ble State law, stating that the contractor 
has fully performed the contract obliga-
tions, shall be deemed proof of completion 
of such obligations for purposes of this 
subsection. 
‘‘(ii) LACK OF AVAILABILITY OF CER-
TIFICATE UNDER STATE LAW.—If applica-
ble State law does not provide for or recog-
nize completion certificates for home im-
provement contractors, a signed statement 
by both the consumer who entered into the 
higher-cost mortgage and the home im-
provement contractor referred to in sub-
paragraph (A) that the contractor has fully 
performed the contract shall constitute 
proof of completion of such obligation for 
purposes of this subsection. 
‘‘(C) INSPECTION.—No creditor may use 
the proceeds of a higher-cost mortgage to make 
a final payment or payment in full to a home 
improvement contractor under a home improve-
ment contract without first arranging and pay-
ing for an independent inspection of any home 
improvements exceeding $10,000 to verify that 
the work has been completed.
‘‘(D) DISCLOSURE.—Before making a final 
payment to a home improvement contractor, the 
creditor shall provide the following written dis-
closure to the consumer: ‘You will be asked, 
when the job is completed, to sign a statement 
confirming the work has been completed be-
cause the lender may not make a final payment 
or payment in full to the home improvement 
contractor without such a statement signed by 
both the contractor and you. If the work has 
not been completed according to the terms of 
your work agreement, do not sign the statement 
and notify the lender immediately. If the im-
provements you are financing exceed $10,000, 
the lender is required by law to arrange for an 
inspection of the job. The purpose of the in-
spection is to ensure that the job has been com-
pleted according to the terms of the contract, 
and it is not a warranty or guarantee of the 
overall quality of the work. If you would like a 
more detailed inspection of the contractor’s 
work, you may want to arrange for an addi-
tional inspection on your own.’.’’. 
(k) ADDITIONAL SPECIFIC DISCLOSURES.—Section 
129(a)(1) of the Truth in Lending Act (15 U.S.C.
1639(a)(1)) is amended by adding at the end the following 
new subparagraphs: 
‘‘(C) ‘The interest rate and the amount of 
fees you pay on this loan are higher than you 
would pay for a conventional or ‘‘prime’’ rate 
loan. As a result, your monthly interest pay-
ments are higher than those on a comparable 
loan with a lower interest rate.’. 
‘‘(D) ‘The rate of interest and the amount 
of fees you pay on a loan may vary depending 
on which lender or broker you select. You may 
be able to get a loan with a lower interest rate. 
Your credit score can provide an indication of 
whether you may qualify for a lower-cost prime 
loan. If you have a relatively good credit score, 
such as a FICO score in excess of 660, you 
may qualify for a ‘‘prime’’ loan. In that event, 
you should consider shopping more for a lower-
cost loan instead of simply accepting the high-
er-cost loan that has been offered to you.’. 
‘‘(E) ‘If you are taking out this loan to 
repay other loans, look to see how many months 
it will take to pay for this loan and what the 
total amount is that you will have to pay before 
this loan is repaid. Even though the total
amount you will have to pay each month for 
this loan may be less than the total amount you 
are paying each month for those other loans, 
you may have to pay on this loan for a longer 
period than those other loans, and that may 
cost you more overall.’. 
‘‘(F) ‘You may get into serious financial 
difficulties if you use this loan to pay off old 
debts and then replace them with other new 
debts.’.’’. 
(l) NO CALL PROVISION.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (r) (as added by subsection (i) of this sec-
tion) the following new subsection: 
‘‘(s) NO CALL PROVISION.—
‘‘(1) IN
GENERAL.—A higher-cost mortgage 
may not include terms under which the indebtedness 
may be accelerated by the creditor, in the creditor’s 
sole discretion. 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply if the repayment of the higher-cost mortgage 
has been accelerated—
‘‘(A) by default or pursuant to a due-on-
sale provision or some other provision of the
loan documents unrelated to the payment 
schedule; or 
‘‘(B) due to any action or omission by the 
consumer that adversely affects the creditor’s 
security interest in the dwelling or any rights of 
the creditor in such security.’’. 
(m) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (s) 
(as added by subsection (l) of this section) the following 
new subsection: 
‘‘(t) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—
‘‘(1) IN GENERAL.—A creditor may not charge 
a consumer any fee in excess of the lesser of the 
amount of 1 monthly loan payment on the existing 
higher-cost mortgage or $300.00 to modify, renew, 
extend, or amend a higher-cost mortgage, or to defer 
any payment due under the terms of such mortgage. 
‘‘(2) EXCEPTION FOR CERTAIN WORKOUTS.—
The restrictions in paragraph (1) shall not apply in 
the case of an existing higher-cost mortgage that is 
in default or more than 60 days delinquent, if the 
modification, renewal, extension, or amendment is
part of the resolution or workout of the default or 
delinquency.’’. 
(n) INCREASED INTEREST RATE UPON DEFAULT 
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 (m) of this section) the fol-
lowing new subsection: 
‘‘(u) INCREASED INTEREST RATE UPON DEFAULT 
PERMITTED FOR VARIABLE-RATE HIGHER-COST MORT-
GAGE.—In the case of a higher-cost mortgage that is sub-
ject to a variable rate of interest, subsection (d) shall not 
apply to changes in the rate of interest due to any change 
in the index rate, to the extent the change of interest is 
not due in any part to a default by the consumer or a 
permissible acceleration by the creditor.’’. 
