Sec. 2. Table of contents. 
TITLE I—MORTGAGE SERVICING 
Sec. 101. Escrow and impound accounts relating to certain consumer credit 
transactions. 
Sec. 102. Disclosure notice required for consumers who opt out of escrow serv-
ices. 
Sec. 103. Real Estate Settlement Procedures Act of 1974 amendments. 
Sec. 104. Mortgage servicing studies required. 
Sec. 105. Escrows included in repayment analysis. 
TITLE II—APPRAISAL ACTIVITIES 
Sec. 201. Property appraisal requirements. 
Sec. 202. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions. 
Sec. 203. Amendments relating to appraisal subcommittee of FIEC, appraiser 
independence, and approved appraiser education. 
Sec. 204. Study required on improvements in appraisal process and compliance 
programs. 
Sec. 205. Consumer appraisal disclosure. 
TITLE I—MORTGAGE SERVICING 
SEC. 101. 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 129 the following new section: 
‘‘SEC. 129A. 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 
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escrow or impound account for the payment of taxes and 
hazard insurance, and, if applicable, flood insurance, 
mortgage insurance, ground rents, and any other required 
periodic payments or premiums with respect to the prop-
erty or the loan terms, as provided in, and in accordance 
with, this section, unless such account already exists. 
‘‘(b) WHEN REQUIRED.—No impound, trust, or other 
type of account for the payment of property taxes, insur-
ance premiums, or other purposes relating to the property 
may be required as a condition of a real property sale con-
tract 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 at the 
time the home mortgage is established taking into 
account income from all sources including the con-
sumer’s employment exceeds 40 percent; 
‘‘(4) the transaction is secured by— 
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‘‘(A) a first mortgage or lien on the con-
sumer’s principal dwelling and the annual per-
centage rate on the credit, at the time of con-
summation of the transaction, will exceed by 
more than 2.5 percentage points the yield on 
Treasury securities having comparable periods 
of maturity on the 15th day of the month im-
mediately preceding the month in which the ap-
plication of the extension of credit is received by 
the creditor; or 
‘‘(B) a junior or subordinate mortgage on 
the consumer’s principal dwelling and the an-
nual percentage rate on the credit, at the time 
of consummation of the transaction, will exceed 
by more than 5 percentage points the yield on 
Treasury securities having comparable periods 
of maturity on the 15th day of the month im-
mediately preceding the month in which the ap-
plication of the extension of credit is received by 
the creditor; 
‘‘(5) a consumer obtains a mortgage referred to 
in section 103(aa); 
‘‘(6) the original principal amount of such loan 
at the time of consummation of the transaction is— 
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‘‘(A) 90 percent or more of the sale price, 
if the property involved is purchased with the 
proceeds of the loan; or 
‘‘(B) 90 percent or more of the appraised 
value of the property securing the loan; 
‘‘(7) 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 at the time of consummation of the last trans-
action; 
‘‘(8) the consumer was the subject of a pro-
ceeding under title 11, United States Code, at any 
time during the 10-year period preceding the date of 
the transaction (as determined on the basis of the 
date of entry of the order for relief or the date of 
adjudication, as the case may be, with respect to 
such proceeding); or 
‘‘(9) 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 
establishing the account is terminated. 
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‘‘(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 shall be estab-
lished in an insured depository institution. 
‘‘(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.—If prescribed by 
applicable Federal or State law, each creditor shall 
pay interest to the consumer on the amount held in 
any impound, trust, or escrow account that is sub-
ject to this section in the manner as prescribed by 
that applicable Federal or State law. 
‘‘(e) DISCLOSURES RELATING TO ESCROW OR IM-
POUND ACCOUNT.—In the case of any impound, trust, or 
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escrow account that is subject to this section, the creditor 
shall disclose by written notice to the consumer within 3 
business days before the consummation of the consumer 
credit transaction giving rise to such account the following 
information: 
‘‘(1) The fact that an escrow or impound ac-
count will be established at consummation of the 
transaction. 
‘‘(2) The amount required at closing to initially 
fund the escrow or impound account. 
‘‘(3) The amount, in the initial year, of the esti-
mated taxes and hazard insurance, including flood 
insurance, if applicable, and any other required peri-
odic payments or premiums that reflects the taxable 
assessed value of the real property securing the 
transaction, including the value of any improvements 
on the property or to be constructed on the property 
(whether or not such construction will be financed 
from the proceeds of the transaction). 
‘‘(4) The estimated monthly amount payable for 
taxes, hazard insurance (including flood insurance, if 
applicable) and any other required periodic pay-
ments or premiums. 
