IB 
Union Calendar No. 42 
111TH CONGRESS 
1ST SESSION H. R. 1728 
[Report No. 111–94] 
To amend the Truth in Lending Act to reform consumer mortgage practices 
and provide accountability for such practices, to provide certain minimum 
standards for consumer mortgage loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 26, 2009 
Mr. MILLER of North Carolina (for himself, Mr. WATT, Mr. FRANK of Massa-
chusetts, Mr. KANJORSKI, Mr. GUTIERREZ, Ms. BEAN, and Mr. 
MINNICK) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
MAY 4, 2009 
Additional sponsors: Ms. SUTTON, Mr. MEEK of Florida, Mr. BACA, Mr. 
MEEKS of New York, and Ms. JACKSON-LEE of Texas 
MAY 4, 2009 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on March 26, 2009] 
A BILL 
To amend the Truth in Lending Act to reform consumer 
mortgage practices and provide accountability for such 
practices, to provide certain minimum standards for con-
sumer 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’’. 
(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 STANDARDS 
Sec. 101. Definitions. 
Sec. 102. Residential mortgage loan origination. 
Sec. 103. Prohibition on steering incentives. 
Sec. 104. Liability. 
Sec. 105. Regulations. 
Sec. 106. RESPA and TILA disclosure improvement. 
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. 
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. Credit risk retention. 
Sec. 214. Required disclosures. 
Sec. 215. Disclosures required in monthly statements for residential mortgage 
loans. 
Sec. 216. Legal assistance for foreclosure-related issues. 
Sec. 217. Effective date. 
Sec. 218. Report by the GAO. 
Sec. 219. State Attorney General enforcement authority. 
Sec. 220. Tenant protection. 
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. 
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Sec. 304. Regulations. 
Sec. 305. 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. 
Sec. 409. Home inspection counseling. 
TITLE V—MORTGAGE SERVICING 
Sec. 501. Escrow and impound accounts relating to certain consumer credit 
transactions. 
Sec. 502. Disclosure notice required for consumers who waive escrow services. 
Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments. 
Sec. 504. Truth in Lending Act amendments. 
Sec. 505. Escrows included in repayment analysis. 
TITLE VI—APPRAISAL ACTIVITIES 
Sec. 601. Property appraisal requirements. 
Sec. 602. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions. 
Sec. 603. Amendments relating to appraisal subcommittee of FIEC, appraiser 
independence, and approved appraiser education. 
Sec. 604. Study required on improvements in appraisal process and compliance 
programs. 
Sec. 605. Equal Credit Opportunity Act amendment. 
Sec. 606. Real Estate Settlement Procedures Act of 1974 amendment relating to 
certain appraisal fees. 
TITLE VII—SENSE OF CONGRESS REGARDING THE IMPORTANCE OF 
GOVERNMENT SPONSORED ENTERPRISES REFORM 
Sec. 701. Sense of Congress regarding the importance of Government-sponsored 
enterprises reform to enhance the protection, limitation, and reg-
ulation of the terms of residential mortgage credit. 
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TITLE 
I—RESIDENTIAL 
MORT-
GAGE 
LOAN 
ORIGINATION 
STANDARDS 
SEC. 101. 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 ORIGINA-
TION AND RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) COMMISSION.—Unless otherwise specified, 
the term ‘Commission’ means the Federal Trade Com-
mission. 
‘‘(2) FEDERAL BANKING AGENCIES.—The term 
‘Federal banking agencies’ means the Board of Gov-
ernors of the Federal Reserve System, the Comptroller 
of the Currency, the Director of the Office of Thrift 
Supervision, the Federal Deposit Insurance Corpora-
tion, and the National Credit Union Administration 
Board. 
‘‘(3) MORTGAGE ORIGINATOR.—The term ‘mort-
gage originator’— 
‘‘(A) means any person who, for direct or 
indirect compensation or gain, or in the expecta-
tion of direct or indirect compensation or gain— 
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‘‘(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; 
‘‘(B) includes any person who represents to 
the public, through advertising or other means of 
communicating or providing information (in-
cluding the use of business cards, stationery, bro-
chures, signs, rate lists, or other promotional 
items), that such person can or will provide any 
of the services or perform any of the activities 
described in subparagraph (A); 
‘‘(C) does not include any person who is (i) 
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, or (ii) an em-
ployee of a retailer of manufactured homes who 
is not described in clause (i) or (iii) of subpara-
graph (A); 
‘‘(D) does not include a person or entity 
that only performs real estate brokerage activities 
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and is licensed or registered in accordance with 
applicable State law, unless such person or enti-
ty is compensated for performing such brokerage 
activities by a lender, a mortgage broker, or 
other mortgage originator or by any agent of 
such lender, mortgage broker, or other mortgage 
originator; and 
‘‘(E) does not include, with respect to a res-
idential mortgage loan, a person, estate, or trust 
that provides mortgage financing for the sale of 
1 property in any 36-month period, provided 
that such loan— 
‘‘(i) is fully amortizing; 
‘‘(ii) is with respect to a sale for which 
the seller determines in good faith and docu-
ments that the buyer has a reasonable abil-
ity to repay the loan; 
‘‘(iii) has a fixed rate or an adjustable 
rate that is adjustable after 5 or more years, 
subject to reasonable annual and lifetime 
limitations on interest rate increases; and 
‘‘(iv) meets any other criteria the Fed-
eral banking agencies may prescribe. 
‘‘(4) NATIONWIDE MORTGAGE LICENSING SYSTEM 
AND REGISTRY.—The term ‘Nationwide Mortgage Li-
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censing System and Registry’ has the same meaning 
as in the Secure and Fair Enforcement for Mortgage 
Licensing Act of 2008. 
‘‘(5) OTHER DEFINITIONS RELATING TO MORT-
GAGE ORIGINATOR.—For purposes of this subsection, 
a person ‘assists a consumer in obtaining or applying 
to obtain a residential mortgage loan’ by, among 
other things, advising on residential mortgage loan 
terms (including rates, fees, and other costs), pre-
paring residential mortgage loan packages, or col-
lecting information on behalf of the consumer with re-
gard to a residential mortgage loan. 
‘‘(6) RESIDENTIAL MORTGAGE LOAN.—The term 
‘residential mortgage loan’ means any consumer cred-
it transaction that is secured by a mortgage, deed of 
trust, or other equivalent consensual security interest 
on a dwelling or on residential real property that in-
cludes a dwelling, other than a consumer credit trans-
action under an open end credit plan or a reverse 
mortgage or, for purposes of sections 129B and 129C 
and section 128(a) (16), (17), and (18), 128(a)(f) and 
128(b)(4) and any regulations promulgated there-
under, an extension of credit relating to a plan de-
scribed in section 101(53D) of title 11, United States 
Code. 
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‘‘(7) SECRETARY.—The term ‘Secretary’, when 
used in connection with any transaction or person in-
volved 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, special purpose 
entity, or other structure that— 
‘‘(A) is the issuer, or is created by the 
issuer, of mortgage pass-through certificates, par-
ticipation certificates, mortgage-backed securi-
ties, 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-
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 Estate 
Settlement Procedures Act of 1974.’’. 
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SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lending 
Act (15 U.S.C. 1631 et seq.) is amended by inserting after 
section 129A the following new section: 
‘‘§ 129B. Residential mortgage loan origination 
‘‘(a) FINDING AND PURPOSE.— 
‘‘(1) FINDING.—The Congress finds that eco-
nomic stabilization would be enhanced by the protec-
tion, limitation, and regulation of the terms of resi-
dential mortgage credit and the practices related to 
such credit, while ensuring that responsible, affordable 
mortgage credit remains available to consumers. 
‘‘(2) PURPOSE.—It is the purpose of this section 
and section 129C to assure that consumers are offered 
and receive residential mortgage loans on terms that 
reasonably reflect their ability to repay the loans and 
that are understandable and not unfair, deceptive or 
abusive. 
‘‘(b) 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 
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accordance with applicable State or Federal law, 
including the Secure and Fair Enforcement for 
Mortgage Licensing Act of 2008; 
‘‘(B) with respect to each consumer seeking 
or inquiring about a residential mortgage loan, 
diligently work to present the consumer with a 
range of residential mortgage loan products for 
which the consumer likely qualifies and which 
are appropriate to the consumer’s existing cir-
cumstances, based on information known by, or 
obtained in good faith by, the originator; 
‘‘(C) make full, complete, and timely disclo-
sure to each such consumer of— 
‘‘(i) the comparative costs and benefits 
of each residential mortgage loan product 
offered, discussed, or referred to by the origi-
nator; 
‘‘(ii) the nature of the originator’s rela-
tionship to the consumer (including the cost 
of the services to be provided by the origi-
nator and a statement that the mortgage 
originator is or is not acting as an agent 
for the consumer, as the case may be); and 
‘‘(iii) any relevant conflicts of interest 
between the originator and the consumer; 
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‘‘(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 
under this section with respect to the trans-
action; and 
‘‘(E) include on all loan documents any 
unique identifier of the mortgage originator pro-
vided by the Nationwide Mortgage Licensing 
System and Registry. 
‘‘(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 re-
ferrals from, or consumer applications sub-
mitted by or through, such originator; or 
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‘‘(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 
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 residen-
tial mortgage loan, receives a net tangible 
benefit, as determined in accordance with 
regulations prescribed under subsections (a) 
and (b) of section 129C; and 
‘‘(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— 
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‘‘(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 
‘‘(B) restricting a mortgage originator from 
holding himself or herself out as an agent or fi-
duciary of a consumer subject to any additional 
duty, requirement, or limitation applicable 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 regu-
lations to— 
‘‘(i) further define the duty established 
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 
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‘‘(iv) establish such other requirements 
for any mortgage originator as such regu-
latory agencies may determine to be appro-
priate to meet the purposes of this sub-
section. 
‘‘(B) COMPLEMENTARY
AND
NONDUPLICA-
TIVE DISCLOSURES.—The agencies referred to in 
subparagraph (A) shall endeavor to make the re-
quired disclosures to consumers under this sub-
section 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 subsidiaries with 
the requirements of this section and the registration 
procedures established under section 1507 of the Se-
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cure and Fair Enforcement for Mortgage Licensing 
Act of 2008.’’. 
(b) CLERICAL AMENDMENT.—The table of sections for 
chapter 2 of the Truth in Lending Act is amended by insert-
ing after the item relating to section 129 the following new 
items: 
‘‘129A. Fiduciary duty of servicers of pooled residential mortgages. 
‘‘129B. Residential mortgage loan origination.’’. 
SEC. 103. PROHIBITION ON STEERING INCENTIVES. 
Section 129B of the Truth in Lending Act (as added 
by section 102(a)) is amended by inserting after subsection 
(b) the following new subsection: 
‘‘(c) PROHIBITION ON STEERING INCENTIVES.— 
‘‘(1) IN GENERAL.—For any mortgage loan, the 
total amount of direct and indirect compensation 
from all sources permitted to a mortgage originator 
may not vary based on the terms of the loan (other 
than the amount of the principal). 
‘‘(2) REGULATIONS.—The Federal banking agen-
cies, in consultation with the Secretary and the Com-
mission, shall jointly prescribe regulations to pro-
hibit— 
‘‘(A) mortgage originators from steering 
any consumer to a residential mortgage loan 
that— 
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‘‘(i) the consumer lacks a reasonable 
ability to repay (in accordance with regula-
tions prescribed under section 129C(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 129C(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 
129C(c)(3)) to a residential mortgage loan that 
is not a qualified mortgage; 
‘‘(C) abusive or unfair lending practices 
that promote disparities among consumers of 
equal credit worthiness but of different race, eth-
nicity, gender, or age; and 
‘‘(D) mortgage originators from assessing 
excessive points and fees (as such term is de-
scribed under section 103(aa)(4) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)(4))) to a con-
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sumer for the origination of a residential mort-
gage loan based on such consumer’s decision to 
finance all or part of the payment through the 
rate for such points and fees. 
