I 
111TH CONGRESS 
1ST SESSION H. R. 1728 
To amend the Truth in Lending Act to reform consumer mortgage practices 
and provide accountability for such practices, to provide certain minimum 
standards for consumer mortgage loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 26, 2009 
Mr. MILLER of North Carolina (for himself, Mr. WATT, Mr. FRANK of Massa-
chusetts, Mr. KANJORSKI, Mr. GUTIERREZ, Ms. BEAN, and Mr. 
MINNICK) introduced the following bill; which was referred to the Com-
mittee on Financial Services 
A BILL 
To amend the Truth in Lending Act to reform consumer 
mortgage practices and provide accountability for such 
practices, to provide certain minimum standards for con-
sumer mortgage loans, 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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Mortgage Reform and Anti-Predatory Lending Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
Sec. 1. Short title; table of contents. 
TITLE I—RESIDENTIAL MORTGAGE LOAN ORIGINATION 
STANDARDS 
Sec. 101. Definitions. 
Sec. 102. Residential mortgage loan origination. 
Sec. 103. Prohibition on steering incentives. 
Sec. 104. Liability. 
Sec. 105. Regulations. 
TITLE II—MINIMUM STANDARDS FOR MORTGAGES 
Sec. 201. Ability to repay. 
Sec. 202. Net tangible benefit for refinancing of residential mortgage loans. 
Sec. 203. Safe harbor and rebuttable presumption. 
Sec. 204. Liability. 
Sec. 205. Defense to foreclosure. 
Sec. 206. Additional standards and requirements. 
Sec. 207. Rule of construction. 
Sec. 208. Effect on State laws. 
Sec. 209. Regulations. 
Sec. 210. Amendments to civil liability provisions. 
Sec. 211. Lender rights in the context of borrower deception. 
Sec. 212. Six-month notice required before reset of hybrid adjustable rate mort-
gages. 
Sec. 213. Credit risk retention. 
Sec. 214. Required disclosures. 
Sec. 215. Disclosures required in monthly statements for residential mortgage 
loans. 
Sec. 216. Legal assistance for foreclosure-related issues. 
Sec. 217. Effective date. 
Sec. 218. Report by the GAO. 
TITLE III—HIGH-COST MORTGAGES 
Sec. 301. Definitions relating to high-cost mortgages. 
Sec. 302. Amendments to existing requirements for certain mortgages. 
Sec. 303. Additional requirements for certain mortgages. 
Sec. 304. Amendment to provision governing correction of errors. 
Sec. 305. Regulations. 
Sec. 306. Effective date. 
TITLE IV—OFFICE OF HOUSING COUNSELING 
Sec. 401. Short title. 
Sec. 402. Establishment of Office of Housing Counseling. 
Sec. 403. Counseling procedures. 
Sec. 404. Grants for housing counseling assistance. 
Sec. 405. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 406. Study of defaults and foreclosures. 
Sec. 407. Definitions for counseling-related programs. 
Sec. 408. Updating and simplification of mortgage information booklet. 
TITLE V—MORTGAGE SERVICING 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6211
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
Sec. 501. Escrow and impound accounts relating to certain consumer credit 
transactions. 
Sec. 502. Disclosure notice required for consumers who waive escrow services. 
Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments. 
Sec. 504. Mortgage servicing studies required. 
Sec. 505. Escrows included in repayment analysis. 
TITLE VI—APPRAISAL ACTIVITIES 
Sec. 601. Property appraisal requirements. 
Sec. 602. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions. 
Sec. 603. Amendments relating to appraisal subcommittee of FIEC, appraiser 
independence, and approved appraiser education. 
Sec. 604. Study required on improvements in appraisal process and compliance 
programs. 
Sec. 605. Equal Credit Opportunity Act amendment. 
TITLE 
I—RESIDENTIAL 
MORT-
GAGE 
LOAN 
ORIGINATION 
STANDARDS 
SEC. 101. DEFINITIONS. 
Section 103 of the Truth in Lending Act (15 U.S.C. 
1602) is amended by adding at the end the following new 
subsection: 
‘‘(cc) DEFINITIONS RELATING TO MORTGAGE ORIGI-
NATION AND RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) COMMISSION.—Unless otherwise specified, 
the term ‘Commission’ means the Federal Trade 
Commission. 
‘‘(2) FEDERAL BANKING AGENCIES.—The term 
‘Federal banking agencies’ means the Board of Gov-
ernors of the Federal Reserve System, the Comp-
troller of the Currency, the Director of the Office of 
Thrift Supervision, the Federal Deposit Insurance 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
Corporation, and the National Credit Union Admin-
istration Board. 