‘‘(5) The fact that if the consumer chooses to 
terminate the account after 5 years, the consumer 
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will become responsible for the payment of all taxes, 
hazard insurance, and flood insurance, if applicable, 
as well as any other required periodic payments or 
premiums on the property unless a new escrow or 
impound account is established. 
‘‘(f) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) FLOOD INSURANCE.—The term ‘flood in-
surance’ means flood insurance coverage provided 
under the national flood insurance program pursu-
ant to the National Flood Insurance Act of 1968. 
‘‘(2) HAZARD INSURANCE.—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 lo-
cated.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Board shall prescribe, 
in final form, such regulations as the Board deter-
mines to be necessary to implement the amendments 
made by subsection (a) before the end of the 120- 
day period beginning on the date of the enactment 
of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply to covered mort-
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gage loans consummated after the end of the 1-year 
period beginning on the date of enactment of this 
Act. 
(c) 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: 
‘‘129A. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 102. DISCLOSURE NOTICE REQUIRED FOR CON-
SUMERS WHO OPT OUT OF ESCROW SERV-
ICES. 
(a) IN GENERAL.—Section 129A of the Truth in 
Lending Act (as added by section 101 of this title) is 
amended by adding at the end the following new sub-
section: 
‘‘(g) DISCLOSURE NOTICE REQUIRED
FOR CON-
SUMERS WHO OPT OUT OF ESCROW SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an impound, trust, or other type of 
account for the payment of property taxes, in-
surance premiums, or other purposes relating to 
property securing a consumer credit transaction 
is not established in connection with the trans-
action; or 
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‘‘(B) a consumer chooses, at any time after 
such an account is established in connection 
with any such transaction, to close such ac-
count, 
the creditor shall provide a timely and clearly writ-
ten 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. 
‘‘(2) DISCLOSURE
REQUIREMENTS.—Any dis-
closure provided to a consumer under paragraph (1) 
shall include the following: 
‘‘(A) Information concerning any applica-
ble fees associated with either the non-establish-
ment of any such account at the time of the 
transaction, or any subsequent closure of any 
such account. 
‘‘(B) A 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 the fact 
that the costs for taxes, insurance, and related 
fees can be substantial. 
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‘‘(C) A clear explanation of the con-
sequences of any failure to pay non-escrowed 
items, including the possible requirement for 
the forced placement of insurance by the cred-
itor and the potentially higher cost (including 
any potential commission payments to the 
servicer) or reduced coverage for the consumer 
in the event of any such creditor-placed insur-
ance.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Board shall prescribe, 
in final form, such regulations as the Board deter-
mines to be necessary to implement the amendments 
made by subsection (a) before the end of the 120- 
day period beginning on the date of the enactment 
of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply in accordance with 
the regulations established in paragraph (1) and be-
ginning on the date occurring 180-days after the 
date of enactment of this Act. 
SEC. 103. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 
1974 AMENDMENTS. 
(a) SERVICER PROHIBITIONS.—Section 6 of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 
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2605) is amended by adding at the end the following new 
subsections: 
‘‘(k) SERVICER PROHIBITIONS.— 
‘‘(1) IN GENERAL.—A servicer of a federally re-
lated mortgage shall not— 
‘‘(A) obtain force-placed insurance unless 
there is a reasonable basis to believe the bor-
rower has failed to comply with the loan con-
tract’s requirements to maintain property insur-
ance; 
‘‘(B) charge fees for responding to valid 
qualified written requests under this section; 
‘‘(C) fail to take timely action to respond 
to a borrower’s requests to correct errors relat-
ing to allocation of payments, final balances for 
purposes of paying off the loan, or avoiding 
foreclosure, or other standard servicer’s duties; 
‘‘(D) fail to respond within 10 business 
days to a request from a borrower to provide 
the identity, address, and other relevant infor-
mation about the owner assignee of the loan; or 
‘‘(E) fail to comply with any other obliga-
tion found by the Secretary to be appropriate to 
carry out the consumer protection purposes of 
this Act. 
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‘‘(2) FORCE-PLACED
INSURANCE
DEFINED.— 
For purposes of this subsection and subsections (l) 
and (m), the term ‘force-placed insurance’ means 
hazard insurance coverage obtained by a servicer of 
a federally related mortgage to protect the mortga-
gee’s interest in the property secured by the mort-
gage when the borrower has failed to maintain or 
renew hazard or flood insurance on such property as 
required of the borrower under the terms of the 
mortgage. 
‘‘(l) REQUIREMENTS
FOR FORCE-PLACED INSUR-
ANCE.—A servicer of a federally related mortgage shall 
not be construed as having a reasonable basis for obtain-
ing force-placed insurance unless the requirements of this 
subsection have been met. 
