by substituting ‘mortgage originator’ for ‘creditor’ 
each place such term appears in each such sub-
section 
‘‘(2) MAXIMUM.—The maximum amount of any 
liability of a mortgage originator under paragraph 
(1) to a consumer for any violation of this section 
shall not exceed an amount equal to 3 times the 
total amount of direct and indirect compensation or 
gain accruing to the mortgage originator in connec-
tion with the residential mortgage loan involved in 
the violation, plus the costs to the consumer of the 
action, including a reasonable attorney’s fee.’’. 
SEC. 106. REGULATIONS. 
Except as otherwise provided in the amendment made 
by section 104, regulations required or authorized to be 
prescribed under this title or the amendments made by 
this title— 
(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
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TITLE II—MINIMUM STANDARDS 
FOR MORTGAGES 
SEC. 201. ABILITY TO REPAY. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after section 129A (as added by section 102(a)) the fol-
lowing new section: 
‘‘§ 129B. Minimum standards for residential mortgage 
loans 
‘‘(a) ABILITY TO REPAY.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions prescribed jointly by the Comptroller of the 
Currency, the Director of the Office of Thrift Super-
vision and the Federal Deposit Insurance Corpora-
tion, in consultation with the Commission, no cred-
itor may make a residential mortgage loan unless 
the creditor makes a reasonable and good faith de-
termination based on verified and documented infor-
mation that, at the time the loan is consummated, 
the consumer has a reasonable ability to repay the 
loan, according to its terms, and all applicable taxes, 
insurance, and assessments. 
‘‘(2) MULTIPLE LOANS.—If the creditor knows, 
or has reason to know, that 1 or more residential 
mortgage loans secured by the same dwelling will be 
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made to the same consumer, the creditor shall make 
a reasonable and good faith determination, based on 
verified and documented information, that the con-
sumer has a reasonable ability to repay the com-
bined payments of all loans on the same dwelling ac-
cording to the terms of those loans and all applicable 
taxes, insurance, and assessments. 
‘‘(3) BASIS
FOR
DETERMINATION.—A deter-
mination under this subsection of a consumer’s abil-
ity to repay a residential mortgage loan shall be 
based on consideration of the consumer’s credit his-
tory, current income, expected income the consumer 
is reasonably assured of receiving, current obliga-
tions, debt-to-income ratio, employment status, and 
other financial resources other than the consumer’s 
equity in the real property that secures repayment 
of the loan. 
‘‘(4) NONSTANDARD LOANS.— 
‘‘(A) ADJUSTABLE
RATE
LOANS
THAT 
DEFER REPAYMENT OF ANY PRINCIPAL OR IN-
TEREST.—For purposes of determining, under 
this subsection, a consumer’s ability to repay an 
adjustable rate residential mortgage loan that 
defers the repayment of any principal or inter-
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est, the creditor shall take into consideration a 
fully amortizing repayment schedule. 
‘‘(B) INTEREST-ONLY
LOANS.—For pur-
poses of determining, under this subsection, a 
consumer’s ability to repay a residential mort-
gage loan that requires the payment of interest 
only, the creditor shall take into consideration 
the payment amount required to amortize the 
loan by its final maturity. 
‘‘(C) CALCULATION FOR NEGATIVE AMOR-
TIZATION.—In making any determination under 
this subsection, a creditor shall also take into 
consideration any balance increase that may ac-
crue from any negative amortization provision. 
‘‘(D) CALCULATION
PROCESS.—For pur-
poses of making any determination under this 
subsection, a creditor shall calculate the month-
ly payment amount for principal and interest on 
any residential mortgage loan by assuming— 
‘‘(i) the loan proceeds are fully dis-
bursed on the date of the consummation of 
the loan; 
‘‘(ii) the loan is to be repaid in sub-
stantially equal monthly amortizing pay-
ments for principal and interest over the 
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entire term of the loan with no balloon 
payment, unless the loan contract requires 
more rapid repayment (including balloon 
payment), in which case the contract’s re-
payment schedule shall be used in this cal-
culation; and 
‘‘(iii) the interest rate over the entire 
term of the loan is a fixed rate equal to the 
fully indexed rate at the time of the loan 
closing, without considering the introduc-
tory rate. 
‘‘(5) FULLY-INDEXED
RATE
DEFINED.—For 
purposes of this subsection, the term ‘fully indexed 
rate’ means the index rate prevailing on a residential 
mortgage loan at the time the loan is made plus the 
margin that will apply after the expiration of an in-
troductory interest rate.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129A (as 
added by section 102(b)) the following new item: 
‘‘129B. Minimum standards for all mortgages.’’. 
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SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS. 
Section 129B of the Truth in Lending Act (as added 
by section 201(a)) is amended by inserting after sub-
section (a) the following new subsection: 
‘‘(b) NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) IN
GENERAL.—No creditor may extend 
credit in connection with any residential mortgage 
loan that involves a refinancing of a prior existing 
residential mortgage loan unless the creditor reason-
ably and in good faith determines, at the time the 
loan is consummated and on the basis of information 
known by or provided in good faith to the creditor, 
that the refinanced loan will provide a net tangible 
benefit to the consumer. 