‘‘(3) 
MORTGAGE
ORIGINATOR.—The 
term 
‘mortgage originator’— 
‘‘(A) means any person who— 
‘‘(i) takes a residential mortgage loan 
application; 
‘‘(ii) assists a consumer in obtaining 
or applying to obtain a residential mort-
gage loan; or 
‘‘(iii) offers or negotiates terms of a 
residential mortgage loan, for direct or in-
direct compensation or gain, or in the ex-
pectation of direct or indirect compensa-
tion or gain; 
‘‘(B) includes any person who represents 
to the public, through advertising or other 
means of communicating or providing informa-
tion (including the use of business cards, sta-
tionery, brochures, signs, rate lists, or other 
promotional items), that such person can or will 
provide any of the services or perform any of 
the activities described in subparagraph (A); 
and 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(C) does not include any person who is 
not otherwise described in subparagraph (A) or 
(B) and who performs purely administrative or 
clerical tasks on behalf of a person who is de-
scribed in any such subparagraph. 
‘‘(4) NATIONWIDE MORTGAGE LICENSING SYS-
TEM AND REGISTRY.—The term ‘Nationwide Mort-
gage Licensing System and Registry’ has the same 
meaning as in the Secure and Fair Enforcement for 
Mortgage Licensing Act of 2008. 
‘‘(5) OTHER DEFINITIONS RELATING TO MORT-
GAGE
ORIGINATOR.—For purposes of this sub-
section, a person ‘assists a consumer in obtaining or 
applying to obtain a residential mortgage loan’ by, 
among other things, advising on residential mort-
gage loan terms (including rates, fees, and other 
costs), preparing residential mortgage loan packages, 
or collecting information on behalf of the consumer 
with regard to a residential mortgage loan. 
‘‘(6) RESIDENTIAL
MORTGAGE
LOAN.—The 
term ‘residential mortgage loan’ means any con-
sumer credit transaction that is secured by a mort-
gage, deed of trust, or other equivalent consensual 
security interest on a dwelling or on residential real 
property that includes a dwelling, other than a con-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
sumer credit transaction under an open end credit 
plan or a reverse mortgage. 
‘‘(7) SECRETARY.—The term ‘Secretary’, when 
used in connection with any transaction or person 
involved with a residential mortgage loan, means the 
Secretary of Housing and Urban Development. 
‘‘(8) SECURITIZATION
VEHICLE.—The term 
‘securitization vehicle’ means a trust, corporation, 
partnership, limited liability entity, special purpose 
entity, or other structure that— 
‘‘(A) is the issuer, or is created by the 
issuer, of mortgage pass-through certificates, 
participation certificates, mortgage-backed secu-
rities, or other similar securities backed by a 
pool of assets that includes residential mortgage 
loans; and 
‘‘(B) holds such loans. 
‘‘(9) SECURITIZER.—The term ‘securitizer’ 
means the person that transfers, conveys, or assigns, 
or causes the transfer, conveyance, or assignment of, 
residential mortgage loans, including through a spe-
cial purpose vehicle, to any securitization vehicle, ex-
cluding any trustee that holds such loans solely for 
the benefit of the securitization vehicle. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(10) SERVICER.—The term ‘servicer’ has the 
same meaning as in section 6(i)(2) of the Real Es-
tate Settlement Procedures Act of 1974.’’. 
SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION. 
(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 the following new section: 
‘‘§ 129B. Residential mortgage loan origination 
‘‘(a) FINDING AND PURPOSE.— 
‘‘(1) FINDING.—The Congress finds that eco-
nomic stabilization would be enhanced by the protec-
tion, limitation, and regulation of the terms of resi-
dential mortgage credit and the practices related to 
such credit. 
‘‘(2) PURPOSE.—It is the purpose of this sec-
tion and section 129C to assure that consumers are 
offered and receive residential mortgage loans on 
terms that reasonably reflect their ability to repay 
the loans and that are understandable and not un-
fair, deceptive or abusive. 