‘‘(1) WRITTEN
NOTICES
TO
BORROWER.—A 
servicer may not impose any charge on any borrower 
for force-placed insurance with respect to any prop-
erty securing a federally related mortgage unless— 
‘‘(A) the servicer has sent, by first-class 
mail, a written notice to the borrower con-
taining— 
‘‘(i) a reminder of the borrower’s obli-
gation to maintain hazard or flood insur-
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the date the notice under subparagraph (B) was 
sent by the servicer. 
‘‘(2) SUFFICIENCY
OF
DEMONSTRATION.—A 
servicer of a federally related mortgage shall accept 
any reasonable form of confirmation from a bor-
rower of existing insurance coverage, including 
verbal confirmation of the existing insurance policy 
number along with the identity of the insurance 
company or agent. 
‘‘(3) TERMINATION OF FORCE-PLACED INSUR-
ANCE.—Within 15 days of the receipt by a servicer 
of confirmation of a borrower’s existing insurance 
coverage, the servicer shall— 
‘‘(A) terminate the force-placed insurance; 
and 
‘‘(B) refund to the consumer all force- 
placed insurance premiums paid by the bor-
rower during any period during which the bor-
rower’s insurance coverage and the force-placed 
insurance coverage were each in effect, and any 
related fees charged to the consumer’s account 
with respect to the force-placed insurance dur-
ing such period. 
‘‘(4) PROHIBITION ON DEFAULT, LATE FEES, 
OR FORECLOSURE.— 
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‘‘(A) IN GENERAL.—A servicer of a feder-
ally related mortgage may not place the mort-
gage in default, assess late fees, or initiate any 
foreclosure or similar proceedings with respect 
to such mortgage solely due to a borrower’s 
failure to pay force-placed insurance premiums 
or obtain hazard insurance or flood insurance 
coverage directly. 
‘‘(B) ADDITION TO LOAN AMOUNT.—The 
amount of force-placed insurance premiums re-
lating to a federally related mortgage that have 
not been paid by the borrower may be treated 
by the servicer of such mortgage as additional 
debt of the borrower secured by the security in-
strument and interest may be charged on such 
additional debt as provided in the loan instru-
ments at the note rate. 
‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE 
CHARGES.—All charges for force-placed insurance pre-
miums shall be bona fide and reasonable in amount. 
‘‘(n) PROMPT
CREDITING
OF
PAYMENTS
RE-
QUIRED.—All amounts received by a lender or a servicer 
shall be accepted and credited on the date received. The 
payments shall be credited to interest and principal due 
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on the loan, before crediting payment to taxes, insurance, 
or fees, except if taxes and insurance are in arrears.’’. 
(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) 
of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(f)) is amended— 
(1) in paragraphs (1)(B) and (2)(B), by strik-
ing ‘‘$1,000’’ each place such term appears and in-
serting ‘‘$3,000’’; and 
(2) 
in 
paragraph 
(2)(B)(i), 
by 
striking 
‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(e)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘20 days’’ 
and inserting ‘‘10 days’’; 
(2) in paragraph (2), by striking ‘‘60 days’’ and 
inserting ‘‘20 days’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(4) 
LIMITED
EXTENSION
OF
RESPONSE 
TIME.—The 20-day period described in paragraph 
(2) may be extended for not more than 25 days if, 
before the end of such 20-day period, the servicer 
notifies the borrower of the extension and the rea-
sons for the delay in responding.’’. 
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(d) REQUESTS
FOR PAY-OFF AMOUNTS.—Section 
6(e) of the Real Estate Settlement Procedures Act of 1974 
(12 U.S.C. 2605(e)) is amended by inserting after para-
graph (4) (as added by subsection (c) of this section) the 
following new paragraph: 
‘‘(5) REQUESTS
FOR
PAY-OFF
AMOUNTS.—A 
creditor or servicer shall send a payoff balance with-
in 5 business days of the receipt of a written request 
for such balance from or on behalf of the borrower 
by first-class mail.’’. 
(e) PROMPT REFUND OF ESCROW ACCOUNTS UPON 
PAYOFF.—Section 6(g) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(g)) is amended 
by adding at the end the following new sentence: ‘‘Any 
balance in any such account at the time the loan is paid 
off shall be promptly returned to the borrower.’’. 
SEC. 104. MORTGAGE SERVICING STUDIES REQUIRED. 
(a) MORTGAGE SERVICING FRAUD.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Board 
of Governors of the Federal Reserve System and the 
Federal Trade Commission, shall conduct a com-
prehensive study on mortgage servicing fraud. 
