(iii) of the 
McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11408(b)(1)(F)(iii)); 
‘‘(ix) 
sections 
202(3) 
and 
810(b)(2)(A) of the Native American 
Housing and Self-Determination Act of 
1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 
‘‘(x) in the National Housing Act— 
‘‘(I) in section 203 (12 U.S.C. 
1709), the penultimate undesignated 
paragraph of paragraph (2) of sub-
section (b), subsection (c)(2)(A), and 
subsection (r)(4); 
‘‘(II) subsections (a) and (c)(3) 
of section 237 (12 U.S.C. 1715z–2); 
and 
‘‘(III) subsections (d)(2)(B) and 
(m)(1) of section 255 (12 U.S.C. 
1715z–20); 
‘‘(xi) section 502(h)(4)(B) of the 
Housing 
Act 
of 
1949 
(42 
U.S.C. 
1472(h)(4)(B)); and 
‘‘(xii) section 508 of the Housing and 
Urban Development Act of 1970 (12 
U.S.C. 1701z–7). 
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129 
HR 3915 RFS
ment of Housing and Urban Development Act, shall 
establish standards for materials and forms to be 
used, as appropriate, by organizations providing 
homeownership counseling services, including any re-
cipients of assistance pursuant to subsection (a)(4). 
‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 
‘‘(A) CERTIFICATION.—The Secretary shall 
provide for the certification of various computer 
software programs for consumers to use in eval-
uating different residential mortgage loan pro-
posals. The Secretary shall require, for such 
certification, that the mortgage software sys-
tems take into account— 
‘‘(i) the consumer’s financial situation 
and the cost of maintaining a home, in-
cluding insurance, taxes, and utilities; 
‘‘(ii) the amount of time the consumer 
expects to remain in the home or expected 
time to maturity of the loan; 
‘‘(iii) such other factors as the Sec-
retary considers appropriate to assist the 
consumer in evaluating whether to pay 
points, to lock in an interest rate, to select 
an adjustable or fixed rate loan, to select 
a conventional or government-insured or 
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130 
HR 3915 RFS
guaranteed loan and to make other choices 
during the loan application process. 
If the Secretary determines that available exist-
ing software is inadequate to assist consumers 
during the residential mortgage loan application 
process, the Secretary shall arrange for the de-
velopment by private sector software companies 
of new mortgage software systems that meet 
the Secretary’s specifications. 
‘‘(B) USE
AND
INITIAL
AVAILABILITY.— 
Such certified computer software programs 
shall be used to supplement, not replace, hous-
ing counseling. The Secretary shall provide that 
such programs are initially used only in connec-
tion with the assistance of housing counselors 
certified pursuant to subsection (e). 
‘‘(C) AVAILABILITY.—After a period of ini-
tial availability under subparagraph (B) as the 
Secretary considers appropriate, the Secretary 
shall take reasonable steps to make mortgage 
software systems certified pursuant to this 
paragraph widely available through the Internet 
and at public locations, including public librar-
ies, senior-citizen centers, public housing sites, 
offices of public housing agencies that admin-
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131 
HR 3915 RFS
ister rental housing assistance vouchers, and 
housing counseling centers. 
‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA 
CAMPAIGNS TO PROMOTE HOUSING COUNSELING.— 
‘‘(A) IN GENERAL.—The Director of Hous-
ing Counseling shall develop, implement, and 
conduct national public service multimedia cam-
paigns designed to make persons facing mort-
gage 
foreclosure, 
persons 
considering 
a 
subprime mortgage loan to purchase a home, el-
derly persons, persons who face language bar-
riers, low-income persons, and other potentially 
vulnerable consumers aware that it is advisable, 
before seeking or maintaining a residential 
mortgage loan, to obtain homeownership coun-
seling from an unbiased and reliable sources 
and that such homeownership counseling is 
available, including through programs spon-
sored by the Secretary of Housing and Urban 
Development. 
‘‘(B) CONTACT INFORMATION.—Each seg-
ment of the multimedia campaign under sub-
paragraph (A) shall publicize the toll-free tele-
phone number and web site of the Department 
of Housing and Urban Development through 
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132 
HR 3915 RFS
which persons seeking housing counseling can 
locate a housing counseling agency in their 
State that is certified by the Secretary of Hous-
ing and Urban Development and can provide 
advice on buying a home, renting, defaults, 
foreclosures, credit issues, and reverse mort-
gages. 
‘‘(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There are authorized to be appro-
priated to the Secretary, not to exceed 
$3,000,000 for fiscal years 2008, 2009, and 
2010, for the develop, implement, and conduct 
of national public service multimedia campaigns 
under this paragraph. 
‘‘(5) EDUCATION
PROGRAMS.—The Secretary 
shall provide advice and technical assistance to 
States, units of general local government, and non-
profit organizations regarding the establishment and 
operation of, including assistance with the develop-
ment of content and materials for, educational pro-
grams to inform and educate consumers, particularly 
those most vulnerable with respect to residential 
mortgage loans (such as elderly persons, persons 
facing language barriers, low-income persons, and 
other potentially vulnerable consumers), regarding 
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133 
HR 3915 RFS
home mortgages, mortgage refinancing, home equity 
loans, and home repair loans.’’. 
(b) CONFORMING AMENDMENTS
TO GRANT PRO-
GRAM
FOR HOMEOWNERSHIP COUNSELING ORGANIZA-
TIONS.—Section 106(c)(5)(A)(ii) of the Housing and 
Urban 
Development 
Act 
of 
1968 
(12 
U.S.C. 
1701x(c)(5)(A)(ii)) is amended— 
(1) in subclause (III), by striking ‘‘and’’ at the 
end; 
(2) in subclause (IV) by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after subclause (IV) the fol-
lowing new subclause: 
‘‘(V) notify the housing or mort-
gage applicant of the availability of 
mortgage software systems provided 
pursuant to subsection (g)(3).’’. 