(o) PREPAYMENT OF PERIODIC PAYMENTS FROM 
PROCEEDS PROHIBITED.—Subsection (g) of section 129 
of the Truth in Lending Act (15 U.S.C. 1639) is amended 
to read as follows: 
‘‘(g) PREPAYMENT OF PERIODIC PAYMENTS FROM 
PROCEEDS PROHIBITED.—No higher-cost mortgage may 
include terms under which more than 2 scheduled pay-
ments of interest or principal due under such mortgage 
may be paid in advance or otherwise deducted from the 
proceeds of the loan.’’.
(p) PAYOFF
STATEMENTS.—Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by 
inserting after subsection (u) (as added by subsection (n) 
of this section) the following new subsection: 
‘‘(v) PAYOFF STATEMENTS.—
‘‘(1) FEES.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraphs (B) and (C), no creditor or 
servicer may charge a fee for informing or 
transmitting to any person the balance due to 
pay off the outstanding balance on a higher-
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 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 that are not higher-cost 
mortgages. 
‘‘(C) MULTIPLE REQUESTS.—A creditor or 
servicer shall not charge any fee for the first 2 
payoff requests in any continuous 6-month pe-
riod. A creditor or servicer may charge a rea-
sonable fee for each additional request during 
any such period. 
‘‘(2) 
PROMPT
DELIVERY.—A 
creditor 
or 
servicer shall send a payoff balance within 7 busi-
ness days of receipt of a written request for such 
balance.’’. 
(q) CREDIT REPORTING REQUIREMENTS.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (v) (as added by 
subsection (p) of this section) the following new sub-
section: 
‘‘(w) DUTY TO REPORT.—
‘‘(1) IN GENERAL.—Each creditor who enters 
into a higher-cost mortgage, and each successor, as-
signee or servicer to such creditor with respect to 
such mortgage shall report monthly the complete 
payment history, favorable and unfavorable, of the 
obligor with respect to such transaction to a con-
sumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis, while such 
transaction is in effect. 
‘‘(2) EXCEPTION
FOR
SHORT-TERM
HOLD-
ERS.—Paragraph (1) shall not apply to any person
who holds a higher-cost mortgage for less than 90 
days. 
‘‘(3) 
EXCEPTION
FOR
CERTAIN
CIR-
CUMSTANCES.—Paragraph (1) shall not apply in 
connection with a loan forbearance or workout of a 
loan in default or the settlement of a dispute or con-
sumer complaint.’’. 
(r) STEERING PROHIBITED.—Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by 
inserting after (w) (as added by subsection (q) of this sec-
tion) the following new subsection: 
‘‘(x) STEERING PROHIBITED.—
‘‘(1) CREDITORS.—
‘‘(A) IN GENERAL.—A creditor who origi-
nates a higher-cost mortgage shall not know-
ingly or intentionally steer or direct a consumer 
into a loan product offered by the creditor that 
is not based upon the creditor’s best credit 
grade that the consumer would qualify for 
under the creditor’s then-current underwriting 
guidelines. 
‘‘(B) NOTICE OF CREDIT SCORE.—A cred-
itor who originates a higher-cost mortgage 
shall, within 3 business days of the later of—
‘‘(i) the receipt of an application for 
such higher-cost mortgage loan; or 
‘‘(ii) the making of a determination 
that the consumer only qualifies for a 
higher-cost mortgage, 
notify the consumer in writing of the con-
sumer’s credit score. 
‘‘(C) RESCISSION OR REFORMATION.—
‘‘(i) IN GENERAL.—A creditor found 
by a preponderance of the evidence to have 
violated subparagraph (A) shall, if the 
creditor is the holder of the obligation, at 
the consumer’s option—
‘‘(I) rescind the loan as provided 
for in section 125; or 
‘‘(II) rewrite the loan into a loan 
product at the credit grade that the 
consumer would have originally quali-
fied for but for the violation. 
‘‘(ii) RESTITUTION.—In addition to 
the action required under clause (i) with 
respect to a creditor, or in the case of a 
creditor who is not the holder of the obli-
gation and has been found by a preponder-
ance of the evidence to have violated sub-
paragraph (A), such creditor shall make 
appropriate restitution to the consumer of 
all fees, interest, or other charges paid by 
the consumer above those that would have 
been paid had the loan not been originated 
at the less favorable credit grade. 
‘‘(D) SAFE HARBOR.—A creditor shall not 
be presumed to have violated subparagraph (A) 
if—
‘‘(i) the creditor had a reasonable 
basis to believe that the credit grade deter-
mined by the creditor’s then-current un-
derwriting guidelines applied to a con-
sumer was appropriate, based on the infor-
mation available to that creditor, including 
the information provided by the consumer; 
or 
‘‘(ii) the consumer voluntarily, on an 
informed basis, agreed to a loan with a 
higher rate than that for which the con-
sumer would otherwise qualify. 
‘‘(2) BROKERS.—
‘‘(A) IN GENERAL.—A broker who is not a 
creditor shall not knowingly or intentionally 
steer or direct any prospective consumer to ac-
cept a loan product offered by a creditor that 
is less favorable than the loan products offered 
by the creditors with whom the broker regularly 
does business and for which the consumer 
would qualify for under such creditors’ best 
credit grade based on such creditors’ then-cur-
rent underwriting guidelines. 