(2) ISSUES TO BE INCLUDED.—In addition to 
other issues the Secretary, Board, and Commission 
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may determine to be appropriate and possibly perti-
nent to the study conducted under paragraph (1), 
the study shall include the following issues: 
(A) A survey of the industry in order to 
examine the issue of the timely posting of pay-
ments by servicers. 
(B) The use of force-placed insurance. 
(C) The employment of daily interest when 
payments are made after a due date. 
(D) The charging of late fees on the entire 
outstanding principal. 
(E) The charging of interest on servicing 
fees. 
(F) The utilization of abusive collection 
practices. 
(G) The charging of prepayment penalties 
when not authorized by either the note or law. 
(H) The employment of unconscionable 
forbearance agreements. 
(I) Foreclosure abuses. 
(3) REPORT.—Before the end of the 12-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
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Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate. 
(b) MORTGAGE SERVICING IMPROVEMENTS.— 
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Board 
of Governors of the Federal Reserve System and the 
Federal Trade Commission, shall conduct a com-
prehensive study on means to improve the best prac-
tices of the mortgage servicing industry, and Federal 
and State laws governing such industry. 
(2) REPORT.—Before the end of the 18-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs 
of the Senate, together with such recommendations 
for administrative or legislative action as the Sec-
retary, in consultation with the Board and the Com-
mission, may determine to be appropriate. 
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SEC. 105. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 
(a) IN GENERAL.—Section 128(b) of the Truth in 
Lending Act (15 U.S.C. 1638(b)) is amended by adding 
at the end the following new paragraph: 
‘‘(4) REPAYMENT ANALYSIS REQUIRED TO IN-
CLUDE ESCROW PAYMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
consumer credit transaction secured by a first 
mortgage or lien on the consumer’s principal 
residence for which an impound, trust, or other 
type of account has been or will be established 
in connection with the transaction for the pay-
ment of property taxes, hazard and flood (if 
any) insurance premiums, or other purposes re-
lating to the property, the information required 
to be provided under subsection (a) with respect 
to the amount of the repayments shall take into 
account the amount of any payment to such ac-
count for each such repayment in accordance 
with section 10(a)(2) of the Real Estate Settle-
ment Procedures Act of 1974. 
‘‘(B) ASSESSMENT
VALUE.—The amount 
taken into account under subparagraph (A) for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other purposes 
shall reflect the taxable assessed value of the 
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real property securing the transaction, including 
the value of any improvements on the property 
or to be constructed on the property (whether 
or not such construction will be financed from 
the proceeds of the transaction).’’. 
TITLE II—APPRAISAL 
ACTIVITIES 
SEC. 201. PROPERTY APPRAISAL REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (l) the fol-
lowing new subsection: 
‘‘(m) PROPERTY APPRAISAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit in the form of a mortgage referred to in sec-
tion 103(aa) to any consumer without first obtaining 
a written appraisal of the property to be mortgaged 
prepared in accordance with the requirements of this 
subsection. 
‘‘(2) APPRAISAL REQUIREMENTS.— 
‘‘(A) PHYSICAL PROPERTY VISIT.—An ap-
praisal of property to be secured by a mortgage 
referred to in section 103(aa) does not meet the 
requirement of this subsection unless it is per-
formed by a qualified appraiser who conducts a 
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physical property visit of the interior of the 
mortgaged property. 
‘‘(B) SECOND APPRAISAL UNDER CERTAIN 
CIRCUMSTANCES.— 
‘‘(i) IN GENERAL.—If the purpose of 
a mortgage referred to in section 103(aa) 
is to finance the purchase or acquisition of 
the mortgaged property from a person 
within 180 days of the purchase or acquisi-
tion of such property by that person at a 
price that was lower than the current sale 
price of the property, the creditor shall ob-
tain a second appraisal from a different 
qualified appraiser. The second appraisal 
shall include an analysis of the difference 
in sale prices, changes in market condi-
tions, and any improvements made to the 
property between the date of the previous 
sale and the current sale. 
‘‘(ii) NO COST TO CONSUMER.—The 
cost of any second appraisal required 
under clause (i) may not be charged to the 
consumer. 
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‘‘(C) QUALIFIED
APPRAISER
DEFINED.— 
For purposes of this subsection, the term 
‘qualified appraiser’ means a person who— 
‘‘(i) is certified or licensed by the 
State in which the property to be ap-
praised is located; and 
‘‘(ii) performs each appraisal in con-
formity with the Uniform Standards of 
Professional Appraisal Practice and title 
XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, 
and the regulations prescribed under such 
title, as in effect on the date of the ap-
praisal. 
