(10) A number of government agencies have be-
come involved in addressing various aspects of the 
predatory lending issue in an attempt to reduce the 
number of lenders that use high-pressure tele-
marketing sales techniques and mislead borrowers 
about increases in interest rates and monthly pay-
ments on adjustable rate mortgages. 
(11) Predatory lending threatens to undo the 
work of many nonprofit organizations that have 
worked with lenders and local governments to im-
prove distressed neighborhoods. More needs to be 
done to assist borrowers who already have predatory 
loans, to educate consumers about the dangers and 
pitfalls of entering into a home loan, and to refer 
consumers to appropriate governmental agencies or 
consumer protection organizations for assistance. 
SEC. 3. GRANT PROGRAM FOR EDUCATION AND COUN-
SELING REGARDING PREDATORY LENDING. 
(a) IN GENERAL.—The Secretary of Housing and 
Urban Development may make grants under this section 
to States, units of general local government, and nonprofit 
organizations, which shall be used only for costs of car-
rying out eligible anti-predatory lending activities under 
subsection (b).
(b) ELIGIBLE ANTI-PREDATORY LENDING ACTIVI-
TIES.—Amounts from a grant under this section may be 
used only for carrying out the following activities: 
(1) EDUCATION
PROGRAMS.—For education 
programs to inform and educate consumers, particu-
larly those most vulnerable to being taken advantage 
of by predatory and unscrupulous lending practices 
relating to home loans (such as low-income bor-
rowers and senior citizens), regarding home mort-
gages, mortgage refinancing, home equity loans, and 
home repair loans with unjustifiably high interest 
rates, excessive fees, balloon payments, prepayment 
penalties, and the imposition of other unreasonable, 
and sometimes fraudulent, terms. 
(2) COUNSELING
PROGRAMS.—For programs, 
provided only by organizations certified by the Sec-
retary as competent to provide homeownership coun-
seling, that counsel homeowners and prospective 
homeowners regarding predatory and unscrupulous 
lending practices relating to home loans. 
(3) REFERRAL
SERVICES.—For services that 
provide referrals, for homeowners and prospective 
homeowners—
(A) to education and counseling programs 
described in paragraphs (1) and (2); or
(B) to appropriate agencies or authorities 
responsible for handling consumer complaints, 
allegations, or requests for assistance regarding 
predatory and unscrupulous lending practices 
relating to home loans or for investigating the 
circumstances surrounding home loans for pos-
sible violations of law. 
(c) ELIGIBILITY AND APPLICATION.—To be eligible 
for a grant under this section, a State, unit of general 
local government, or nonprofit organization shall submit 
to the Secretary an application for a grant in such form 
and including such information as the Secretary shall re-
quire, which shall include such information as the Sec-
retary considers appropriate to ensure that the grant 
amounts are used for activities eligible under subsection 
(b). 
(d) MAXIMUM
GRANT
AMOUNT.—The maximum 
amount of grant funds that may be provided under this 
section to any single grantee for any single fiscal year shall 
be $1,000,000. 
(e) SELECTION
OF APPLICANTS.—The Secretary 
shall provide for States, units of general local government, 
and nonprofit organizations to submit applications for 
grants under this section. The Secretary shall select appli-
cations to receive such grants according to selection cri-
teria, which the Secretary shall establish. 
SEC. 4. TOLL-FREE TELEPHONE NUMBER FOR PREDATORY 
LENDING COMPLAINTS. 
The Secretary shall, using any amounts reserved 
under section 7(1), provide for the establishment, oper-
ation, and publication of a nationwide toll-free telephone 
number to receive consumer complaints regarding preda-
tory and unscrupulous lending practices relating to home 
loans, provide information about predatory lending, refer 
borrowers who already have predatory loans to the appro-
priate governmental agencies or consumer protection orga-
nizations for assistance, and coordinate between existing 
State and nonprofit community organizations to create a 
resource database of information for consumers. 
SEC. 5. PREDATORY LENDING ADVISORY COUNCIL. 
(a) ESTABLISHMENT.—There is established in the 
Department of Housing and Urban Development a Preda-
tory Lending Advisory Council (in this section referred to 
as the ‘‘Council’’) to advise the Secretary on policies and 
issues relating to predatory and unscrupulous lending 
practices relating to home loans. 
(b) MEMBERSHIP.—The Council shall be composed of 
13 members appointed by the Secretary, who shall in-
clude—
(1) 4 members who are representatives of com-
munity-based organizations that work with con-
sumers, lenders, and State and local governments to 
improve distressed neighborhoods, assist borrowers 
who already have predatory loans, educate con-
sumers about the dangers and pitfalls of entering 
into a home loan, and refer consumers to appro-
priate governmental agencies or consumer protection 
organizations for assistance; 
(2) 3 members who are officials of State agen-
cies or offices for consumer affairs or consumer pro-
tection; 
(3) 3 members who are private homeowners 
who are familiar with home mortgages, mortgage re-
financing, home equity loans, and home repair loans; 
and 
(4) 3 members who are representatives of the 
private real estate industry, such as realtors, mort-
gage brokers, and bankers. 