‘‘(3) RULES OF CONSTRUCTION.—No provision of 
this subsection shall be construed as— 
‘‘(A) permitting yield spread premiums or 
other similar incentive compensation; 
‘‘(B) affecting the mechanism for providing 
the total amount of direct and indirect com-
pensation permitted to a mortgage originator; 
‘‘(C) limiting or affecting the amount of 
compensation received by a creditor upon the 
sale of a consummated loan to a subsequent pur-
chaser; 
‘‘(D) restricting a consumer’s ability to fi-
nance, including through rate or principal, any 
origination fees or costs permitted under this 
subsection, or the mortgage originator’s ability to 
receive such fees or costs (including compensa-
tion) from any person, so long as such fees or 
costs were fully and clearly disclosed to the con-
sumer earlier in the application process as re-
quired by 129B(b)(1)(C)(i) and do not vary 
based on the terms of the loan (other than the 
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amount of the principal) or the consumer’s deci-
sion about whether to finance such fees or costs; 
or 
‘‘(E) prohibiting incentive payments to a 
mortgage originator based on the number of resi-
dential mortgage loans originated within a spec-
ified period of time.’’. 
SEC. 104. LIABILITY. 
Section 129B of the Truth in Lending Act is amended 
by inserting after subsection (c) (as added by section 103) 
the following new subsection: 
‘‘(d) LIABILITY FOR VIOLATIONS.— 
‘‘(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 sub-
stituting ‘mortgage originator’ for ‘creditor’ each 
place such term appears in each such subsection. 
‘‘(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 the greater of actual damages or an 
amount equal to 3 times the total amount of direct 
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and indirect compensation or gain accruing to the 
mortgage originator in connection with the residen-
tial mortgage loan involved in the violation, plus the 
costs to the consumer of the action, including a rea-
sonable attorney’s fee.’’. 
SEC. 105. REGULATIONS. 
(a) DISCRETIONARY REGULATORY AUTHORITY.—Sec-
tion 129B of the Truth in Lending Act is amended by in-
serting after subsection (d) (as added by section 104) the 
following new subsection: 
‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.— 
‘‘(1) IN GENERAL.—The Federal banking agen-
cies shall, by regulations issued jointly, prohibit or 
condition terms, acts or practices relating to residen-
tial mortgage loans that the agencies find to be abu-
sive, unfair, deceptive, predatory, inconsistent with 
reasonable underwriting standards, necessary or 
proper to effectuate the purposes of this section and 
section 129C, to prevent circumvention or evasion 
thereof, or to facilitate compliance with such sections, 
or are not in the interest of the borrower. 
‘‘(2) APPLICATION.—The regulations prescribed 
under paragraph (1) shall be applicable to all resi-
dential mortgage loans and shall be applied in the 
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same manner as regulations prescribed under section 
105. 
‘‘(f) Section 129B and any regulations promulgated 
thereunder do not apply to an extension of credit relating 
to a plan described in section 101(53D) of title 11, United 
States Code.’’. 
(b) EFFECTIVE DATE.—The regulations required or 
authorized to be prescribed under this title or the amend-
ments 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. 
(c) TRUTH
IN
LENDING
FINAL
RULE.—Notwith-
standing any other provision of this Act, the regulations 
adopted by the Board concerning Truth in Lending, 73 Fed. 
Reg. 44522 (July 30, 2008), shall take effect as decided by 
the Board with such exceptions or revisions as the Board 
determines necessary. 
(d) TECHNICAL AND CONFORMING AMENDMENTS.— 
Section 129(l)(2) of the Truth in Lending Act (15 U.S.C. 
1639(l)(2)) is amended by inserting ‘‘referred to in section 
103(aa)’’ after ‘‘loans’’ each place such term appears. 
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SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT. 
(a) COMPATIBLE DISCLOSURES.—The Secretary of 
Housing and Urban Development and the Board of Gov-
ernors of the Federal Reserve shall, not later than the expi-
ration of the 6-month period beginning upon the date of 
the enactment of this Act, jointly issue for public comment 
proposed regulations providing for compatible disclosures 
for borrowers to receive at the time of mortgage application 
and at the time of closing. 
(b) REQUIREMENTS.—Such disclosures shall— 
(1) provide clear and concise information to bor-
rowers on the terms and costs of residential mortgage 
transactions and mortgage transactions covered by the 
Truth in Lending Act (12 U.S.C. 1601 et seq.) and 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2601 et seq.); 
(2) satisfy the requirements of section 128 of the 
Truth in Lending Act (12 U.S.C. 1638) and section 
4 and 5 of the Real Estate Settlement Procedures Act 
of 1974; and 
(3) comprise early disclosures under the Truth in 
Lending Act and the good faith estimate disclosures 
under the Real Estate Settlement Procedures Act of 
1974 and final Truth in Lending Act disclosures and 
the uniform settlement statement disclosures under 
Real Estate Settlement Procedures Act of 1974 and 
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provide for standardization to the greatest extent pos-
sible among such disclosures from mortgage origina-
tion through the mortgage settlement. 
(4) shall include, with respect to a residential 
home mortgage loan, a written statement of— 
(A) the principal amount of the loan; 
(B) the term of the loan; 
(C) whether the loan has a fixed rate of in-
terest or an adjustable rate of interest; 
(D) the annual percentage rate of interest 
under the loan as of the time of the disclosure; 
(E) if the rate of interest under the loan can 
adjust after the disclosure, for each such possible 
adjustment— 
(i) when such adjustment will or may 
occur; and 
(ii) the maximum annual percentage 
rate of interest to which it can be adjusted; 
(F) the total monthly payment under the 
loan (including loan principal and interest, 
property taxes, and insurance) at the time of the 
disclosure; 
(G) the maximum total estimated monthly 
maximum payment pursuant to each such pos-
sible adjustment; 
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(H) the total settlement charges in connec-
tion with the loan and the amount of any down-
payment and cash required at settlement; and 
(I) whether or not the loan has a prepay-
ment penalty or balloon payment and the terms, 
timing, and amount of any such penalty or pay-
ment. 
(c) SUSPENSION OF 2008 RESPA RULE.— 
(1) REQUIREMENT.—The Secretary of Housing 
and Urban Development shall, during the period be-
ginning on the date of the enactment of this Act and 
ending upon issuance of proposed regulations pursu-
ant to subsection (a), suspend implementation of any 
provisions of the final rule referred to in paragraph 
(2) that would establish and implement a new stand-
ardized good faith estimate and a new standardized 
uniform settlement statement. Any such provisions 
shall be replaced by the regulations issued pursuant 
to subsections (a) and (b). 
(2) 2008 RULE.—The final rule referred to in 
this paragraph is the rule of the Department of Hous-
ing and Urban Development published on November 
17, 2008, on pages 68204–68288 of Volume 73 of the 
Federal Register (Docket No. FR–5180–F–03; relating 
to ‘‘Real Estate Settlement Procedures Act (RESPA): 
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Rule to Simplify and Improve the Process of Obtain-
ing Mortgages and Reduce Consumer Settlement 
Costs’’). 
(d) 
IMPLEMENTATION.—The 
regulations 
required 
under subsection (a) shall take effect, and shall provide an 
implementation date for the new disclosures required under 
such regulations, not later than the expiration of the 12- 
month period beginning upon the date of the enactment of 
this Act. 
(e) FAILURE TO ISSUE COMPATIBLE DISCLOSURES.— 
If the Secretary of Housing and Urban Development and 
the Board of Governors of the Federal Reserve System can-
not agree on compatible disclosures pursuant to subsections 
(a) and (b), the Secretary and the Board shall submit a 
report to the Congress, after the 6-month period referred to 
in subsection (a), explaining the reasons for such disagree-
ment. After the 15-day period beginning upon submission 
of such report, the Secretary and the Board may separately 
issue for public comment regulations providing for disclo-
sures under the Real Estate Settlement Procedures Act of 
1974 and the Truth in Lending Act, respectively. Any final 
disclosures as a result of such regulations issued by the Sec-
retary and the Board shall take effect on the same date, 
and not later than the expiration of the 12-month period 
beginning on the date of the enactment of this Act. If either 
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the Secretary or the Board fails to act during such 12- 
month period, either such agency may act independently 
and implement final regulations. 
TITLE II—MINIMUM STANDARDS 
FOR MORTGAGES 
SEC. 201. ABILITY TO REPAY. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lending 
Act (15 U.S.C. 1631 et seq.) is amended by inserting after 
section 129B (as added by section 102(a)) the following new 
section: 
‘‘§ 129C. 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 creditor 
may make a residential mortgage loan unless the 
creditor makes a reasonable and good faith deter-
mination based on verified and documented informa-
tion 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, in-
surance, and assessments. 
‘‘(2) MULTIPLE LOANS.—If the creditor knows, 
or has reason to know, that 1 or more residential 
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mortgage loans secured by the same dwelling will be 
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 combined 
payments of all loans on the same dwelling according 
to the terms of those loans and all applicable taxes, 
insurance, and assessments. 
‘‘(3) BASIS FOR DETERMINATION.—A determina-
tion under this subsection of a consumer’s ability to 
repay a residential mortgage loan shall include con-
sideration of the consumer’s credit history, current in-
come, expected income the consumer is reasonably as-
sured of receiving, current obligations, debt-to-income 
ratio, employment status, and other financial re-
sources other than the consumer’s equity in the dwell-
ing or real property that secures repayment of the 
loan. 
‘‘(4) NONSTANDARD LOANS.— 
‘‘(A) VARIABLE RATE LOANS THAT DEFER 
REPAYMENT OF ANY PRINCIPAL OR INTEREST.— 
For purposes of determining, under this sub-
section, a consumer’s ability to repay a variable 
rate residential mortgage loan that allows or re-
quires the consumer to defer the repayment of 
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any principal or interest, the creditor shall use 
a fully amortizing repayment schedule. 
‘‘(B) INTEREST-ONLY LOANS.—For purposes 
of determining, under this subsection, a con-
sumer’s ability to repay a residential mortgage 
loan that permits or requires the payment of in-
terest only, the creditor shall use the payment 
amount required to amortize the loan by its final 
maturity. 
‘‘(C) CALCULATION FOR NEGATIVE AMORTI-
ZATION.—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 monthly 
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 pay-
ment, unless the loan contract requires more 
rapid repayment (including balloon pay-
ment), in which case the contract’s repay-
ment schedule shall be used in this calcula-
tion; 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 pur-
poses 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 insert-
ing after the item relating to section 129B (as added by 
section 102(b)) the following new item: 
‘‘129C. Minimum standards for residential mortgage loans.’’. 
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SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS. 
Section 129C of the Truth in Lending Act (as added 
by section 201(a)) is amended by inserting after subsection 
(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 informa-
tion known by or obtained in good faith by the cred-
itor, that the refinanced loan will provide a net tan-
gible 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 refi-
nanced loan, including points, fees and other charges, 
exceed the amount of any newly advanced principal 
without any corresponding changes in the terms of the 
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refinanced loan that are advantageous to the con-
sumer. 
‘‘(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 129C of the Truth in Lending Act is amended 
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. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) QUALIFIED
MORTGAGE.—The term 
‘qualified mortgage’ means any residential mort-
gage loan— 
‘‘(i) that does not allow a consumer to 
defer repayment of principal or interest, or 
is not otherwise deemed a ‘non-traditional 
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mortgage’ under guidance, advisories, or 
regulations prescribed by the Federal Bank-
ing Agencies; 
‘‘(ii) that does not provide for a repay-
ment schedule that results in negative amor-
tization at any time; 
‘‘(iii) for which the terms are fully am-
ortizing and which does not result in a bal-
loon payment, where a ‘balloon payment’ is 
a scheduled payment that is more than 
twice as large as the average of earlier 
scheduled payments; 
‘‘(iv) which has an annual percentage 
rate that does not exceed the average prime 
offer rate for a comparable transaction, as 
of the date the interest rate is set— 
‘‘(I) by 1.5 or more percentage 
points, in the case of a first lien resi-
dential mortgage loan having a origi-
nal principal obligation amount that 
does not exceed the amount of the max-
imum limitation on the original prin-
cipal obligation of mortgage in effect 
for a residence of the applicable size, as 
of the date of such interest rate set, 
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pursuant to the sixth sentence of sec-
tion 305(a)(2) the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 
1454(a)(2)); and 
‘‘(II) by 2.5 or more percentage 
points, in the case of a first lien resi-
dential mortgage loan having a origi-
nal principal obligation amount that 
exceeds the amount of the maximum 
limitation on the original principal 
obligation of mortgage in effect for a 
residence of the applicable size, as of 
the date of such interest rate set, pur-
suant to the sixth sentence of section 
305(a)(2) the Federal Home Loan 
Mortgage Corporation Act (12 U.S.C. 