‘‘(3) FREE
COPY
OF
APPRAISAL.—A creditor 
shall provide 1 copy of each appraisal conducted in 
accordance with this subsection in connection with a 
mortgage referred to in section 103(aa) to the con-
sumer without charge, and at least 3 days prior to 
the transaction closing date. 
‘‘(4) CONSUMER NOTIFICATION.—At the time 
of the initial mortgage application, the consumer 
shall be provided with a statement by the creditor 
that any appraisal prepared for the mortgage is for 
the sole use of the creditor, and that the consumer 
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may choose to have a separate appraisal conducted 
at their own expense. 
‘‘(5) VIOLATIONS.—In addition to any other li-
ability to any person under this title, a creditor 
found to have willfully failed to obtain an appraisal 
as required in this subsection shall be liable to the 
consumer for the sum of $2,000.’’. 
SEC. 202. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 
RELATING TO CERTAIN CONSUMER CREDIT 
TRANSACTIONS. 
(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 101 of this Act) 
the following new section: 
‘‘SEC. 129B. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 
RELATING TO CERTAIN CONSUMER CREDIT 
TRANSACTIONS. 
‘‘(a) IN GENERAL.—It shall be unlawful, in providing 
any mortgage lending services for a consumer credit trans-
action secured by the principal dwelling of the consumer 
or any mortgage brokerage services for such a transaction, 
to engage in any unfair or deceptive act or practice. 
‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of 
subsection (a), unfair and deceptive practices shall in-
clude— 
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‘‘(1) any appraisal of a property offered as se-
curity for repayment of the consumer credit trans-
action that is conducted in connection with such 
transaction in which a person with an interest in the 
underlying transaction compensates, coerces, extorts, 
colludes, instructs, induces, bribes, or intimidates a 
person conducting or involved in an appraisal, or at-
tempts, to compensate, coerce, extort, collude, in-
struct, induce, bribe, or intimidate such a person, 
for the purpose of causing the appraised value as-
signed, under the appraisal, to the property to be 
based on any factor other than the independent 
judgment of the appraiser; 
‘‘(2) 
mischaracterizing, 
or 
suborning 
any 
mischaracterization of, the appraised value of the 
property securing the extension of the credit; 
‘‘(3) seeking to influence an appraiser or other-
wise to encourage a targeted value in order to facili-
tate the making or pricing of the transaction; and 
‘‘(4) failing to timely compensate an appraiser 
for a completed appraisal regardless of whether the 
transaction closes. 
‘‘(c) EXCEPTIONS.—The requirements of subsection 
(b) shall not be construed as prohibiting a mortgage lend-
er, mortgage broker, mortgage banker, real estate broker, 
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or any other person with an interest in a real estate trans-
action from asking an appraiser to provide 1 or more of 
the following services: 
‘‘(1) Consider additional, appropriate property 
information, including the consideration of addi-
tional comparable properties to make or support an 
appraisal. 
‘‘(2) Provide further detail, substantiation, or 
explanation for the appraiser’s value conclusion. 
‘‘(3) Correct errors in the appraisal report. 
‘‘(d) RULEMAKING PROCEEDINGS.—The Board and 
the Federal Trade Commission— 
‘‘(1) shall jointly prescribe regulations defining 
with specificity acts or practices which are unfair or 
deceptive in the provision of mortgage lending serv-
ices for a consumer credit transaction secured by the 
principal dwelling of the consumer or mortgage bro-
kerage services for such a transaction, within the 
meaning of subsections (a), (b), and (c); and 
‘‘(2) may jointly issue interpretive guidelines 
and general statements of policy with respect to un-
fair or deceptive acts or practices in the provision of 
mortgage lending services for a consumer credit 
transaction secured by the principal dwelling of the 
consumer and mortgage brokerage services for such 
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a transaction, within the meaning of subsections (a), 
(b), and (c). 
‘‘(e) DEFINITIONS.—For purposes of this section, the 
terms ‘mortgage brokerage services’ and ‘mortgage lend-
ing services’, have the meanings given such terms in sec-
tion 13(f) of the Real Estate Settlement Procedures Act 
of 1974 (12 U.S.C. 2611(f)). 
‘‘(f) PENALTIES.— 
‘‘(1) FIRST VIOLATION.—In addition to the en-
forcement provisions referred to in section 130, each 
person who violates this section shall forfeit and pay 
a civil penalty of not more than $10,000 for each 
day any such violation continues. 
‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of 
any person on whom a civil penalty has been im-
posed under paragraph (1), paragraph (1) shall be 
applied by substituting ‘$20,000’ for ‘$10,000’ with 
respect to all subsequent violations. 