‘‘(B) SAFE HARBOR.—A broker shall not 
be presumed to have violated subparagraph (A) 
if—
‘‘(i) the broker had a reasonable basis 
to believe that the credit grade applied to 
a consumer was appropriate, based on the 
information available to that broker, in-
cluding the information provided by the 
consumer; or 
‘‘(ii) the consumer voluntarily, on an 
informed basis, agreed to a loan with a 
higher rate than that for which the con-
sumer would otherwise qualify. 
‘‘(C) PENALTY.—A broker who knowingly 
or intentionally violates this section shall be lia-
ble to the consumer for an amount equal to the 
sum of $4,000 and the consumer’s actual finan-
cial damages and reasonable attorney’s fees and 
court costs.’’. 
(s) 
REGULATIONS
FOR
DISCLOSURES.—Section 
129(l) of the Truth in Lending Act (15 U.S.C. 1639(l)) 
is amended by adding at the end the following new para-
graph: 
‘‘(3) REDEFINITION.—The Board may amend 
the definition and determination of what constitutes 
a prime loan for purposes of the disclosure require-
ments contained in subsection (a)(1).’’. 
SEC. 104. AMENDMENTS RELATING TO DISPUTE AND 
ERROR RESOLUTION. 
(a) 
PROHIBITION
ON
ARBITRATION
REQUIRE-
MENTS.—Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (m) 
(as added by subsection (d) of section 103) the following 
new subsection: 
‘‘(n) ARBITRATION.—
‘‘(1) IN
GENERAL.—A higher-cost mortgage 
may not include terms that require arbitration or 
any other nonjudicial procedure as the method for 
resolving any controversy or settling any claim aris-
ing out of the transaction. 
‘‘(2) POST-CONTROVERSY VOLUNTARY AGREE-
MENTS.—
‘‘(A) IN GENERAL.—Subject to paragraph 
(3), paragraph (1) shall not be construed as 
limiting the right of the consumer and the cred-
itor to agree voluntarily to arbitration or any 
other nonjudicial procedure as the method for 
resolving any controversy at any time after a 
dispute or claim under the transaction arises. 
‘‘(B) 
REQUIREMENTS
FOR
POST-CON-
TROVERSY
AGREEMENTS.—Post-controversy 
voluntary agreements shall—
‘‘(i) establish the venue for the arbi-
tration in the Federal judicial district or 
division in which the real property that is 
the security for the higher-cost mortgage is 
located; 
‘‘(ii) comply with the standards set 
forth by a nationally recognized arbitration 
organization, such as the Statement of 
Principles of the National Consumer Dis-
pute Advisory Committee of the American 
Arbitration Association or any comparable 
standards of such other organization as 
may be approved by the Board; and 
‘‘(iii) require the creditor to bear the 
reasonable costs of all parties to the arbi-
tration, including the production of fact 
witnesses and documents, during at least 
the first 2 days of such arbitration. 
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any higher-cost mortgage or 
any voluntary agreement between the consumer and 
the creditor shall be applied or interpreted so as to 
bar a consumer from bringing an action in an appro-
priate 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.’’. 
(b) CORRECTION OF ERRORS.—Subsection (b) of sec-
tion 130 of the Truth in Lending Act (15 U.S.C. 1640(b)) 
is amended to read as follows: 
‘‘(b) CORRECTION OF ERRORS.—
‘‘(1) IN GENERAL.—A creditor or assignee shall 
have no liability under this section or section 108 or 
section 112 for any failure to comply with any re-
quirement imposed under this chapter or chapter 5, 
if—
‘‘(A) before the end of the 45-day period 
beginning on the date of consummation of a
loan, the creditor or assignee notifies the con-
sumer of the error and makes appropriate res-
titution to the consumer of any amounts col-
lected in error, and takes the necessary action 
to make all appropriate adjustments to the 
credit transaction to correct the error, includ-
ing, if applicable, that the consumer will not be 
required to pay an amount in excess of the 
charge actually disclosed, or the dollar equiva-
lent of the annual percentage rate actually dis-
closed, whichever is less; or 
‘‘(B) before the end of the 60-day period 
beginning on the date an error is discovered, 
whether pursuant to a final examination report 
or notice issued under section 108(e) of this 
title, or through the creditor’s or assignee’s own 
procedures, or receipt of written notice from the 
consumer or service upon the creditor or as-
signee of the institution of an action, the cred-
itor or assignee notifies the consumer of the 
error, makes appropriate restitution to the con-
sumer of any amounts collected in error, takes 
the necessary action to make all appropriate ad-
justments to the credit transaction to correct 
the error, including, if applicable, that the con-
sumer will not be required to pay an amount in 
excess of the charge actually disclosed, or the 
dollar equivalent of the annual percentage rate 
actually disclosed, whichever is less, pays the 
consumer an error penalty of $2,000 and the 
consumer’s reasonable attorney’s fees, if any, 
except that no error penalty or attorney’s fees 
shall be assessed if the creditor or assignee dis-
covers the error through the creditor’s or as-
signee’s own procedures. 
‘‘(2) MODIFICATION OF TERMS.—In the case of 
a higher-cost mortgage, appropriate restitution for 
purposes of paragraph (1) above may also include a 
creditor modifying the terms of the credit trans-
action in such a way that the transaction is no 
longer a higher-cost mortgage within the meaning of 
this title. 
