HR 4471 IH 
‘‘(1) IN GENERAL.—A high-cost home loan may 
not include terms which require arbitration or any 
other nonjudicial procedure as the method for resolv-
ing any controversy or settling any claims arising 
out of the transaction. 
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Sub-
ject to paragraph (3), paragraph (1) shall not be 
construed as limiting the right of the consumer and 
the creditor to agree to arbitration or any other non-
judicial 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 high-cost home loan and 
no other pre-controversy agreement between the con-
sumer and the creditor shall be applied or inter-
preted so as to bar a consumer from bringing an ac-
tion in an appropriate district court of the United 
States, or any other court of competent 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, any other provi-
sion of this title, or any other Federal law, provided 
that this section does not prohibit a creditor from
HR 4471 IH 
requiring a consumer to waive or release such rights 
in connection with the settlement of a dispute.’’. 
(b) CORRECTION OF ERRORS.—Section 130 of the 
Truth in Lending Act (15 U.S.C. 1640) is amended— 
(1) by redesignating subsections (d) through (i) 
as subsections (e) through (j); 
(2) by adding the following sentence at the end 
of subsection (b): ‘‘This section does not apply to 
violations of section 129 or section 129A.’’; 
(3) by adding the following sentence at the end 
of subsection (c): ‘‘This section does not apply to 
violations of section 129 or section 129A.’’; and 
(4) by inserting the following new subsection 
(d): 
‘‘(d) CORRECTION
OF VIOLATIONS
OF REQUIRE-
MENTS
FOR
HIGH-COST
HOME
LOANS
AND
HOME 
LOANS.— 
‘‘(1) IN GENERAL.—A creditor or assignee shall 
have no liability under this section or section 108, 
112, or 125 for any failure to comply with any re-
quirement imposed under section 129 or 129A, ex-
cept for knowing or intentional violations, if— 
‘‘(A) before the end of the 45-day period 
beginning on the date of consummation of a 
loan, the creditor or assignee notifies the con-
HR 4471 IH 
sumer of the error and makes appropriate res-
titution to the consumer of any amounts col-
lected in error, and takes the necessary action 
to make all appropriate adjustments to the 
credit transaction to correct the error, includ-
ing, if applicable, that the consumer will not be 
required to pay an amount in excess of the 
charge actually disclosed, or the dollar equiva-
lent of the annual percentage rate actually dis-
closed, whichever is less; or 
‘‘(B) before the end of the 60-day period 
beginning on the date an error is discovered, 
whether pursuant to a final examination report 
or notice issued under section 108(e) of this 
title, or through the creditor’s or assignee’s own 
procedures, or receipt of written notice from the 
consumer or service upon the creditor or as-
signee of the institution of an action, the cred-
itor or assignee notifies the consumer of the 
error, makes appropriate restitution to the con-
sumer of any amounts collected in error, takes 
the necessary action to make all appropriate ad-
justments to the credit transaction to correct 
the error, including, if applicable, that the con-
sumer will not be required to pay an amount in
HR 4471 IH 
excess of the charge actually disclosed, or the 
dollar equivalent of the annual percentage rate 
actually disclosed, whichever is less, pays the 
consumer an error penalty of $2,000 and the 
consumer’s reasonable attorney’s fees, if any, 
except that no error penalty or attorney’s fees 
shall be assessed if the creditor or assignee dis-
covers the error through the creditor’s or as-
signee’s own procedures. 
‘‘(2) MODIFICATION OF TERMS.—In the case of 
a high-cost home loan, appropriate restitution for 
purposes of paragraph (1) above may also include a 
creditor modifying the terms of the credit trans-
action in such a way that the transaction is no 
longer a high-cost home loan within the meaning of 
this title. 
‘‘(3) CONSUMER REMEDY.—If a creditor or as-
signee fails to correct the error as provided for above 
in paragraph (1), the consumer may file an action 
or proceed with an action already filed. 
‘‘(4) CONSUMER
RESCISSION
RIGHT
UNAF-
FECTED.—This section does not affect a consumer’s 
right to rescind the transaction in accordance with 
section 125.
HR 4471 IH 
‘‘(5) EFFECTIVE
DATE
OF
DOCUMENT
REVI-
SIONS.—Any document revisions necessitated by and 
made consistent with the procedures set forth above 
in subparagraph (A) or (B) of paragraph (1) shall 
be deemed legally effective for all purposes as of the 
original date of the document that was revised.’’. 
(b) CLARIFICATION
RELATING
TO
STATE-REGU-
LATED TRANSACTIONS.—Section 123 of the Truth in 
Lending Act (15 U.S.C. 1633) is amended by striking 
‘‘The Board’’ and inserting ‘‘Except with respect to sec-
tion 129 and 129A, the Board’’. 
