I 
109TH CONGRESS 
1ST SESSION H. R. 1643 
To amend various banking laws to combat predatory lending, particularly 
in regards to low and moderate income individuals, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 14, 2005 
Mr. FORD introduced the following bill; which was referred to the Committee 
on Financial Services, and in addition to the Committee on the Judiciary, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of the 
committee concerned 
A BILL 
To amend various banking laws to combat predatory lending, 
particularly in regards to low and moderate income indi-
viduals, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Borrower’s Bill of 
Rights Act’’.
SEC. 2. ASSISTANT SECRETARY OF THE TREASURY FOR FI-
NANCIAL EDUCATION. 
Section 301(e) of title 31, United States Code, is 
amended— 
(1) by striking ‘‘7 Assistant Secretaries’’ and 
inserting ‘‘8 Assistant Secretaries’’; and 
(2) by inserting after the 2nd sentence the fol-
lowing new sentence: ‘‘One of the Assistant Secre-
taries shall be the Assistant Secretary for Financial 
Education.’’ 
SEC. 3. FINANCIAL LITERACY FOR MIDDLE AND HIGH 
SCHOOL STUDENTS. 
The Financial Literacy and Education Improvement 
Act (20 U.S.C. 9701, et seq.) is amended— 
(1) by redesignating section 519 as section 520; 
and 
(2) by inserting after section 518 the following 
new section: 
‘‘SEC. 519. FINANCIAL LITERACY FOR MIDDLE AND HIGH 
SCHOOL STUDENTS. 
‘‘(a) PILOT PROGRAM.—The Assistant Secretary for 
Financial Education (hereafter in this section referred to 
as the ‘Assistant Secretary’ shall establish a 2-year pilot 
financial literacy pilot program for middle and high school 
students.
‘‘(b) REQUIREMENTS.—The pilot program estab-
lished by the Assistant Secretary shall comply with the 
following requirements: 
‘‘(1) The pilot program shall be implemented in 
10 middle schools and 10 high schools, selected by 
the Assistant Secretary based on such criteria as the 
Assistant Secretary may determine to be appro-
priate, in 10 different school systems and provided 
to 8th grade students at the middle schools selected 
and 12th grade students at the high schools selected. 
‘‘(2) The program shall use as guidance the fi-
nancial education program in the secondary schools 
of the State of Delaware called the ‘Keys to Finan-
cial Success’. 
‘‘(3) The program shall be funded by the Sec-
retary of the Treasury, out of funds appropriated to 
the Secretary, and administered by the State and 
the local school administration of each school se-
lected, based on criteria established by the Assistant 
Secretary, including an annual update of the mate-
rials used in the curriculum. 
‘‘(c) REPORT.—Upon the completion of the 2-year 
pilot program, the Assistant Secretary shall submit to the 
Secretary of the Treasury and the Congress a report con-
taining a detailed description of the findings and conclu-
sions of the Assistant Secretary with respect to the pilot 
program.’’. 
SEC. 4. ‘‘PLAIN LANGUAGE’’ DISCLOSURES. 
Section 122 of the Truth in Lending Act (15 U.S.C. 
1632) is amended by adding at the end the following new 
subsection: 
‘‘(d) PLAIN AND SIMPLE LANGUAGE DISCLOSURES 
REQUIRED
FOR ALL DISCLOSURES.—The Board shall 
take such action as may be necessary to ensure that all 
disclosures that are required to be provided under this title 
with respect to any consumer credit transaction, including 
all the disclosures required under section 129, shall be 
simple and easy to understand and in a language under-
stood by the consumer.’’. 
SEC. 5. LIMITATION ON USURIOUS INTEREST RATES AND 
UNFAIR PRACTICES. 
(a) REPEAL OF PREEMPTION OF STATE MORTGAGE 
USURY LAWS.— 
(1) IN GENERAL.—Sections 501, 511, 512, 525, 
526, 527, 528, and 529 of the Depository Institu-
tions Deregulation and Monetary Control Act of 
1980 are hereby repealed. 
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—
(A) 
INSURED
DEPOSITORY
INSTITU-
TIONS.—Section 27 of the Federal Deposit In-
surance Act (12 U.S.C. 1831d) is amended to 
read as follows: 
‘‘SEC. 27. UNIFORM APPLICABILITY OF STATE LAW. 