‘‘(3) CONSUMER REMEDY.—If a creditor or as-
signee fails to correct the error as provided for above 
in paragraph (1), the consumer may file an action 
or proceed with an action already filed. 
‘‘(4) EFFECTIVE
DATE
OF
DOCUMENT
REVI-
SIONS.—Any document revisions necessitated by and 
made consistent with the procedures set forth above 
in subparagraph (A) or (B) of paragraph (1) shall
be deemed legally effective for all purposes as of the 
original date of the document that was revised.’’. 
(c) CLARIFICATION
RELATING
TO
STATE-REGU-
LATED TRANSACTIONS.—Section 123 of the Truth in 
Lending Act (15 U.S.C. 1633) is amended by striking 
‘‘The Board’’and inserting ‘‘Except with respect to higher-
cost mortgages, the Board’’. 
SEC. 105. AMENDMENTS TO DAMAGES, RESCISSION AND LI-
ABILITY PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a) of 
the Truth in Lending Act (15 U.S.C. 1640(a)) is amend-
ed—
(1) in paragraph (2)(A)(iii), by striking 
‘‘$2,000’’ and inserting ‘‘$4,000’’; and 
(2) 
in 
paragraph 
(2)(B), 
by 
striking 
‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(b) COORDINATION
OF
CLASS-ACTION
DAMAGES 
WITH ACTUAL DAMAGES.—Section 130 of the Truth in 
Lending Act (15 U.S.C. 1640) is amended by adding at 
the end the following new subsection: 
‘‘(j) CLASS ACTIONS RELATING TO HIGHER-COST 
MORTGAGES.—
‘‘(1) COORDINATION
OF
CLASS-ACTION
DAM-
AGES
WITH
ACTUAL
DAMAGES.—The maximum
amount of general damages that may otherwise be 
imposed on any person under subsection (a)(2)(B) 
for violations of section 129 in a class action shall 
be reduced by the aggregate amount of actual dam-
ages for which such person is liable to members of 
the class under subsection (a)(1). 
‘‘(2) PATTERN AND PRACTICE.—In determining 
the amount of any liability of any person under sub-
section (a)(2)(B) for violations of section 129 in a 
class action, the court shall consider the pattern and 
practices of the person giving rise to the violations, 
and whether or not such pattern and practices were 
willful.’’. 
(c) AMENDMENTS RELATING TO TIMING OF WAIVER 
BY
CONSUMER
OF
RIGHT
OF
RESCISSION.—Section 
125(a) of the Truth in Lending Act (15 U.S.C. 1635(a)) 
is amended—
(1) by striking ‘‘(a) Except as otherwise pro-
vided’’ and inserting ‘‘(a) RIGHT ESTABLISHED.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) TIMING OF ELECTION OF WAIVER BY CON-
SUMER.—No election by a consumer to waive the
right established under paragraph (1) to rescind a 
transaction shall be effective if—
‘‘(A) the waiver was required by the cred-
itor as a condition for the transaction; or 
‘‘(B) the creditor advised or encouraged 
the consumer to waive such right of the con-
sumer.’’. 
(d) 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—
(1) in the 1st sentence, by striking ‘‘Any ac-
tion’’ and inserting ‘‘Except as provided in the sub-
sequent sentence, any action’’; 
(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 (other 
than subsection (x) of such section) may be brought 
in any United States district court, or in any other 
court of competent jurisdiction, before the end of the 
2-year period beginning on the date of the occur-
rence of the violation, unless a shorter time period 
is herein provided.’’; and 
(3) by inserting ‘‘and except that this sentence 
shall not apply to a violation of section 129(x)’’ be-
fore the period at the end of the 3rd sentence (as
determined taking into account the amendment 
made by paragraph (2) of this subsection). 
(e) AMENDMENTS RELATING TO LIABILITY OF AS-
SIGNEES.—
(1) IN
GENERAL.—Paragraph (4) of section 
131(d) of the Truth in Lending Act (15 U.S.C. 
1641(d)) is amended by striking ‘‘mortgage referred 
to in section 103(aa)’’ and inserting ‘‘higher-cost 
mortgage’’. 
(2) RIGHTS
UPON
ASSIGNMENT
OF
HIGHER-
COST MORTGAGES.—Section 131(d) of the Truth in 
Lending Act (15 U.S.C. 1641(d)) is amended—
(A) by redesignating paragraphs (3) and 
(4) as paragraphs (4) and (5), respectively; and 
(B) by striking paragraphs (1) and (2) and 
inserting the following new paragraphs: 
‘‘(1) CLAIMS AND DEFENSES.—
‘‘(A) IN GENERAL.—Any person who pur-
chases or is otherwise assigned a higher-cost 
mortgage shall be subject to all claims and de-
fenses with respect to that mortgage that the 
consumer could assert against the creditor of 
the mortgage either— 
‘‘(i) as a defense to the enforcement 
of such mortgage by the purchaser or as-
signee based on a default by the consumer 
if such default is reasonably related to a 
violation of this section by the creditor, un-
less the consumer demonstrates that the 
purchaser or assignee had actual knowl-
edge of or exhibited reckless indifference to 
a violation in which case the consumer may 
raise any defensive claim without regard to 
whether such violation is related to the 
consumer’s default; or 
‘‘(ii) as an affirmative claim, unless 
the purchaser or assignee demonstrates, by 
a preponderance of the evidence, that a 
reasonable person exercising ordinary due 
diligence could not determine with reason-
able certainty based on information con-
tained in the documentation required by 
this title, the itemization of the amount fi-
nanced, and other disclosure of disburse-
ments that a violation had occurred. 
