I
107TH CONGRESS
1ST SESSION
H. R. 2531
To amend the Truth in Lending Act, the Revised Statutes of the United
States, the Home Mortgage Disclosure Act of 1975, and the amendments
made by the Home Ownership and Equity Protection Act of 1994 to
protect consumers from predatory lending practices, and for other pur-
poses.
IN THE HOUSE OF REPRESENTATIVES
JULY 17, 2001
Ms. SCHAKOWSKY (for herself, Mr. SANDERS, Mr. GUTIERREZ, Mr. JACKSON
of Illinois, Mrs. CLAYTON, Mr. HINCHEY, Ms. NORTON, Mr. PAYNE, Mr.
DAVIS of Illinois, Ms. MCKINNEY, Mr. RUSH, Ms. JACKSON-LEE of
Texas, Mr. DEFAZIO, Ms. WATERS, Mr. JEFFERSON, and Mr. FILNER)
introduced the following bill; which was referred to the Committee on Fi-
nancial Services
A BILL
To amend the Truth in Lending Act, the Revised Statutes
of the United States, the Home Mortgage Disclosure
Act of 1975, and the amendments made by the Home
Ownership and Equity Protection Act of 1994 to protect
consumers from predatory lending practices, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Save Our Homes Act’’.
SEC. 2. HOME MORTGAGE DISCLOSURE ACT AMENDMENTS.
(a) STATUTORY REPORTING REQUIREMENTS.—
(1) IN GENERAL.—Section 304(b) of the Home
Mortgage Disclosure Act of 1975 (12 U.S.C.
2803(b)) is amended—
(A) in paragraph (3), by striking ‘‘and’’
after the semicolon;
(B) in paragraph (4), by striking the pe-
riod at the end and inserting ‘‘; and’’; and
(C) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) the annual percentage rate of mortgage
loans and other loans secured by residential real
property originated by the institution, and the
amount of fees and points imposed in connection
with the origination of such loans, grouped accord-
ing to census tract, income level, racial characteris-
tics, age, and gender.’’.
(2) CONFORMING
AMENDMENTS.—The Home
Mortgage Disclosure Act of 1975 (12 U.S.C. 2801
et seq.) is amended—
(A) in section 304(i), by striking ‘‘sub-
section (b)(4)’’ and inserting ‘‘paragraphs (4)
and (5) of subsection (b)’’.
(B) in section 308, by striking ‘‘subsection
(b)(4)’’ and inserting ‘‘paragraphs (4) and (5)
of subsection (b)’’.
(b) PROHIBITION
ON REGULATORY EXEMPTIONS
FROM REPORTING REQUIREMENTS.—Section 304 of the
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803)
is amended by adding at the end the following new sub-
section:
‘‘(n) PROHIBITION ON REGULATORY EXEMPTIONS
FROM
REPORTING
REQUIREMENTS.—Subject to sub-
section (i)—
‘‘(1) no provision of this title may be construed
as authorizing the Board, the Secretary, or any
other Federal agency to exempt any depository insti-
tution from the requirements of this title; and
‘‘(2) any exemption from the requirements of
this title provided in any regulation, such as the ex-
emption provided in Appendix A to part 203 of the
Code of Federal Regulations for lending institutions
described in section 303(2)(B) whose total dollar
amount of purchase loans originated in any year did
not exceed 10 percent of the total dollar amount of
all loan originations by such institution in such year,
shall cease to be effective as of the date of the enact-
ment of the Anti-Predatory Lending Act of 2001.’’.
SEC. 3. TRUTH IN LENDING ACT AMENDMENTS.
(a) APPLYING HIGH-COST LOAN PROTECTIONS TO
HOME PURCHASE LOANS AND LOWERING THE THRESH-
OLD FOR HIGH-COST LOANS.—Section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(1)) is amended
by striking all that precedes paragraph (2) and inserting
the following:
‘‘(aa) HIGH-COST MORTGAGE DEFINED.—
‘‘(1) IN GENERAL.—The term ‘high-cost mort-
gage’, 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 transaction, if any of the following
apply with respect to such consumer credit trans-
action:
‘‘(A) The annual percentage rate at con-
summation of the transaction exceeds by 5 or
more percentage points the yield on United
States Treasury securities having comparable
periods of maturity (as made available by the
Board) as of the week immediately preceding
the week in which the interest rate for the loan
is established.