SEC. 404. GRANTS FOR HOUSING COUNSELING ASSIST-
ANCE. 
Section 106(a) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended 
by adding at the end the following new paragraph: 
‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING 
ASSISTANCE.— 
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134 
HR 3915 RFS
‘‘(A) IN GENERAL.—The Secretary shall make 
financial assistance available under this paragraph 
to States, units of general local governments, and 
nonprofit organizations providing homeownership or 
rental counseling (as such terms are defined in sub-
section (g)(1)). 
‘‘(B) QUALIFIED
ENTITIES.—The Secretary 
shall establish standards and guidelines for eligibility 
of organizations (including governmental and non-
profit organizations) to receive assistance under this 
paragraph. 
‘‘(C) DISTRIBUTION.—Assistance made avail-
able under this paragraph shall be distributed in a 
manner that encourages efficient and successful 
counseling programs. 
‘‘(D) AUTHORIZATION OF APPROPRIATIONS.— 
There 
are 
authorized 
to 
be 
appropriated 
$45,000,000 for each of fiscal years 2008 through 
2011 for— 
‘‘(i) the operations of the Office of Hous-
ing Counseling of the Department of Housing 
and Urban Development; 
‘‘(ii) the responsibilities of the Secretary 
under paragraphs (2) through (5) of subsection 
(g); and 
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135 
HR 3915 RFS
‘‘(iii) assistance pursuant to this para-
graph for entities providing homeownership and 
rental counseling.’’. 
SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUN-
SELORS UNDER HUD PROGRAMS. 
Section 106(e) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(e)) is amended— 
(1) by striking paragraph (1) and inserting the 
following new paragraph: 
‘‘(1) REQUIREMENT FOR ASSISTANCE.—An or-
ganization may not receive assistance for counseling 
activities under subsection (a)(1)(iii), (a)(2), (a)(4), 
(c), or (d) of this section, or under section 101(e), 
unless the organization, or the individuals through 
which the organization provides such counseling, has 
been certified by the Secretary under this subsection 
as competent to provide such counseling.’’; 
(2) in paragraph (2)— 
(A) by inserting ‘‘and for certifying organi-
zations’’ before the period at the end of the 
first sentence; and 
(B) in the second sentence by striking ‘‘for 
certification’’ and inserting ‘‘, for certification 
of an organization, that each individual through 
which the organization provides counseling shall 
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136 
HR 3915 RFS
demonstrate, and, for certification of an indi-
vidual,’’; 
(3) in paragraph (3), by inserting ‘‘organiza-
tions and’’ before ‘‘individuals’’; 
(4) by redesignating paragraph (3) as para-
graph (5); and 
(5) by inserting after paragraph (2) the fol-
lowing new paragraphs: 
‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.— 
Any homeownership counseling or rental housing 
counseling (as such terms are defined in subsection 
(g)(1)) required under, or provided in connection 
with, any program administered by the Department 
of Housing and Urban Development shall be pro-
vided only by organizations or counselors certified by 
the Secretary under this subsection as competent to 
provide such counseling. 
‘‘(4) OUTREACH.—The Secretary shall take 
such actions as the Secretary considers appropriate 
to ensure that individuals and organizations pro-
viding homeownership or rental housing counseling 
are aware of the certification requirements and 
standards of this subsection and of the training and 
certification programs under subsection (f).’’. 
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HR 3915 RFS
SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES. 
The Secretary of Housing and Urban Development 
shall conduct an extensive study of the root causes of de-
fault and foreclosure of home loans, using as much empir-
ical data as are available. The study shall also examine 
the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures. Not later 
than 12 months after the date of the enactment of this 
Act, the Secretary shall submit to the Congress a prelimi-
nary report regarding the study. Not later than 24 months 
after such date of enactment, the Secretary shall submit 
a final report regarding the results of the study, which 
shall include any recommended legislation relating to the 
study, and recommendations for best practices and for a 
process to identify populations that need counseling the 
most. 
SEC. 407. DEFINITIONS FOR COUNSELING-RELATED PRO-
GRAMS. 
Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(h) DEFINITIONS.—For purposes of this section: 
‘‘(1) NONPROFIT
ORGANIZATION.—The term 
‘nonprofit organization’ has the meaning given such 
term in section 104(5) of the Cranston-Gonzalez Na-
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tional 
Affordable 
Housing 
Act 
(42 
U.S.C. 
12704(5)), except that subparagraph (D) of such 
section shall not apply for purposes of this section. 
‘‘(2) STATE.—The term ‘State’ means each of 
the several States, the Commonwealth of Puerto 
Rico, the District of Columbia, the Commonwealth 
of the Northern Mariana Islands, Guam, the Virgin 
Islands, American Samoa, the Trust Territories of 
the Pacific, or any other possession of the United 
States. 
‘‘(3) UNIT
OF
GENERAL
LOCAL
GOVERN-
MENT.—The term ‘unit of general local government’ 
means any city, county, parish, town, township, bor-
ough, village, or other general purpose political sub-
division of a State.’’. 
SEC. 408. UPDATING AND SIMPLIFICATION OF MORTGAGE 
INFORMATION BOOKLET. 