SEC. 105. AMENDMENTS TO DAMAGES, LIABILITY, AND RE-
SCISSION PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a) of 
the Truth in Lending Act (15 U.S.C. 1640(a)) is amend-
ed— 
(1) by redesignating paragraph (2)(A)(iii) as 
paragraph (2)(A)(iii)(I); 
(2) by inserting ‘‘or’’ at the end of paragraph 
(2)(A)(iii)(I); 
(3) by inserting at the end the following: 
‘‘(II) in the case of an individual 
action relating to violations of sections
HR 4471 IH 
129 or 129A, not less than $500 or 
greater than $5,000’’; 
(4) by redesignating paragraph (2)(B) as para-
graph (2)(B)(i); 
(5) by inserting ‘‘or’’ at the end of paragraph 
(2)(B)(i); and 
(6) by inserting at the end the following: 
‘‘(ii) in the case of a class action re-
lating to violations of sections 129 or 
129A, such amount as the court may 
allow, except that as to each member of 
the class no minimum recovery shall be ap-
plicable, and the total recovery under this 
subparagraph in any class action or series 
of class actions arising out of the same 
failure to comply by the same creditor shall 
not be more than the lesser of $1,500,000 
or 1 per centum of the net worth of the 
creditor.’’. 
(b) CLASS-ACTIONS RELATING TO HIGH-COST HOME 
LOANS.—Section 130 of the Truth in Lending Act (15 
U.S.C. 1640) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(j) CLASS
ACTIONS
RELATING
TO
HIGH-COST 
HOME
LOANS; KNOWING
OR
INTENTIONAL
VIOLA-
HR 4471 IH 
TIONS.—In determining the amount of any liability of any 
person under subsection (a)(2)(B)(ii) for violations of sec-
tion 129 in a class action, the court shall consider whether 
the person knowingly or intentionally violated this part.’’. 
(c) 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 sub-
sequent sentence, any action’’; 
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘Any action under this section 
with respect to any violation of section 129 or 129A 
may be brought in any United States district court, 
or in any other court of competent jurisdiction, be-
fore the end of the 2-year period beginning on the 
date of the occurrence of the violation, unless a 
shorter time period is herein provided.’’. 
(d) AMENDMENTS RELATING TO LIABILITY OF AS-
SIGNEES.— 
(1) IN
GENERAL.—Paragraph (4) of section 
131(d) of the Truth in Lending Act (15 U.S.C. 
1641(d)) is amended by striking ‘‘mortgage referred 
to in section 103(aa)’’ and inserting ‘‘high-cost home 
loan’’.
HR 4471 IH 
(2) RIGHTS UPON ASSIGNMENT OF HIGH-COST 
HOME
LOANS.—Section 131(d) of the Truth in 
Lending Act (15 U.S.C. 1641(d)) is amended by 
striking paragraph (1) and inserting the following 
new paragraph: 
‘‘(1) IN GENERAL.—A borrower acting only in 
an individual capacity may assert affirmative claims 
and any defenses with respect to a high-cost home 
loan against any subsequent holder or assignee of 
the high-cost home loan that the borrower could as-
sert against the original lender or broker of the loan, 
provided that this paragraph shall not apply if the 
purchaser or assignee demonstrates by a preponder-
ance of the evidence that it: 
‘‘(A) has in place at the time of the pur-
chase or assignment of the subject loan policies 
that expressly prohibit its purchase or accept-
ance of assignment of any high-cost home 
loans; 
‘‘(B) requires by contract that a seller or 
assignor of home loans represents and warrants 
to the purchaser or assignee that either— 
‘‘(i) the seller or assignor will not sell 
or assign any high-cost home loans to the 
purchaser or assignee; or
HR 4471 IH 
‘‘(ii) that the seller or assignor is a 
beneficiary of a representation and war-
ranty from a previous seller or assignor to 
that effect; and 
‘‘(C) exercises reasonable due diligence at 
the time of purchase or assignment of home 
loans or within a reasonable period of time 
after the purchase or assignment of the home 
loans, intended by the purchaser or assignee to 
prevent the purchaser or assignee from pur-
chasing or taking assignment of any high-cost 
home loans: Provided, however, That reasonable 
due diligence may provide for sampling and 
shall not require loan by loan review.’’. 
(e) CONFORMING AMENDMENT CONCERNING CON-
SUMER’S RIGHT TO RESCIND IN STEERING CASES.—Sec-
tion 125(b) of the Truth in Lending Act (15 U.S.C. 