‘‘(B) The mortgage is a variable-rate loan
in which the annual percentage rate can reason-
ably be expected to increase beyond the thresh-
old established in subparagraph (A).
‘‘(C) Potential or scheduled increases in
the annual percentage rate of the home loan are
controlled by the creditor and not directly tied
to changes in a publicly available rate not con-
trolled by the creditor.
‘‘(D) The total points and fees payable on
the transaction will exceed the greater of 3 per-
cent of the total loan amount or $1,000.’’.
(b) DEFINITION OF ‘‘POINTS AND FEES’’.—Para-
graph (4) of section 103(aa) of the Truth in Lending Act
(15 U.S.C. 1602(aa)) is amended to read as follows:
‘‘(4) DEFINITION OF POINTS AND FEES.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(D) and section 129(q), the term
‘points and fees’ shall include—
‘‘(i) all items included in the finance
charge, except interest or the time-price
differential;
‘‘(ii) all compensation paid directly or
indirectly to a mortgage broker, including
a broker that originates a loan in its own
name in a table-funded transaction;
‘‘(iii) each of the charges listed in sec-
tion 106(e) (except an escrow for future
payment of taxes and insurance);
‘‘(iv) the cost of all premiums fi-
nanced by the lender, directly or indirectly,
for any credit life, credit disability, credit
unemployment or credit property insur-
ance, or any other life or health insurance,
or any payments financed by the lender,
directly or indirectly, for any debt cancella-
tion or suspension agreement or contract,
except that, for purposes of this subpara-
graph, insurance premiums or debt can-
cellation or suspension fees calculated and
paid on a monthly basis shall not be con-
sidered financed by the lender;
‘‘(v) any prepayment penalty (as de-
fined in section 129(c)(5)) or other fee
paid by the consumer in connection with
an existing loan which is being refinanced
with the proceeds of the consumer credit
transaction; and
‘‘(vi) such other charges as the Board
determines to be appropriate.
‘‘(B) ITEMS EXCLUDED.—For purposes of
paragraph (1)(D) and section 129(q), the term
‘points and fees’ shall not include the following:
‘‘(i) Taxes, filing fees, recording and
other charges and fees paid or to be paid
to public officials for determining the exist-
ence of or for perfecting, releasing, or sat-
isfying a security interest.
‘‘(ii) Fees paid to a person other than
a creditor or an affiliate of the creditor or
to the mortgage broker or an affiliate of
the mortgage broker for any of the fol-
lowing:
‘‘(I) Fees for flood certification.
‘‘(II) Fees for pest infestation
and flood determinations.
‘‘(III) Appraisal fees.
‘‘(IV) Fees for inspections per-
formed prior to closing.
‘‘(V) Credit reports.
‘‘(VI) Surveys.
‘‘(VII) Attorneys’ fees (if the bor-
rower has the right to select the attor-
ney from an approved list or other-
wise).
‘‘(VIII) Notary fees.
‘‘(IX) Escrow charges, so long as
not otherwise included under subpara-
graph (A).
‘‘(X) Title insurance premiums.
‘‘(XI) Fire insurance and flood
insurance premiums, to the extent
that 
the 
conditions 
in 
section
226.4(d)(2) of title 12 of the Code of
Federal Regulations, as in effect on
the date of the enactment of the Anti-
Predatory Lending Act of 2001, are
met.’’.
(c) COVERAGE OF MORTGAGE BROKERS.—
(1) IN GENERAL.—The last sentence of section
103(f) of the Truth in Lending Act (15 U.S.C.