Section 5 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2604) is amended— 
(1) in the section heading, by striking ‘‘SPE-
CIAL’’ and inserting ‘‘HOME BUYING’’; 
(2) by striking subsections (a) and (b) and in-
serting the following new subsections: 
‘‘(a) PREPARATION AND DISTRIBUTION.—The Sec-
retary shall prepare, at least once every 5 years, a booklet 
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to help consumers applying for federally related mortgage 
loans to understand the nature and costs of real estate 
settlement services. The Secretary shall prepare the book-
let in various languages and cultural styles, as the Sec-
retary determines to be appropriate, so that the booklet 
is understandable and accessible to homebuyers of dif-
ferent ethnic and cultural backgrounds. The Secretary 
shall distribute such booklets to all lenders that make fed-
erally related mortgage loans. The Secretary shall also dis-
tribute to such lenders lists, organized by location, of 
homeownership counselors certified under section 106(e) 
of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(e)) for use in complying with the require-
ment under subsection (c) of this section. 
‘‘(b) CONTENTS.—Each booklet shall be in such form 
and detail as the Secretary shall prescribe and, in addition 
to such other information as the Secretary may provide, 
shall include in plain and understandable language the fol-
lowing information: 
‘‘(1) A description and explanation of the na-
ture and purpose of the costs incident to a real es-
tate settlement or a federally related mortgage loan. 
The description and explanation shall provide gen-
eral information about the mortgage process as well 
as specific information concerning, at a minimum— 
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‘‘(A) balloon payments; 
‘‘(B) prepayment penalties; and 
‘‘(C) the trade-off between closing costs 
and the interest rate over the life of the loan. 
‘‘(2) An explanation and sample of the uniform 
settlement statement required by section 4. 
‘‘(3) A list and explanation of lending practices, 
including those prohibited by the Truth in Lending 
Act or other applicable Federal law, and of other un-
fair practices and unreasonable or unnecessary 
charges to be avoided by the prospective buyer with 
respect to a real estate settlement. 
‘‘(4) A list and explanation of questions a con-
sumer obtaining a federally related mortgage loan 
should ask regarding the loan, including whether the 
consumer will have the ability to repay the loan, 
whether the consumer sufficiently shopped for the 
loan, whether the loan terms include prepayment 
penalties or balloon payments, and whether the loan 
will benefit the borrower. 
‘‘(5) An explanation of the right of rescission as 
to certain transactions provided by sections 125 and 
129 of the Truth in Lending Act. 
‘‘(6) A brief explanation of the nature of a vari-
able rate mortgage and a reference to the booklet 
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entitled ‘Consumer Handbook on Adjustable Rate 
Mortgages’, published by the Board of Governors of 
the Federal Reserve System pursuant to section 
226.19(b)(1) of title 12, Code of Federal Regula-
tions, or to any suitable substitute of such booklet 
that such Board of Governors may subsequently 
adopt pursuant to such section. 
‘‘(7) A brief explanation of the nature of a 
home equity line of credit and a reference to the 
pamphlet required to be provided under section 
127A of the Truth in Lending Act. 
‘‘(8) Information about homeownership coun-
seling services made available pursuant to section 
106(a)(4) of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x(a)(4)), a rec-
ommendation that the consumer use such services, 
and notification that a list of certified providers of 
homeownership counseling in the area, and their 
contact information, is available. 
‘‘(9) An explanation of the nature and purpose 
of escrow accounts when used in connection with 
loans secured by residential real estate and the re-
quirements under section 10 of this Act regarding 
such accounts. 
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‘‘(10) An explanation of the choices available to 
buyers of residential real estate in selecting persons 
to provide necessary services incidental to a real es-
tate settlement. 
‘‘(11) An explanation of a consumer’s respon-
sibilities, liabilities, and obligations in a mortgage 
transaction. 
‘‘(12) An explanation of the nature and purpose 
of real estate appraisals, including the difference be-
tween an appraisal and a home inspection. 
‘‘(13) Notice that the Office of Housing of the 
Department of Housing and Urban Development has 
made publicly available a brochure regarding loan 
fraud and a World Wide Web address and toll-free 
telephone number for obtaining the brochure. 
The booklet prepared pursuant to this section shall take 
into consideration differences in real estate settlement pro-
cedures that may exist among the several States and terri-
tories of the United States and among separate political 
subdivisions within the same State and territory.’’; 
(3) in subsection (c), by inserting at the end 
the following new sentence: ‘‘Each lender shall also 
include with the booklet a reasonably complete or 
updated list of homeownership counselors who are 
certified pursuant to section 106(e) of the Housing 
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and Urban Development Act of 1968 (12 U.S.C. 
1701x(e)) and located in the area of the lender.’’; 
and 
(4) in subsection (d), by inserting after the pe-
riod at the end of the first sentence the following: 
‘‘The lender shall provide the HUD-issued booklet in 
the version that is most appropriate for the person 
receiving it.’’. 
TITLE 
V—MORTGAGE 
DISCLO-
SURES UNDER REAL ESTATE 
SETTLEMENT 
PROCEDURES 
ACT OF 1974 
SEC. 501. UNIVERSAL MORTGAGE DISCLOSURE IN GOOD 
FAITH ESTIMATE OF SETTLEMENT SERVICES 
COSTS. 
(a) IN GENERAL.—Section 5 of the Real Estate Set-
tlement Procedures Act of 1974 (12 U.S.C. 2604) is 
amended— 
(1) in subsection (c), by adding after the period 
at the end the following: ‘‘Each such good faith esti-
mate shall include the disclosure required under sub-
section (f) in the form prescribed by the Secretary 
pursuant to such subsection, except that if the Sec-
retary at any time issues any regulations requiring 
the use of a standard or uniform form or statement 
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HR 3915 RFS
in providing the good faith estimate required under 
this subsection and prescribing such standard or 
uniform form or statement, such disclosure shall not 
be required after the effective date of such regula-
tions.’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(f) UNIVERSAL MORTGAGE DISCLOSURE REQUIRE-
MENT FOR GOOD FAITH ESTIMATES.— 
‘‘(1) DISCLOSURE.—The disclosure required 
under this subsection is a written statement regard-
ing the federally related mortgage loan for which the 
good faith estimate under subsection (c) is made, 
that consists of the following statements, appro-
priately and in good faith completed by the lender 
in accordance with the terms of the federally related 
mortgage loan involved in the settlement: 
‘‘(A) ‘Your Loan Amount will be’ and 
‘$llll’, each statement appearing in a 
separate column of the disclosure. 