‘‘(3) ASSESSMENT.—The agency referred to in 
subsection (a) or (c) of section 108 with respect to 
any person described in paragraph (1) shall assess 
any penalty under this subsection to which such per-
son is subject.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
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by inserting after the item relating to section 129A (as 
added by section 101 of this Act) the following new item: 
‘‘129B. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions.’’. 
SEC. 203. AMENDMENTS RELATING TO APPRAISAL SUB-
COMMITTEE OF FIEC, APPRAISER INDEPEND-
ENCE, 
AND 
APPROVED 
APPRAISER 
EDU-
CATION. 
(a) CONSUMER PROTECTION MISSION.— 
(1) PURPOSES.—Section 1101 of the Financial 
Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3331) is amended by inserting 
‘‘and to provide the Appraisal Subcommittee with a 
consumer protection mandate’’ before the period at 
the end. 
(2) 
FUNCTIONS
OF
APPRAISAL
SUB-
COMMITTEE.—Section 1103(a) of the Financial In-
stitutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3332(a) is amended— 
(A) by striking ‘‘and’’ at the end of para-
graph (3); 
(B) by striking the period at the end of 
paragraph (4) and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
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‘‘(5) protect the consumer from improper ap-
praisal practices and the predations of unlicensed 
appraisers.’’. 
(3) THRESHOLD LEVELS.—Section 1112(b) of 
the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (12 U.S.C. 3341(b)) is 
amended by inserting before the period the fol-
lowing: ‘‘, and that such threshold level provides rea-
sonable protection for consumers who purchase 1-4 
unit single-family residences’’. 
(b) 
ANNUAL
REPORT
OF
APPRAISAL
SUB-
COMMITTEE.—Section 1103(a)(4) of Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 (12 
U.S.C. 3332(a)(4)) is amended at the end by inserting: 
‘‘The report shall also detail the activities of the Appraisal 
Subcommittee, including the results of all audits of State 
appraiser regulatory agencies, and provide an accounting 
of disapproved actions and warnings taken in the previous 
year, including a description of the conditions causing the 
disapproval.’’. 
(c) OPEN MEETINGS.—Section 1104(b) of the Finan-
cial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3333(b)) is amended by inserting ‘‘in 
public session after notice in the Federal Register’’ after 
‘‘shall meet’’. 
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(d) REGULATIONS.—Section 1106 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3335) is amended— 
(1) by inserting ‘‘prescribe regulations after no-
tice and opportunity for comment,’’ after ‘‘hold 
hearings’’; and 
(2) at the end by inserting ‘‘Any regulations 
prescribed by the Appraisal Subcommittee shall (un-
less otherwise provided in this title) be limited to the 
following functions: temporary practice, national reg-
istry, information sharing, and enforcement. For 
purposes of prescribing regulations, the Appraisal 
Subcommittee shall establish an advisory committee 
of industry participants, including appraisers and 
government agencies, and hold regular meetings.’’. 
(e) STATE AGENCY REPORTING REQUIREMENT.— 
Section 1109(a) of the Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989 (12 U.S.C. 3338(a)) 
is amended— 
(1) by striking ‘‘and’’ after the semicolon in 
paragraph (1); 
(2) by redesignating paragraph (2) as para-
graph (3); and 
(3) by inserting after paragraph (1) the fol-
lowing new paragraph: 
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‘‘(2) transmit reports on claims, disciplinary ac-
tions, license and certification revocations, and li-
cense and certification suspensions on a timely basis 
to the national registry of the Appraisal Sub-
committee; and’’. 
(f) REGISTRY FEES MODIFIED.—Section 1109(a)(3) 
of the Financial Institutions Reform, Recovery, and En-
forcement Act of 1989 (12 U.S.C. 3338(a)(3)) (as modi-
fied by section 203(e) of this Act) is amended by— 
(1) striking ‘‘$25’’ and inserting ‘‘$40’’; 
(2) striking ‘‘$50’’ and inserting ‘‘$80’’; and 
(3) inserting after the period at the end the fol-
lowing new sentences: ‘‘The Appraisal Subcommittee 
must consider at least once every 5 years whether to 
adjust the dollar amount of the registry fees to ac-
count for inflation. In implementing any change in 
registry fees, the Appraisal Subcommittee shall pro-
vide flexibility to the States for multi-year certifi-
cations and licenses already in place, as well as a 
transition period to implement the changes in reg-
istry fees.’’ 