1602(f)) is amended—
(A) by striking ‘‘or any person who’’ and
inserting a comma;
(B) by inserting after ‘‘through a mortgage
broker’’ the following: ‘‘, or acted as a mortgage
broker between originators and borrowers on
more than 5 home loans within the past 12-
month period,’’.
(2) LIABILITY OF CREDITOR FOR VIOLATIONS
BY MORTGAGE BROKER.—Section 130 of the Truth
in Lending Act (15 U.S.C. 1640) is amended by
adding at the end the following new subsection:
‘‘(j) LIABILITY OF CREDITOR FOR VIOLATIONS BY
MORTGAGE BROKER.—In the case of any credit extended
to a consumer by a creditor through a mortgage broker,
the creditor shall be liable under this section to the con-
sumer for any violation of any requirement of this title,
or regulations prescribed under this title, by the mortgage
broker in connection with such extension of credit.’’.
(d) PROHIBITED PRACTICES FOR HIGH-COST HOME
LOANS.—Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended—
(1) in subsection (e), by striking ‘‘of less than
five years’’;
(2) by striking subsections (c), (f), and (h);
(3) by redesignating subsections (d), (e), (g),
and (i) as subsections (c), (d), (e), and (f), respec-
tively; and
(4) by inserting after subsection (f) (as so re-
designated by paragraph (3) of this subsection) the
following new subsections:
‘‘(g) NO CALL PROVISION.—
‘‘(1) IN GENERAL.—A high-cost mortgage may
not include terms under which the indebtedness may
be accelerated by the creditor, in the creditor’s sole
discretion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply when repayment of the loan has been acceler-
ated by default or made pursuant to a due-on-sale
provision or some other provision of the loan docu-
ments unrelated to the payment schedule.
‘‘(h) NO MODIFICATION OR DEFERRAL FEES.—A
creditor shall not charge a borrower any fees or other
charges to modify, renew, extend, or amend a high-cost
mortgage or to defer any payment due under any such
mortgage.
‘‘(i) NO
LENDING
WITHOUT
HOME-OWNERSHIP
COUNSELING.—A creditor shall not enter into a high-cost
mortgage without having received certification from a
housing counseling agency (which is certified by the De-
partment of Housing and Urban Development) that the
borrower has received counseling on the advisability of the
loan transaction and the appropriateness of the loan for
the borrower.
‘‘(j) NO MANDATORY ARBITRATION CLAUSE.—A
high-cost mortgage may not include terms under which a
mandatory arbitration clause limits in any way the right
of the borrower to seek relief through the judicial process.
‘‘(k) NO PREPAYMENT PENALTY.—
‘‘(1) LIMITATION
ON
TERMS.—A high-cost
mortgage may not contain terms under which a con-
sumer must pay a prepayment penalty for paying all
or part of the principal before the date on which the
principal is due.
‘‘(2) CONSTRUCTION.—For purposes of this
subsection, any method of computing a refund of un-
earned scheduled interest is a prepayment penalty if
it is less favorable to the consumer than the actu-
arial method (as that term is defined in section
933(d)(1) of the Housing and Community Develop-
ment Act of 1992).
‘‘(l) NO NEGATIVE AMORTIZATION.—A high-cost
mortgage may not include terms under which the out-
standing principal balance will increase at any time over
the course of the loan because the regular periodic pay-
ments do not cover the full amount of interest due.
‘‘(m) PROHIBITION ON EXTENDING CREDIT WITH-
OUT REGARD TO PAYMENT ABILITY OF CUSTOMER.—
‘‘(1) IN GENERAL.—No creditor may make a
high-cost mortgage, unless the creditor reasonably
believes at the time the loan is consummated that 1
or more of the obligors, when considered individually
or collectively, will be able to make the scheduled
payments to repay the obligation based upon a con-
sideration of their current and expected income, cur-
rent obligations, employment status, and other fi-
nancial resources (other than the borrower’s equity
in the dwelling which secures repayment of the
loan).
‘‘(2) OBLIGOR
DEFINED.—For purposes of
paragraph (1), the term ‘obligor’ means each bor-
rower, coborrower, cosigner, or guarantor obligated
to repay a loan.