(c) TERMS AND VACANCIES.—Members of the Coun-
cil shall serve terms of two years, except that, of the initial 
members appointed, half shall serve terms of one year and 
half shall serve terms of two years. A vacancy in the Coun-
cil shall be filled in the manner in which the original ap-
pointment was made.
(d) TRAVEL EXPENSES.—Members of the Council 
shall serve without compensation but shall receive travel 
expenses, including per diem in lieu of subsistence, in ac-
cordance with sections 5702 and 5703 of title 5, United 
States Code. 
(e) CHAIRPERSON.—The Secretary shall designate a 
chairperson of the Council at the time of appointment. 
(f) MEETINGS AND HEARINGS.—The Council shall 
meet upon the call of the chairperson, except that the 
council shall meet not fewer than 3 times per year. The 
Council shall have the authority, when a majority of the 
members deem necessary, to hold public hearings and to 
take testimony and receive evidence from individuals and 
organizations. 
(g) ADVISORY FUNCTIONS.—The Council shall pro-
vide advice to the Secretary regarding—
(1) the grant program under section 3, includ-
ing advice regarding criteria for selection of applica-
tions to receive grant amounts; 
(2) the establishment, operation, and publica-
tion of the toll-free telephone number under section 
4; 
(3) coordination of activities of the Secretary 
regarding prevention of predatory and unscrupulous
lending practices relating to home loans with such 
activities of lending institutions; and 
(4) any other matters regarding predatory and 
unscrupulous lending practices relating to home 
loans that the Secretary considers appropriate. 
(h) STUDY OF DEFAULTS AND FORECLOSURES.—
The Council shall conduct an extensive study of the root 
causes of default and foreclosure of home loans, using as 
much empirical data as are available. The Council shall 
submit a report to the Secretary and the Congress, not 
later than 12 months after the full membership of the 
Council is first appointed, regarding the results of the 
study, which shall include recommendations for consumer 
protection legislation regarding predatory and unscrupu-
lous lending practices relating to home loans. 
SEC. 6. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) HOME
LOAN.—The term ‘‘home loan’’ 
means a loan or agreement to extend credit made to 
a natural person, which loan is secured by a deed to 
secure debt, security deed, mortgage, security instru-
ment, deed of trust, or other document representing 
a security interest or lien upon any interest in one- 
to four-family residential property or a manufac-
tured home, regardless of where made, including the 
renewal or refinancing of any such loan. Such term 
includes a home equity line of credit or home im-
provement loan or other similar agreement. 
(2) NONPROFIT
ORGANIZATION.—The term 
‘‘nonprofit organization’’ has the meaning given 
such term in section 104(5) of the Cranston-Gon-
zalez National Affordable Housing Act (42 U.S.C. 
12704(5)), except that subparagraph (D) of such 
section shall not apply for purposes of this Act. 
(3) PREDATORY OR UNSCRUPULOUS LENDING 
PRACTICE.—The term ‘‘predatory or unscrupulous 
lending practice’’ includes—
(A) making any loan that—
(i) is solely based on the borrower’s 
home equity; 
(ii) is made without regard to the bor-
rower’s ability to repay the obligation; and 
(iii) is unaffordable to the borrower, 
as may be evidenced by a failure to fully 
understand the terms of the loans, a fail-
ure to offer adequate disclosures of the 
loan terms, a difficulty in meeting over-
whelming mortgage payments, loss of a 
home through foreclosure, or otherwise;
(B) inducing a borrower to refinance a 
loan repeatedly and charging additional points 
and fees, even though refinancing may not be in 
the borrower’s interest; and 
(C) engaging in fraud or deception to con-
ceal the true nature of the loan obligation from 
an unsuspecting or unsophisticated borrower. 
(4) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(5) 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. 
(6) UNIT OF GENERAL LOCAL GOVERNMENT.—
The term ‘‘unit of general local government’’ means 
any city, town, township, parish, village, or other 
general purpose political subdivision of a State. 
SEC. 7. AUTHORIZATION OF APPROPRIATIONS. 
There is authorized to be appropriated for carrying 
out this Act $55,000,000 for each of fiscal years 2004 
through 2008, of which—
(1) not more than $2,000,000 in each such fis-
cal year shall be for carrying out section 4; and 
(2) not more than $5,000,000 in each such fis-
cal year shall be for carrying out section 5. 
SEC. 8. REGULATIONS. 
The Secretary may issue any regulations necessary 
to carry out this Act.
Æ