‘‘(b) DUTY OF CARE.— 
‘‘(1) STANDARD.—Subject to regulations pre-
scribed under this subsection, each mortgage origi-
nator shall, in addition to the duties imposed by oth-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
erwise applicable provisions of State or Federal 
law— 
‘‘(A) be qualified and, when required, reg-
istered and licensed as a mortgage originator in 
accordance with applicable State or Federal 
law, including the Secure and Fair Enforcement 
for Mortgage Licensing Act of 2008; 
‘‘(B) with respect to each consumer seek-
ing or inquiring about a residential mortgage 
loan, diligently work to present the consumer 
with a range of residential mortgage loan prod-
ucts for which the consumer likely qualifies and 
which are appropriate to the consumer’s exist-
ing circumstances, based on information known 
by, or obtained in good faith by, the originator; 
‘‘(C) make full, complete, and timely dis-
closure to each such consumer of— 
‘‘(i) the comparative costs and bene-
fits of each residential mortgage loan prod-
uct offered, discussed, or referred to by the 
originator; 
‘‘(ii) the nature of the originator’s re-
lationship to the consumer (including the 
cost of the services to be provided by the 
originator and a statement that the mort-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
gage originator is or is not acting as an 
agent for the consumer, as the case may 
be); and 
‘‘(iii) any relevant conflicts of interest; 
‘‘(D) certify to the creditor, with respect to 
any transaction involving a residential mortgage 
loan, that the mortgage originator has fulfilled 
all requirements applicable to the originator 
under this section with respect to the trans-
action; and 
‘‘(E) include the unique identifier of the 
originator provided by the Nationwide Mortgage 
Licensing System and Registry on all loan doc-
uments. 
‘‘(2) CLARIFICATION OF EXTENT OF DUTY TO 
PRESENT RANGE OF PRODUCTS AND APPROPRIATE 
PRODUCTS.— 
‘‘(A) NO DUTY TO OFFER PRODUCTS FOR 
WHICH
ORIGINATOR
IS
NOT
AUTHORIZED
TO 
TAKE
AN
APPLICATION.—Paragraph (1)(B) 
shall not be construed as requiring— 
‘‘(i) a mortgage originator to present 
to any consumer any specific residential 
mortgage loan product that is offered by a 
creditor which does not accept consumer 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
referrals from, or consumer applications 
submitted by or through, such originator; 
or 
‘‘(ii) a creditor to offer products that 
the creditor does not offer to the general 
public. 
‘‘(B) APPROPRIATE LOAN PRODUCT.—For 
purposes of paragraph (1)(B), a residential 
mortgage loan shall be presumed to be appro-
priate for a consumer if— 
‘‘(i) the mortgage originator deter-
mines in good faith, based on then existing 
information and without undergoing a full 
underwriting process, that the consumer 
has a reasonable ability to repay and, in 
the case of a refinancing of an existing res-
idential mortgage loan, receives a net tan-
gible benefit, as determined in accordance 
with regulations prescribed under sub-
sections (a) and (b) of section 129B; and 
‘‘(ii) the loan does not have predatory 
characteristics or effects (such as equity 
stripping and excessive fees and abusive 
terms) as determined in accordance with 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
regulations prescribed under paragraph 
(4). 
‘‘(3) RULES OF CONSTRUCTION.—No provision 
of this subsection shall be construed as— 
‘‘(A) creating an agency or fiduciary rela-
tionship between a mortgage originator and a 
consumer if the originator does not hold himself 
or herself out as such an agent or fiduciary; or 
‘‘(B) restricting a mortgage originator 
from holding himself or herself out as an agent 
or fiduciary of a consumer subject to any addi-
tional duty, requirement, or limitation applica-
ble to agents or fiduciaries under any Federal 
or State law. 
‘‘(4) REGULATIONS.— 
‘‘(A) IN GENERAL.—The Federal banking 
agencies, in consultation with the Secretary, the 
Chairman of the State Liaison Committee to 
the Financial Institutions Examination Council, 
and the Commission, shall jointly prescribe reg-
ulations to— 
‘‘(i) further define the duty estab-
lished under paragraph (1); 
‘‘(ii) implement the requirements of 
this subsection; 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(iii) establish the time period within 
which any disclosure required under para-
graph (1) shall be made to the consumer; 
and 
‘‘(iv) establish such other require-
ments for any mortgage originator as such 
regulatory agencies may determine to be 
appropriate to meet the purposes of this 
subsection. 
‘‘(B) COMPLEMENTARY AND NONDUPLICA-
TIVE DISCLOSURES.—The agencies referred to 
in subparagraph (A) shall endeavor to make the 
required disclosures to consumers under this 
subsection complementary and nonduplicative 
with other disclosures for mortgage consumers 
to the extent such efforts— 
‘‘(i) are practicable; and 
‘‘(ii) do not reduce the value of any 
such disclosure to recipients of such disclo-
sures. 
‘‘(5) COMPLIANCE PROCEDURES REQUIRED.— 
The Federal banking agencies shall prescribe regula-
tions requiring depository institutions to establish 
and maintain procedures reasonably designed to as-
sure and monitor the compliance of such depository 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
institutions, the subsidiaries of such institutions, 
and the employees of such institutions or subsidi-
aries with the requirements of this section and the 
registration procedures established under section 
1507 of the Secure and Fair Enforcement for Mort-
gage Licensing Act of 2008.’’. 