‘‘In order to prevent discrimination against State- 
chartered insured depository institutions, including in-
sured savings banks and insured branches of foreign 
banks and notwithstanding any other provision of Federal 
law, the provision of the constitution or the laws of any 
State expressly limiting the rate or amount of interest, 
discount points, finance charges, or other charges which 
may be charged, taken, received, or reserved shall apply 
to all depository institutions that are located in, have any 
branch in, or do business in such State with respect to 
customers of any such institution which reside in or are 
located in such State.’’. 
(B) INSURED
CREDIT
UNIONS.—Section 
205(g) of the Federal Credit Union Act (12 
U.S.C. 1785(g)) is amended to read as follows: 
‘‘(g) UNIFORM APPLICABILITY OF STATE LAW.—In 
order to prevent discrimination against State-chartered in-
sured credit unions and notwithstanding any other provi-
sion of Federal law, the provision of the constitution or 
the laws of any State expressly limiting the rate or amount
of interest, discount points, finance charges, or other 
charges which may be charged, taken, received, or re-
served shall apply to all credit unions that are located in, 
have any branch in, or do business in such State with re-
spect to customers of any such credit union which reside 
in or are located in such State.’’. 
(b) PROHIBITION ON LOAN ‘‘FLIPPING’’ AND MAN-
DATORY ARBITRATION.— 
(1) IN GENERAL.—Chapter 2 of the Truth in 
Lending Act (15 U.S.C. 1631 et seq.) is amended by 
inserting after section 129 the following new section: 
‘‘§ 129A. Protections for all loans 
‘‘(a) FLIPPING.— 
‘‘(1) IN GENERAL.—No creditor may knowingly 
or intentionally engage in the unfair act or practice 
of flipping. 
‘‘(2) FLIPPING DEFINED.—For purposes of this 
subsection, the term ‘flipping’ means the making of 
a loan or extension of credit to a consumer which re-
finances an existing loan or other extension of credit 
when the new loan or extension of credit does not 
have reasonable, tangible net benefit to the con-
sumer considering all of the circumstances, including 
the terms of both the new and the refinanced loans
or credit, the cost of the new loan or credit, and the 
consumer’s circumstances. 
‘‘(3) TANGIBLE
NET
BENEFIT.—The Board 
may prescribe regulations, in the discretion of the 
Board, defining the term ‘tangible net benefit’ for 
purposes of this subsection. 
‘‘(b) ARBITRATION.— 
‘‘(1) IN GENERAL.—A loan or other extension 
of credit subject to this title may not include terms 
which require arbitration or any other nonjudicial 
procedure as the method for resolving any con-
troversy or settling any claims arising out of the 
transaction. 
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Sub-
ject to paragraph (3), paragraph (1) shall not be 
construed as limiting the right of the consumer and 
the creditor to agree to arbitration or any other non-
judicial procedure as the method for resolving any 
controversy at any time after a dispute or claim 
under the transaction arises. 
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any loan or other extension 
of credit or any agreement between the consumer 
and the creditor shall be applied or interpreted so as 
to bar a consumer from bringing an action in an ap-
propriate district court of the United States, or any 
other court of competent jurisdiction, pursuant to 
section 130 or any other provision of law, for dam-
ages or other relief in connection with any alleged 
violation of this section, any other provision of this 
title, or any other Federal law.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 2 of the Truth in Lending Act is 
amended by inserting after the item relating to sec-
tion 129 the following new item: 
‘‘129A. Protections for all loans.’’. 
(3) REGULATIONS.—The Board of Governors of 
the Federal Reserve System shall publish regulations 
implementing the amendments made by this section 
in final form before the end of the 6-month period 
beginning on the date of enactment of this Act. 
(c) AMENDMENT TO DEFINITION OF HIGH COST 
MORTGAGES.—Subparagraph (A) of section 103(aa)(1) of 
the Truth in Lending Act (15 U.S.C. 1602(aa)(1)(A)) is 
amended by striking ‘‘10 percentage points’’ and inserting 
‘‘8 percentage points’’. 