1454(a)(2)); 
‘‘(v) for which the income and finan-
cial resources relied upon to qualify the ob-
ligors on the loan are verified and docu-
mented; 
‘‘(vi) in the case of a fixed rate loan, 
for which the underwriting process is based 
on a payment schedule that fully amortizes 
the loan over the loan term and takes into 
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account all applicable taxes, insurance, and 
assessments; 
‘‘(vii) in the case of an adjustable rate 
loan, for which the underwriting is based on 
the maximum rate permitted under the loan 
during the first seven years, and a payment 
schedule that fully amortizes the loan over 
the loan term and takes into account all ap-
plicable taxes, insurance, and assessments; 
‘‘(viii) that does not cause the con-
sumer’s total monthly debts, including 
amounts under the loan, to exceed a per-
centage established by regulation of the con-
sumer’s monthly gross income or such other 
maximum percentage of such income as 
may be prescribed by regulation under 
paragraph (4), and such rules shall also 
take into consideration the consumer’s in-
come available to pay regular expenses after 
payment of all installment and revolving 
debt; 
‘‘(ix) for which the total points and 
fees payable in connection with the loan do 
not exceed 2 percent of the total loan 
amount, where ‘points and fees’ means 
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points and fees as defined by Section 
103(aa)(4) of the Truth in Lending Act (15 
U.S.C. 1602(aa)(4)); and 
‘‘(x) for which the term of the loan does 
not exceed 30 years, except as such term 
may be extended under paragraph (4). 
‘‘(B) AVERAGE PRIME OFFER RATE.—The 
term ‘average prime offer rate’ means an annual 
percentage rate that is derived from average in-
terest rates, points, and other loan pricing terms 
currently offered to consumers by a representa-
tive sample of creditors for mortgage trans-
actions that have low risk pricing characteris-
tics. 
‘‘(3) PUBLICATION OF AVERAGE PRIME OFFER 
RATE.—The Board— 
‘‘(A) shall publish, and update at least 
weekly, average prime offer rates; and 
‘‘(B) may publish multiple rates based on 
varying types of mortgage transactions. 
‘‘(4) REGULATIONS.— 
‘‘(A) IN
GENERAL.—The Federal banking 
agencies shall jointly prescribe regulations to 
carry out the purposes of this subsection. 
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‘‘(B) REVISION
OF
SAFE
HARBOR
CRI-
TERIA.— 
‘‘(i) IN GENERAL.—The Federal bank-
ing agencies may jointly prescribe regula-
tions that revise, add to, or subtract from 
the criteria that define a qualified mortgage 
upon a finding that such regulations are 
necessary and appropriate to effectuate the 
purposes of this section and section 129B, to 
prevent circumvention or evasion thereof, or 
to facilitate compliance with such sections. 
‘‘(ii) LOAN DEFINITION.—The following 
agencies shall prescribe rules defining the 
types of loans they insure, guarantee or ad-
minister, as the case may be, that are 
Qualified Mortgages for purposes of sub-
section (c)(1)(A) upon a finding that such 
rules are consistent with the purposes of this 
section and section 129B, to prevent cir-
cumvention or evasion thereof, or to facili-
tate compliance with such sections— 
‘‘(I) The Department of Housing 
and Urban Development, with regard 
to mortgages insured under title II of 
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‘‘(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 (9), a civil action may 
be maintained against a creditor for a violation 
of subsection (a) or (b) with respect to a residen-
tial 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 
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 residential 
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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 EXEMPTION.— 
No assignee or securitizer of a residential mortgage 
loan that has exercised reasonable due diligence in 
complying with the requirements of subsections (a) 
and (b) shall be liable under paragraph (2) with re-
spect to such loan if, no later than 90 days after the 
receipt of notification from the consumer that the loan 
violates subsection (a) or (b), the assignee or 
securitizer provides a cure so that the loan satisfies 
the requirements of subsections (a) and (b). 
‘‘(4) ABSENT PARTIES.— 
‘‘(A) ABSENT CREDITOR.—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) 
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 receiver, conservator, 
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or liquidating agent appointed, a consumer may 
maintain a civil action against an assignee to 
cure the residential mortgage loan, plus the costs 
and reasonable attorney’s fees incurred in ob-
taining such remedy. 
‘‘(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, 
conservators, or liquidating agents appointed, 
the consumer may maintain the civil action re-
ferred to in subparagraph (A) against the 
securitizer. 
‘‘(5) CURE DEFINED.—For purposes of this sub-
section, the term ‘cure’ means, with respect to a resi-
dential 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 satisfy the 
requirements of subsections (a) and (b) and the pay-
ment of such additional costs as the obligor may have 
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incurred in connection with obtaining a cure of the 
loan, including a reasonable 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 RESCIS-
SION.—If a creditor, assignee, or securitizer cannot 
provide, or a consumer cannot obtain, rescission 
under paragraph (1) or (2), the liability of such cred-
itor, assignee, or securitizer shall be met by providing 
the financial equivalent of a rescission, together with 
such additional costs as the obligor may have in-
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curred as a result of the violation and in connection 
with obtaining a rescission of the loan, including 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 viola-
tion 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 mortgage 
loan other than a loan to which subparagraph 
(B) applies, the end of the 3-year period begin-
ning 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 adjusts to 
a variable rate or that provides for a nonamor-
tizing payment schedule and then converts to an 
amortizing payment schedule, the earlier of— 
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‘‘(i) the end of the 1-year period begin-
ning on the date of such reset, adjustment, 
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 interests 
in such pools including through a securitization vehi-
cle, 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. 
‘‘(e) OBLIGATION OF SECURITIZERS, AND PRESERVA-
TION OF BORROWER REMEDIES.— 
‘‘(1) OBLIGATION
TO
RETAIN
ACCESS.—Any 
securitizer of a residential mortgage loan sold or to 
be sold as part of a securitization vehicle shall, in 
any document or contract providing for the transfer, 
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conveyance, or the establishment of such securitization 
vehicle, reserve the right and preserve the ability— 
‘‘(A) to identify and obtain access to any 
such loan; 
‘‘(B) to acquire any such loan in the event 
of a violation of subsections (a) or (b) of this sec-
tion; and 
‘‘(C) to provide to the consumer any and all 
remedies provided for under this title for any 
violation of this title. 
‘‘(2) ADDITIONAL DAMAGES.—Any creditor, as-
signee, or securitizer of a residential mortgage loan 
that is subject to a remedy under subsection (d) and 
has failed to comply with paragraph (1) shall be sub-
ject to additional exemplary or punitive damages not 
to exceed the original principal balance of such loan. 
‘‘(3) 
CONTACT
INFORMATION
NOTICE.—The 
servicer with respect to a residential mortgage loan 
shall provide a written notice to a consumer identi-
fying the name and contact information of the cred-
itor or any assignee or securitizer who should be con-
tacted by the consumer for any reason concerning the 
consumer’s rights with respect to the loan. Such notice 
shall be provided— 
‘‘(A) upon request of the consumer; 
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‘‘(B) whenever there is a change in owner-
ship of a residential mortgage loan; or 
‘‘(C) on a regular basis, not less than annu-
ally. 
‘‘(f) RULES TO ESTABLISH PROCESS.—The Board 
shall promulgate rules to govern the rescission process estab-
lished for violations of subsections (a) and (b) of this sec-
tion. Such rules shall provide that notice given to a servicer 
or holder is sufficient notice regardless of the identity of 
the party or the parties liable under this title.’’. 
SEC. 205. DEFENSE TO FORECLOSURE. 
Section 129C of the Truth in Lending Act is amended 
by inserting after subsection (f) (as added by section 204) 
the following new subsections: 
‘‘(g) 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 judi-
cial 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 foreclosure 
against the holder, or 
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‘‘(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 con-
sumer may seek actual damages incurred by rea-
son of the violation which gave rise to the right 
of rescission, together with costs of the action, in-
cluding 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, transfer, 
convey, or assign a residential mortgage loan to a 
creditor, any assignee, or any securitizer, or their des-
ignees, to effect a rescission or cure.’’. 
SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS. 
(a) IN GENERAL.—Section 129C of the Truth in Lend-
ing Act is amended by inserting after subsection (g) (as 
added by section 205) the following new subsections: 
‘‘(h) PROHIBITION ON CERTAIN PREPAYMENT PEN-
ALTIES.— 
‘‘(1) PROHIBITED ON CERTAIN LOANS.—A resi-
dential mortgage loan that is not a ‘qualified mort-
gage’ may not contain terms under which a consumer 
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must pay a prepayment penalty for paying all or 
part of the principal after the loan is consummated. 
For purposes of this subsection, a ‘qualified mortgage’ 
may not include a residential mortgage loan that has 
an adjustable rate. 
‘‘(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 paying 
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 prepay-
ment penalty shall not exceed an amount equal 
to 3 percent of the outstanding balance on the 
loan. 
‘‘(B) During the 1-year period beginning 
after the period described in subparagraph (A), 
the prepayment penalty shall not exceed an 
amount equal to 2 percent of the outstanding 
balance on the loan. 
‘‘(C) During the 1-year period beginning 
after the 1-year period described in subpara-
graph (B), the prepayment penalty shall not ex-
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ceed an amount equal to 1 percent of the out-
standing balance on the loan. 
‘‘(D) After the end of the 3-year period be-
ginning on the date the loan is consummated, no 
prepayment penalty may be imposed on a quali-
fied mortgage. 
‘‘(3) PROHIBITED
AFTER
INITIAL
PERIOD
ON 
LOANS WITH A RESET.—A qualified mortgage with a 
fixed interest rate for an introductory period that ad-
justs or resets after such period may not contain 
terms under which a consumer must pay a prepay-
ment penalty for paying all or part of the principal 
after the beginning of the 3-month period ending on 
the date of the adjustment or reset. 
‘‘(4) OPTION FOR NO PREPAYMENT PENALTY RE-
QUIRED.—A creditor may not offer a consumer a resi-
dential mortgage loan product that has a prepayment 
penalty for paying all or part of the principal after 
the loan is consummated as a term of the loan with-
out offering the consumer a residential mortgage loan 
product that does not have a prepayment penalty as 
a term of the loan. 
‘‘(i) SINGLE PREMIUM CREDIT INSURANCE PROHIB-
ITED.—No creditor may finance, directly or indirectly, in 
connection with any residential mortgage loan or with any 
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extension of credit under an open end consumer credit plan 
secured by the principal dwelling of the consumer (other 
than a reverse mortgage), any credit life, credit disability, 
credit unemployment or credit property insurance, or any 
other accident, loss-of-income, life or health insurance, or 
any payments directly or indirectly for any debt cancella-
tion or suspension agreement or contract, except that— 
‘‘(1) insurance premiums or debt cancellation or 
suspension fees calculated and paid in full on a 
monthly basis shall not be considered financed by the 
creditor; and 
‘‘(2) this subsection shall not apply to credit un-
employment insurance for which the unemployment 
insurance premiums are reasonable, the creditor re-
ceives no direct or indirect compensation in connec-
tion with the unemployment insurance premiums, 
and the unemployment insurance premiums are paid 
pursuant to another insurance contract and not paid 
to an affiliate of the creditor. 
‘‘(j) ARBITRATION.— 
‘‘(1) IN GENERAL.—No residential mortgage loan 
and no extension of credit under an open end con-
sumer credit plan secured by the principal dwelling 
of the consumer, other than a reverse mortgage, may 
include terms which require arbitration or any other 
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nonjudicial procedure as the method for resolving any 
controversy or settling any claims arising out of the 
transaction. 