(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 items: 
‘‘129A. Fiduciary duty of servicers of pooled residential mortgages. 
‘‘129B. Residential mortgage loan origination.’’. 
SEC. 103. PROHIBITION ON STEERING INCENTIVES. 
Section 129B of the Truth in Lending Act (as added 
by section 102(a)) is amended by inserting after sub-
section (b) the following new subsection: 
‘‘(c) PROHIBITION ON STEERING INCENTIVES.— 
‘‘(1) IN GENERAL.—For any mortgage loan, the 
total amount of direct and indirect compensation 
from all sources permitted to a mortgage originator 
may not vary based on the terms of the loan (other 
than the amount of the principal). 
‘‘(2) REGULATIONS.—The Federal banking 
agencies, in consultation with the Secretary and the 
Commission, shall jointly prescribe regulations to 
prohibit— 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(A) mortgage originators from steering 
any consumer to a residential mortgage loan 
that— 
‘‘(i) the consumer lacks a reasonable 
ability to repay (in accordance with regula-
tions prescribed under section 129B(a)); 
‘‘(ii) in the case of a refinancing of a 
residential mortgage loan, does not provide 
the consumer with a net tangible benefit 
(in accordance with regulations prescribed 
under section 129B(b)); or 
‘‘(iii) has predatory characteristics or 
effects (such as equity stripping, excessive 
fees, or abusive terms); 
‘‘(B) mortgage originators from steering 
any consumer from a residential mortgage loan 
for which the consumer is qualified that is a 
qualified mortgage (as defined in section 
129B(c)(3)) to a residential mortgage loan that 
is not a qualified mortgage; and 
‘‘(C) abusive or unfair lending practices 
that promote disparities among consumers of 
equal credit worthiness but of different race, 
ethnicity, gender, or age. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(3) RULES OF CONSTRUCTION.—No provision 
of this subsection shall be construed as— 
‘‘(A) affecting the mechanism for providing 
the total amount of direct and indirect com-
pensation permitted to a mortgage originator; 
‘‘(B) limiting or affecting the ability of a 
mortgage originator to sell residential mortgage 
loans to subsequent purchasers; 
‘‘(C) restricting a consumer’s ability to fi-
nance, including through rate or principal, any 
origination fees or costs permitted under this 
subsection, or the originator’s ability to receive 
such fees or costs (including compensation) 
from any person, so long as such fees or costs 
were fully and clearly disclosed to the consumer 
earlier in the application process as required by 
129A(a)(1)(C)(ii) and do not vary based on the 
terms of the loan or the consumer’s decision 
about whether to finance such fees or costs; or 
‘‘(D) prohibiting incentive payments to a 
mortgage originator based on the number of 
residential mortgage loans originated within a 
specified period of time.’’. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
SEC. 104. LIABILITY. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (c) (as added by section 
103) the following new subsection: 
‘‘(d) LIABILITY FOR VIOLATIONS.— 
‘‘(1) IN GENERAL.—For purposes of providing 
a cause of action for any failure by a mortgage origi-
nator to comply with any requirement imposed 
under this section and any regulation prescribed 
under this section, subsections (a) and (b) of section 
130 shall be applied with respect to any such failure 
by substituting ‘mortgage originator’ for ‘creditor’ 
each place such term appears in each such sub-
section. 
‘‘(2) MAXIMUM.—The maximum amount of any 
liability of a mortgage originator under paragraph 
(1) to a consumer for any violation of this section 
shall not exceed øthe greater of actual damages or¿ 
an amount equal to 3 times the total amount of di-
rect and indirect compensation or gain accruing to 
the mortgage originator in connection with the resi-
dential mortgage loan involved in the violation, plus 
the costs to the consumer of the action, including a 
reasonable attorney’s fee.’’. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
SEC. 105. REGULATIONS. 
(a) DISCRETIONARY REGULATORY AUTHORITY.— 
Section 129B of the Truth in Lending Act is amended 
by inserting after subsection (c) (as added by section 104) 
the following new subsection: 
‘‘(e) DISCRETIONARY REGULATORY AUTHORITY.— 
‘‘(1) IN GENERAL.—The Federal banking agen-
cies shall, by regulations issued jointly, prohibit or 
condition terms, acts or practices relating to residen-
tial mortgage loans that the agencies find to be abu-
sive, unfair, deceptive, predatory, inconsistent with 
reasonable underwriting standards, necessary or 
proper to effectuate the purposes of this section and 
section 129C, to prevent circumvention or evasion 
thereof, or to facilitate compliance with such sec-
tions, or are not in the interest of the borrower. 