(g) GRANTS AND REPORTS.—Section 1109(b) of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3348(b)) is amended— 
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(1) by striking ‘‘and’’ after the semicolon in 
paragraph (3); 
(2) by striking the period at the end of para-
graph (4) and inserting a semicolon; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(5) make grants to State appraiser regulatory 
agencies to help defray those costs relating to en-
forcement activities; and 
‘‘(6) to report to all State appraiser certifying 
and licensing agencies when a license or certification 
is revoked or suspended.’’. 
(h) CRITERIA.—Section 1116 of the Financial Insti-
tutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3345) is amended— 
(1) in subsection (c), by inserting ‘‘whose cri-
teria for the licensing of a real estate appraiser cur-
rently meet or exceed the minimum criteria issued 
by the Appraisal Qualifications Board of The Ap-
praisal Foundation for the licensing of real estate 
appraisers’’ before the period at the end; and 
(2) by striking subsection (e) and inserting the 
following new subsection: 
‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.— 
Any requirements established for individuals in the posi-
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tion of ‘Trainee Appraiser’ and ‘Supervisory Appraiser’ 
shall meet or exceed the minimum qualification require-
ments of the Appraiser Qualifications Board of the Ap-
praisal Foundation. The Appraisal Subcommittee shall 
have the authority to enforce these requirements.’’. 
(i) MONITORING OF STATE APPRAISER CERTIFYING 
AND LICENSING AGENCIES.—Section 1118(a) of the Fi-
nancial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3347(a)) is amended— 
(1) by inserting ‘‘funding, staffing,’’ after 
‘‘practices,’’ each place such term appears; 
(2) by inserting before the period at the end of 
the first sentence the following: ‘‘, whether a State 
agency processes complaints and completes exams in 
a reasonable time period, and whether a State agen-
cy reports claims and disciplinary actions on a time-
ly basis to the national registry maintained by the 
Appraisal Subcommittee’’; and 
(3) by inserting at the end the following new 
sentence: ‘‘The Appraisal Subcommittee shall have 
the authority to impose interim sanctions and sus-
pensions.’’. 
(j) RECIPROCITY.—Subsection (b) of section 1122 of 
the Financial Institutions Reform, Recovery, and Enforce-
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ment Act of 1989 (12 U.S.C. 3351(b)) is amended to read 
as follows: 
‘‘(b) RECIPROCITY.—A State appraiser certifying or 
licensing agency shall issue a reciprocal certification or li-
cense for an individual from another State when— 
‘‘(1) the appraiser licensing and certification 
program of such other State is in compliance with 
the provisions of this title; and 
‘‘(2) the appraiser holds a valid certification 
from a State whose requirements for certification or 
licensing meet or exceed the licensure standards es-
tablished by the State where an individual seeks ap-
praisal licensure.’’. 
(k) CONSIDERATION OF PROFESSIONAL APPRAISAL 
DESIGNATIONS.—Section 1122(d) of the Financial Insti-
tutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3351(d)) is amended by adding at the end the 
following new sentence: ‘‘No provision of this subsection 
shall be construed as prohibiting consideration of designa-
tions conferred by recognized national professional ap-
praisal organizations, such as sponsoring organizations of 
The Appraisal Foundation.’’. 
(l) APPRAISER INDEPENDENCE.—Section 1122 of 
the Financial Institutions Reform, Recovery, and Enforce-
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ment Act of 1989 (12 U.S.C. 3351) is amended by adding 
at the end the following new subsection: 
‘‘(g) APPRAISER INDEPENDENCE.— 
‘‘(1) PROHIBITIONS ON INTERESTED PARTIES 
IN
A
REAL
ESTATE
TRANSACTION.—No mortgage 
lender, mortgage broker, mortgage banker, real es-
tate broker, nor any other person with an interest in 
a real estate transaction involving an appraisal shall 
improperly influence, or attempt to improperly influ-
ence, through coercion, extortion, collusion, com-
pensation, instruction, inducement, intimidation, 
non-payment for services rendered, or bribery, the 
development, reporting, result, or review of a real es-
tate appraisal sought in connection with a mortgage 
loan. 
‘‘(2) EXCEPTIONS.—The requirements of para-
graph (1) shall not be construed as prohibiting a 
mortgage lender, mortgage broker, mortgage banker, 
real estate broker, or any other person with an inter-
est in a real estate transaction from asking an ap-
praiser to provide 1 or more of the following serv-
ices: 
‘‘(A) 
Consider 
additional, 
appropriate 
property information, including the consider-
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ation of additional comparable properties to 
make or support an appraisal. 
‘‘(B) Provide further detail, substantiation, 
or explanation for the appraiser’s value conclu-
sion. 
‘‘(C) Correct errors in the appraisal report. 