‘‘(B) CLARIFICATION OF RIGHTS OF CON-
SUMER.—Subparagraph (A) may not be con-
strued as affecting any rights of a consumer 
under subsection (a), (b), or (c) of this section 
or any other provision of this title.
‘‘(C) EXCLUSION.—This section shall not 
apply if a purchaser or assignee has exercised 
such due diligence by demonstrating that such 
purchaser or assignee— 
‘‘(i) has in place at the time of the 
purchase or assignment of the loans, poli-
cies that expressly prohibit the purchase or 
acceptance of assignment, by such pur-
chaser or assignee, of either any higher-
cost mortgage at all or any higher-cost 
mortgage containing such violations; 
‘‘(ii) requires, by the applicable pur-
chase contract, that a seller or assignor of 
such loans to the purchaser or assignee 
represents and warrants to the purchaser 
or assignee as of the applicable sale date 
that either— 
‘‘(I) the seller or assignor will not 
sell or assign to the purchaser or as-
signee either any higher-cost mort-
gage at all or any higher-cost mort-
gage containing such violations; or 
‘‘(II) the seller or assignor is a 
beneficiary of a representation and 
warranty from a previous seller or as-
signor to that effect, and, as a result 
of its purchase of the loans, the pur-
chaser or assignee is a beneficiary of 
such representation and warranty; 
and 
‘‘(iii) exercises reasonable due dili-
gence at or before the time of the purchase 
or assignment of home loans, or within a 
reasonable period of time after the pur-
chase or assignment of such home loans, 
that is intended by the purchaser or as-
signee to prevent the purchaser or assignee 
from purchasing or taking assignment of 
either any higher-cost mortgages at all or 
any higher-cost mortgages containing such 
violations. 
‘‘(D) REASONABLE DUE DILIGENCE.—The 
reasonable due diligence requirement referred to 
in subparagraph (C)(iii) may be met by employ-
ing a statistically significant sampling method-
ology and shall not require loan-by-loan review, 
for purposes of this subsection. 
‘‘(2) LIMITATION ON RELIEF.—
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, relief provided as a re-
sult of any action made permissible by para-
graph (1) may not exceed the greater of—
‘‘(i) with respect to actions based 
upon a violation of this title, the amount 
specified in section 130; or 
‘‘(ii) with respect to other actions, as 
specified in paragraph (1)(A)(i), the sum 
of—
‘‘(I) the amount of all remaining 
indebtedness; and 
‘‘(II) the total amount paid by 
the consumer in connection with the 
transaction. 
‘‘(B) FACTORS FOR THE COURT TO CON-
SIDER.—In determining the amount of the 
award in any action referred to in clause (i) or 
(ii) of subparagraph (A), the court shall con-
sider, among other relevant factors—
‘‘(i) the amount of any actual eco-
nomic damages awarded and the extent to 
which the noneconomic harm suffered from 
the violation should be compensable by 
general damages; 
‘‘(ii) the lack of such purchaser’s or 
assignee’s knowledge of or participation in
the facts or circumstances giving rise to 
the violations and claim and defenses; 
‘‘(iii) the materiality of the violation; 
and 
‘‘(iv) the relative harm to the con-
sumer. 
‘‘(C) 
LIMITATION
ON
DAMAGES
FOR 
WRONGS NOT CREATING FINANCIAL LOSSES.—
Unless the consumer demonstrates that the 
purchaser or assignee had actual knowledge of 
or exhibited reckless indifference to a violation 
of this title or other applicable law, the dam-
ages for which a purchaser or assignee shall be 
liable shall be limited to the amounts specified 
in paragraphs (1) and (2) of section 130(a), 
which consist of damages for actual financial 
losses and attorney’s fees. 
‘‘(3) CLARIFICATION OF TERMS.—For purposes 
of determining the liability of assignees under this 
section, the terms ‘purchaser’ and ‘assignee’ shall 
not include— 
‘‘(A) persons whose interest in higher-cost 
mortgages is limited to a security interest or 
who acquire title as a result of the foreclosure 
of such security interest;
‘‘(B) broker-dealers and their affiliates 
that trade in mortgage loans and related mort-
gage securities and otherwise are not involved 
in any material respect in the terms and condi-
tions under which such mortgage loans were 
made or such securities were issued; 
‘‘(C) passive investors in securities, or in-
terests in securities, including investors who 
guarantee the payment of principal and interest 
of securities to other investors, based on and 
backed by a pool of residential mortgage loans; 
or 
‘‘(D) purchasers of mortgage loans that do 
not take record title to such loans where, within 
1 year following the initial sale, the seller is ob-
ligated by written agreement to repurchase the 
loans or the purchaser is obligated by written 
agreement to deliver the loans to a third party 
at the direction of a seller.’’. 
SEC. 106. COORDINATION WITH STATE LAW. 
Section 111 of the Truth in Lending Act (15 U.S.C. 
