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home ownership counseling, to a percentage 
of such grant amounts of the State or State 
designated entity for such year, which may 
not exceed 10 percent. 
‘‘(E) PROHIBITION OF CONSIDERATION OF 
USE FOR MEETING HOUSING GOALS OR DUTY TO 
SERVE.—In determining compliance with the 
housing goals under this subpart and the duty to 
serve underserved markets under section 1335, 
the Director may not consider any grant 
amounts used under this section for eligible ac-
tivities under paragraph (7). The Director shall 
give credit toward the achievement of such hous-
ing goals and such duty to serve underserved 
markets to purchases by the enterprises of mort-
gages for housing that receives funding from such 
grant amounts, but only to the extent that such 
purchases by the enterprises are funded other 
than with such grant amounts. 
‘‘(d) REDUCTION FOR FAILURE TO OBTAIN RETURN 
OF MISUSED FUNDS.—If in any year a State or State des-
ignated entity fails to obtain reimbursement or return of 
the full amount required under subsection (e)(1)(B) to be 
reimbursed or returned to the State or State designated en-
tity during such year—
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‘‘(1) except as provided in paragraph (2)— 
‘‘(A) the amount of the grant for the State 
or State designated entity for the succeeding 
year, as determined pursuant to this section, 
shall be reduced by the amount by which such 
amounts required to be reimbursed or returned 
exceed the amount actually reimbursed or re-
turned; and 
‘‘(B) the amount of the grant for the suc-
ceeding year for each other State or State des-
ignated entity whose grant is not reduced pursu-
ant to subparagraph (A) shall be increased by 
the amount determined by applying the formula 
established pursuant to this section to the total 
amount of all reductions for all State or State 
designated entities for such year pursuant to 
subparagraph (A); or 
‘‘(2) in any case in which such failure to obtain 
reimbursement or return occurs during a year imme-
diately preceding a year in which grants under this 
section will not be made, the State or State des-
ignated entity shall pay to the Secretary for realloca-
tion among the other grantees an amount equal to the 
amount of the reduction for the entity that would oth-
erwise apply under paragraph (1)(A).
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processing or underwriting of a loan, to the 
extent that such communication does not in-
clude offering or negotiating loan rates or 
terms, or counseling consumers about resi-
dential mortgage loan rates or terms. 
(5) NATIONWIDE MORTGAGE LICENSING SYSTEM 
AND REGISTRY.—The term ‘‘Nationwide Mortgage Li-
censing System and Registry’’ means a mortgage li-
censing system developed and maintained by the Con-
ference of State Bank Supervisors and the American 
Association of Residential Mortgage Regulators for the 
State licensing and registration of State-licensed loan 
originators and the registration of registered loan 
originators or any system established by the Secretary 
under section 1509. 
(6) NONTRADITIONAL MORTGAGE PRODUCT.—The 
term ‘‘nontraditional mortgage product’’ means any 
mortgage product other than a 30-year fixed rate 
mortgage. 
(7) REGISTERED LOAN ORIGINATOR.—The term 
‘‘registered loan originator’’ means any individual 
who— 
(A) meets the definition of loan originator 
and is an employee of— 
(i) a depository institution;