‘‘(n) PROHIBITION ON FLIPPING OF HOME LOANS.—
‘‘(1) IN GENERAL.—No creditor may knowingly
or intentionally engage in the practice of flipping a
high-cost mortgage.
‘‘(2) FLIPPING
DEFINED.—For purposes of
paragraph (1), the term ‘flipping’ means the act of
making of a new high-cost mortgage to a borrower
to refinance an existing home loan when the new
loan does not have a reasonable, tangible net benefit
to the borrower considering all of the circumstances,
including the terms of both the new and refinanced
loans, the cost of the new loan, and the borrower’s
circumstances.
‘‘(o) NO ENCOURAGEMENT OF DEFAULT.—No cred-
itor may recommend or encourage default on an existing
loan or other debt prior to and in connection with the clos-
ing or planned closing of a high-cost mortgage that refi-
nances all or any portion of such existing loan or debt.
‘‘(p) NO FINANCING OF CREDIT INSURANCE.—
‘‘(1) IN GENERAL.—No creditor may finance,
directly or indirectly, any credit life, credit disability,
or credit unemployment insurance, or any other life
or health insurance premiums through a high-cost
mortgage.
‘‘(2) RULE OF CONSTRUCTION.—Paragraph (1)
shall not be construed as affecting the right of a
creditor to require the collection of insurance pre-
mium payments into an escrow account in conjunc-
tion with the servicing of a high-cost mortgage to
the extent the calculation and servicing of such in-
surance premiums are conducted and reported inde-
pendently of the high-cost mortgage.
‘‘(q) RESTRICTION
ON
FINANCING
POINTS
AND
FEES.—
‘‘(1) LIMIT ON AMOUNT OF POINTS AND FEES
THAT MAY BE FINANCED.—No creditor may, in con-
nection with the formation or consummation of a
high-cost mortgage, finance, directly or indirectly,
any portion of the points, fees, or other charges pay-
able to the creditor or any third party in an amount
in excess of the greater of 3 percent of the total loan
amount or $600.
‘‘(2) PROHIBITION
ON
FINANCING
CERTAIN
POINTS, FEES, OR CHARGES.—No creditor may, in
connection with the formation or consummation of a
high-cost mortgage, finance, directly or indirectly,
any of the following fees or other charges payable to
the creditor or any third party:
‘‘(A) Any prepayment fee or penalty re-
quired to be paid by the consumer in connection
with a loan or other extension of credit which
is being refinanced by such mortgage if the
creditor, with respect to such mortgage, or any
affiliate of the creditor, is the creditor with re-
spect to the loan or other extension of credit
being refinanced.
‘‘(B) Any points, fees, or other charges re-
quired to be paid by the consumer in connection
with such mortgage if—
‘‘(i) the mortgage is being entered
into in order to refinance an existing high-
cost mortgage of the consumer; and
‘‘(ii) if the creditor, with respect to
such new mortgage, or any affiliate of the
creditor, is the creditor with respect to the
existing high-cost mortgage which is being
refinanced.
‘‘(r) NO BLANK ITEMS.—A high-cost mortgage docu-
ment in which blanks are left to be filled in after the con-
tract is signed shall not be enforceable under Federal law
or the law of any State.
‘‘(s) SAME LANGUAGE REQUIREMENT.—If the dis-
cussions between a creditor and a borrower or potential
borrower with respect to a high-cost mortgage are con-
ducted primarily in a language other than English, the
creditor shall, before closing, provide an additional copy
of all information required to be disclosed to the borrower
under this title translated into the language in which the
discussions were conducted.
‘‘(t) ATTEMPTED EVASION OF COVERAGE.—The pro-
visions of this section shall apply to any person who in
bad faith attempts to avoid its application by—
‘‘(1) structuring a loan transaction as an open
end credit plan for the purpose and with the intent
of evading the provisions of this section when the
loan would have been a high-cost mortgage if the
loan had been structured as a closed-end loan;
‘‘(2) dividing any loan transaction into separate
parts for the purpose and with the intent of evading
the provisions of this section; or
‘‘(3) engaging in any other such subterfuge for
the purpose of evading the provisions of this section.