‘‘(B) ‘Your Loan is’, ‘A Fixed Rate Loan’, 
and ‘An Adjustable Rate Loan ’, each state-
ment appearing in a separate column and each 
of the last two such statements preceded by a 
checkbox. 
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‘‘(C) ‘Your Loan Term is’, ‘lll years’, 
and ‘lll years’, each statement appearing 
in a separate column, and the second such 
statement shall appear in the same column as 
the statement required by subparagraph (B) re-
garding fixed rate loans and the third such 
statement shall appear in the same column as 
the statement required by subparagraph (B) re-
garding adjustable rate loans; 
‘‘(D) ‘Your Estimated Interest Rate (APR) 
is’, ‘lll%’, and ‘lll% initially, then it 
will adjust. In lll months, Your rate may 
adjust to a maximum of lll%’, each state-
ment appearing in a separate column, the sec-
ond such statement shall appear in the same 
column as the statement required by subpara-
graph (B) regarding fixed rate loans and the 
third such statement shall appear in the same 
column as the statement required by subpara-
graph (B) regarding adjustable rate loans, and 
the blanks relating to estimated interest rate 
shall be completed by the lender using an an-
nual percentage rate determined in accordance 
with the Truth in Lending Act. 
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‘‘(E) ‘Your Total Estimated Monthly Pay-
ment (Including loan Principal and Interest, 
and property Taxes (based on current rates) 
and Insurance (PITI)) is’, ‘$llll which 
represents lll% of Your estimated monthly 
income’, and ‘$llll which represents 
lll% of Your estimated monthly income. 
When Your interest rate initially adjusts, Your 
maximum monthly payment may be as high as 
$llll which represents lll% of Your 
estimated monthly income’, each statement ap-
pearing in a separate column, and the second 
such statement shall appear in the same column 
as the statement required by subparagraph (B) 
regarding fixed rate loans and the third such 
statement shall appear in the same column as 
the statement required by subparagraph (B) re-
garding adjustable rate loans. 
‘‘(F) ‘Your Rate Lock Period is’ and 
‘lll days. After You lock into Your inter-
est rate, You must go to settlement within this 
number of days to be guaranteed this interest 
rate.’, each statement appearing in a separate 
column. 
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‘‘(G) ‘Does Your loan have a prepayment 
penalty?’, ‘YES, Your maximum prepayment 
penalty is $llll’, and ‘NO’, the first such 
statement and the last two such statements ap-
pearing in a separate column, and each of the 
last two such statements preceded by a 
checkbox. 
‘‘(H) ‘Does Your loan have a balloon pay-
ment?’, 
‘YES, 
Your 
balloon 
payment 
of 
$llll is due in lll months’, and ‘NO’, 
the first such statement and the last two such 
statements appearing in a separate column, and 
each of the last two such statements preceded 
by a checkbox. 
‘‘(I) ‘Your Total Estimated Settlement 
Charges Will be $llll (a)’ and ‘Your 
Total Estimated Down Payment will be 
$llll (b)’, each statement appearing in a 
separate column. 
‘‘(J) ‘Your Total Estimated Cash Needed 
at Closing Will Be’ and ‘$llll (a+b)’, 
each statement appearing in a separate column. 
‘‘(K) ‘This represents a simple summary of 
Your Good Faith Estimate (GFE). To under-
stand the terms of Your loan, You must see dis-
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HR 3915 RFS
closure forms and the Truth in Lending Act.’, 
such statement appearing directly below the en-
tirety of the remainder of the disclosure. 
‘‘(2) STANDARD FORM.— 
‘‘(A) DEVELOPMENT AND USE.—The Sec-
retary, in consultation with the Secretary of 
Veterans Affairs, the Federal Deposit Insurance 
Corporation, and the Director of the Office of 
Thrift Supervision, shall develop and prescribe 
a standard form for the disclosure required 
under this subsection, which shall be used with-
out variation in all transactions in the United 
States that involve federally related mortgage 
loans. 
‘‘(B) APPEARANCE.—The standard form 
developed pursuant to this paragraph shall— 
‘‘(i) set forth each statement required 
under a separate subparagraph under 
paragraph (1) on a separate row of the 
disclosure; 
‘‘(ii) be set forth in 8-point type; 
‘‘(iii) be not more than 6 inches in 
width or 3.5 inches in height; 
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‘‘(iv) include such boldface type and 
shading as the Secretary considers appro-
priate; 
‘‘(v) include such parenthetical state-
ments directing the borrower to the terms 
of the loan (such as ‘see terms’) as the 
Secretary considers appropriate, in such 
places as the Secretary considers appro-
priate; and 
‘‘(vi) be located in the upper one-third 
of the first page of the good faith estimate 
required under subsection (c) in a manner 
that allows the identity, address, phone 
number, and other relevant information of 
the lender, the identity, address, phone 
number, and other relevant information of 
the borrower, and the address of the prop-
erty for which the federally related mort-
gage loan is to be made, to be located 
above the standard form.’’. 
(b) REGULATIONS.—The Secretary of Housing and 
Urban Development shall issue regulations prescribing the 
standard form and the use of such form, as required by 
the amendment made by subsection (a), not later than the 
expiration of the 180-day period beginning upon the date 
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HR 3915 RFS
of the enactment of this Act, and such regulations shall 
take effect upon issuance. 