‘‘(2) APPLICATION.—The regulations prescribed 
under paragraph (1) shall be applicable to all resi-
dential mortgage loans and shall be applied in the 
same manner as regulations prescribed under section 
105.’’. 
(b) EFFECTIVE DATE.—The regulations required or 
authorized to be prescribed under this title or the amend-
ments made by this title— 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
(c) TECHNICAL AND CONFORMING AMENDMENTS.— 
Section 129(l)(2) of the Truth in Lending Act (15 U.S.C. 
1639(l)(2)) is amended by inserting ‘‘referred to in section 
103(aa)’’ after ‘‘loans’’ each place such term appears. 
TITLE II—MINIMUM STANDARDS 
FOR MORTGAGES 
SEC. 201. ABILITY TO REPAY. 
(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 102(a)) the fol-
lowing new section: 
‘‘§ 129C. Minimum standards for residential mortgage 
loans 
‘‘(a) ABILITY TO REPAY.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions prescribed jointly by the Federal banking agen-
cies, in consultation with the Commission, no cred-
itor may make a residential mortgage loan unless 
the creditor makes a reasonable and good faith de-
termination based on verified and documented infor-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
mation that, at the time the loan is consummated, 
the consumer has a reasonable ability to repay the 
loan, according to its terms, and all applicable taxes, 
insurance, and assessments. 
‘‘(2) MULTIPLE LOANS.—If the creditor knows, 
or has reason to know, that 1 or more residential 
mortgage loans secured by the same dwelling will be 
made to the same consumer, the creditor shall make 
a reasonable and good faith determination, based on 
verified and documented information, that the con-
sumer has a reasonable ability to repay the com-
bined payments of all loans on the same dwelling ac-
cording to the terms of those loans and all applicable 
taxes, insurance, and assessments. 
‘‘(3) BASIS
FOR
DETERMINATION.—A deter-
mination under this subsection of a consumer’s abil-
ity to repay a residential mortgage loan shall be 
based on consideration of the consumer’s credit his-
tory, current income, expected income the consumer 
is reasonably assured of receiving, current obliga-
tions, debt-to-income ratio, employment status, and 
other financial resources other than the consumer’s 
equity in the dwelling or real property that secures 
repayment of the loan. 
‘‘(4) NONSTANDARD LOANS.— 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(A) VARIABLE RATE LOANS THAT DEFER 
REPAYMENT
OF
ANY
PRINCIPAL
OR
INTER-
EST.—For purposes of determining, under this 
subsection, a consumer’s ability to repay a vari-
able rate residential mortgage loan that allows 
or requires the consumer to defer the repay-
ment of any principal or interest, the creditor 
shall use a fully amortizing repayment schedule. 
‘‘(B) INTEREST-ONLY
LOANS.—For pur-
poses of determining, under this subsection, a 
consumer’s ability to repay a residential mort-
gage loan that permits or requires the payment 
of interest only, the creditor use the payment 
amount required to amortize the loan by its 
final maturity. 
‘‘(C) CALCULATION FOR NEGATIVE AMOR-
TIZATION.—In making any determination under 
this subsection, a creditor shall also take into 
consideration any balance increase that may ac-
crue from any negative amortization provision. 
‘‘(D) CALCULATION
PROCESS.—For pur-
poses of making any determination under this 
subsection, a creditor shall calculate the month-
ly payment amount for principal and interest on 
any residential mortgage loan by assuming— 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(i) the loan proceeds are fully dis-
bursed on the date of the consummation of 
the loan; 
‘‘(ii) the loan is to be repaid in sub-
stantially equal monthly amortizing pay-
ments for principal and interest over the 
entire term of the loan with no balloon 
payment, unless the loan contract requires 
more rapid repayment (including balloon 
payment), in which case the contract’s re-
payment schedule shall be used in this cal-
culation; and 
‘‘(iii) the interest rate over the entire 
term of the loan is a fixed rate equal to the 
fully indexed rate at the time of the loan 
closing, without considering the introduc-
tory rate. 
‘‘(5) FULLY-INDEXED
RATE
DEFINED.—For 
purposes of this subsection, the term ‘fully indexed 
rate’ means the index rate prevailing on a residential 
mortgage loan at the time the loan is made plus the 
margin that will apply after the expiration of any in-
troductory interest rates.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
by inserting after the item relating to section 129B (as 
added by section 102(b)) the following new item: 
‘‘129C. Minimum standards for residential mortgage loans.’’. 
SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS. 