‘‘(2) CERTAIN LOANS PROVIDING NO NET TAN-
GIBLE BENEFIT.—A residential mortgage loan that 
involves a refinancing of a prior existing residential 
mortgage loan shall not be considered to provide a 
net tangible benefit to the consumer if the costs of 
the refinanced loan, including points, fees and other 
charges, exceed the amount of any newly advanced 
principal. 
‘‘(3) NET
TANGIBLE
BENEFIT.—The Comp-
troller of the Currency, the Director of the Office of 
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Thrift Supervision and the Federal Deposit Insur-
ance Corporation shall jointly prescribe regulations 
defining the term ‘net tangible benefit’ for purposes 
of this subsection.’’. 
SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (b) (as added by section 
202) the following new subsection: 
‘‘(c) PRESUMPTION OF ABILITY TO REPAY AND NET 
TANGIBLE BENEFIT.— 
‘‘(1) IN GENERAL.—Any creditor with respect 
to any residential mortgage loan, and any assignee 
of such loan, may presume that the loan has met the 
requirements of subsections (a) and (b), if the loan 
is a qualified mortgage or a qualified safe harbor 
mortgage. 
‘‘(2) REBUTTABLE
PRESUMPTION.—Any pre-
sumption established under paragraph (1) with re-
spect to any residential mortgage loan shall be re-
buttable only— 
‘‘(A) against the creditor of such loan; and 
‘‘(B) if such loan is a qualified safe harbor 
mortgage. 
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion the following definitions shall apply: 
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‘‘(A) MOST RECENT CONVENTIONAL MORT-
GAGE RATE.—The term ‘most recent conven-
tional mortgage rate’ means the contract inter-
est rate on commitments for fixed-rate first 
mortgages most recently published in the Fed-
eral Reserve Statistical Release on selected in-
terest rates (daily or weekly), and commonly re-
ferred to as the H.15 release, in the week pre-
ceding a date of determination for purposes of 
applying this subsection. 
‘‘(B) QUALIFIED
MORTGAGE.—The term 
‘qualified mortgage’ means— 
‘‘(i) a residential mortgage loan 
that— 
‘‘(I) constitutes a first lien on the 
real property securing the loan; 
‘‘(II) has an annual percentage 
rate that does not equal or exceed the 
yield on securities issued by the Sec-
retary of the Treasury under chapter 
31 of title 31, United States Code, 
that bear comparable periods of matu-
rity by more than 3 percentage points; 
and 
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‘‘(III) has an annual percentage 
rate that does not equal or exceed the 
most recent conventional mortgage 
rate, or such other annual percentage 
rate as may be established by regula-
tion under paragraph (6), by more 
than 175 basis points; or 
‘‘(ii) a residential mortgage loan 
that— 
‘‘(I) is not the first lien on the 
real property securing the loan; 
‘‘(II) has an annual percentage 
rate that does not equal or exceed the 
yield on securities issued by the Sec-
retary of the Treasury under chapter 
31 of title 31, United States Code, 
that bear comparable periods of matu-
rity by more than 5 percentage points; 
and 
‘‘(III) has an annual percentage 
rate that does not equal or exceed the 
most recent conventional mortgage 
rate, or such other annual percentage 
rate as may be established by regula-
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tion under paragraph (6), by more 
than 375 basis points. 
‘‘(C) QUALIFIED
SAFE
HARBOR
MORT-
GAGE.—The term ‘qualified safe harbor mort-
gage’ means a residential mortgage loan— 
‘‘(i) for which the income and finan-
cial resources of the consumer are verified 
and documented; 
‘‘(ii) for which the residential mort-
gage loan underwriting process is based on 
the fully-indexed rate, and takes into ac-
count real estate taxes and homeowner’s 
and mortgage insurance premiums; 
‘‘(iii) which does not cause the con-
sumer’s total monthly debts, including 
amounts under the loan, to exceed 50 per-
cent of his or her monthly gross income or 
such other maximum percentage of such 
income as may be prescribed by regulation 
under paragraph (4); 
‘‘(iv) which does not provide for a re-
payment schedule that results in negative 
amortization at any time; 
‘‘(v) meets such other requirements as 
may be established by regulation; and 
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‘‘(vi) for which any of the following 
factors apply with respect to such loan: 
‘‘(I) 
The 
periodic 
payment 
amount for principal or interest are 
fixed for a minimum of 7 years under 
the terms of the loan. 
‘‘(II) In the case of an adjustable 
rate loan, the annual percentage rate 
varies based on a margin that is less 
than 3 percent over a single generally 
accepted interest rate index that is 
the basis for determining the rate of 
interest for the mortgage. 
‘‘(4) DETERMINATION
OF
COMPARISON
TO 
TREASURY SECURITIES.— 
‘‘(A) IN
GENERAL.—Without regard to 
whether a residential mortgage loan is subject 
to or reportable under the Home Mortgage Dis-
closure Act of 1975 and subject to subpara-
graph (B), the difference between the annual 
percentage rate of such loan and the yield on 
securities issued by the Secretary of the Treas-
ury under chapter 31 of title 31, United States 
Code, having comparable periods of maturity 
shall be determined using the same procedures 
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