TITLE VI—MORTGAGE 
SERVICING 
SEC. 601. ESCROW AND IMPOUND ACCOUNTS RELATING TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
(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 129B (as added by section 201) the following 
new section: 
‘‘SEC. 129C. ESCROW OR IMPOUND ACCOUNTS RELATING 
TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b) or (c), a creditor, in connection with the formation or 
consummation of a consumer credit transaction secured 
by a first lien on the principal dwelling of the consumer, 
other than a consumer credit transaction under an open 
end credit plan or a reverse mortgage, shall establish, at 
the time of the consummation of such transaction, an es-
crow or impound account for the payment of taxes and 
hazard insurance, and, if applicable, flood insurance, 
mortgage insurance, ground rents, and any other required 
periodic payments or premiums with respect to the prop-
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151 
HR 3915 RFS
erty or the loan terms, as provided in, and in accordance 
with, this section. 
‘‘(b) WHEN REQUIRED.—No impound, trust, or other 
type of account for the payment of property taxes, insur-
ance premiums, or other purposes relating to the property 
may be required as a condition of a real property sale con-
tract or a loan secured by a first deed of trust or mortgage 
on the principal dwelling of the consumer, other than a 
consumer credit transaction under an open end credit plan 
or a reverse mortgage, except when— 
‘‘(1) any such impound, trust, or other type of 
escrow or impound account for such purposes is re-
quired by Federal or State law; 
‘‘(2) a loan is made, guaranteed, or insured by 
a State or Federal governmental lending or insuring 
agency; 
‘‘(3) the consumer’s debt-to-income ratio at the 
time the home mortgage is established taking into 
account income from all sources including the con-
sumer’s employment exceeds 50 percent; 
‘‘(4) the transaction is secured by a first mort-
gage or lien on the consumer’s principal dwelling 
and the annual percentage rate on the credit, at the 
time of consummation of the transaction, will exceed 
by more than 3.0 percentage points the yield on 
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Treasury securities having comparable periods of 
maturity on the 15th day of the month immediately 
preceding the month in which the application of the 
extension of credit is received by the creditor; 
‘‘(5) a consumer obtains a mortgage referred to 
in section 103(aa); 
‘‘(6) the original principal amount of such loan 
at the time of consummation of the transaction is— 
‘‘(A) 90 percent or more of the sale price, 
if the property involved is purchased with the 
proceeds of the loan; or 
‘‘(B) 90 percent or more of the appraised 
value of the property securing the loan; 
‘‘(7) the combined principal amount of all loans 
secured by the real property exceeds 95 percent of 
the appraised value of the property securing the 
loans at the time of consummation of the last mort-
gage transaction; 
‘‘(8) the consumer was the subject of a pro-
ceeding under title 11, United States Code, at any 
time during the 7-year period preceding the date of 
the transaction (as determined on the basis of the 
date of entry of the order for relief or the date of 
adjudication, as the case may be, with respect to 
such proceeding and included in a consumer report 
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HR 3915 RFS
on the consumer under the Fair Credit Reporting 
Act) ; or 
‘‘(9) so required by the Board pursuant to reg-
ulation. 
‘‘(c) DURATION OF MANDATORY ESCROW OR IM-
POUND ACCOUNT.—An escrow or impound account estab-
lished pursuant to subsection (b), shall remain in existence 
for a minimum period of 5 years and until such borrower 
has sufficient equity in the dwelling securing the consumer 
credit transaction so as to no longer be required to main-
tain private mortgage insurance, or such other period as 
may be provided in regulations to address situations such 
as borrower delinquency, unless the underlying mortgage 
establishing the account is terminated. 
‘‘(d) CLARIFICATION
ON ESCROW ACCOUNTS
FOR 
LOANS NOT MEETING STATUTORY TEST.—For mort-
gages not covered by the requirements of subsection (b), 
no provision of this section shall be construed as pre-
cluding the establishment of an impound, trust, or other 
type of account for the payment of property taxes, insur-
ance premiums, or other purposes relating to the prop-
erty— 
‘‘(1) on terms mutually agreeable to the parties 
to the loan; 
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‘‘(2) at the discretion of the lender or servicer, 
as provided by the contract between the lender or 
servicer and the borrower; or 
‘‘(3) pursuant to the requirements for the 
escrowing of flood insurance payments for regulated 
lending institutions in section 102(d) of the Flood 
Disaster Protection Act of 1973. 
‘‘(e) ADMINISTRATION OF MANDATORY ESCROW OR 
IMPOUND ACCOUNTS.— 
‘‘(1) IN GENERAL.—Except as may otherwise 
be provided for in this title or in regulations pre-
scribed by the Board, escrow or impound accounts 
established pursuant to subsection (b) shall be estab-
lished in a federally insured depository institution. 
‘‘(2) ADMINISTRATION.—Except as provided in 
this section or regulations prescribed under this sec-
tion, an escrow or impound account subject to this 
section shall be administered in accordance with— 
‘‘(A) the Real Estate Settlement Proce-
dures Act of 1974 and regulations prescribed 
under such Act; 
‘‘(B) the Flood Disaster Protection Act of 
1973 and regulations prescribed under such 
Act; and 
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‘‘(C) the law of the State, if applicable, 
where the real property securing the consumer 
credit transaction is located. 
‘‘(3) APPLICABILITY OF PAYMENT OF INTER-
EST.—If prescribed by applicable State or Federal 
law, each creditor shall pay interest to the consumer 
on the amount held in any impound, trust, or escrow 
account that is subject to this section in the manner 
as prescribed by that applicable State or Federal 
law. 