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Subject 
to paragraph (3), paragraph (1) shall not be con-
strued as limiting the right of the consumer and the 
creditor, any assignee, or any securitizer to agree 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. 
‘‘(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 con-
sumer credit plan secured by the principal dwelling 
of the consumer (other than a reverse mortgage), and 
no other agreement between the consumer 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 appropriate district 
court of the United States, or any other court of com-
petent jurisdiction, pursuant to section 130 or any 
other provision of law, for damages or other relief in 
connection with any alleged violation of this section, 
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any other provision of this title, or any other Federal 
law. 
‘‘(k) MORTGAGES WITH NEGATIVE AMORTIZATION.— 
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 residen-
tial real property that includes a dwelling, other than a 
reverse mortgage, that provides or permits 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— 
‘‘(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 con-
sumer’s equity in the dwelling or real property; 
and 
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‘‘(2) in the case of a first-time borrower with re-
spect 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 Development 
as competent to provide such counseling.’’. 
(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 para-
graph (6) the following new paragraph: 
‘‘(7) sections 21B and 21C of the Securities Ex-
change 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 129B 
or 129C of the Truth in Lending Act (as added by this Act), 
no provision of such section 129B or 129C shall be con-
strued 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. 
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SEC. 208. EFFECT ON STATE LAWS. 
(a) IN GENERAL.—Except as provided in subsection 
(b), section 129C(d) of the Truth in Lending Act (as added 
by section 204) shall supersede any State law to the extent 
that it provides additional remedies against any assignee, 
securitizer, or securitization vehicle for a violation of sub-
section (a) or (b) of section 129C 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 section 129C 
of such Act, and the remedies described in section 129C(d) 
shall constitute the sole remedies against any assignee, 
securitizer, or securitization vehicle for such violations. 
(b) RULES OF CONSTRUCTION.—No provision of this 
section shall be construed as limiting— 
(1) the application of any State law, or the 
availability of remedies under such law, against a 
creditor for a particular residential mortgage loan re-
gardless of whether such creditor also acts as an as-
signee, securitizer, or securitization vehicle for such 
loan; 
(2) the application of any State law, or the 
availability of remedies under such law, against an 
assignee, securitizer, or securitization vehicle under 
State law, other than a provision of such law the 
terms of which address the specific subject matter of 
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subsection (a) (determination of ability to repay) or 
(b) (requirement of a net tangible benefit) of section 
129C of such Act; 
(3)(A) the application of any State law, or the 
availability of remedies under such law, against an 
assignee, securitizer or securitization vehicle for its 
participation in or direction of the credit or under-
writing decisions of a creditor relating to the making 
of a residential mortgage loan; or 
(B) the ability of a consumer to assert any rights 
against or obtain any remedies from an assignee, 
securitizer or securitization vehicle with respect to a 
residential mortgage loan as a defense to foreclosure 
under section 129C(g); or 
(4) the availability of any equitable remedies, in-
cluding injunctive relief, under State law. 
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. 
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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 amend-
ed— 
(1) by striking ‘‘$100’’ and inserting ‘‘$200’’; 
(2) by striking ‘‘$1,000’’ and inserting ‘‘$2,000’’; 
and 
(3) 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— 
(1) in the first sentence, by striking ‘‘Any ac-
tion’’ and inserting ‘‘Except as provided in the subse-
quent 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 occur-
rence of the violation.’’. 
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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: 
‘‘(k) EXEMPTION FROM LIABILITY AND RESCISSION IN 
CASE OF BORROWER FRAUD OR DECEPTION.—In addition 
to any other remedy available by law or contract, no cred-
itor, 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 obligor, or co- 
obligor, knowingly, or willfully and with actual knowledge 
furnished material information known to be false for the 
purpose of obtaining such residential mortgage loan.’’. 
SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF 
HYBRID ADJUSTABLE RATE MORTGAGES. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lending 
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 adjusts 
or resets to a variable interest rate after such period. 
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‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—During 
the 1-month period that ends 6 months before the date on 
which the interest rate in effect during the introductory pe-
riod of a hybrid adjustable rate mortgage adjusts or resets 
to a variable interest rate or, in the case of such an adjust-
ment or resetting that occurs within the first 6 months after 
consummation of such loan, at consummation, the creditor 
or servicer of such loan shall provide a written notice, sepa-
rate and distinct from all other correspondence to the con-
sumer, 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 ex-
planation of how the index was adjusted, such as by 
the addition of a margin. 
‘‘(3) A good faith estimate, based on accepted in-
dustry 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 pursue 
before the date of adjustment or reset, and descrip-
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tions 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 pro-
grams reasonably available to the consumer that have 
been certified or approved and made publicly avail-
able by the Secretary of Housing and Urban Develop-
ment or a State housing finance authority (as defined 
in section 1301 of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989). 
‘‘(6) The address, telephone number, and Internet 
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 insert-
ing after the item relating to section 128 the following new 
item: 
‘‘128A. Reset of hybrid adjustable rate mortgages.’’. 
SEC. 213. CREDIT RISK RETENTION. 
Section 129C of the Truth in Lending Act is amended 
by inserting after subsection (k) (as added by section 206) 
the following new subsection: 
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‘‘(l) CREDIT RISK RETENTION.— 
‘‘(1) IN GENERAL.—The Federal banking agen-
cies shall prescribe regulations jointly to require any 
creditor that makes a residential mortgage loan that 
is not a qualified mortgage (as defined in section 
129C(c)(2)(A)), to retain an economic interest in a 
material portion of the credit risk for any such loan 
that the creditor transfers, sells or conveys to a third 
party. 
‘‘(2) STANDARDS
FOR
REGULATIONS.—Regula-
tions prescribed under paragraph (1) shall— 
‘‘(A) apply only to residential mortgage 
loans that are not qualified mortgages (as so de-
fined); 
‘‘(B) prohibit creditors from directly or in-
directly hedging or otherwise transferring the 
credit risk creditors are required to retain under 
the regulations with respect to any residential 
mortgage loan; 
‘‘(C) require creditors to retain at least 5 
percent of the credit risk on any non-qualified 
mortgage that is transferred, sold or conveyed; 
and 
‘‘(D) specify the permissible forms of the re-
quired risk retention (for example, first loss posi-
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tion or pro rata vertical slice) and the minimum 
duration of the required risk retention. 
‘‘(3) EXCEPTIONS AND ADJUSTMENTS.— 
‘‘(A) IN
GENERAL.—The Federal banking 
agencies shall have authority to provide excep-
tions or adjustments to the requirements of this 
subsection, including exceptions or adjustments 
relating to the 5 percent risk retention threshold 
and the hedging prohibition. 
‘‘(B) APPLICABLE STANDARDS.—Any excep-
tions or adjustments granted by the Federal 
banking agencies shall— 
‘‘(i) be consistent with the purpose of 
this subsection to help ensure high quality 
underwriting standards for mortgage lend-
ers; and 
‘‘(ii) facilitate appropriate risk man-
agement practices by mortgage lenders, im-
prove access of consumers to mortgage credit 
on reasonable terms, or otherwise serve the 
public interest. 
‘‘(4) 
ALTERNATIVE
RISK
RETENTION
FOR 
SECURITIZATION
SPONSORS.—The Federal banking 
agencies shall have discretion to apply the risk reten-
tion requirements of this subsection to securitizers of 
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non-qualified mortgages in addition to or in place of 
creditors that make non-qualified mortgages if the 
agencies determine that applying the requirements to 
securitization 
sponsors 
rather 
than 
originators 
would— 
‘‘(A) be consistent with the purpose of this 
subsection to help ensure high quality under-
writing standards for mortgage lenders; and 
‘‘(B) facilitate appropriate risk manage-
ment practices by mortgage lenders, or improve 
access of consumers to mortgage credit on reason-
able terms. 
‘‘(m) Section 129C and any regulations promulgated 
thereunder do not apply to an extension of credit relating 
to a plan described in section 101(53D) of title 11, United 
States Code.’’. 
SEC. 214. 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 a variable rate residential 
mortgage loan for which an escrow or impound ac-
count will be established for the payment of all appli-
cable taxes, insurance, and assessments— 
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originator in connection with the loan, the amount of 
such fees paid directly by the consumer, and any ad-
ditional amount received by the originator from the 
creditor.’’. 
(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-
section (a) with respect to such loan shall be disclosed 
before the earlier of— 
‘‘(A) the time required under the first sen-
tence of paragraph (1); or 
‘‘(B) the end of the 3-business-day period 
beginning on the date the application for the 
loan from a consumer is received by the cred-
itor.’’. 
SEC. 215. 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: 
‘‘(f) PERIODIC STATEMENTS FOR RESIDENTIAL MORT-
GAGE LOANS.— 
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‘‘(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 items, to 
the extent applicable, in a conspicuous and promi-
nent manner: 
‘‘(A) The amount of the principal obligation 
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-
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count that the statements required may be trans-
mitted in writing or electronically.’’. 
SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED 
ISSUES. 
(a) ESTABLISHMENT.—The Secretary of Housing and 
Urban Development (hereafter in this section referred to as 
the ‘‘Secretary’’ shall establish a program for making grants 
for providing a full range of foreclosure legal assistance to 
low- and moderate-income homeowners and tenants related 
to home ownership preservation, home foreclosure preven-
tion, and tenancy associated with home foreclosure. 
(b) COMPETITIVE ALLOCATION.—The Secretary shall 
allocate amounts made available for grants under this sec-
tion to State and local legal organizations on the basis of 
a competitive process. For purposes of this subsection ‘‘State 
and local legal organizations’’ are those State and local or-
ganizations whose primary business or mission is to pro-
vide legal assistance. 
(c) PRIORITY
TO CERTAIN AREAS.—In allocating 
amounts in accordance with subsection (b), the Secretary 
shall give priority consideration to State and local legal 
organizations that are operating in the 100 metropolitan 
statistical areas (as that term is defined by the Director 
of the Office of Management and Budget) with the highest 
home foreclosure rates. 
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(d) LEGAL ASSISTANCE.— 
(1) IN GENERAL.—Any State or local legal orga-
nization that receives financial assistance pursuant to 
this section may use such amounts only to assist— 
(A) homeowners of owner-occupied homes 
with mortgages in default, in danger of default, 
or subject to or at risk of foreclosure; and 
(B) tenants at risk of or subject to eviction 
as a result of foreclosure of the property in which 
such tenant resides. 
(2) COMMENCE
USE
WITHIN
DAYS.—Any 
State or local legal organization that receives finan-
cial assistance pursuant to this section shall begin 
using any financial assistance received under this sec-
tion within 90 days after receipt of the assistance. 
(3) PROHIBITION ON CLASS ACTIONS.—No funds 
provided to a State or local legal organization under 
this section may be used to support any class action 
litigation. 
(4) LIMITATION ON LEGAL ASSISTANCE.—Legal 
assistance funded with amounts provided under this 
section shall be limited to mortgage-related default, 
eviction, or foreclosure proceedings, without regard to 
whether such foreclosure is judicial or nonjudicial. 
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(5) EFFECTIVE DATE.—Notwithstanding section 
217, this subsection shall take effect on the date of the 
enactment of this Act. 
(e) LIMITATION ON DISTRIBUTION OF ASSISTANCE.— 
(1) IN GENERAL.—None of the amounts made 
available under this section shall be distributed to— 
(A) any organization which has been in-
dicted for a violation under Federal law relating 
to an election for Federal office; or 
(B) any organization which employs appli-
cable individuals. 
(2) DEFINITION OF APPLICABLE INDIVIDUAL.— 
In this subparagraph, the term ‘‘applicable indi-
vidual’’ means an individual who— 
(A) is— 
(i) employed by the organization in a 
permanent or temporary capacity; 
(ii) contracted or retained by the orga-
nization; or 
(iii) acting on behalf of, or with the ex-
press or apparent authority of, the organi-
zation; and 
(B) has been indicted for a violation under 
Federal law relating to an election for Federal 
office. 
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(f) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to the Secretary $35,000,000 
for each of fiscal years 2009 through 2012 for grants under 
this section. 