Section 129C of the Truth in Lending Act (as added 
by section 201(a)) is amended by inserting after sub-
section (a) the following new subsection: 
‘‘(b) NET TANGIBLE BENEFIT FOR REFINANCING OF 
RESIDENTIAL MORTGAGE LOANS.— 
‘‘(1) IN GENERAL.—In accordance with regula-
tions prescribed under paragraph (3), no creditor 
may extend credit in connection with any residential 
mortgage loan that involves a refinancing of a prior 
existing residential mortgage loan unless the creditor 
reasonably and in good faith determines, at the time 
the loan is consummated and on the basis of infor-
mation known by or obtained in good faith by the 
creditor, that the refinanced loan will provide a net 
tangible benefit to the consumer. 
‘‘(2) CERTAIN LOANS PROVIDING NO NET TAN-
GIBLE BENEFIT.—A residential mortgage loan that 
involves a refinancing of a prior existing residential 
mortgage loan shall not be considered to provide a 
net tangible benefit to the consumer if the costs of 
the refinanced loan, including points, fees and other 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
charges, exceed the amount of any newly advanced 
principal without any corresponding changes in the 
terms of the refinanced loan that are advantageous 
to the consumer. 
‘‘(3) NET
TANGIBLE
BENEFIT.—The Federal 
banking agencies shall jointly prescribe regulations 
defining the term ‘net tangible benefit’ for purposes 
of this subsection.’’. 
SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION. 
Section 129C of the Truth in Lending Act is amend-
ed by inserting after subsection (b) (as added by section 
202) the following new subsection: 
‘‘(c) PRESUMPTION OF ABILITY TO REPAY AND NET 
TANGIBLE BENEFIT.— 
‘‘(1) IN GENERAL.—Any creditor with respect 
to any residential mortgage loan, and any assignee 
or securitizer of such loan, may presume that the 
loan has met the requirements of subsections (a) 
and (b), if the loan is a qualified mortgage 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) QUALIFIED
MORTGAGE.—The term 
‘qualified mortgage’ means any residential 
mortgage loan— 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(i) with an annual percentage rate 
that does not exceed the average prime 
offer rate for a comparable transaction, as 
of the date the interest rate is set— 
‘‘(I) by 1.5 or more percentage 
points for a first lien residential mort-
gage loan; and 
‘‘(II) by 3.5 or more percentage 
points for a subordinate lien residen-
tial mortgage loan; 
‘‘(ii) for which the income and finan-
cial resources of the consumer are verified 
and documented; 
‘‘(iii) for which the residential mort-
gage loan underwriting process is based on 
the fully-indexed rate, and takes into ac-
count all applicable taxes, insurance, and 
assessments; 
‘‘(iv) that does not cause the con-
sumer’s total monthly debts, including 
amounts under the loan, to exceed a per-
centage established by regulation of the 
consumer’s monthly gross income or such 
other maximum percentage of such income 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
as may be prescribed by regulation under 
paragraph (4); and 
‘‘(v) for which the term of the loan is 
fixed for a period of not less than or more 
than 30 years. 
‘‘(B) AVERAGE PRIME OFFER RATE.—The 
term ‘average prime offer rate’ means an an-
nual percentage rate that is derived from aver-
age interest rates, points, and other loan pric-
ing terms currently offered to consumers by a 
representative sample of creditors for mortgage 
transactions that have low risk pricing charac-
teristics. 
‘‘(3) PUBLICATION OF AVERAGE PRIME OFFER 
RATE.—The Board— 
‘‘(A) shall publish, and update at least 
weekly, average prime offer rates; and 
‘‘(B) may publish multiple rates based on 
varying types of mortgage transactions. 
‘‘(4) REGULATIONS.— 
‘‘(A) IN GENERAL.—The Federal banking 
agencies shall jointly prescribe regulations to 
carry out the purposes of this subsection. 
‘‘(B) REVISION
OF
SAFE
HARBOR
CRI-
TERIA.—The Federal banking agencies may 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
jointly prescribe regulations that revise, add to, 
or subtract from the criteria that define a quali-
fied mortgage to the extent necessary and ap-
propriate to effectuate the purposes of this sub-
section, to prevent circumvention or evasion of 
this subsection, or to facilitate compliance with 
this subsection.’’. 
SEC. 204. LIABILITY. 
Section 129C of the Truth in Lending Act is amend-
ed by inserting after subsection (c) (as added by section 
203) the following new subsection: 
‘‘(d) LIABILITY FOR VIOLATIONS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) RESCISSION.—In addition to any 
other liability under this title for a violation by 
a creditor of subsection (a) or (b) (for example 
under section 130) and subject to the statute of 
limitations in paragraph (7), a civil action may 
be maintained against a creditor for a violation 
of subsection (a) or (b) with respect to a resi-
dential mortgage loan for the rescission of the 
loan, and such additional costs as the obligor 
may have incurred as a result of the violation 
and in connection with obtaining a rescission of 
the loan, including a reasonable attorney’s fee. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(B) CURE.—A creditor shall not be liable 
for rescission under subparagraph (A) with re-
spect to a residential mortgage loan if, no later 
than 90 days after the receipt of notification 
from the consumer that the loan violates sub-
section (a) or (b), the creditor provides a cure. 