‘‘(4) PENALTY COORDINATION WITH RESPA.— 
Any action or omission on the part of any person 
which constitutes a violation of the Real Estate Set-
tlement Procedures Act of 1974 or any regulation 
prescribed under such Act for which the person has 
paid any fine, civil money penalty, or other damages 
shall not give rise to any additional fine, civil money 
penalty, or other damages under this section, unless 
the action or omission also constitutes a direct viola-
tion of this section. 
‘‘(f) DISCLOSURES RELATING TO MANDATORY ES-
CROW OR IMPOUND ACCOUNT.—In the case of any im-
pound, trust, or escrow account that is subject to this sec-
tion, the creditor shall disclose by written notice to the 
consumer at least 3 business days before the consumma-
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HR 3915 RFS
tion of the consumer credit transaction giving rise to such 
account or in accordance with timeframes established in 
prescribed regulations the following information: 
‘‘(1) The fact that an escrow or impound ac-
count will be established at consummation of the 
transaction. 
‘‘(2) The amount required at closing to initially 
fund the escrow or impound account. 
‘‘(3) The amount, in the initial year after the 
consummation of the transaction, of the estimated 
taxes and hazard insurance, including flood insur-
ance, if applicable, and any other required periodic 
payments or premiums that reflects, as appropriate, 
either the taxable assessed value of the real property 
securing the transaction, including the value of any 
improvements on the property or to be constructed 
on the property (whether or not such construction 
will be financed from the proceeds of the trans-
action) or the replacement costs of the property. 
‘‘(4) The estimated monthly amount payable to 
be escrowed for taxes, hazard insurance (including 
flood insurance, if applicable) and any other re-
quired periodic payments or premiums. 
‘‘(5) The fact that, if the consumer chooses to 
terminate the account at the appropriate time in the 
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future, the consumer will become responsible for the 
payment of all taxes, hazard insurance, and flood in-
surance, if applicable, as well as any other required 
periodic payments or premiums on the property un-
less a new escrow or impound account is established. 
‘‘(g) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) FLOOD INSURANCE.—The term ‘flood in-
surance’ means flood insurance coverage provided 
under the national flood insurance program pursu-
ant to the National Flood Insurance Act of 1968. 
‘‘(2) HAZARD INSURANCE.—The term ‘hazard 
insurance’ shall have the same meaning as provided 
for ‘hazard insurance’, ‘casualty insurance’, ‘home-
owner’s insurance’, or other similar term under the 
law of the State where the real property securing the 
consumer credit transaction is located.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System, the Comptroller of the 
Currency, the Director of the Office of Thrift Super-
vision, the Federal Deposit Insurance Corporation, 
the National Credit Union Administration Board, 
(hereafter in this Act referred to as the ‘‘Federal 
banking agencies’’) and the Federal Trade Commis-
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sion shall prescribe, in final form, such regulations 
as determined to be necessary to implement the 
amendments made by subsection (a) before the end 
of the 180-day period beginning on the date of the 
enactment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply to covered mort-
gage loans consummated after the end of the 1-year 
period beginning on the date of the publication of 
final regulations in the Federal Register. 
(c) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129B (as 
added by section 201) the following new item: 
‘‘129C. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 602. DISCLOSURE NOTICE REQUIRED FOR CON-
SUMERS WHO WAIVE ESCROW SERVICES. 
(a) IN GENERAL.—Section 129C of the Truth in 
Lending Act (as added by section 601) is amended by add-
ing at the end the following new subsection: 
‘‘(h) DISCLOSURE NOTICE REQUIRED
FOR CON-
SUMERS WHO WAIVE ESCROW SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an impound, trust, or other type of 
account for the payment of property taxes, in-
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surance premiums, or other purposes relating to 
real property securing a consumer credit trans-
action is not established in connection with the 
transaction; or 
‘‘(B) a consumer chooses, at any time after 
such an account is established in connection 
with any such transaction and in accordance 
with any statute, regulation, or contractual 
agreement, to close such account, 
the creditor or servicer shall provide a timely and 
clearly written disclosure to the consumer that ad-
vises the consumer of the responsibilities of the con-
sumer and implications for the consumer in the ab-
sence of any such account. 
‘‘(2) DISCLOSURE
REQUIREMENTS.—Any dis-
closure provided to a consumer under paragraph (1) 
shall include the following: 
‘‘(A) Information concerning any applica-
ble fees or costs associated with either the non- 
establishment of any such account at the time 
of the transaction, or any subsequent closure of 
any such account. 
‘‘(B) A clear and prominent notice that the 
consumer is responsible for personally and di-
rectly paying the non-escrowed items, in addi-
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tion to paying the mortgage loan payment, in 
the absence of any such account, and the fact 
that the costs for taxes, insurance, and related 
fees can be substantial. 
‘‘(C) A clear explanation of the con-
sequences of any failure to pay non-escrowed 
items, including the possible requirement for 
the forced placement of insurance by the cred-
itor or servicer and the potentially higher cost 
(including any potential commission payments 
to the servicer) or reduced coverage for the con-
sumer in the event of any such creditor-placed 
insurance.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Federal banking agen-
cies and the Federal Trade Commission shall pre-
scribe, in final form, such regulations as such agen-
cies determine to be necessary to implement the 
amendments made by subsection (a) before the end 
of the 180-day period beginning on the date of the 
enactment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply in accordance with 
the regulations established in paragraph (1) and be-
ginning on the date occurring 180-days after the 
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date of the publication of final regulations in the 
Federal Register. 
