‘‘§ 115. Unfair or deceptive acts or practices and
false, deceptive, or misleading statements
or representations prohibited
‘‘(a) IN GENERAL.—No person may—
‘‘(1) engage, directly or indirectly, in any unfair
or deceptive act or practice in connection with any
consumer credit transaction, the business of extend-
ing or servicing any consumer credit, or any adver-
tisement relating to any such transaction or busi-
ness’ or
‘‘(2) make or cause to be made, directly or indi-
rectly, any false, deceptive, or misleading statement
or representation in connection with any consumer
credit transaction, any application, solicitation, or
advertisement for any consumer credit transaction,
or any real or personal property securing any such
transaction.
‘‘(b) RULE OF CONSTRUCTION.—Subsection (a) shall
not be construed as creating any implication with regard
to whether any person referred to in such subsection is
or is not also subject to section 5 of the Federal Trade
Commission Act.’’
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 108(a) of the Truth in Lending Act (15 U.S.C.
1607(a)) is amended, in that portion of subsection that
precedes paragraph (1), by inserting ‘‘, other than section
115,’’ after ‘‘requirements imposed under this title’’.
(c) CLERICAL AMENDMENT.—The table of sections
for chapter 1 of the Truth in Lending Act is amended
by inserting after the item relating to section 114 the fol-
lowing new item:
‘‘115. Unfair or deceptive acts or practices prohibited.’’.
SEC. 3. SAFEGUARDS FOR CONSUMER CREDIT TRANS-
ACTIONS SECURED BY DWELLINGS.
(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:
‘‘§ 129A. General provisions applicable to consumer
credit secured by the consumer’s dwell-
ing
‘‘(a) PREPAYMENT
PENALTIES
PROHIBITED.—A
consumer credit transaction which is secured by the con-
sumer’s dwelling may not be subject to terms under which
a consumer must pay a prepayment penalty for paying all
or part of the principal before any date on which any pay-
ment of principal is due.
‘‘(b) FINANCING OF CREDIT INSURANCE PROHIB-
ITED.—
‘‘(1) IN GENERAL.—No creditor may, directly
or indirectly—
‘‘(A) finance any credit life, credit dis-
ability, or credit unemployment insurance, or
any other life or health insurance premiums in
a consumer credit transaction secured by the
consumer’s dwelling; or
‘‘(B) require or allow the advance collec-
tion of a fee for any debt cancellation or sus-
pension agreement or contract in connection
with any such mortgage,
whether such premium or fee is paid directly by the
consumer or is financed by the consumer through
such 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 an extension of credit.
‘‘(c) FLIPPING
OF
CONSUMER
LOANS
PROHIB-
ITED.—
‘‘(1) IN GENERAL.—No creditor may knowingly
or intentionally engage in the practice of flipping a
consumer loan or other extension of credit secured
by a consumer’s dwelling.
‘‘(2) FLIPPING
DEFINED.—For purposes of
paragraph (1), the term ‘flipping’ means the act of
making of a new loan or other extension of credit to
a borrower to refinance an existing consumer loan or
other extension of credit when the new loan or ex-
tension of credit does not have a reasonable, tangible
net benefit to the borrower considering all of the cir-
cumstances, including the terms of both the new and
refinanced loans or extensions of credit, the cost of
the new loan or extension of credit, and the bor-
rower’s circumstances.
‘‘(d) FEES PROHIBITED FOR SERVICES OR PROD-
UCTS NOT ACTUALLY PROVIDED.—A creditor may not,
in connection with a consumer credit transaction secured
by the consumer’s dwelling—
‘‘(1) impose, directly or indirectly, a fee or
charge for a product or service that is not actually
provided to or for the direct benefit of the consumer;
and
‘‘(2) misrepresent the amount charged by or
paid to a third party for a product or service.
‘‘(e) DIRECT PAYMENTS TO HOME IMPROVEMENT
CONTRACTORS
WITHOUT
CONSUMER
COUNTER-
SIGNATURE PROHIBITED.—A creditor shall not make a
payment to a contractor under a home improvement con-
tract from the proceeds of a consumer credit transaction
secured by the consumer’s dwelling, other than—
(1) in the form of an instrument that is payable
either to the consumer or jointly to the consumer
and the contractor; or
(2) at the election of the consumer, by a third
party escrow agent in accordance with terms estab-
lished in a written agreement signed by the con-
sumer, the creditor, and the contractor before the
date of payment.
‘‘(f) CREDITOR ATTEMPT TO INFLUENCE APPRAISER
PROHIBITED.—A creditor may not influence, or attempt
to influence, directly or indirectly, the independent judg-
ment of an appraiser in connection with an appraisal or
a consumer’s dwelling which is or will secure a loan or
other extension of credit by such creditor.
‘‘(g) DISCLOSURE OF CONSUMER’S CREDIT SCORE
REQUIRED.—If a creditor obtains or calculates a credit
score of any consumer in connection with any consumer
credit transaction, or any application or solicitation for
any consumer credit transaction, which is or is to be se-
cured by the consumer’s dwelling (without regard to
whether the transaction is consummated), the creditor
shall disclose, in writing—
‘‘(1) such credit score to the consumer; and
‘‘(2) the methodology used for the evaluation of
the credit score, including the statistical basis for
the calculation of the consumer’s credit score from
the credit history of the consumer.
‘‘(h) BLANK TERMS IN CREDIT AGREEMENTS PRO-
HIBITED.—Any contract for the extension of consumer
credit secured by the consumer’s dwelling which, at the
time the consumer signs or otherwise acknowledges the
contract, does not contain all the written terms of the con-
tract, or has blank spaces for such terms to be filled in
after the contract is entered into, shall be null and void.