‘‘(u) CORRECTIONS
AND UNINTENTIONAL VIOLA-
TIONS.—
‘‘(1) IN GENERAL.—A creditor with respect to
a high-cost mortgage who, when acting in good
faith, fails to comply with this section, shall not be
deemed to have violated this section if the creditor
establishes that either—
‘‘(A) within 30 days of the loan closing
and prior to the institution of any action under
this section, the borrower is notified of the com-
pliance failure, appropriate restitution is made,
and whatever adjustments are necessary are
made to the loan to either, at the choice of the
borrower—
‘‘(i) make the high-cost home loan
satisfy the requirements of this section; or
‘‘(ii) change the terms of the loan in
a manner beneficial to the borrower so that
the loan will no longer be considered a
high-cost mortgage subject to the provi-
sions of this section; or
‘‘(B) the compliance failure was not inten-
tional and resulted from a bona fide error not-
withstanding the maintenance of procedures
reasonably adapted to avoid such errors, and
within 60 days after the discovery of the com-
pliance failure and prior to the institution of
any action under this section or the receipt of
written notice of the compliance failure, the
borrower is notified of the compliance failure,
appropriate restitution is made, and whatever
adjustments are necessary are made to the loan
to either, at the choice of the borrower—
‘‘(i) make the high-cost home loan
satisfy the requirements of this section; or
‘‘(ii) change the terms of the loan in
a manner beneficial to the borrower so that
the loan will no longer be considered a
high-cost home loan subject to the provi-
sions of this section.
‘‘(2) BONA
FIDE
ERROR.—For purposes of
paragraph (1), examples of a bona fide error include
clerical, calculation, computer malfunction and pro-
gramming, and printing errors. An error of legal
judgment with respect to a person’s obligations
under this section is not a bona fide error.’’.
SEC. 4. REQUIREMENTS FOR ALL CONFORMING HOME
LOANS.
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1601 et seq.) is amended by inserting
after section 129 the following new section:
‘‘SEC. 129A. REQUIREMENTS FOR ALL CONFORMING HOME
LOANS.
‘‘(a) DEFINITION OF CONFORMING HOME LOAN.—
For the purpose of this section, the term ‘conforming
home loan’ means a loan, other than an extension of credit
under an open end credit plan or a reverse mortgage
transaction, where—
‘‘(1) the principal amount of the loan does not
exceed the conforming loan size limit for a single-
family dwelling as established from time to time by
the Federal National Mortgage Association;
‘‘(2) the borrower is an individual or are indi-
viduals;
‘‘(3) the debt is incurred by the borrower pri-
marily for personal, family, or household purposes;
and
‘‘(4) the loan is secured by a mortgage or deed
of trust on real estate upon which there is located
or there is to be located a structure or structures de-
signed principally for occupancy of from 1 to 4 fami-
lies which is or will be occupied by the borrower as
the borrower’s principal dwelling.
‘‘(b) NO PAYMENTS TO APPRAISERS.—No creditor or
mortgage broker may compensate, directly or indirectly,
coerce, or intimidate an appraiser for the purpose of influ-
encing the independent judgment of the appraiser with re-
spect to the value of real estate that is to be covered by
a conforming home loan or is being offered as security
according to an application for a conforming home loan.
‘‘(c) NONCOMPLIANT
LOANS
PROHIBITED
FROM
MORTGAGE-BACKED SECURITY POOLS.—
‘‘(1) ISSUANCE OF SECURITIES FROM TAINTED
POOLS PROHIBITED.—No person may issue a secu-
rity representing an interest in or an obligation
backed by a pool of mortgages, deeds of trust, or
other security interests created in connection with
consumer credit transactions secured by principal
dwellings of consumers if such person knows or has
reason to believe that any high-cost mortgage or
conforming home loan included in such pool violates
any provision of this section or section 129.
