(A) by inserting ‘‘and for certifying organi-
zations’’ before the period at the end of the 
first sentence; and 
(B) in the second sentence by striking ‘‘for 
certification’’ and inserting ‘‘, for certification 
of an organization, that each individual through 
which the organization provides counseling shall 
demonstrate, and, for certification of an indi-
vidual,’’; 
(3) in paragraph (3), by inserting ‘‘organiza-
tions and’’ before ‘‘individuals’’; 
(4) by redesignating paragraph (3) as para-
graph (5); and 
(5) by inserting after paragraph (2) the fol-
lowing new paragraphs: 
‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—
Any homeownership counseling or rental housing 
counseling (as such terms are defined in subsection 
(h)(1)) required under, or provided in connection 
with, any program administered by the Department 
of Housing and Urban Development shall be pro-
vided only by organizations or counselors certified by 
the Secretary under this subsection as competent to 
provide such counseling.
‘‘(4) OUTREACH.—The Secretary shall take 
such actions as the Secretary considers appropriate 
to ensure that individuals and organizations pro-
viding homeownership or rental housing counseling 
are aware of the certification requirements and 
standards of this subsection and of the training and 
certification programs under subsection (f).’’. 
SEC. 216. STUDY OF DEFAULTS AND FORECLOSURES. 
The Secretary of Housing and Urban Development 
shall conduct an extensive study of the root causes of de-
fault and foreclosure of home loans, using as much empir-
ical data as are available. The study shall also examine 
the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures. Not later 
than 12 months after the date of the enactment of this 
Act, the Secretary shall submit to the Congress a prelimi-
nary report regarding the study. Not later than 24 months 
after such date of enactment, the Secretary shall submit 
a final report regarding the results of the study, which 
shall include any recommended legislation relating to the 
study, and recommendations for best practices and for a 
process to identify populations that need counseling the 
most.
SEC. 217. 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 pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(i) 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 Northern 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
GOVERN-
MENT.—The term ‘unit of general local government’ 
means any city, county, parish, town, township, bor-
ough, village, or other general purpose political sub-
division of a State.’’.
SEC. 218. 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 ‘‘SPE-
CIAL’’ 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 
settlement services. The Secretary shall prepare the book-
let in various languages and cultural styles, as the Sec-
retary determines to be appropriate, so that the booklet 
is understandable and accessible to homebuyers of dif-
ferent ethnic and cultural backgrounds. The Secretary 
shall distribute such booklets to all lenders that make fed-
erally related mortgage loans. The Secretary shall also dis-
tribute to such lenders 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 require-
ment 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
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 na-
ture and purpose of the costs incident to a real es-
tate settlement or a federally related mortgage loan. 
The description and explanation shall provide gen-
eral information 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,
whether the consumer sufficiently shopped for the 
loan, whether the loan terms include prepayment 
penalties 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 
entitled ‘Consumer Handbook on Adjustable Rate 
Mortgages’, published by the Board of Governors of 
the Federal Reserve System pursuant to section 
226.19(b)(1) of title 12, Code of Federal Regula-
tions, 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 rec-
ommendation that the consumer use such services,
and notification 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 es-
tate 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 pro-
cedures that may exist among the several States and terri-
tories of the United States and among separate political 
subdivisions within the same State and territory.’’; 
(3) in subsection (c), by striking the last sen-
tence and inserting the following new sentence: 
‘‘Each lender shall also include with the booklet a 
reasonably complete or updated list of homeowner-
ship counselors who are certified pursuant to section 
106(e) of the Housing and Urban Development Act 
of 1968 (12 U.S.C. 1701x(e)) and located in the 
area of the lender.’’; and 
(4) in subsection (d), by inserting after the pe-
riod at the end of the first sentence the following: 
‘‘The lender shall provide the HUD-issued booklet in 
the version that is most appropriate for the person 
receiving it.’’. 
SEC. 219. OPTION FOR NOTICE OF FORECLOSURE PREVEN-
TION COUNSELING AVAILABILITY. 
Section 4 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2603) is amended by adding at 
the end the following new subsection: 
‘‘(c) OPTION FOR NOTICE OF FORECLOSURE PRE-
VENTION COUNSELING AVAILABILITY.—
‘‘(1) OPTION.—In connection with any federally 
related mortgage loan, the mortgagee shall provide
the borrower, at the time of the execution of the 
mortgage, an optional written agreement that, if 
signed by the borrower, allows, but does not require, 
the mortgagee to provide the notice described in 
paragraph (2) to a homeownership counseling entity 
that has agreed to provide the notice and counseling 
required under paragraph (3) and is approved by the 
Secretary. 
‘‘(2) NOTICE
TO
COUNSELING
AGENCY.—The 
notice described in this paragraph, with respect to 
any federally related mortgage loan, is notice, pro-
vided at the earliest time practicable after the bor-
rower becomes 60 days delinquent with respect to 
any payment due under the mortgage, that the bor-
rower is so delinquent and of how to contact the bor-
rower. Such notice may only be provided once with 
respect to each delinquency period for a mortgage. 