1635(b)) is amended in the first sentence by inserting ‘‘or 
subsection (d) of section 129A’’ after ‘‘subsection (a) of 
this section’’. 
SEC. 106. COORDINATION WITH STATE LAW. 
Section 111 of the Truth in Lending Act (15 U.S.C. 
1610) is amended— 
(1) by adding at the end the following new sub-
section:
HR 4471 IH 
‘‘(f) HOME LOANS AND HIGH-COST HOME LOANS.— 
‘‘(1) IN GENERAL.—The provisions of this title 
shall supersede any provision of the law of any 
State, whether enacted before, on, or after the effec-
tive date of this Act, to the extent that such provi-
sion of law attempts, directly or indirectly, to regu-
late, or has the effect of regulating, mortgage lend-
ing activities by or through— 
‘‘(A) the imposition of a rate limitation, in-
cluding— 
‘‘(i) limitations or prohibitions in con-
nection with contracts for other business 
with any such State or any political sub-
division of any such State; 
‘‘(ii) by making any conduct in con-
nection with any such activities subject to 
civil or criminal penalties; or 
‘‘(iii) by making activities regulated 
under real estate, foreclosure, or other 
laws of such State or political subdivision 
contingent upon the manner in which 
mortgage lending activities are conducted; 
or
HR 4471 IH 
‘‘(B) any requirement, including data col-
lection, or any limitation, or prohibition per-
taining to— 
‘‘(i) unfair, deceptive or abusive mort-
gage lending practices, or 
‘‘(ii) the subject matters contained in 
sections 129 and 129A, 
regardless of whether the consumer credit 
transaction subject to such requirement, limita-
tion, or prohibition is a home loan or high-cost 
home loan. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) MORTGAGE
LENDING
ACTIVITIES.— 
The term ‘mortgage lending activities’ includes 
any advertisement, solicitation, offer, negotia-
tion, placement, application, processing, under-
writing, originating, closing, funding, recording, 
assignment, purchase, pledge, securitization, 
holding, servicing, collection, modification, satis-
faction, or foreclosure in connection with or 
arising out of a consumer credit transaction se-
cured by a lien against a consumer’s principal 
dwelling, by or on behalf of a broker, creditor, 
secured creditor, purchaser, servicer, trustee,
HR 4471 IH 
certificate or securities holder, or any other per-
son or entity that may engage in any of the 
above enumerated activities and their respective 
agents, contractors, employees, officers, and di-
rectors. 
‘‘(B) LAW OF ANY STATE.—The term ‘law 
of any State’ includes any constitutional provi-
sion, statute, rule, regulation, or ordinance of 
any State or any political subdivision of any 
State, including any State law as to which the 
Board has made a determination under section 
123, and any judicial decision or determination 
rendered in connection therewith. 
‘‘(C) RATE LIMITATION.—The term ‘rate 
limitation’ means any requirement, limitation, 
or prohibition on any mortgage lending activi-
ties in connection with a consumer credit trans-
action secured by a lien against a consumer’s 
principal dwelling when the applicability of such 
requirement, limitation or prohibition is based 
in whole or in part on whether the actual or 
contingent, direct or indirect, interest rate, 
costs, fees, price or finance charges to the con-
sumer associated with such consumer credit 
transaction exceed any particular threshold,
HR 4471 IH 
however such threshold may be defined, without 
regard to whether the consumer credit trans-
action subject to such requirement, limitation, 
or prohibition is a high cost home loan. 
‘‘(3) CLARIFICATION
OF
PREEMPTION.—Any 
law of any State preempted under paragraph (1) of 
this subsection shall, without in any way limiting the 
effect of paragraph (1) of this subsection, include, 
but not be limited to, any law of any State that di-
rectly or indirectly— 
‘‘(A) limits a creditor’s ability to extend to 
a consumer new consumer credit secured by a 
consumer’s principal dwelling; 
‘‘(B) limits the rights, claims, defenses, or 
other remedies at law or equity available to a 
creditor, secured creditor, servicer, assignee or 
other direct or indirect holder, and their respec-
tive agents or contractors, including without 
limitation, the right to foreclose on the lien 
against the consumer’s principal dwelling in re-
spect of a consumer’s default under the related 
mortgage loan documents; or 
‘‘(C) imposes legal liability on any party 
for the violations of law by another party by 
virtue of such first party’s acquisition of any di-
HR 4471 IH 
rect or indirect right, title or interest in and to, 
or contractual responsibility for the servicing or 
administration of, a home loan or high cost 
home loan. 