1610) is amended—
(1) by adding at the end the following new sub-
section: 
‘‘(f) HIGHER-COST MORTGAGES.—
‘‘(1) IN GENERAL.—The provisions of this title 
shall supersede any provision of the law of any State 
to the extent that such provision of law attempts, di-
rectly or indirectly, to regulate, or has the effect of 
regulating, 
mortgage 
lending 
activities 
by 
or 
through—
‘‘(A) the imposition of a high-cost limita-
tion, including—
‘‘(i) through limitations or prohibi-
tions in connection with contracts for other 
business with any such State or any polit-
ical subdivision of any such State; 
‘‘(ii) by making any conduct in con-
nection with any such activities subject to 
civil or criminal penalties; or 
‘‘(iii) by making activities regulated 
under real estate, foreclosure, or other 
laws of such State or political subdivision 
contingent upon the manner in which 
mortgage lending activities are conducted; 
or 
‘‘(B) any requirement, limitation, or prohi-
bition without regard to whether the provisions 
of the requirement, limitation, or prohibition 
are consistent or inconsistent with section 129
or 129A or whether the consumer credit trans-
action subject to such requirement is a higher-
cost mortgage, 
without respect to whether or the extent to which 
such provision of law may afford greater protection, 
substantive or otherwise, to consumers. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) MORTGAGE
LENDING
ACTIVITIES.—
The term ‘mortgage lending activities’ includes 
any advertisement, solicitation, offer, negotia-
tion, placement, application, processing, under-
writing, originating, closing, funding, recording, 
assignment, purchase, pledge, securitization, 
holding, servicing, collection, modification, satis-
faction, or foreclosure in connection with or 
arising out of a consumer credit transaction se-
cured by a lien against a consumer’s dwelling, 
by or on behalf of a broker, creditor, secured 
creditor, purchaser, servicer, trustee, certificate 
or securities holder, or any other person or enti-
ty that may engage in any of the above enumer-
ated activities and their respective agents, con-
tractors, employees, officers, and directors.
‘‘(B) LAW OF ANY STATE.—The term ‘law 
of any State’ includes any constitutional provi-
sion, statute, rule, regulation, or ordinance of 
any State or any political subdivision of any 
State, including any State law as to which the 
Board has made a determination under section 
123, and any judicial decision or determination 
rendered in connection therewith. 
‘‘(C) HIGH-COST LIMITATION.—The term 
‘high-cost limitation’ means any requirement, 
limitation, or prohibition on any mortgage lend-
ing activities in connection with a consumer 
credit transaction secured by a lien against a 
consumer’s dwelling when the applicability of 
such requirement, limitation or prohibition is 
based in whole or in part on whether the actual 
or contingent, direct or indirect, interest rate, 
costs, fees, price or finance charges to the con-
sumer associated with such consumer credit 
transaction exceed any particular threshold, 
however such threshold may be defined, without 
regard to whether the consumer credit trans-
action subject to such requirement, limitation, 
or prohibition is a higher-cost mortgage.
‘‘(3) CLARIFICATION
OF
PREEMPTION.—Any 
law of any State preempted under paragraph (1) of 
this subsection shall, without in any way limiting the 
effect of paragraph (1) of this subsection, include 
any law of any State that directly or indirectly—
‘‘(A) limits a creditor’s ability to extend 
new credit to a consumer; 
‘‘(B) limits the rights, claims, defenses, or 
other remedies at law or equity available to a 
creditor, secured creditor, servicer, assignee or 
other direct or indirect holder, and their respec-
tive agents or contractors, including without 
limitation, the right to foreclose on the lien 
against the consumer’s dwelling in respect of a 
consumer’s default under the related loan docu-
ments; or 
‘‘(C) imposes legal liability on any party 
for the violations of law by another party by 
virtue of such first party’s acquisition of any di-
rect or indirect right, title or interest in and to, 
or contractual responsibility for the servicing or 
administration of, a higher-cost mortgage. 
‘‘(4) 
EXCLUSIONS.—Notwithstanding 
para-
graphs (1), (2), and (3), the following laws are ex-
pressly excluded from the preemption established 
under paragraph (1): 
‘‘(A) Any law of any State, not otherwise 
preempted under Federal law, limiting the rate 
of interest reflected in the note or other instru-
ment evidencing an extension of consumer cred-
it secured by a lien against a consumer’s dwell-
ing, to the extent that such law does not re-
quire compliance with any law that is otherwise 
preempted under paragraphs (1), (2), and (3) 
as a condition of contracting for, charging, or 
collecting any rate of interest otherwise per-
mitted by such law. 
‘‘(B) Any law of any State requiring the li-
censing, registration, or authorization of any 
person engaged in mortgage-lending activities, 
except that the law of any State will be pre-
empted to the extent that such law conditions 
the issuance or maintenance of such a license, 
registration or other authorization, or the au-
thority granted thereby, on compliance with any 
law that is otherwise preempted under para-
graphs (1), (2) and (3). 
‘‘(5) PROMPT DETERMINATION BY BOARD OF 
GOVERNORS.—
‘‘(A) IN GENERAL.—In response to a re-
quest from any person, the Board, or any offi-
cial or employee of the Board duly authorized 
by the Board, shall—
‘‘(i) promptly determine whether and 
to the extent to which the specific law of 
any State identified in such request is pre-
empted by operation of this subsection; 
and 
‘‘(ii) cause such determination to be 
published in the Federal Register. 