SEC. 603. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 
1974 AMENDMENTS. 
(a) SERVICER PROHIBITIONS.—Section 6 of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 
2605) is amended by adding at the end the following new 
subsections: 
‘‘(k) SERVICER PROHIBITIONS.— 
‘‘(1) IN GENERAL.—A servicer of a federally re-
lated mortgage shall not— 
‘‘(A) obtain force-placed hazard insurance 
unless there is a reasonable basis to believe the 
borrower has failed to comply with the loan 
contract’s requirements to maintain property 
insurance; 
‘‘(B) charge fees for responding to valid 
qualified written requests (as defined in regula-
tions which the Secretary shall prescribe) under 
this section; 
‘‘(C) fail to take timely action to respond 
to a borrower’s requests to correct errors relat-
ing to allocation of payments, final balances for 
purposes of paying off the loan, or avoiding 
foreclosure, or other standard servicer’s duties; 
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‘‘(D) fail to respond within 10 business 
days to a request from a borrower to provide 
the identity, address, and other relevant contact 
information about the owner assignee of the 
loan; or 
‘‘(E) fail to comply with any other obliga-
tion found by the Secretary, by regulation, to 
be appropriate to carry out the consumer pro-
tection purposes of this Act. 
‘‘(2) FORCE-PLACED
INSURANCE
DEFINED.— 
For purposes of this subsection and subsections (l) 
and (m), the term ‘force-placed insurance’ means 
hazard insurance coverage obtained by a servicer of 
a federally related mortgage when the borrower has 
failed to maintain or renew hazard insurance on 
such property as required of the borrower under the 
terms of the mortgage. 
‘‘(l) REQUIREMENTS
FOR FORCE-PLACED INSUR-
ANCE.—A servicer of a federally related mortgage shall 
not be construed as having a reasonable basis for obtain-
ing force-placed insurance unless the requirements of this 
subsection have been met. 
‘‘(1) WRITTEN
NOTICES
TO
BORROWER.—A 
servicer may not impose any charge on any borrower 
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for force-placed insurance with respect to any prop-
erty securing a federally related mortgage unless— 
‘‘(A) the servicer has sent, by first-class 
mail, a written notice to the borrower con-
taining— 
‘‘(i) a reminder of the borrower’s obli-
gation to maintain hazard insurance on the 
property securing the federally related 
mortgage; 
‘‘(ii) a statement that the servicer 
does not have evidence of insurance cov-
erage of such property; 
‘‘(iii) a clear and conspicuous state-
ment of the procedures by which the bor-
rower may demonstrate that the borrower 
already has insurance coverage; and 
‘‘(iv) a statement that the servicer 
may obtain such coverage at the borrower’s 
expense if the borrower does not provide 
such demonstration of the borrower’s exist-
ing coverage in a timely manner; 
‘‘(B) the servicer has sent, by first-class 
mail, a second written notice, at least 30 days 
after the mailing of the notice under subpara-
graph (A) that contains all the information de-
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scribed in each clauses of such subparagraph; 
and 
‘‘(C) the servicer has not received from the 
borrower any demonstration of hazard insur-
ance coverage for the property securing the 
mortgage by the end of the 15-day period be-
ginning on the date the notice under subpara-
graph (B) was sent by the servicer. 
‘‘(2) SUFFICIENCY
OF
DEMONSTRATION.—A 
servicer of a federally related mortgage shall accept 
any reasonable form of written confirmation from a 
borrower of existing insurance coverage, which shall 
include the existing insurance policy number along 
with the identity of, and contact information for, the 
insurance company or agent. 
‘‘(3) TERMINATION OF FORCE-PLACED INSUR-
ANCE.—Within 15 days of the receipt by a servicer 
of confirmation of a borrower’s existing insurance 
coverage, the servicer shall— 
‘‘(A) terminate the force-placed insurance; 
and 
‘‘(B) refund to the consumer all force- 
placed insurance premiums paid by the bor-
rower during any period during which the bor-
rower’s insurance coverage and the force-placed 
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insurance coverage were each in effect, and any 
related fees charged to the consumer’s account 
with respect to the force-placed insurance dur-
ing such period. 
‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD 
DISASTER PROTECTION ACT.—No provision of this 
section shall be construed as prohibiting a servicer 
from providing simultaneous or concurrent notice of 
a lack of flood insurance pursuant to section 102(e) 
of the Flood Disaster Protection Act of 1973. 
‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE 
CHARGES.—All charges for force-placed insurance pre-
miums shall be bona fide and reasonable in amount. 
‘‘(n) PROMPT
CREDITING
OF
PAYMENTS
RE-
QUIRED.— 
‘‘(1) IN GENERAL.—All amounts received by a 
lender or a servicer on a home loan at the address 
where the borrower has been instructed to make 
payments shall be accepted and credited, or treated 
as credited, on the business day received, to the ex-
tent that the borrower has made the full contractual 
payment and has provided sufficient information to 
credit the account. 
‘‘(2) SCHEDULED METHOD.—If a servicer uses 
the scheduled method of accounting, any regularly 
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scheduled payment made prior to the scheduled due 
date shall be credited no later than the due date. 
‘‘(3) NOTICE OF NONCREDIT.—If any payment 
is received by a lender or a servicer on a home loan 
and not credited, or treated as credited, the bor-
rower shall be notified within 10 business days by 
mail at the borrower’s last known address of the dis-
position of the payment, the reason the payment was 
not credited, or treated as credited to the account, 
and any actions necessary by the borrower to make 
the loan current.’’. 
(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) 
of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(f)) is amended— 
(1) in paragraphs (1)(B) and (2)(B), by strik-
ing ‘‘$1,000’’ each place such term appears and in-
serting ‘‘$2,000’’; and 
(2) 
in 
paragraph 
(2)(B)(i), 
by 
striking 
‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(e)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘20 days’’ 
and inserting ‘‘10 days’’; 
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(2) in paragraph (2), by striking ‘‘60 days’’ and 
inserting ‘‘30 days’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(4) 
LIMITED
EXTENSION
OF
RESPONSE 
TIME.—The 30-day period described in paragraph 
(2) may be extended for not more than 30 days if, 
before the end of such 30-day period, the servicer 
notifies the borrower of the extension and the rea-
sons for the delay in responding.’’. 