‘‘(4) EXCLUSIONS.—The following laws are ex-
pressly excluded from the preemption established 
under paragraph (1): 
‘‘(A) Any law of any State prohibiting a 
creditor or broker from discriminating against 
any person in making available a consumer 
credit transaction that is secured by the con-
sumer’s principal dwelling because of race, 
creed, color, religion, age, sex, handicap, mar-
ital status, familial status, or national origin. 
For the purpose of this section, the term ‘dis-
criminating’ means engaging in any of the fol-
lowing acts in a manner that is arbitrary or un-
supported by a reasonable analysis of the lend-
ing risks associated with a particular consumer 
credit transaction: 
‘‘(i) failing to provide information or 
services or providing different information 
or services regarding any aspect of the 
mortgage lending process, including credit
HR 4471 IH 
availability, 
application 
procedures, 
or 
mortgage lending standards; 
‘‘(ii) discouraging or selectively en-
couraging consumer credit transaction ap-
plicant with respect to inquiries about or 
applications for consumer credit; 
‘‘(iii) refusing to extend consumer 
credit card or using different standards in 
determining whether to extend consumer 
credit; 
‘‘(iv) varying the terms of consumer 
credit offered, including the amount, inter-
est rate, duration, type, or other terms 
term or condition of loan; 
‘‘(v) using different standards to 
evaluate collateral; and 
‘‘(vi) treating a consumer differently 
in servicing a loan or in invoking default 
remedies. 
‘‘(B) Any law of any State, not otherwise 
preempted under Federal law, limiting the rate 
of interest reflected in the note or other instru-
ment evidencing an extension of consumer cred-
it secured by a lien against a consumer’s prin-
cipal dwelling, to the extent that such law does
HR 4471 IH 
not require compliance with any law that is oth-
erwise preempted under paragraphs (1), (2), 
and (3) as a condition of contracting for, charg-
ing, or collecting any rate of interest otherwise 
permitted by such law; 
‘‘(C) Any law of any State requiring the li-
censing, registration, or authorization of any 
person engaged in mortgage-lending activities, 
except that the law of any State will be pre-
empted to the extent that such law conditions 
the issuance or maintenance of such a license, 
registration or other authorization, or the au-
thority granted thereby, on compliance with any 
law that is otherwise preempted under para-
graphs (1), (2), and (3); 
‘‘(D) General contract and commercial law 
to the extent that such law is not otherwise pre-
empted under paragraphs (1), (2), and (3); 
‘‘(E) Torts to the extent that such law is 
not otherwise preempted under paragraphs (1), 
(2), and (3); 
‘‘(F) Real property law to the extent that 
such law is not otherwise preempted under 
paragraphs (1), (2), and (3);
HR 4471 IH 
‘‘(G) Tax law to the extent that such law 
is not otherwise preempted under paragraphs 
(1), (2), and (3); and 
‘‘(H) Criminal law to the extent that such 
law is not otherwise preempted under para-
graphs (1), (2), and (3). 
‘‘(5) PROMPT DETERMINATION BY BOARD OF 
GOVERNORS.— 
‘‘(A) IN GENERAL.—In response to a bona 
fide request from any person, the Board, or any 
official or employee of the Board duly author-
ized by the Board, shall— 
‘‘(i) promptly determine whether and 
to the extent to which the specific law of 
any State identified in such request is pre-
empted by operation of this subsection; 
and 
‘‘(ii) cause such determination to be 
published in the Federal Register. 
‘‘(B) EFFECT OF PUBLICATION.—The pre-
emption provided under this section shall be 
self-executing, and the publication of a finding 
or preemption by the Board shall not be re-
quired in order for preemption to occur in ac-
cordance with the terms of this section.
HR 4471 IH 
‘‘(6) EFFECT ON PREEMPTION BY OTHER FED-
ERAL LAWS.—Nothing in this subsection shall nar-
row or limit the extent to which another provision of 
Federal law preempts or validates any State law to 
the extent such State law would be preempted or 
validated in the absence of this subsection. 
‘‘(7) PROHIBITION ON EVASION.—No State or 
any political subdivision of a State shall regulate 
mortgage lending activities with the intent to cir-
cumvent or evade the provisions of this title, or in 
a manner which has the effect of circumventing or 
evading the provisions of this title.’’. 
(2) in subsection (a)(1), by striking the first 
sentence and inserting the following new sentence: 
‘‘Except as provided in subsections (3) and (f), no 
provision of chapter 1, 2, or 3 shall be construed as 
annulling, altering, or affecting the laws of any 
State relating to the disclosure of information in 
connection with credit transactions, except to the ex-
tent that those laws are inconsistent with the provi-
sions of this title, and then only to the extent of the 
inconsistency.’’, 
(3) in subsection (b)—