‘‘(B) EFFECT OF PUBLICATION.—The pre-
emption provided under this section shall be 
self-executing, and the publication of a finding 
or preemption by the Board shall not be re-
quired in order for preemption to occur in ac-
cordance with the terms of this section.’’; 
(2) in subsection (a)(1), by striking the 1st sen-
tence and inserting the following new sentence: ‘‘Ex-
cept as provided in subsections (e) and (f), no provi-
sion of chapter 1, 2, or 3 shall be construed as an-
nulling, altering, or affecting the laws of any State 
relating to the disclosure of information in connec-
tion with credit transactions, except to the extent 
that those laws are inconsistent with the provisions
of this title, and then only to the extent of the incon-
sistency.’’; 
(3) in subsection (b)—
(A) by striking ‘‘section 129’’ the 1st place 
such term appears and inserting ‘‘subsection (f) 
and sections 129, 129A, and 129B’’; and 
(B) by inserting ‘‘, 129A, or 129B’’ after 
‘‘section 129’’ each place such term appears 
after the 1st place; and 
(4) in subsection (d), by striking ‘‘sections 125, 
130, and 166’’ and inserting ‘‘subsection (f) and 
sections 125, 130, and 166’’. 
SEC. 107. CLARIFICATION OF STATE ENFORCEMENT AU-
THORITY. 
Subsection (e) of section 130 of Truth in Lending 
Act (15 U.S.C. 1640(e)) (as amended by section 105(d) 
of this Act) is amended—
(1) by striking ‘‘(e) Except as provided in the 
subsequent sentence, any action’’ and inserting ‘‘(e) 
JURISDICTION; STATUTE OF LIMITATIONS.— 
‘‘(1) IN GENERAL.—Except as provided in the 
subsequent sentence, any action’’; and 
(2) by adding at the end the following new 
paragraph:
‘‘(2) CLARIFICATION
OF
PRIMARY
ENFORCE-
MENT AUTHORITY WITH RESPECT TO STATE-CHAR-
TERED OR LICENSED ENTITIES.—In addition to the 
authority provided under subsection (1), no provision 
of this title shall be construed as limiting the au-
thority of any State to enforce the provisions of this 
title, as the primary enforcement authority, with re-
gard to any person licensed or chartered by such 
State.’’. 
SEC. 108. PREPAYMENT PENALTIES AND LATE CHARGES. 
(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. Prepayment penalties and late charges 
‘‘Except as otherwise provided by this title, any con-
sumer credit transaction that is secured by a dwelling that 
is, or upon the consummation of the transaction will be, 
occupied by the consumer as his principal dwelling, may 
contain—
‘‘(1) a provision for the imposition of a prepay-
ment penalty for the prepayment of the credit trans-
action, only if—
‘‘(A) the penalty cannot be imposed if the 
debt is accelerated as a result of default or any 
other breach of the loan documents;
‘‘(B) the penalty does not apply after the 
end of the 36-month period beginning on the 
date the transaction is consummated; 
‘‘(C) the consumer is offered a choice of 
another similar loan without a prepayment pen-
alty and is given a description of the benefit the 
consumer will receive, and the consequences the 
consumer might encounter, for accepting a loan 
with the prepayment penalty; and 
‘‘(D) the penalty does not exceed an 
amount equal to the payment of 6 months ad-
vance interest on the amount prepaid in any 
12-month period in excess of 20 percent of the 
original principal amount; and 
‘‘(2) a provision for the imposition of unantici-
pated late payment, only if the late-payment fee—
‘‘(A) is not in excess of 5 percent of the 
amount of the scheduled payment past due; 
‘‘(B) may only be assessed on a payment 
past due for 15 days or more; and 
‘‘(C) may not be charged more than once 
with respect to a single late payment.’’. 
(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. Prepayment penalties and late charges.’’.
SEC. 109. REGULATIONS. 
Notwithstanding any provision of the Truth in Lend-
ing Act, the Board of Governors of the Federal Reserve 
System shall—
(1) prescribe such regulations implementing 
this title and the amendments made by this title as 
the Board may determine to be appropriate; and 
(2) publish such regulations in final form in the 
Federal Register before the end of the 12-month pe-
riod beginning on the date of the enactment of this 
Act. 
SEC. 110. EFFECTIVE DATES. 
(a) IN GENERAL.—This title, and the amendments 
made by this title, shall take effect at the end of the 3-
month period beginning on the date of the enactment of 
this Act. 
(b) SCOPE OF APPLICATION.—This title, and the 
amendments made by this title, shall apply with respect 
to applications for consumer credit transactions received 
on or after the effective date of this Act.
TITLE II—HOUSING 
COUNSELING 
Subtitle A—Consumer Counseling 
SEC. 201. CONSUMER COUNSELING REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (x) (as 
added by section 103(r) of this Act) the following: 
‘‘(y) CONSUMER COUNSELING REQUIREMENTS.—
‘‘(1) IN GENERAL.—A creditor may not extend 
any credit in the form of a higher-cost mortgage to 
any consumer unless the creditor has provided to the 
consumer, at such time before the consummation of 
the mortgage and in such manner as the Board shall 
provide by regulation—
‘‘(A) a separate written statement recom-
mending that the consumer take advantage of 
available home ownership or credit counseling 
services before agreeing to the terms of any 
higher-cost mortgage; and 
‘‘(B) a written statement containing the 
names, addresses and telephone numbers of 
counseling agencies or programs reasonably 
available to the consumer that have been cer-
tified or approved and made publicly available 
by the Secretary of Housing and Urban Devel-
opment, a State housing finance authority (as 
defined in section 1301 of the Financial Institu-
tions Reform, Recovery, and Enforcement Act 
of 1989), or the agency referred to in sub-
section (a) or (c) of section 108 with jurisdic-
tion over the creditor as qualified to provide 
counseling on—
‘‘(i) the advisability of a higher-cost 
mortgage transaction; and 
‘‘(ii) the appropriateness of a higher-
cost mortgage for the consumer. 