SEC. 217. 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. 218. REPORT BY THE GAO. 
(a) REPORT REQUIRED.—The Comptroller General 
shall conduct a study to determine the effects the enactment 
of this Act will have on the availability and affordability 
of credit for homebuyers and mortgage lending, including 
the effect— 
(1) on the mortgage market for mortgages that 
are not within the safe harbor provided in the amend-
ments 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 unavailability of 
certain loan products that were available before the 
enactment of this Act; 
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(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 foreclosure; 
(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 and 
offered through the Office of Housing Counseling. 
(b) REPORT.—Before the end of the 1-year period be-
ginning on the date of the enactment of this Act, the Comp-
troller General shall submit a report to the Congress con-
taining the findings and conclusions of the Comptroller 
General with respect to the study conducted pursuant to 
subsection (a). 
(c) EXAMINATION RELATED TO CERTAIN CREDIT RISK 
RETENTION PROVISIONS.—The report required by sub-
section (b) shall also include an analysis by the Comptroller 
General of the effect on the capital reserves and funding 
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of lenders of credit risk retention provisions for non-quali-
fied mortgages. 
SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AU-
THORITY. 
Section 130(e) of the Truth in Lending Act (15 U.S.C. 
1640(e)) is amended by striking ‘‘section 129 may also’’ 
and inserting ‘‘section 129, 129B, or 129C of this Act, sec-
tion 219 of the Mortgage Reform and Anti-Predatory Lend-
ing Act, or any amendment made by section 219 of the 
Mortgage Reform and Anti-Predatory Lending Act may 
also’’. 
SEC. 220. TENANT PROTECTION. 
(a) TENANT PROTECTION GENERALLY.— 
(1) IN GENERAL.—In the case of any foreclosure 
on any dwelling or residential real property, after the 
date of the enactment of the Mortgage Reform and 
Anti-Predatory Lending Act, the immediate successor 
in interest in such property pursuant to the fore-
closure shall assume such interest subject to— 
(A) except as provided in paragraph (2), 
the rights of any bona fide tenant, as of the date 
of foreclosure under any bona fide lease entered 
into before the date of foreclosure, to occupy the 
premises until the end of the remaining term of 
the lease; and 
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(B) the rights of any bona fide tenant, as 
of the date of foreclosure, without a lease or with 
a lease terminable at will under State law, sub-
ject to the provision by the immediate successor 
in interest and the receipt by the tenant in the 
unit, of a notice to vacate at least 90 days before 
the effective date of such notice. 
(2) EXCEPTION FOR SUBSEQUENT OWNER-OCCU-
PANT.—Notwithstanding paragraph (1), if the imme-
diate successor in interest of any dwelling or residen-
tial real property that is otherwise subject to para-
graph (1) is a purchaser who will occupy a unit of 
the dwelling or residential real property as a primary 
residence, or such successor in interest sells the dwell-
ing or residential real property to a purchaser who 
will occupy a unit of the dwelling or residential real 
property, as a primary residence— 
(A) such purchaser may terminate a lease 
relating to such unit on the effective date of a 
notice to vacate; and 
(B) such notice to vacate shall be provided 
by the purchaser to the tenant in such unit at 
least 90 days before the effective date of such no-
tice. 
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(3) BONA FIDE LEASE OR TENANCY.—For pur-
poses of this subsection, 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; and 
(C) the lease or tenancy requires the receipt 
of rent that is not substantially less than fair 
market rent for the property or the unit’s rent is 
reduced or subsidized due to a Federal, State, or 
local subsidy. 
(4) RULE
OF
CONSTRUCTION.—Except for the 
specific provisions of this subsection, no provision of 
this subsection shall be construed as affecting the re-
quirements for termination of any Federal- or State- 
subsidized tenancy. The provisions of this subsection 
shall not be construed to limit any State or local law 
that provides longer time periods or other additional 
protections for tenants. 
(b) CORRESPONDING PROVISION RELATING TO EFFECT 
OF FORECLOSURES ON SECTION 8 TENANCIES.—Paragraph 
(7) of section 8(o) of the United States Housing Act of 1937 
(42 U.S.C. 1437f(o)(7)) is amended— 
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(1) in subparagraph (C), by inserting before the 
semicolon at the end the following: ‘‘, and in the case 
of an owner who is an immediate successor in interest 
pursuant to foreclosure— 
‘‘(i) during the initial term of the ten-
ant’s lease, having the property vacant 
prior to sale shall not constitute good cause; 
and 
‘‘(ii) in subsequent lease terms of the 
tenant’s lease, who will occupy the unit as 
a primary residence, who sells the property 
to a purchaser who will occupy a unit of 
the property as a primary residence, or if 
the unit is unmarketable while occupied, 
such owner may terminate a lease relating 
to such unit for good cause on the effective 
date of the notice to vacate, where such no-
tice is provided by the owner to the tenant 
in such unit at least 90 days before the ef-
fective date of such notice;’’. 
(2) in subparagraph (E), by striking ‘‘and’’ at 
the end; 
(3) by redesignating subparagraph (F) as sub-
paragraph (G); and 
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(4) by inserting after subparagraph (E) the fol-
lowing: 
‘‘(F) shall provide that in the case of any 
foreclosure on any residential real property in 
which a recipient of assistance under this sub-
section resides, the immediate successor in inter-
est in such property pursuant to the foreclosure 
shall assume such interest subject to the lease be-
tween the prior owner and the tenant and to the 
housing assistance payments contract between 
the prior owner and the public housing agency 
for the occupied unit; if a public housing agency 
is unable to make payments under the contract 
to the immediate successor in interest after fore-
closure, due to action or inaction by the suc-
cessor in interest, including the rejection of pay-
ments or the failure of the successor to maintain 
the unit in compliance with paragraph (8) or an 
inability to identify the successor, the agency 
may use funds that would have been used to pay 
the rental amount on behalf of the family— 
‘‘(i) to pay for utilities that are the re-
sponsibility of the owner under the lease or 
applicable law, after taking reasonable steps 
to notify the owner that it intends to make 
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payments to a utility provider in lieu of 
payments to the owner, except prior notifi-
cation shall not be required in any case in 
which the unit will be or has been rendered 
uninhabitable due to the termination or 
threat of termination of service, in which 
case the public housing agency shall notify 
the owner within a reasonable time after 
making such payment; or 
‘‘(ii) for the family’s reasonable mov-
ing costs, including security deposit costs; 
except that this subparagraph and the provisions 
related to foreclosure in subparagraph (C) shall 
not affect any State or local law that provides 
longer time periods or other additional protec-
tions for tenants.’’. 
(c) EFFECTIVE DATE.—Notwithstanding section 217, 
this section and the amendments made by this section shall 
take effect on the date of the enactment of this Act. 
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)) 
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is amended by striking all that precedes paragraph (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 transaction 
that is secured by the consumer’s principal 
dwelling, other than a reverse mortgage trans-
action, if— 
‘‘(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 6.5 percentage points (8.5 per-
centage points, if the dwelling is per-
sonal property and the transaction is 
for less than $50,000) the average 
prime offer rate, as defined in section 
129C(c)(2)(B), for a comparable trans-
action; or 
‘‘(II) by a subordinate or junior 
mortgage on the consumer’s principal 
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dwelling, the annual percentage rate at 
consummation of the transaction will 
exceed by more than 8.5 percentage 
points the average prime offer rate, as 
defined in section 129C(c)(2)(B), for a 
comparable transaction; 
‘‘(ii) the total points and fees payable 
in connection with the transaction exceed— 
‘‘(I) in the case of a transaction 
for $20,000 or more, 5 percent of the 
total transaction amount; or 
‘‘(II) in the case of a transaction 
for less than $20,000, the lesser of 8 
percent of the total transaction amount 
or $1,000 (or such other dollar amount 
as the Board shall prescribe by regula-
tion); or 
‘‘(iii) the credit transaction documents 
permit the creditor to charge or collect pre-
payment fees or penalties more than 36 
months after the transaction closing or such 
fees or penalties exceed, in the aggregate, 
more than 2 percent of the amount prepaid. 
‘‘(B) INTRODUCTORY
RATES
TAKEN
INTO 
ACCOUNT.—For purposes of subparagraph (A)(i), 
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the annual percentage rate of interest shall be de-
termined based on the following interest rate: 
‘‘(i) In the case of a fixed-rate trans-
action in which the annual percentage rate 
will not vary during the term of the loan, 
the interest rate in effect on the date of con-
summation of the transaction. 
‘‘(ii) In the case of a transaction in 
which the rate of interest varies solely in 
accordance with an index, the interest rate 
determined by adding the index rate in ef-
fect on the date of consummation of the 
transaction to the maximum margin per-
mitted at any time during the transaction 
agreement. 
‘‘(iii) In the case of any other trans-
action in which the rate may vary at any 
time during the term of the loan for any 
reason, the interest charged on the trans-
action at the maximum rate that may be 
charged during the term of the trans-
action.’’. 
(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 
103(aa)(2) of the Truth in Lending Act (15 U.S.C. 
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1602(aa)(2)) is amended by striking subparagraph (B) and 
inserting the following new subparagraph: 
‘‘(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 in-
directly 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;’’; 
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(B) in subparagraph (C)(ii), by inserting 
‘‘except where applied to the charges set forth in 
section 106(e)(1) where a creditor may receive 
indirect compensation solely as a result of ob-
taining distributions of profits from an affiliated 
entity based on its ownership interest in compli-
ance with section 8(c)(4) of the Real Estate Set-
tlement Procedures Act of 1974’’ before the semi-
colon 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 in-
surance premiums or debt cancellation or sus-
pension fees calculated and paid in full on a 
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monthly basis shall not be considered financed 
by the creditor; 
‘‘(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 fol-
lowing 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 
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penalties which may be charged or collected under the 
terms of the credit transaction, plus the minimum ad-
ditional fees the consumer would be required to pay 
to draw down an amount equal to the total credit 
line.’’. 
(d) 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 101) 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: 
‘‘(1) EXCLUSION
OF
BONA
FIDE
DISCOUNT 
POINTS.—The discount points described in 1 of the 
following subparagraphs shall be excluded from deter-
mining the amounts of points and fees with respect 
to a high-cost mortgage for purposes of subsection 
(aa): 
‘‘(A) Up to and including 2 bona fide dis-
count points payable by the consumer in connec-
tion with the mortgage, but only if the interest 
rate from which the mortgage’s interest rate will 
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be discounted does not exceed by more than 1 
percentage point (i) 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, or (ii) if secured by a 
personal property loan, the average rate on a 
loan in connection with which insurance is pro-
vided under title I of the National Housing Act 
(12 U.S.C. 1702 et seq.). 
‘‘(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 percent-
age points (i) the required net yield for a 90-day 
standard mandatory delivery commitment for a 
reasonably comparable loan from either the Fed-
eral National Mortgage Association or the Fed-
eral Home Loan Mortgage Corporation, which-
ever is greater, or (ii) if secured by a personal 
property loan, the average rate on a loan in con-
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nection with which insurance is provided under 
title I of the National Housing Act (12 U.S.C. 
1702 et seq.). 
‘‘(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.—Para-
graph (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 prac-
tices for secondary mortgage market transactions.’’. 
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 hereby repealed. 
(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: 
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‘‘(e) NO BALLOON PAYMENTS.—No high-cost mortgage 
may contain a scheduled payment that is more than twice 
as large as the average of earlier scheduled payments. This 
subsection shall not apply when the payment schedule is 
adjusted to the seasonal or irregular income of the con-
sumer.’’. 
SEC. 
303. 
ADDITIONAL 
REQUIREMENTS 
FOR 
CERTAIN 
MORTGAGES. 