(d) REQUESTS
FOR PAY-OFF AMOUNTS.—Section 
6(e) of the Real Estate Settlement Procedures Act of 1974 
(12 U.S.C. 2605(e)) is amended by inserting after para-
graph (4) (as added by subsection (c) of this section) the 
following new paragraph: 
‘‘(5) REQUESTS
FOR
PAY-OFF
AMOUNTS.—A 
creditor or servicer shall send a payoff balance with-
in 7 business days of the receipt of a written request 
for such balance from or on behalf of the bor-
rower.’’. 
(e) PROMPT REFUND OF ESCROW ACCOUNTS UPON 
PAYOFF.—Section 6(g) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(g)) is amended 
by adding at the end the following new sentence: ‘‘Any 
balance in any such account that is within the servicer’s 
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control at the time the loan is paid off shall be promptly 
returned to the borrower within 20 business days or cred-
ited to a similar account for a new mortgage loan to the 
borrower with the same lender.’’. 
SEC. 604. MORTGAGE SERVICING STUDIES REQUIRED. 
(a) MORTGAGE SERVICING PRACTICES.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Fed-
eral banking agencies, and the Federal Trade Com-
mission, shall conduct a comprehensive study on 
mortgage servicing practices and their potential for 
fraud and abuse. 
(2) ISSUES TO BE INCLUDED.—In addition to 
other issues the Secretary of Housing and Urban 
Development, the Federal banking agencies, and the 
Federal Trade Commission may determine to be ap-
propriate and possibly pertinent to the study con-
ducted under paragraph (1), the study shall include 
the following issues: 
(A) A survey of the industry in order to 
examine the issue of the timely or effective 
posting of payments by servicers. 
(B) The employment of daily interest when 
payments are made after a due date. 
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(C) The charging of late fees on the entire 
outstanding principal. 
(D) The charging of interest on servicing 
fees. 
(E) The utilization of collection practices 
that failed to comply with the Fair Debt Collec-
tion Practices Act. 
(F) The charging of prepayment penalties 
when not authorized by either the note or law. 
(G) The employment of unconscionable for-
bearance agreements. 
(H) Foreclosure abuses. 
(3) REPORT.—Before the end of the 12-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate. 
(b) MORTGAGE SERVICING IMPROVEMENTS.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Fed-
eral banking agencies, and the Federal Trade Com-
mission, shall conduct a comprehensive study on 
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means to improve the best practices of the mortgage 
servicing industry, and Federal and State laws gov-
erning such industry. 
(2) REPORT.—Before the end of the 18-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate, together with such recommendations 
for administrative or legislative action as the Sec-
retary, in consultation with the Board and the Com-
mission, may determine to be appropriate. 
SEC. 605. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 
(a) IN GENERAL.—Section 128(b) of the Truth in 
Lending Act (15 U.S.C. 1638(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(4) REPAYMENT ANALYSIS REQUIRED TO IN-
CLUDE ESCROW PAYMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
consumer credit transaction secured by a first 
mortgage or lien on the principal dwelling of 
the consumer, other than a consumer credit 
transaction under an open end credit plan or a 
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reverse mortgage, for which an impound, trust, 
or other type of account has been or will be es-
tablished in connection with the transaction for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property, the information required to be pro-
vided under subsection (a) with respect to the 
number, amount, and due dates or period of 
payments scheduled to repay the total of pay-
ments shall take into account the amount of 
any monthly payment to such account for each 
such repayment in accordance with section 
10(a)(2) of the Real Estate Settlement Proce-
dures Act of 1974. 
‘‘(B) ASSESSMENT
VALUE.—The amount 
taken into account under subparagraph (A) for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property shall reflect the taxable assessed value 
of the real property securing the transaction 
after the consummation of the transaction, in-
cluding the value of any improvements on the 
property or to be constructed on the property 
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(whether or not such construction will be fi-
nanced from the proceeds of the transaction), if 
known, and the replacement costs of the prop-
erty for hazard insurance, in the initial year 
after the transaction.’’. 
TITLE VII—APPRAISAL 
ACTIVITIES 
SEC. 701. PROPERTY APPRAISAL REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (u) (as 
added by section 303(f)) the following new subsection: 
‘‘(v) PROPERTY APPRAISAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit in the form of a mortgage referred to in sec-
tion 103(aa) to any consumer without first obtaining 
a written appraisal of the property to be mortgaged 
prepared in accordance with the requirements of this 
subsection. 
‘‘(2) APPRAISAL REQUIREMENTS.— 
‘‘(A) PHYSICAL PROPERTY VISIT.—An ap-
praisal of property to be secured by a mortgage 
referred to in section 103(aa) does not meet the 
requirement of this subsection unless it is per-
formed by a qualified appraiser who conducts a 
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physical property visit of the interior of the 
mortgaged property. 
‘‘(B) SECOND APPRAISAL UNDER CERTAIN 
CIRCUMSTANCES.— 
‘‘(i) IN GENERAL.—If the purpose of 
a mortgage referred to in section 103(aa) 
is to finance the purchase or acquisition of 
the mortgaged property from a person 
within 180 days of the purchase or acquisi-
tion of such property by that person at a 
price that was lower than the current sale 
price of the property, the creditor shall ob-
tain a second appraisal from a different 
qualified appraiser. The second appraisal 
shall include an analysis of the difference 
in sale prices, changes in market condi-
tions, and any improvements made to the 
property between the date of the previous 
sale and the current sale. 
‘‘(ii) NO COST TO CONSUMER.—The 
cost of any second appraisal required 
under clause (i) may not be charged to the 
consumer. 
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