‘‘(2) COMPLETE
AND
UPDATED
LISTS
RE-
QUIRED.—A creditor shall be deemed to be in com-
pliance with the requirements of this subsection if 
the creditor provides the consumer with a reasonably 
complete or updated list of counseling agencies re-
quired by section 5(a) of the Real Estate Settlement 
Procedures Act of 1974.’’. 
Subtitle B—Expanded Housing 
Counseling Opportunities 
SEC. 211. SHORT TITLE. 
This subtitle may be cited as the ‘‘Expanding Hous-
ing Opportunities Through Education and Counseling 
Act’’.
SEC. 212. 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
‘‘(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(h)(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(h) of
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 216 of the
Expanding 
Housing 
Opportunities 
Through Education and Counseling Act; 
‘‘(vii) providing for operation of the 
advisory committee established under para-
graph (4) of this subsection; and 
‘‘(viii) collaborating with community-
based organizations with expertise in the 
field of housing counseling. 
‘‘(4) ADVISORY COMMITTEE.—
‘‘(A) IN
GENERAL.—The Secretary shall 
appoint an advisory committee to provide advice 
and oversight 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 
three years. Members may be reappointed at 
the discretion 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, four shall be appointed 
for a term of one year and four shall be ap-
pointed for a term of two 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 
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. 213. COUNSELING PROCEDURES. 
(a) IN GENERAL.—Section 106 of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x), as 
amended by the preceding provisions of this title, is fur-
ther amended by adding at the end the following new sub-
section: 
‘‘(h) 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, 
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)); 
‘‘(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)); 
‘‘(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). 
‘‘(C) RENTAL
HOUSING
COUNSELING.—
For purposes of this subsection, the term ‘rent-
al housing counseling’ means counseling related
to rental of residential property, which may in-
clude counseling regarding future homeowner-
ship opportunities and providing referrals for 
renters and prospective renters to entities pro-
viding counseling and shall include counseling 
related to such topics that is provided pursuant 
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 18(a)(4)(D) (42 
U.S.C. 1437p(a)(4)(D)); 
‘‘(III) 
section 
23(c)(4) 
(42 
U.S.C. 1437u(c)(4)); 
‘‘(IV) section 32(e)(4) (42 U.S.C. 
1437z–4(e)(4)); 
‘‘(V) section 33(d)(2)(B) (42 
U.S.C. 1437z–5(d)(2)(B)); and 
‘‘(VI) 
section 
302(b)(6) 
(42 
U.S.C. 1437aaa–1(b)(6));
‘‘(iii) section 233(b)(2) of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12773(b)(2)); 
‘‘(iv) section 106 of the Housing and 
Urban Development Act of 1968 (12 
U.S.C. 1701x); 
‘‘(v) section 422(b)(6) of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12872(b)(6)); 
‘‘(vi) section 491(b)(1)(F)(iii) of the 
McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11408(b)(1)(F)(iii)); 
‘‘(vii) 
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)); 
and 
‘‘(viii) the rental assistance program 
under section 8 of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437f). 
‘‘(2) TOLL-FREE
TELEPHONE
NUMBER
AND 
WEB SITE.—The Secretary shall provide for the es-
tablishment, operation, and publication of a toll-free 
telephone number and a World Wide Web site 
through which persons interested in homeownership
or rental housing counseling services may locate and 
obtain names and contact information of persons 
and organizations certified under section 106(e) of 
the Housing and Urban Development Act of 1968 to 
provide such services. 
‘‘(3) STANDARDS FOR MATERIALS.—The Sec-
retary, in conjunction with the advisory committee 
established under subsection (g)(4), shall establish 
standards for materials and forms to be used, as ap-
propriate, by organizations providing homeownership 
counseling services, including any recipients of as-
sistance pursuant to subsection (a)(4). 
‘‘(4) 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 
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-
ister rental housing assistance vouchers, and 
housing counseling centers. 
‘‘(5) 
OUTREACH
TO
VULNERABLE
POPU-
LATIONS.—The Secretary shall develop a multimedia 
outreach program designed to make elderly persons, 
persons who face language barriers, low-income per-
sons, and other potentially vulnerable consumers 
aware that it is advisable, before seeking a residen-
tial mortgage loan, to obtain homeownership coun-
seling from an unbiased and reliable source and that 
such homeownership counseling is available, includ-
ing through programs of the Department of Housing 
and Urban Development. 
‘‘(6) 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 
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 (II), by striking ‘‘and’’ at the 
end; 
(2) in subclause (III) by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after subclause (III) the fol-
lowing new subclause: 
‘‘(IV) notify the housing or mort-
gage applicant of the availability of 
mortgage software systems provided 
pursuant to subsection (h)(4).’’.
SEC. 214. 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.—
‘‘(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 (h)(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 
$75,000,000 for each of fiscal years 2006 through 
2009 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 (6) of subsection 
(h); and 
‘‘(iii) assistance pursuant to this para-
graph for entities providing homeownership and 
rental counseling.’’. 
SEC. 215. 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)—