(a) ADDITIONAL REQUIREMENTS FOR CERTAIN MORT-
GAGES.—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 following 
new subsections: 
‘‘(j) RECOMMENDED DEFAULT.—No creditor shall rec-
ommend 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— 
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‘‘(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 be-
ginning on the date the payment is due, or in 
the case of a loan on which interest on each in-
stallment is paid in advance, before the end of 
the 30-day period beginning on the date the pay-
ment 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 de-
linquency 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 ap-
plied to any past due principal balance, the consumer 
fails to make an installment payment and the con-
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sumer subsequently resumes making installment pay-
ments but has not paid all past due installments, the 
creditor may impose a separate late payment 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 mortgage 
may contain a provision which permits the creditor, in its 
sole discretion, to accelerate the indebtedness. This provision 
shall not apply when repayment of the loan has been accel-
erated by default, pursuant to a due-on-sale provision, 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 cred-
itor 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 in-
serting after subsection (p) (as so redesignated by subsection 
(a)(1)) the following new subsection: 
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‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF 
TRANSACTIONS, 
AND
RECIPROCAL
ARRANGEMENTS.—A 
creditor may not take any action in connection with a high- 
cost mortgage— 
‘‘(1) to structure a loan transaction as an open- 
end credit plan or another form of loan for the pur-
pose and with the intent of evading the provisions of 
this title; or 
‘‘(2) to divide any loan transaction into separate 
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 subsection: 
‘‘(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 mortgage, 
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 similar transactions in 
connection with consumer credit transactions that are se-
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cured by a consumer’s principal dwelling 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: 
‘‘(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 con-
sumer credit transactions that are secured by the 
consumer’s principal dwelling and are not high- 
cost mortgages. 
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‘‘(C) FEE DISCLOSURE.—Prior to charging 
a transaction fee as provided in subparagraph 
(B), a creditor or servicer shall disclose that pay-
off balances are available for free pursuant to 
subparagraph (A). 
‘‘(D) MULTIPLE REQUESTS.—If a creditor 
or servicer has provided payoff information re-
ferred to in subparagraph (A) without charge, 
other than the transaction fee allowed by sub-
paragraph (B), on 4 occasions during a calendar 
year, the creditor or servicer may thereafter 
charge a reasonable fee for providing such infor-
mation during the remainder of the calendar 
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. 
‘‘(3) SERVICES CONSIDERED ASSIGNEE.—For the 
purposes of this subsection, a servicer shall be consid-
ered an assignee under the Truth in Lending Act.’’. 
(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 subsection: 
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‘‘(t) PRE-LOAN COUNSELING.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a high-cost mortgage with-
out first receiving certification from a counselor that 
is approved by the Secretary of Housing and Urban 
Development, or at the discretion of the Secretary, a 
State housing finance authority, that the consumer 
has received counseling on the advisability of the 
mortgage. Such counselor shall not be employed 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 Board may prescribe 
such regulations as the Board determines to be appro-
priate 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 
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after subsection (t) (as added by subsection (e)) the fol-
lowing 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 
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 129C(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. 
‘‘(v) CORRECTIONS
AND
UNINTENTIONAL
VIOLA-
TIONS.—A creditor or assignee in a high cost loan who, 
when acting in good faith, fails to comply with any require-
ment under this section will not be deemed to have violated 
such requirement if the creditor or assignee establishes that 
either— 
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‘‘(1) within 30 days of the loan closing and prior 
to the institution of any action, the consumer is noti-
fied of or discovers the violation, appropriate restitu-
tion 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 requirements 
of this chapter; or 
‘‘(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 violation 
or bona fide error as described in subsection (c) and 
prior to the institution of any action, the consumer 
is notified of the compliance failure, appropriate res-
titution is made, and whatever adjustments are nec-
essary are made to the loan to either, at the choice 
of the consumer— 
‘‘(A) make the loan satisfy the requirements 
of this chapter; or 
‘‘(B) in the case of a high-cost mortgage, 
change the terms of the loan in a manner bene-
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ficial so that the loan will no longer be a high- 
cost mortgage.’’. 
SEC. 304. REGULATIONS. 
(a) IN GENERAL.—The Board of Governors of the Fed-
eral Reserve System shall publish regulations implementing 
this title and the amendments made by this title in final 
form before the end of the 6-month period beginning on the 
date of the enactment of this Act. 
(b) CONSUMER MORTGAGE EDUCATION.— 
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System may prescribe regulations 
requiring or encouraging creditors to provide con-
sumer mortgage education to prospective customers or 
direct such customers to qualified consumer 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 respect 
to consumer mortgage counseling or education. 
SEC. 305. EFFECTIVE DATE. 
The amendments made by this title shall take effect 
at the end of the 6-month period beginning on the date of 
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the enactment of this Act and shall apply to mortgages re-
ferred to in section 103(aa) of the Truth in Lending Act 
(15 U.S.C. 1602(aa)) for which an application is received 
by the creditor 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’’. 
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 Department, the Office of Housing Counseling. 
‘‘(2) DIRECTOR.—There is established the posi-
tion of Director of Housing Counseling. The Director 
shall be the head of the Office of Housing Counseling 
and shall be appointed by, and shall report to, the 
Secretary. Such position shall be a career-reserved po-
sition in the Senior Executive Service. 
‘‘(3) FUNCTIONS.— 
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‘‘(A) IN GENERAL.—The Director shall have 
primary responsibility within the Department 
for all activities and matters relating to home-
ownership counseling and rental housing coun-
seling, including— 
‘‘(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 administered 
by the Department that relate to housing 
counseling, homeownership counseling (in-
cluding maintenance of homes), mortgage- 
related counseling (including home equity 
conversion mortgages and credit protection 
options to avoid foreclosure), and rental 
housing counseling, including the require-
ments, standards, and performance meas-
ures 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 
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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 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) contributing to the preparation 
and distribution of home buying informa-
tion booklets pursuant to section 5 of the 
Real Estate Settlement Procedures Act of 
1974 (12 U.S.C. 2604); 
‘‘(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, 
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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 considers 
appropriate, which shall include conducting 
the study under section 6 of the 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 ap-
point an advisory committee to provide advice 
regarding the carrying out of the functions of the 
Director. 
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‘‘(B) MEMBERS.—Such advisory committee 
shall consist of not more than 12 individuals, 
and the membership of the committee shall equal-
ly represent the mortgage and real estate indus-
try, including consumers and housing counseling 
agencies certified by the Secretary. 
‘‘(C) TERMS.—Except as provided in sub-
paragraph (D), each member of the advisory 
committee shall be appointed for a term of 3 
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. 
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‘‘(F) ADVISORY ROLE ONLY.—The advisory 
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 homeown-
ership, including the decision to purchase a home, the 
selection and purchase of a home, issues arising dur-
ing or affecting the period of ownership of a home 
(including refinancing, default and foreclosure, and 
other financial decisions), and the sale or other dis-
position 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 subsection: 
‘‘(g) PROCEDURES AND ACTIVITIES.— 
‘‘(1) COUNSELING PROCEDURES.— 
‘‘(A) IN GENERAL.—The Secretary shall es-
tablish, coordinate, and monitor the administra-
tion by the Department of Housing and Urban 
Development of the counseling procedures for 
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100 
homeownership counseling and rental housing 
counseling provided in connection with any pro-
gram of the Department, including all require-
ments, 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 coun-
seling related to homeownership and residential 
mortgage loans. Such term includes counseling 
related to homeownership and residential mort-
gage loans 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 
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)); 
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101 
‘‘(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)); 
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102 
‘‘(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); 
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103 
‘‘(xi) section 502(h)(4)(B) of the Hous-
ing 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 ‘rental hous-
ing counseling’ means counseling related to rent-
al of residential property, which may include 
counseling regarding future homeownership op-
portunities and providing referrals for renters 
and prospective renters to entities providing 
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)); 
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105 
‘‘(viii) the rental assistance program 
under section 8 of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437f). 
‘‘(2) STANDARDS
FOR
MATERIALS.—The Sec-
retary, in consultation with the advisory committee 
established under subsection (g)(4) of the Department 
of Housing and Urban Development Act, shall estab-
lish standards for materials and forms to be used, as 
appropriate, by organizations providing homeowner-
ship counseling services, including any recipients 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 evalu-
ating different residential mortgage loan pro-
posals. The Secretary shall require, for such cer-
tification, that the mortgage software systems 
take into account— 
‘‘(i) the consumer’s financial situation 
and the cost of maintaining a home, includ-
ing 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; and 
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106 
‘‘(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 devel-
opment 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, housing coun-
seling. The Secretary shall provide that such pro-
grams are initially used only in connection with 
the assistance of housing counselors certified pur-
suant to subsection (e). 
‘‘(C) AVAILABILITY.—After a period of ini-
tial availability under subparagraph (B) as the 
Secretary considers appropriate, the Secretary 
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shall take reasonable steps to make mortgage 
software systems certified pursuant to this para-
graph widely available through the Internet and 
at public locations, including public libraries, 
senior-citizen centers, public housing sites, offices 
of public housing agencies that administer rental 
housing assistance vouchers, and housing coun-
seling centers. 
‘‘(D) BUDGET
COMPLIANCE.—This para-
graph shall be effective only to the extent that 
amounts to carry out this paragraph are made 
available in advance in appropriations Acts. 
‘‘(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 mortgage 
foreclosure, persons considering a subprime 
mortgage loan to purchase a home, elderly per-
sons, persons who face language barriers, low-in-
come persons, minorities, and other potentially 
vulnerable consumers aware that it is advisable, 
before seeking or maintaining a residential mort-
gage loan, to obtain homeownership counseling 
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from an unbiased and reliable sources and that 
such homeownership counseling is available, in-
cluding through programs sponsored by the Sec-
retary 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 website of the Department of 
Housing and Urban Development through which 
persons seeking housing counseling can locate a 
housing counseling agency in their State that is 
certified by the Secretary of Housing and Urban 
Development and can provide advice on buying 
a home, renting, defaults, foreclosures, credit 
issues, and reverse mortgages. 
‘‘(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There are authorized to be appropriated 
to the Secretary, not to exceed $3,000,000 for fis-
cal years 2009, 2010, and 2011, for the develop-
ment, implementation, and conduct of national 
public service multimedia campaigns under this 
paragraph. 
‘‘(D) FORECLOSURE
RESCUE
EDUCATION 
PROGRAMS.— 
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‘‘(i) IN GENERAL.—Ten percent of any 
funds appropriated pursuant to the author-
ization under subparagraph (C) shall be 
used by the Director of Housing Counseling 
to conduct an education program in areas 
that have a high density of foreclosure. Such 
program shall involve direct mailings to 
persons living in such areas describing— 
‘‘(I) tips on avoiding foreclosure 
rescue scams; 
‘‘(II) tips on avoiding predatory 
lending mortgage agreements; 
‘‘(III) tips on avoiding for-profit 
foreclosure counseling services; and 
‘‘(IV) local counseling resources 
that are approved by the Department 
of Housing and Urban Development. 
‘‘(ii) PROGRAM
EMPHASIS.—In con-
ducting the education program described 
under clause (i), the Director of Housing 
Counseling shall also place an emphasis on 
serving communities that have a high per-
centage of retirement communities or a high 
percentage of low-income minority commu-
nities. 
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‘‘(iii) TERMS DEFINED.—For purposes 
of this subparagraph: 
‘‘(I) HIGH
DENSITY
OF
FORE-
CLOSURES.—An area has a ‘high den-
sity of foreclosures’ if such area is one 
of the metropolitan statistical areas (as 
that term is defined by the Director of 
the Office of Management and Budget) 
with the highest home foreclosure rates. 
‘‘(II) HIGH PERCENTAGE OF RE-
TIREMENT
COMMUNITIES.—An 
area 
has a ‘high percentage of retirement 
communities’ if such area is one of the 
metropolitan statistical areas (as that 
term is defined by the Director of the 
Office of Management and Budget) 
with the highest percentage of residents 
aged 65 or older. 
‘‘(III) HIGH
PERCENTAGE
OF 
LOW-INCOME
MINORITY
COMMU-
NITIES.—An area has a ‘high percent-
age of low-income minority commu-
nities’ if such area contains a higher- 
than-normal percentage of residents 
who are both minorities and low-in-
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111 
come, as defined by the Director of 
Housing Counseling. 
‘‘(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 mort-
gage loans (such as elderly persons, persons facing 
language barriers, low-income persons, minorities, 
and other potentially vulnerable consumers), regard-
ing home mortgages, mortgage refinancing, home eq-
uity loans, and home repair loans.’’. 