‘‘(3) PROHIBITIONS ON CONFLICTS OF INTER-
EST.—No certified or licensed appraiser conducting 
an appraisal may have a direct or indirect interest, 
financial or otherwise, in the property or transaction 
involving the appraisal. 
‘‘(4) MANDATORY REPORTING.—Any mortgage 
lender, mortgage broker, mortgage banker, real es-
tate broker, or any other person with an interest in 
a real estate transaction involving an appraisal who 
has a reasonable basis to believe an appraiser is vio-
lating applicable laws, or is otherwise engaging in 
unethical or unprofessional conduct, shall refer the 
matter to the applicable State appraiser certifying 
and licensing agency. 
‘‘(5) REGULATIONS.—The Federal financial in-
stitutions regulatory agencies (as defined in section 
1003(1) of the Federal Financial Institutions Exam-
ination Council Act of 1978) shall prescribe such 
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regulations as may be necessary to carry out the 
provisions of this subsection. 
‘‘(6) PENALTIES.—Any person who violates any 
provision of this section shall be subject to civil pen-
alties under section 8(i)(2) of the Federal Deposit 
Insurance Act or section 206(k)(2) of the Federal 
Credit Union Act, as appropriate. 
‘‘(7) PROCEEDING.—A proceeding with respect 
to a violation of this section shall be an administra-
tive proceeding which may be conducted by a Fed-
eral financial institutions regulatory agency in ac-
cordance with the procedures set forth in subchapter 
II of chapter 5 of title 5, United States Code.’’. 
(m) APPRAISER EDUCATION.—Section 1122 of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3351) is amended by insert-
ing after subsection (g) (as added by subsection (l) of this 
section) the following new subsection: 
‘‘(h) APPROVED EDUCATION.—The Appraisal Sub-
committee shall encourage the States to accept courses ap-
proved by the Appraiser Qualification Board’s Course Ap-
proval Program.’’. 
(n) TECHNICAL CORRECTIONS.— 
(1) Section 1119(a)(2) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
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1989 (12 U.S.C. 3348(a)(2)) is amended by striking 
‘‘council,’’ and inserting ‘‘Council,’’. 
(2) Section 1121(6) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3350(6)) is amended by striking 
‘‘Corporations,’’ and inserting ‘‘Corporation,’’. 
(3) Section 1121(8) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3350(8)) is amended by striking 
‘‘council’’ and inserting ‘‘Council’’. 
(4) Section 1122 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3351) is amended— 
(A) in subsection (a)(1) by moving the left 
margin of subparagraphs (A), (B), and (C) 2 
ems to the right; and 
(B) in subsection (c)— 
(i) by striking ‘‘Federal Financial In-
stitutions Examination Council’’ and in-
serting ‘‘Financial Institutions Examina-
tion Council’’; and 
(ii) by striking ‘‘the council’s func-
tions’’ and inserting ‘‘the Council’s func-
tions’’. 
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SEC. 204. STUDY REQUIRED ON IMPROVEMENTS IN AP-
PRAISAL PROCESS AND COMPLIANCE PRO-
GRAMS. 
(a) STUDY.—The Comptroller General shall conduct 
a comprehensive study on possible improvements in the 
appraisal process generally, and specifically on the consist-
ency in and the effectiveness of, and possible improve-
ments in, State compliance efforts and programs in ac-
cordance with title XI of the Financial Institutions Re-
form, Recovery, and Enforcement Act of 1989. In addi-
tion, this study shall examine the existing de minimus loan 
levels established by Federal regulators for compliance 
under title XI and whether there is a need to revise them 
to reflect the addition of consumer protection to the pur-
poses and functions of the Appraisal Subcommittee. 
(b) REPORT.—Before the end of the 18-month period 
beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report on the study 
under subsection (a) to the Committee on Financial Serv-
ices of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate, 
together with such recommendations for administrative or 
legislative action, at the Federal or State level, as the 
Comptroller General may determine to be appropriate. 
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SEC. 205. CONSUMER APPRAISAL DISCLOSURE. 
(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 129B (as added by section 202 of this Act) 
the following new section: 
‘‘SEC. 129C. CONSUMER APPRAISAL DISCLOSURE. 
‘‘In any case in which an appraisal is performed in 
connection with an extension of credit secured by an inter-
est in real property, the creditor or other mortgage origi-
nator shall make available to the applicant for the exten-
sion of credit a copy of all appraisal valuation reports upon 
completion but no later than 3 days prior to the trans-
action closing date.’’. 
(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 129B (as 
added by section 202 of this Act) the following new item: 
‘‘129C. Consumer appraisal disclosure.’’. 
Æ 
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