SEC. 207. 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, 
village, or other general purpose political subdivision 
of a State.’’. 
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SEC. 208. 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: 
‘‘(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 
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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-
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, 
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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. 
‘‘(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 
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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-
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 
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