(b) CONFORMING AMENDMENTS TO GRANT PROGRAM 
FOR HOMEOWNERSHIP COUNSELING ORGANIZATIONS.— 
Section 106(c)(5)(A)(ii) of the Housing and Urban Devel-
opment 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 
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112 
(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 ASSISTANCE. 
Section 106(a) of the Housing and Urban Development 
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 AS-
SISTANCE.— 
‘‘(A) IN GENERAL.—The Secretary shall make fi-
nancial assistance available under this paragraph to 
HUD-approved housing counseling agencies and State 
housing finance agencies. 
‘‘(B) QUALIFIED ENTITIES.—The Secretary shall 
establish standards and guidelines for eligibility of or-
ganizations (including governmental and nonprofit 
organizations) to receive assistance under this para-
graph, in accordance with subparagraph (D). 
‘‘(C) DISTRIBUTION.—Assistance made available 
under this paragraph shall be distributed in a man-
ner that encourages efficient and successful counseling 
programs. 
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113 
‘‘(D) LIMITATION ON DISTRIBUTION OF ASSIST-
ANCE.— 
‘‘(i) IN GENERAL.—None of the assistance 
made available under this paragraph shall be 
distributed to— 
‘‘(I) any organization which has been 
indicted for a violation under Federal law 
relating to an election for Federal office; or 
‘‘(II) any organization which employs 
applicable individuals. 
‘‘(ii) DEFINITION
OF
APPLICABLE
INDI-
VIDUAL.—In this subparagraph, the term ‘appli-
cable individual’ means an individual who— 
‘‘(I) is— 
‘‘(aa) employed by the organiza-
tion in a permanent or temporary ca-
pacity; 
‘‘(bb) contracted or retained by 
the organization; or 
‘‘(cc) acting on behalf of, or with 
the express or apparent authority of, 
the organization; and 
‘‘(II) has been indicted for a violation 
under Federal law relating to an election 
for Federal office. 
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114 
‘‘(E) GRANTMAKING PROCESS.—In making as-
sistance available under this paragraph, the Secretary 
shall consider appropriate ways of streamlining and 
improving the processes for grant application, review, 
approval, and award. 
‘‘(F) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated $45,000,000 
for each of fiscal years 2009 through 2012 for— 
‘‘(i) the operations of the Office of Housing 
Counseling of the Department of Housing and 
Urban Development; 
‘‘(ii) the responsibilities of the Director of 
Housing Counseling under paragraphs (2) 
through (5) of subsection (g); and 
‘‘(iii) assistance pursuant to this paragraph 
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 Development 
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 orga-
nization may not receive assistance for counseling ac-
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115 
tivities 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 cer-
tified by the Secretary under this subsection as com-
petent 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 
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 
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116 
(g)(1)) required under, or provided in connection 
with, any program administered by the Department 
of Housing and Urban Development shall be provided 
only by organizations or counselors certified by the 
Secretary under this subsection as competent to pro-
vide such counseling. 
‘‘(4) OUTREACH.—The Secretary shall take such 
actions as the Secretary considers appropriate to en-
sure that individuals and organizations providing 
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).’’. 
SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES. 
The Secretary of Housing and Urban Development 
shall conduct an extensive study of the root causes of default 
and foreclosure of home loans, using as much empirical 
data as are available. The study shall also examine the role 
of escrow accounts in helping prime and nonprime bor-
rowers to avoid defaults and foreclosures. Not later than 12 
months after the date of the enactment of this Act, the Sec-
retary shall submit to the Congress a preliminary 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 
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117 
recommended legislation relating to the study, and rec-
ommendations for best practices and for a process to iden-
tify 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 preceding 
provisions of this title, is further amended by adding 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-
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 North-
ern 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 GOVERNMENT.— 
The term ‘unit of general local government’ means 
any city, county, parish, town, township, borough, 
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118 
village, or other general purpose political subdivision 
of a State. 
‘‘(4) HUD-APPROVED
COUNSELING
AGENCY.— 
The term ‘HUD-approved counseling agency’ means a 
private or public nonprofit organization that is— 
‘‘(A) exempt from taxation under section 
501(c) of the Internal Revenue Code of 1986; and 
‘‘(B) certified by the Secretary to provide 
housing counseling services. 
‘‘(5) STATE
HOUSING
FINANCE
AGENCY.—The 
term ‘State housing finance agency’ means any public 
body, agency, or instrumentality specifically created 
under State statute that is authorised to finance ac-
tivities designed to provide housing and related facili-
ties throughout an entire State through land acquisi-
tion, construction, or rehabilitation.’’. 
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 ‘‘SPECIAL’’ 
and inserting ‘‘HOME BUYING’’; 
(2) by striking subsections (a) and (b) and in-
serting the following new subsections: 
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119 
‘‘(a) PREPARATION
AND DISTRIBUTION.—The Sec-
retary shall prepare, at least once every 5 years, a booklet 
to help consumers applying for federally related mortgage 
loans to understand the nature and costs of real estate settle-
ment services. The Secretary shall prepare the booklet in 
various languages and cultural styles, as the Secretary de-
termines to be appropriate, so that the booklet is under-
standable and accessible to homebuyers of different ethnic 
and cultural backgrounds. The Secretary shall distribute 
such booklets to all lenders that make federally related mort-
gage loans. The Secretary shall also distribute to such lend-
ers 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 requirement 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 nature 
and purpose of the costs incident to a real estate set-
tlement or a federally related mortgage loan. The de-
scription and explanation shall provide general infor-
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mation about the mortgage process as well as specific 
information concerning, at a minimum— 
‘‘(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 pen-
alties 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. 
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121 
‘‘(6) A brief explanation of the nature of a vari-
able rate mortgage and a reference to the booklet enti-
tled ‘Consumer Handbook on Adjustable Rate Mort-
gages’, published by the Board of Governors of the 
Federal 
Reserve 
System 
pursuant 
to 
section 
226.19(b)(1) of title 12, Code of Federal Regulations, 
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 recommendation 
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-
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quirements under section 10 of this Act regarding 
such accounts. 
‘‘(10) An explanation of the choices available to 
buyers of residential real estate in selecting persons to 
provide necessary services incidental to a real estate 
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 procedures 
that may exist among the several States and territories of 
the United States and among separate political subdivi-
sions within the same State and territory.’’; 
(3) in subsection (c), by inserting at the end the 
following new sentence: ‘‘Each lender shall also in-
clude with the booklet a reasonably complete or up-
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dated list of homeownership counselors who are cer-
tified pursuant to section 106(e) of the Housing 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 re-
ceiving it.’’. 
SEC. 409. HOME INSPECTION COUNSELING. 
(a) PUBLIC OUTREACH.— 
(1) IN GENERAL.—The Secretary of Housing and 
Urban Development (in this section referred to as the 
‘‘Secretary’’) shall take such actions as may be nec-
essary to inform potential homebuyers of the avail-
ability and importance of obtaining an independent 
home inspection. Such actions shall include— 
(A) publication of the HUD/FHA form 
HUD 92564–CN entitled ‘‘For Your Protection: 
Get a Home Inspection’’, in both English and 
Spanish languages; 
(B) publication of the HUD/FHA booklet 
entitled ‘‘For Your Protection: Get a Home In-
spection’’, in both English and Spanish lan-
guages; 
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124 
(C) development and publication of a HUD 
booklet entitled ‘‘For Your Protection—Get a 
Home Inspection’’ that does not reference FHA- 
insured homes, in both English and Spanish lan-
guages; and 
(D) publication of the HUD document enti-
tled ‘‘Ten Important Questions To Ask Your 
Home Inspector’’, in both English and Spanish 
languages. 
(2) AVAILABILITY.—The Secretary shall make the 
materials specified in paragraph (1) available for 
electronic access and, where appropriate, inform po-
tential homebuyers of such availability through home 
purchase counseling public service announcements 
and toll-free telephone hotlines of the Department of 
Housing and Urban Development. The Secretary shall 
give special emphasis to reaching first-time and low- 
income homebuyers with these materials and efforts. 
(3) UPDATING.—The Secretary may periodically 
update and revise such materials, as the Secretary de-
termines to be appropriate. 
(b) REQUIREMENT FOR FHA-APPROVED LENDERS.— 
Each mortgagee approved for participation in the mortgage 
insurance programs under title II of the National Housing 
Act shall provide prospective homebuyers, at first contact, 
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whether upon pre-qualification, pre-approval, or initial ap-
plication, the materials specified in subparagraphs (A), 
(B), and (D) of subsection (a)(1). 
(c) REQUIREMENTS
FOR
HUD-APPROVED
COUN-
SELING AGENCIES.—Each counseling agency certified pur-
suant by the Secretary to provide housing counseling serv-
ices shall provide each of their clients, as part of the home 
purchase counseling process, the materials specified in sub-
paragraphs (C) and (D) of subsection (a)(1). 
(d) TRAINING.—Training provided the Department of 
Housing and Urban Development for housing counseling 
agencies, whether such training is provided directly by the 
Department or otherwise, shall include— 
(1) providing information on counseling poten-
tial homebuyers of the availability and importance of 
getting an independent home inspection; 
(2) providing information about the home in-
spection process, including the reasons for specific in-
spections such as radon and lead-based paint testing; 
(3) providing information about advising poten-
tial homebuyers on how to locate and select a quali-
fied home inspector; and 
(4) review of home inspection public outreach 
materials of the Department. 
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126 
TITLE V—MORTGAGE SERVICING 
SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO 
CERTAIN CONSUMER CREDIT TRANSACTIONS. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lending 
Act (15 U.S.C. 1631 et seq.) is amended by inserting after 
section 129C (as added by section 201) the following new 
section: 
‘‘SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO 
CERTAIN CONSUMER CREDIT TRANSACTIONS. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), (c), or (d) , 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, before 
the consummation of such transaction, an escrow or im-
pound account for the payment of taxes and hazard insur-
ance, and, if applicable, flood insurance, mortgage insur-
ance, ground rents, and any other required periodic pay-
ments or premiums with respect to the property 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-
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tract or a loan secured by a first deed of trust or mortgage 
on the principal dwelling of the consumer, other than a con-
sumer 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 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 date 
the interest rate is set, will exceed the average prime 
offer rate for a comparable transaction by 1.5 per-
centage points or more; or 
‘‘(4) so required pursuant to regulation. 
‘‘(c) DURATION OF MANDATORY ESCROW OR IMPOUND 
ACCOUNT.—An escrow or impound account established pur-
suant to subsection (b), shall remain in existence for a min-
imum period of 5 years, beginning with the date of the con-
summation of the loan, and until such borrower has suffi-
cient equity in the dwelling securing the consumer credit 
transaction so as to no longer be required to maintain pri-
vate mortgage insurance, or such other period as may be 
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128 
provided in regulations to address situations such as bor-
rower delinquency, unless the underlying mortgage estab-
lishing the account is terminated. 
‘‘(d) LIMITED EXEMPTIONS FOR LOANS SECURED BY 
SHARES IN A COOPERATIVE AND FOR CERTAIN CONDO-
MINIUM UNITS.—Escrow accounts need not be established 
for loans secured by shares in a cooperative. Insurance pre-
miums need not be included in escrow accounts for loans 
secured by condominium units, where the condominium as-
sociation has an obligation to the condominium unit owners 
to maintain a master policy insuring condominium units. 
‘‘(e) CLARIFICATION
ON
ESCROW
ACCOUNTS
FOR 
LOANS NOT MEETING STATUTORY TEST.—For mortgages 
not covered by the requirements of subsection (b), no provi-
sion of this section shall be construed as precluding the es-
tablishment of an impound, trust, or other type of account 
for the payment of property taxes, insurance premiums, or 
other purposes relating to the property— 
‘‘(1) on terms mutually agreeable to the parties 
to the loan; 
‘‘(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 
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lending institutions in section 102(d) of the Flood 
Disaster Protection Act of 1973. 
