SEC. 2. CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended
by adding after the 2d sentence the following new sen-
tence: ‘‘The finance charge shall not include fees and
amounts imposed by third party closing agents (including
settlement agents, attorneys, and escrow and title compa-
nies) if the creditor does not require the imposition of the
charges or the services provided and does not retain the
charges.’’.
(b) BORROWER-PAID MORTGAGE BROKER FEES.—
(1) INCLUSION IN FINANCE CHARGE.—Section
106(a) of the Truth in Lending Act (15 U.S.C.
1605(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(6) Borrower-paid mortgage broker fees, in-
cluding fees paid directly to the broker or the lender
(for delivery to the broker) whether such fees are
paid in cash or financed.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the earlier of—
(A) 60 days after the date on which the
Board of Governors of the Federal Reserve Sys-
tem issues final regulations under paragraph
(3); or
(B) the date that is 12 months after the
date of the enactment of this Act.
(3) REGULATIONS IMPLEMENTING BORROWER-
PAID MORTGAGE BROKER FEES.—The Board of Gov-
ernors of the Federal Reserve System shall promul-
gate regulations implementing the amendment made
by paragraph (1) by no later than 6 months after
the date of the enactment of this Act.
(c) TAXES
ON SECURITY INSTRUMENTS
OR EVI-
DENCES
OF
INDEBTEDNESS.—Section 106(d) of the
Truth in Lending Act (15 U.S.C. 1605(d)) is amended
by adding at the end the following new paragraph:
‘‘(3) Any tax levied on security instruments or
on documents evidencing indebtedness if the pay-
ment of such taxes is a precondition for recording
the instrument securing the evidence of indebted-
ness.’’.
(d) PREPARATION OF LOAN DOCUMENTS.—Section
106(e)(2) of the Truth in Lending Act (15 U.S.C.
1605(e)(2)) is amended to read as follows:
‘‘(2) Fees for preparation of loan-related docu-
ments.’’.
(e) FEES RELATING TO PEST INFESTATIONS, IN-
SPECTIONS, AND HAZARDS.—Section 106(e)(5) of the
Truth in Lending Act (15 U.S.C. 1605(e)(5)) is amended
by inserting ‘‘, including fees related to any pest infesta-
tion or flood hazard inspections conducted prior to clos-
ing’’ before the period.
(f) ENSURING FINANCE CHARGES REFLECT COST OF
CREDIT.—
(1) REPORT.—
(A) IN
GENERAL.—Not later than 6
months after the date of the enactment of this
Act, the Board of Governors of the Federal Re-
serve System shall submit to the Congress a re-
port containing recommendations on any regu-
latory or statutory changes necessary—
(i) to ensure that finance charges im-
posed in connection with consumer credit
transactions more accurately reflect the
cost of providing credit; and
(ii) to address abusive refinancing
practices engaged in for the purpose of
avoiding rescission.
(B) REPORT REQUIREMENTS.—In prepar-
ing the report under this paragraph, the Board
shall—
(i) consider the extent to which it is
feasible to include in finance charges all
charges payable directly or indirectly by
the consumer to whom credit is extended,
and imposed directly or indirectly by the
creditor as an incident to the extension of
credit (especially those charges excluded
from finance charges under section 106 of
the Truth in Lending Act as of the date of
the enactment of this Act), excepting only
those charges which are payable in a com-
parable cash transaction; and
(ii) consult with and consider the
views of affected industries and consumer
groups.
(2) REGULATIONS.—The Board of Governors of
the Federal Reserve System shall prescribe any ap-
propriate regulation in order to effect any change in-
cluded in the report under paragraph (1), and shall
publish the regulation in the Federal Register before
the end of the 1-year period beginning on the date
of enactment of this Act.
SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of
the Truth in Lending Act (15 U.S.C. 1605) is amended
by adding at the end the following new subsection:
‘‘(f) TOLERANCES FOR ACCURACY.—In connection
with credit transactions not under an open end credit plan
that are secured by real property or a dwelling, the disclo-
sure of the finance charge and other disclosures affected
by any finance charge—
‘‘(1) shall be treated as being accurate for pur-
poses of this title if the amount disclosed as the fi-
nance charge—
‘‘(A) does not vary from the actual finance
charge by more than $100; or
‘‘(B) is greater than the amount required
to be disclosed under this title; and
‘‘(2) shall be treated as being accurate for pur-
poses of section 125 if—
‘‘(A) except as provided in subparagraph
(B), the amount disclosed as the finance charge
does not vary from the actual finance charge by
more than an amount equal to one-half of one
percent of the total amount of credit extended;
or
‘‘(B) in the case of a transaction, other
than a mortgage referred to in section 103(aa),
which—
‘‘(i) is a refinancing of the principal
balance then due and any accrued and un-
paid finance charges of a residential mort-
gage transaction as defined in section