‘‘(2) INCLUSION
IN
POOLS.—No creditor or
other person may knowingly include any high-cost
mortgage or conforming home loan that violates any
provision of this section or section 129 in any pool
described in paragraph (1).’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) The first sentence of section 130(a) of the
Truth in Lending Act (15 U.S.C. 1640(a)) is
amended, in the portion of such section that pre-
cedes paragraph (1), by inserting ‘‘, and to the ex-
tent subject to any requirement of this title, any
mortgage broker (including any person acting as a
mortgage broker),’’ after ‘‘any creditor’’.
(2) Section 130(b) of the Truth in Lending Act
(15 U.S.C. 1640(b)) is amended—
(A) by striking ‘‘creditor or assignee’’ the
first place such term appears and inserting
‘‘creditor, assignee, or, to the extent subject to
any requirement of this title, any mortgage
broker (including any person acting as a mort-
gage broker),’’;
(B) by striking ‘‘creditor’s or assignee’s
own procedures’’ and inserting ‘‘creditor’s, as-
signee’s, or mortgage broker’s own procedure’’;
and
(C) by striking ‘‘the creditor or assignee
notifies’’ and inserting ‘‘creditor, assignee, or
mortgage broker notifies’’.
(3) Section 130(c) of the Truth in Lending Act
(15 U.S.C. 1640(c)) is amended—
(A) by striking ‘‘creditor or assignee’’ the
first place such term appears and inserting
‘‘creditor, assignee, or, to the extent subject to
any requirement of this title, any mortgage
broker (including any person acting as a mort-
gage broker),’’; and
(B) by striking ‘‘if the creditor or assignee
shows’’ and inserting ‘‘if the creditor, assignee,
or mortgage broker shows’’.
(4) The third sentence of section 130(e) of the
Truth in Lending Act (15 U.S.C. 1640(e)) is
amended by inserting ‘‘or 129A’’ after ‘‘section
129’’.
(c) CLERICAL AMENDMENT.—The table of sections
for chapter 2 of the Truth in Lending Act (15 U.S.C.
1601 et seq.) is amended by inserting after the item relat-
ing to section 129 the following new item:
‘‘129A. Requirements for all conforming home loans.’’.
SEC. 5. ALTERNATIVE MAXIMUM AMOUNT OF CIVIL LIABIL-
ITY FOR VIOLATIONS INVOLVING HIGH-COST
MORTGAGES AND CONFORMING LOANS.
(e) ALTERNATIVE MAXIMUM AMOUNT OF CIVIL LI-
ABILITY.—Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (u)
(as added by section 3(d) of this Act) the following new
subsection:
‘‘(v) ALTERNATIVE MAXIMUM AMOUNT OF CIVIL LI-
ABILITY.—Notwithstanding any maximum amount limita-
tion contained in section 130, any creditor, and to the ex-
tent subject to any requirement of this title, any mortgage
broker (including any person acting as a mortgage
broker), who fails to comply with section 129, in connec-
tion with any high-cost mortgage, or with section 129A,
in connection with any conforming loan, shall be liable
for—
‘‘(1) in the case of an individual action, the
greater of—
‘‘(A) the amount determined under section
130; or
‘‘(B) the sum of the amount of the prin-
cipal and the total amount of all finance
charges and fees paid by the consumer with re-
spect to such mortgage or loan; and
‘‘(2) in the case of a class action, the greater
of—
‘‘(A) the amount determined under section
130; or
‘‘(B) as to each member of the class in any
class action or series of class actions arising out
of the same failure to comply by the same cred-
itor, the sum of the amount of the principal and
the total amount of all finance charges and fees
paid by the consumer with respect to such
mortgage or loan.’’.
SEC. 6. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), this Act and the amendments made by this Act shall
take effect at the end of the 90-day period beginning on
the date of the enactment of this Act.
(b) HMDA REQUIREMENTS.—Notwithstanding sub-
section (a), the amendments made by section 2 shall take
effect on January 1 of the first calendar year beginning
after the date of the enactment of this Act.
Æ