‘‘(f) ADMINISTRATION OF MANDATORY ESCROW OR IM-
POUND ACCOUNTS.— 
‘‘(1) IN GENERAL.—Except as may otherwise be 
provided for in this title or in regulations prescribed 
by the Board, escrow or impound accounts established 
pursuant to subsection (b) shall be established 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 Procedures 
Act of 1974 and regulations prescribed under 
such Act; 
‘‘(B) the Flood Disaster Protection Act of 
1973 and regulations prescribed under such Act; 
and 
‘‘(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 
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130 
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 pre-
scribed 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 pen-
alty, or other damages under this section, unless the 
action or omission also constitutes a direct violation 
of this section. 
‘‘(g) 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 con-
sumer at least 3 business days before the consummation 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 account 
will be established at consummation of the trans-
action. 
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131 
‘‘(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 transaction) 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 required 
periodic payments or premiums. 
‘‘(5) The fact that, if the consumer chooses to ter-
minate the account at the appropriate time in the fu-
ture, 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. 
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132 
‘‘(6) Such other information as the Federal 
banking agencies jointly determine necessary for the 
protection of the consumer. 
‘‘(h) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) FLOOD INSURANCE.—The term ‘flood insur-
ance’ means flood insurance coverage provided under 
the national flood insurance program pursuant to the 
National Flood Insurance Act of 1968. 
‘‘(2) HAZARD INSURANCE.—The term ‘hazard in-
surance’ shall have the same meaning as provided for 
‘hazard insurance’, ‘casualty insurance’, ‘homeowner’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 bank-
ing agencies’’) and the Federal Trade Commission 
shall prescribe, in final form, such regulations as de-
termined to be necessary to implement the amend-
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133 
ments made by subsection (a) before the end of the 
180-day period beginning on the date of the enact-
ment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply to covered mortgage 
loans consummated after the end of the 1-year period 
beginning on the date of the publication of final regu-
lations in the Federal Register. 
(c) CLERICAL AMENDMENT.—The table of sections for 
chapter 2 of the Truth in Lending Act is amended by insert-
ing after the item relating to section 129C (as added by 
section 201) the following new item: 
‘‘129D. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS 
WHO WAIVE ESCROW SERVICES. 
(a) IN GENERAL.—Section 129D of the Truth in Lend-
ing Act (as added by section 501) is amended by adding 
at the end the following new subsection: 
‘‘(i) DISCLOSURE NOTICE REQUIRED FOR CONSUMERS 
WHO WAIVE ESCROW SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an impound, trust, or other type of ac-
count for the payment of property taxes, insur-
ance premiums, or other purposes relating to 
real property securing a consumer credit trans-
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134 
action is not established in connection with the 
transaction; or 
‘‘(B) a consumer chooses, and provides writ-
ten notice to the creditor or servicer of such 
choice, at any time after such an account is es-
tablished in connection with any such trans-
action and in accordance with any statute, regu-
lation, or contractual agreement, to close such 
account, 
the creditor or servicer shall provide a timely and 
clearly written disclosure to the consumer that advises 
the consumer of the responsibilities of the consumer 
and implications for the consumer in the absence of 
any such account. 
‘‘(2) DISCLOSURE REQUIREMENTS.—Any disclo-
sure provided to a consumer under paragraph (1) 
shall include the following: 
‘‘(A) Information concerning any applicable 
fees or costs associated with either the non-estab-
lishment 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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135 
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 consequences 
of any failure to pay non-escrowed items, includ-
ing the possible requirement for the forced place-
ment of insurance by the creditor or servicer and 
the potentially higher cost (including any poten-
tial commission payments to the servicer) or re-
duced coverage for the consumer in the event of 
any such creditor-placed insurance. 
‘‘(D) Such other information as the Federal 
banking agencies jointly determine necessary for 
the protection of the consumer.’’. 
(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 enact-
ment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply in accordance with 
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136 
the regulations established in paragraph (1) and be-
ginning on the date occurring 180-days after the date 
of the publication of final regulations in the Federal 
Register. 
SEC. 503. 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 sub-
sections: 
‘‘(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 con-
tract’s requirements to maintain property insur-
ance; 
‘‘(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 relating to 
allocation of payments, final balances for pur-
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137 
poses of paying off the loan, or avoiding fore-
closure, or other standard servicer’s duties; 
‘‘(D) fail to respond within 10 business 
days to a request from a borrower to provide the 
identity, address, and other relevant contact in-
formation 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 protection 
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 feder-
ally related mortgage when the borrower has failed to 
maintain or renew hazard insurance on such prop-
erty 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 obtaining 
force-placed insurance unless the requirements of this sub-
section have been met. 
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138 
‘‘(1) WRITTEN
NOTICES
TO
BORROWER.—A 
servicer may not impose any charge on any borrower 
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 mort-
gage; 
‘‘(ii) a statement that the servicer does 
not have evidence of insurance coverage 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 ex-
pense if the borrower does not provide such 
demonstration of the borrower’s existing 
coverage in a timely manner; 
‘‘(B) the servicer has sent, by first-class 
mail, a second written notice, at least 30 days 
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139 
after the mailing of the notice under subpara-
graph (A) that contains all the information de-
scribed in each clauses of such subparagraph; 
and 
‘‘(C) the servicer has not received from the 
borrower any demonstration of hazard insurance 
coverage for the property securing the mortgage 
by the end of the 15-day period beginning on the 
date the notice under subparagraph (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 cov-
erage, the servicer shall— 
‘‘(A) terminate the force-placed insurance; 
and 
‘‘(B) refund to the consumer all force-placed 
insurance premiums paid by the borrower dur-
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140 
ing any period during which the borrower’s in-
surance coverage and the force-placed insurance 
coverage were each in effect, and any related fees 
charged to the consumer’s account with respect to 
the force-placed insurance during 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.’’. 
(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 striking 
‘‘$1,000’’ each place such term appears and inserting 
‘‘$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— 
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141 
(1) in paragraph (1)(A), by striking ‘‘20 days’’ 
and inserting ‘‘5 days’’; 
(2) in paragraph (2), by striking ‘‘60 days’’ and 
inserting ‘‘30 days’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(4) LIMITED EXTENSION OF RESPONSE TIME.— 
The 30-day period described in paragraph (2) may be 
extended for not more than 15 days if, before the end 
of such 30-day period, the servicer notifies the bor-
rower of the extension and the reasons for the delay 
in responding.’’. 
(d) PROMPT REFUND OF ESCROW ACCOUNTS UPON 
PAYOFF.—Section 6(g) of the Real Estate Settlement Proce-
dures Act of 1974 (12 U.S.C. 2605(g)) is amended by add-
ing at the end the following new sentence: ‘‘Any balance 
in any such account that is within the servicer’s control 
at the time the loan is paid off shall be promptly returned 
to the borrower within 20 business days or credited to a 
similar account for a new mortgage loan to the borrower 
with the same lender.’’. 
SEC. 504. TRUTH IN LENDING ACT AMENDMENTS. 
(a) REQUIREMENTS
FOR PROMPT CREDITING
OF 
HOME LOAN PAYMENTS.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
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142 
after section 129E (as added by section 602) the following 
new section (and by amending the table of contents accord-
ingly): 
‘‘SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF 
HOME LOAN PAYMENTS. 
‘‘(a) IN GENERAL.—In connection with a consumer 
credit transaction secured by a consumer’s principal dwell-
ing, no servicer shall fail to credit a payment to the con-
sumer’s loan account as of the date of receipt, except when 
a delay in crediting does not result in any charge to the 
consumer or in the reporting of negative information to a 
consumer reporting agency, except as required in subsection 
(b). 
‘‘(b) EXCEPTION.—If a servicer specifies in writing re-
quirements for the consumer to follow in making payments, 
but accepts a payment that does not conform to the require-
ments, the servicer shall credit the payment as of 5 days 
after receipt.’’. 
(b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 of 
such Act is further amended by inserting after section 129F 
(as added by subsection (a)) the following new section (and 
by amending the table of contents accordingly): 
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143 
‘‘SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME 
LOAN. 
‘‘A creditor or servicer of a home loan shall send an 
accurate payoff balance within a reasonable time, but in 
no case more than 7 business days, after the receipt of a 
written request for such balance from or on behalf of the 
borrower.’’. 
SEC. 505. 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: 
‘‘(5) REPAYMENT
ANALYSIS
REQUIRED
TO
IN-
CLUDE ESCROW PAYMENTS.— 
‘‘(A) IN GENERAL.—In the case of any con-
sumer credit transaction secured by a first mort-
gage or lien on the principal dwelling of the con-
sumer, other than a consumer credit transaction 
under an open end credit plan or a reverse mort-
gage, for which an impound, trust, or other type 
of account has been or will be established in con-
nection with the transaction for the payment of 
property taxes, hazard and flood (if any) insur-
ance premiums, or other periodic payments or 
premiums with respect to the property, the infor-
mation required to be provided under subsection 
(a) with respect to the number, amount, and due 
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150 
management company, consumer, or any other person with 
an interest in a real estate transaction from asking an ap-
praiser to provide 1 or more of the following services: 
‘‘(1) Consider additional, appropriate property 
information, including the consideration of additional 
comparable properties to make or support an ap-
praisal. 
‘‘(2) Provide further detail, substantiation, or ex-
planation for the appraiser’s value conclusion. 
‘‘(3) Correct errors in the appraisal report. 
‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.—No 
certified or licensed appraiser conducting, and no appraisal 
management company procuring or facilitating, an ap-
praisal in connection with a consumer credit transaction 
secured by the principal dwelling of a consumer may have 
a direct or indirect interest, financial or otherwise, in the 
property or transaction involving the appraisal. 
‘‘(e) MANDATORY REPORTING.—Any mortgage lender, 
mortgage broker, mortgage banker, real estate broker, ap-
praisal management company, employee of an appraisal 
management company, or any other person involved in a 
real estate transaction involving an appraisal in connection 
with a consumer credit transaction secured by the principal 
dwelling of a consumer who has a reasonable basis to believe 
an appraiser is failing to comply with the Uniform Stand-
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161 
qualifications developed by the Appraiser Qualifications 
Board under this section, as such qualifications relate to 
the State appraiser certifying and licensing agencies. The 
Appraisal Subcommittee shall also promulgate regulations 
for the reporting of the activities of appraisal management 
companies in determining the payment of the annual reg-
istry fee. 
‘‘(e) EFFECTIVE DATE.— 
‘‘(1) IN GENERAL.—No appraisal management 
company may perform services related to a federally 
related transaction in a State after the date that is 
36 months after the date of the enactment of this sec-
tion unless such company is registered with such 
State or subject to oversight by a federal financial in-
stitutions regulatory agency. 
‘‘(2) EXTENSION OF EFFECTIVE DATE.—Subject 
to the approval of the Council, the Appraisal Sub-
committee may extend by an additional 12 months 
the requirements for the registration and supervision 
of appraisal management companies if it makes a 
written finding that a State has made substantial 
progress in establishing a State appraisal manage-
ment company registration and supervision system 
that appears to conform with the provisions of this 
title.’’. 
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168 
‘‘(6) to report to all State appraiser certifying 
and licensing agencies when a license or certification 
is surrendered, revoked, or suspended.’’. 
Obligations authorized under this subsection may not ex-
ceed 75 percent of the fiscal year total of incremental in-
crease in fees collected and deposited in the ‘‘Appraisal Sub-
committee Account’’ pursuant to subsection (h). 
(j) CRITERIA.—Section 1116 of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 (12 
U.S.C. 3345) is amended— 
(1) in subsection (c), by inserting ‘‘whose criteria 
for the licensing of a real estate appraiser currently 
meet or exceed the minimum criteria issued by the 
Appraisal Qualifications Board of The Appraisal 
Foundation for the licensing of real estate appraisers’’ 
before the period at the end; and 
(2) by striking subsection (e) and inserting the 
following new subsection: 
‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.—Any 
requirements established for individuals in the position of 
‘Trainee Appraiser’ and ‘Supervisory Appraiser’ shall meet 
or exceed the minimum qualification requirements of the 
Appraiser Qualifications Board of The Appraisal Founda-
tion. The Appraisal Subcommittee shall have the authority 
to enforce these requirements.’’. 
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