‘‘(2) LIMITED ASSIGNEE AND SECURITIZER LI-
ABILITY.—Notwithstanding sections 125(e) and 131 
and except as provided in paragraph (3), a civil ac-
tion which may be maintained against a creditor 
with respect to a residential mortgage loan for a vio-
lation of subsection (a) or (b) may be maintained 
against any assignee or securitizer of such residen-
tial mortgage loan, who has acted in good faith, for 
the following liabilities only: 
‘‘(A) Rescission of the loan. 
‘‘(B) Such additional costs as the obligor 
may have incurred as a result of the violation 
and in connection with obtaining a rescission of 
the loan, including a reasonable attorney’s fee. 
‘‘(3) ASSIGNEE
AND
SECURITIZER
EXEMP-
TION.—No assignee or securitizer of a residential 
mortgage loan shall be liable under paragraph (2) 
with respect to such loan if, no later than 90 days 
after the receipt of notification from the consumer 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
that the loan violates subsection (a) or (b), the as-
signee or securitizer provides a cure so that the loan 
satisfies the requirements of subsections (a) and (b). 
‘‘(4) ABSENT PARTIES.— 
‘‘(A) 
ABSENT
CREDITOR.—Notwith-
standing the exemption provided in paragraph 
(3), if the creditor with respect to a residential 
mortgage loan made in violation of subsection 
(a) or (b) has ceased to exist as a matter of law 
or has filed for bankruptcy protection under 
title 11, United States Code, or has had a re-
ceiver or liquidating agent appointed, a con-
sumer may maintain a civil action against an 
assignee to cure the residential mortgage loan, 
plus the costs and reasonable attorney’s fees in-
curred in obtaining such remedy. 
‘‘(B) ABSENT CREDITOR AND ASSIGNEE.— 
Notwithstanding the exemption provided in 
paragraph (3), if the creditor with respect to a 
residential mortgage loan made in violation of 
subsection (a) or (b) and each assignee of such 
loan have ceased to exist as a matter of law or 
have filed for bankruptcy protection under title 
11, United States Code, or have had receivers 
or liquidating agents appointed, the consumer 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
may maintain the civil action referred to in sub-
paragraph (A) against the securitizer. 
‘‘(5) CURE
DEFINED.—For purposes of this 
subsection, the term ‘cure’ means, with respect to a 
residential mortgage loan that violates subsection (a) 
or (b), the modification or refinancing, at no cost to 
the consumer, of the loan to provide terms that 
would have satisfied the requirements of subsections 
(a) and (b) if the loan had contained such terms as 
of the origination of the loan and the payment of 
such additional costs as the obligor may have in-
curred as a result of the violation and in connection 
with obtaining a cure of the loan, including a rea-
sonable attorney’s fee. 
‘‘(6) DISAGREEMENT OVER CURE.—If any cred-
itor, assignee, or securitizer and a consumer fail to 
reach agreement on a cure with respect to a residen-
tial mortgage loan that violates subsection (a) or (b), 
or the consumer fails to accept a cure proffered by 
a creditor, assignee, or securitizer— 
‘‘(A) the creditor, assignee, or securitizer 
may provide the cure; and 
‘‘(B) the consumer may challenge the ade-
quacy of the cure during the 6-month period be-
ginning when the cure is provided. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
If the consumer’s challenge, under this paragraph, 
of a cure is successful, the creditor, assignee, or 
securitizer shall be liable to the consumer for rescis-
sion of the loan and such additional costs under 
paragraph (2). 
‘‘(7) INABILITY TO PROVIDE OR OBTAIN RE-
SCISSION.—If a creditor, assignee, or securitizer 
cannot provide, or a consumer cannot obtain, rescis-
sion under paragraph (1) or (2), the liability of such 
creditor, assignee, or securitizer shall be met by pro-
viding the financial equivalent of a rescission, to-
gether with such additional costs as the obligor may 
have incurred as a result of the violation and in con-
nection with obtaining a rescission of the loan, in-
cluding a reasonable attorney’s fee. 
‘‘(8) NO CLASS ACTIONS AGAINST ASSIGNEE OR 
SECURITIZER
UNDER
PARAGRAPH (2).—Only indi-
vidual actions may be brought against an assignee 
or securitizer of a residential mortgage loan for a 
violation of subsection (a) or (b). 