‘‘(3) NOTICE
TO
MORTGAGOR.—Upon notice 
from a mortgagee that a borrower is 60 days delin-
quent with respect to payments due under the mort-
gage, the homeownership counseling entity shall at 
the earliest time practicable notify the borrower of 
such delinquency, that the entity makes available 
foreclosure-prevention counseling that may assist the
mortgagor in resolving the delinquency, and of how 
to contact the entity to arrange for such counseling. 
‘‘(4) ABILITY TO CURE.—Failure to provide the 
optional written agreement required under para-
graph (1) may be corrected by sending such agree-
ment to the borrower not later than the earliest time 
practicable after the mortgagor first becomes 60 
days delinquent with respect to payments due under 
the mortgage. Mortgage insurance, if any, provided 
in connection with such federally related mortgage 
loan may not be terminated and penalties for such 
failure may not be prospectively or retroactively im-
posed if such failure is corrected in accordance with 
this paragraph. 
‘‘(5) PENALTIES
FOR
FAILURE
TO
PROVIDE 
AGREEMENT.—The Secretary may establish and im-
pose appropriate penalties for failure of a mortgagee 
to provide the optional written agreement required 
under paragraph (1). 
‘‘(6) LIMITATION
ON
LIABILITY
OF
MORT-
GAGEE.—A mortgagee shall not incur any liability or 
penalties for any failure of a homeownership coun-
seling entity to provide notice under paragraph (3).
‘‘(7) NO
PRIVATE
RIGHT
OF
ACTION.—This 
subsection shall not create any private right of ac-
tion on behalf of the borrower. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) DELINQUENCY
PERIOD.—The term 
‘delinquency period’ means, with respect to a 
mortgage, a period that begins upon the bor-
rower becoming delinquent with respect to pay-
ments due under the mortgage and ends upon 
the first subsequent occurrence of such pay-
ments under the mortgage becoming current or 
the property subject to the mortgage being fore-
closed or otherwise disposed of. 
‘‘(B) HOMEOWNERSHIP COUNSELING ENTI-
TY.—The term ‘homeownership counseling enti-
ty’ means any State, unit of general local gov-
ernment, or nonprofit organization that pro-
vides homeownership counseling (as defined in 
section 106(h)(1)(B) of the Housing and Urban 
Development Act of 1968).’’.
TITLE III—MORTGAGE 
SERVICING 
SEC. 301. ESCROW AND IMPOUND ACCOUNTS RELATING TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
(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 108 of this Act) 
the following new section: 
‘‘SEC. 129B. ESCROW OR IMPOUND ACCOUNTS RELATING 
TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b) or (c), a creditor, in connection with the formation or 
consummation of a consumer credit transaction secured 
by the principal dwelling of the consumer, shall establish, 
at the time of the consummation of such transaction, an 
escrow or impound account for the payment of taxes and 
hazard insurance as provided in, and in accordance with, 
this section. 
‘‘(b) WHEN REQUIRED.—No impound, trust, or other 
type of account for payment of taxes on the property, in-
surance premiums, or other purposes relating to the prop-
erty may be required as a condition of a real property sale 
contract or a loan secured by a deed of trust or mortgage
on real property containing only a single-family, owner-
occupied dwelling, except when—
‘‘(1) any such impound, trust, or other type of 
escrow or impound account for such purposes is re-
quired by Federal or State law; 
‘‘(2) a loan is made, guaranteed, or insured by 
a State or Federal governmental lending or insuring 
agency; 
‘‘(3) the consumer’s debt-to-income ratio taking 
into account income from all sources including the 
consumer’s employment exceeds 45 percent; 
‘‘(4) a consumer obtains a higher-cost mort-
gage; 
‘‘(5) the original principal amount of such loan 
is—
‘‘(A) 90 percent or more of the sale price, 
if the property involved is sold; or 
‘‘(B) 90 percent or more of the appraised 
value of the property securing the loan; 
‘‘(6) the combined principal amount of all loans 
secured by the real property exceeds 95 percent of 
the appraised value of the property securing the 
loans; or 
‘‘(7) so required by the Board pursuant to reg-
ulation.
‘‘(c) DURATION
OF
ESCROW
OR
IMPOUND
AC-
COUNT.—An escrow or impound account established pur-
suant to this section, shall remain in existence for a min-
imum period of 5 years, unless the underlying mortgage 
is terminated. 
‘‘(d) ADMINISTRATION OF ESCROW OR IMPOUND AC-
COUNTS.—
‘‘(1) IN GENERAL.—Except as may otherwise 
be provided for in this title or in regulations pre-
scribed by the Board, escrow or impound accounts 
established pursuant to this section may be estab-
lished in an insured depository institution in the 
State where the creditor, or servicer, if not the cred-
itor, is located. 
‘‘(2) ADMINISTRATION.—Except as provided in 
this section or regulations prescribed under this sec-
tion, an escrow or impound account subject to this 
section shall be administered in accordance with—
‘‘(A) the Real Estate Settlement Proce-
dures Act of 1974 and regulations prescribed 
under such Act; and 
‘‘(B) the law of the State where the real 
property securing the consumer credit trans-
action is located.