‘‘(i) ARBITRATION.—
‘‘(1) IN GENERAL.—Any contract for the exten-
sion of consumer credit secured by the consumer’s
dwelling may not include terms which require arbi-
tration or any other nonjudicial procedure as the
method for resolving any controversy or settling any
claims arising out of the transaction.
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Para-
graph (1) shall not be construed as limiting the
right of the consumer and the creditor 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.
‘‘(j) PROHIBITION ON STEERING CONSUMERS WHO
QUALIFY
FOR CONVENTIONAL MORTGAGES
TO HIGH
COST MORTGAGES.—No creditor or mortgage broker may
direct a consumer to a mortgage loan product the terms
of which are less favorable than the terms for which the
consumer is qualified on the basis of current underwriting
guidelines.
‘‘(k) CONSISTENT STANDARDS FOR LATE FEES.—
Before the end of the 120-day period beginning on the
date of the enactment of the Protecting Our Communities
From Predatory Lending Practices Act, the Board shall
prescribe regulations in final form to be effective within
60 days of such publication that establish the following
requirements with regard to any late fee or charge that
may be imposed for the failure of the consumer to make
any payment due with respect to a consumer credit trans-
action secured by the consumer’s dwelling on or before the
due date for such payment:
‘‘(1) No creditor may impose any such late fee
or charge—
‘‘(A) in an amount in excess of the amount
equal to 4 percent of the amount of payment
past due;
‘‘(B) for any payment unless the payment
past due for 15 days or more;
‘‘(C) more than once with respect to a sin-
gle late payment;
credit transaction and such deduction results in a
subsequent default on a subsequent payment, no late
fee or charge may be imposed with regard to such
default;
‘‘(3) If a late fee or charge has been once im-
posed with respect to a particular late payment by
the consumer, no such charge shall be imposed with
respect to any future payment which would have
been timely and sufficient but for the previous de-
fault, except that, if—
‘‘(A) the consumer fails to make a subse-
quent installment payment;
‘‘(B) the terms of the consumer credit
transaction provide that subsequent payments
shall first be applied to the past due balance;
and
‘‘(C) the consumer resumes making install-
ment payments but has not paid all past due
installments,
the creditor may enforce the contract according to
its terms, imposing a separate late payment fee or
charge for each installment payment that becomes
due until the default is cured.
‘‘(4) Late fees or charges described in para-
graph (1) shall be imposed in accordance with con-
sistent standards established by the Board in such
regulations.
‘‘(5) In consultation with the Postmaster Gen-
eral, the Board shall require suspension of late fees
or charges described in paragraph (1) for payments
made by mail on such terms as the Board may pre-
scribe by regulation or order in the event of disrup-
tion in or suspension of mail distribution.’’.
(b) INCREASE IN MAXIMUM PENALTY AMOUNT.—
Section 130(a)(2)(A)(i) of the Truth in Lending Act (15
U.S.C. 1640(a)(2)(A)(i)) is amended by striking ‘‘$2,000’’
and inserting ‘‘$10,000’’.
(c) TECHNICAL AND CONFORMING AMENDMENT.—
Subsection (i) of section 129 of the Truth in Lending Act
(15 U.S.C. 1639(i)) is amended to read as follows:
‘‘(i) [Repealed]’’.
(d) 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. General provisions applicable to consumer credit secured by the con-
sumer’s dwelling.’’.
SEC. 4. SAFEGUARDS FOR HIGH-COST MORTGAGES.
(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, if any of the
following apply with respect to such consumer credit
transaction:
‘‘(A) The annual percentage rate at con-
summation of the transaction exceeds by 4 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) Surveys.
‘‘(IV) Attorneys’ fees (if the bor-
rower has the right to select the attor-
ney from an approved list or other-
wise).
‘‘(V) Escrow charges, so long as
not otherwise included under subpara-
graph (A).
‘‘(VI) 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-
‘‘(k) FEES
FOR OBTAINING PAY-OFF BALANCES
PROHIBITED.—A creditor may not impose any fee or
charge for providing to a consumer the pay-off balance
amount on any high-cost mortgage of such consumer.
‘‘(l) 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.
‘‘(m) PROHIBITION ON EXTENDING CREDIT WITH-
OUT REGARD TO PAYMENT ABILITY OF CONSUMER.—
‘‘(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 borrowers, when considered individ-
ually or collectively, will be able to make the sched-
uled payments to repay the obligation based upon a
consideration of their current and expected income,
current obligations, employment status, and other fi-
nancial resources (other than the borrower’s equity
in the dwelling which secures repayment of the
loan).
‘‘(2) BORROWER
DEFINED.—For purposes of
paragraph (1), the term ‘borrower’ means each bor-
rower, coborrower, obligor, cosigner, or guarantor
obligated to repay a loan.
‘‘(n) MODIFICATION OR DEFERRAL FEES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a creditor may not charge any consumer
with respect to a mortgage referred to in section
103(aa) any fee or other charge—
‘‘(A) to modify, renew, extend, or amend
such mortgage, or any provision of the terms of
the mortgage; or
‘‘(B) to defer any payment otherwise due
under the terms of the mortgage.
‘‘(2) EXCEPTION FOR MODIFICATIONS FOR THE
BENEFIT OF THE CONSUMER.—Paragraph (1) shall
not apply with respect to any fee imposed in connec-
tion with any action described in subparagraph (A)
or (B) if the action (taking into account the amount
of such fee) provides a material benefit to the con-
sumer.’’.
Æ