(d) PRE-LOAN COUNSELING REQUIRED FOR HIGH 
COST MORTGAGES.—Section 129 of the Truth in Lending 
Act (15 U.S.C. 1639) is amended by inserting after sub-
section (l) the following new subsection: 
‘‘(m) PRE-LOAN COUNSELING.—
‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a mortgage referred to 
in section 103(aa) without first receiving certifi-
cation from a counselor that is approved by the Sec-
retary of Housing and Urban Development, that the 
consumer has received— 
‘‘(A) and successfully completed coun-
seling, in person or by telephone, on the advis-
ability of the loan transaction; and 
‘‘(B) a general range of interest rates that 
the applicant qualifies for given their credit 
score. 
‘‘(2) 
NONAFFILIATION
RULE
FOR
COUN-
SELORS.—A counselor providing a certification to a 
creditor under paragraph (1) may not be employed 
by the creditor or an affiliate of the creditor or be 
affiliated with the creditor in any other manner (in-
cluding any referral agreement). 
‘‘(3) DISCLOSURES REQUIRED PRIOR TO COUN-
SELING.—No counselor may certify that a borrower 
has received counseling on the advisability of the 
loan transaction unless the counselor can verify that 
the consumer has received each statement required 
(in connection with such loan) by this section, or by
the Real Estate Settlement Procedures Act of 1974, 
with respect to the transaction. 
‘‘(4) REGULATIONS.—The Secretary of Housing 
and Urban Development may prescribe such regula-
tions as the Secretary determines to be appropriate 
to carry out the requirements of paragraph (1).’’. 
SEC. 6. LIMITATION ON ROLLOVERS OF PAYDAY LOANS. 
Section 128 of the Truth in Lending Act (15 U.S.C. 
1638) is amended by adding at the end the following new 
subsection: 
‘‘(e) LIMITATIONS ON ROLLOVERS OR REFINANCING 
OF PAYDAY LOANS WITH THE SAME CREDITOR.— 
‘‘(1) IN GENERAL.—A payday lender— 
‘‘(A) may not refinance or roll over any 
payday loan made by such lender, or any affil-
iate or other associate of the payday lender, to 
any consumer with another payday loan more 
than 3 times; and 
‘‘(B) shall provide a consumer who seeks 
to refinance or roll over any payday loan made 
by such lender, or any affiliate or other asso-
ciate of the payday lender, to the consumer 
with another payday loan more than 2 times 
with a disclosure notice, which the Board shall 
prescribe by regulation, regarding the hazards
of payday lending and the benefits of banking 
traditionally, in prominent format and type-size, 
that is separate from the disclosures required 
under subsection (a) with regard to such exten-
sion of credit. 
‘‘(2) DEFINITIONS.— 
‘‘(A) CHECK.—The term ‘check’ means 
any negotiable demand draft drawn on or pay-
able through an office of a depository institu-
tion (as defined in section 19(b)(1)(A) of the 
Federal Reserve Act) located in any State. 
‘‘(B) PAYDAY LENDER.—The term ‘payday 
lender’ means any person who extends credit to 
any other person through a payday loan. 
‘‘(C) PAYDAY
LOAN.—The term ‘payday 
loan’ means means a transaction in which cred-
it is extended by a payday lender, for a speci-
fied period of time, upon receipt by the lender 
of— 
‘‘(i) a check made by the borrower for 
the amount of the credit extended, the pre-
sentment or negotiation of which, by mu-
tual agreement of the lender and borrower, 
will be deferred for such specified period; 
or
‘‘(ii) authorization from the borrower 
for the payday lender to initiate an elec-
tronic fund transfer at the end of the spec-
ified period from the account of the bor-
rower for the amount of the credit ex-
tended.’’. 
SEC. 7. FAIR TREATMENT OF EMPLOYEE BENEFITS. 
(a) DEFINITION OF CLAIM.—Section 101(5) of title 
11, United States Code, is amended— 
(1) in subparagraph (A), by striking ‘‘or’’ at 
the end; 
(2) in subparagraph (B), by inserting ‘‘or’’ 
after the semicolon; and 
(3) by adding at the end the following: 
‘‘(C) right or interest in equity securities 
of the debtor, or an affiliate of the debtor, held 
in a pension plan (within the meaning of sec-
tion 3(2) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(2))) for 
the benefit of an individual who is not an offi-
cer or director of the debtor, if such securities 
were attributable to— 
‘‘(i) employer contributions by the 
debtor or an affiliate of the debtor other 
than elective deferrals (within the meaning