‘‘(3) PAYMENT OF INTEREST.—Each creditor 
shall pay interest to the consumer on the amount 
held in any impound, trust, or escrow account that 
is subject to this section in the manner as prescribed 
by applicable Federal or State law. 
‘‘(e) DISCLOSURES RELATING TO ESCROW OR IM-
POUND ACCOUNT.—
‘‘(1) IN
GENERAL.—In the case of any im-
pound, trust, or escrow account that is subject to 
this section, the creditor shall disclose by written no-
tice to the consumer within 3 business days before 
the consummation of the consumer credit trans-
action giving rise to such account the following in-
formation: 
‘‘(A) The fact that an escrow or impound 
account will be established at consummation of 
the transaction. 
‘‘(B) The amount required at closing to 
initially fund the escrow or impound account. 
‘‘(C) The amount in the initial year of the 
estimated taxes and hazard insurance pre-
miums. 
‘‘(D) The estimated monthly amount pay-
able for taxes and hazard insurance.
‘‘(E) The fact that if the consumer chooses 
to terminate the account after 5 years, the con-
sumer will become responsible for the payment 
of all taxes and hazard insurance on the prop-
erty unless a new escrow or impound account is 
established. 
‘‘(2) REGULATIONS.—The Board shall prescribe 
by regulation the contents of the notice required in 
paragraph (1) no later than 90 days after the date 
of the enactment of the Responsible Lending Act. 
‘‘(f) HAZARD INSURANCE DEFINED.—For purposes 
of this section, the term ‘hazard insurance’ shall have the 
same meaning as provided under the law of the State 
where the real property securing the consumer credit 
transaction is located. 
‘‘(g) EXCLUSIONS.—
‘‘(1) NOT INCLUDED IN POINTS AND FEES.—
Amounts paid for escrow, trust, or impound ac-
counts in accordance with this section shall not be 
treated as points or fees under section 103(aa). 
‘‘(2) EXCLUSIONS BY BOARD.—The Board may 
exclude, by regulation, any category or type of loan 
from the requirements of this section.’’. 
(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 129 the fol-
lowing new item:
‘‘129B. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’.
SEC. 302. DISCLOSURE NOTICE REQUIRED FOR CON-
SUMERS WHO OPT OUT OF ESCROW SERV-
ICES. 
Section 129B of the Truth in Lending Act (as added 
by section 301 of this title) is amended by adding at the 
end the following new subsection: 
‘‘(h) DISCLOSURE NOTICE REQUIRED
FOR CON-
SUMERS WHO OPT OUT OF ESCROW SERVICES.—
‘‘(1) IN GENERAL.—If an impound, trust, or 
other type of account for the payment of property 
taxes, insurance premiums, or other purposes relat-
ing to property securing a consumer credit trans-
action is not established in connection with the 
transaction, or if a consumer chooses, at any time 
after such an account is established in connection 
with any such transaction, to close such account, the 
creditor shall provide a timely and clearly written 
disclosure to the consumer that advises the con-
sumer of the responsibilities of the consumer and 
implications for the consumer in the absence of any 
such account, including—
‘‘(A) information concerning any applicable 
fees associated with either the nonestablishment 
of any such account at the time of the trans-
action, or any subsequent closure of any such 
account; 
‘‘(B) clear and prominent notice that the 
consumer is responsible for personally and di-
rectly paying the non-escrowed items, in addi-
tion to paying the mortgage loan payment, in 
the absence of any such account; and 
‘‘(C) a clear explanation of the con-
sequences of any failure to pay non-escrowed 
items, including the possible requirement for di-
rect placement of insurance by the creditor and 
the potentially higher cost (including any poten-
tial commission payments to the servicer) or re-
duced coverage for the consumer in the event of 
any such creditor-placed insurance. 
‘‘(2) REGULATIONS.—The Board shall prescribe 
such regulations as are necessary to implement the 
requirements of this subsection in final form before 
the end of the 12-month period beginning on the 
date of the enactment of the Responsible Lending 
Act.’’.
SEC. 303. MORTGAGE SERVICING CLARIFICATION. 
(a) IN GENERAL.—The Fair Debt Collection Prac-
tices Act (15 U.S.C. 1692 et seq.) is amended—
(1) by redesignating section 818 as section 819; 
and 
(2) by inserting after section 817 the following 
new section: 
‘‘§ 818. Mortgage servicer exemption 
‘‘(a) EXEMPTION.—A covered mortgage servicer who, 
whether by assignment, sale or transfer, becomes the per-
son responsible for servicing federally related mortgage 
loans secured by first liens that include loans that were 
in default at the time such person became responsible for 
the servicing of such federally related mortgage loans shall 
be exempt from the requirements of section 807(11) in 
connection with the collection of any debt arising from 
such defaulted federally related mortgage loans. 
‘‘(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) COVERED
MORTGAGE
SERVICER.—The 
term ‘covered mortgage servicer’ means any servicer 
of federally related mortgage loans secured by first 
liens—
‘‘(A) who is also a debt collector; and 
‘‘(B) for whom the collection of delinquent 
debts is incidental to the servicer’s primary