‘‘(9) STATUTE OF LIMITATIONS.—The liability 
of a creditor, assignee, or securitizer under this sub-
section shall apply in any original action against a 
creditor under paragraph (1) or an assignee or 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
securitizer under paragraph (2) which is brought be-
fore— 
‘‘(A) in the case of any residential mort-
gage loan other than a loan to which subpara-
graph (B) applies, the end of the 3-year period 
beginning on the date the loan is consummated; 
or 
‘‘(B) in the case of a residential mortgage 
loan that provides for a fixed interest rate for 
an introductory period and then resets or ad-
justs to a variable rate or that provides for a 
nonamortizing payment schedule and then con-
verts to an amortizing payment schedule, the 
earlier of— 
‘‘(i) the end of the 1-year period be-
ginning on the date of such reset, adjust-
ment, or conversion; or 
‘‘(ii) the end of the 6-year period be-
ginning on the date the loan is con-
summated. 
‘‘(10) POOLS
AND
INVESTORS
IN
POOLS
EX-
CLUDED.—In the case of residential mortgage loans 
acquired or aggregated for the purpose of including 
such loans in a pool of assets held for the purpose 
of issuing or selling instruments representing inter-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
ests in such pools including through a securitization 
vehicle, the terms ‘assignee’ and ‘securitizer’, as 
used in this section, do not include the securitization 
vehicle, the pools of such loans or any original or 
subsequent purchaser of any interest in the 
securitization vehicle or any instrument representing 
a direct or indirect interest in such pool.’’. 
SEC. 205. DEFENSE TO FORECLOSURE. 
Section 129C of the Truth in Lending Act is amend-
ed by inserting after subsection (d) (as added by section 
204) the following new subsection: 
‘‘(e) DEFENSE TO FORECLOSURE.—Notwithstanding 
any other provision of law— 
‘‘(1) when the holder of a residential mortgage 
loan or anyone acting for such holder initiates a ju-
dicial or nonjudicial foreclosure— 
‘‘(A) a consumer who has the right to re-
scind under this section with respect to such 
loan against the creditor or any assignee or 
securitizer may assert such right as a defense 
to foreclosure or counterclaim to such fore-
closure against the holder, or 
‘‘(B) if the foreclosure proceeding begins 
after the end of the period during which a con-
sumer may bring an action for rescission under 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
subsection (c) and the consumer would have 
had a valid basis for such an action if it had 
been brought before the end of such period, the 
consumer may seek actual damages incurred by 
reason of the violation which gave rise to the 
right of rescission, together with costs of the 
action, including a reasonable attorney’s fee 
against the creditor or any assignee or 
securitizer; and 
‘‘(2) such holder or anyone acting for such 
holder or any other applicable third party may sell, 
transfer, convey, or assign a residential mortgage 
loan to a creditor, any assignee, or any securitizer, 
or their designees, to effect a rescission or cure.’’. 
SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS. 
(a) IN GENERAL.—Section 129C of the Truth in 
Lending Act is amended by inserting after subsection (e) 
(as added by section 205) the following new subsections: 
‘‘(f) PROHIBITION ON CERTAIN PREPAYMENT PEN-
ALTIES.— 
‘‘(1) PROHIBITED ON CERTAIN LOANS.—A resi-
dential mortgage loan that is not a ‘qualified mort-
gage’ may not contain terms under which a con-
sumer must pay a prepayment penalty for paying all 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
or part of the principal after the loan is con-
summated. 
‘‘(2) PHASED-OUT
PENALTIES
ON
QUALIFIED 
MORTGAGES.—A qualified mortgage (as defined in 
subsection (c)) may not contain terms under which 
a consumer must pay a prepayment penalty for pay-
ing all or part of the principal after the loan is con-
summated in excess of the following limitations: 
‘‘(A) During the 1-year period beginning 
on the date the loan is consummated, the pre-
payment penalty shall not exceed an amount 
equal to 3 percent of the outstanding balance 
on the loan. 
‘‘(B) During the 1-year period beginning 
after the period described in subparagraph (A), 
the prepayment penalty shall not exceed an 
amount equal to 2 percent of the outstanding 
balance on the loan. 
‘‘(C) During the 1-year period beginning 
after the 1-year period described in subpara-
graph (B), the prepayment penalty shall not ex-
ceed an amount equal to 1 percent of the out-
standing balance on the loan. 
‘‘(D) After the end of the 3-year period be-
ginning on the date the loan is consummated, 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
no prepayment penalty may be imposed on a 
qualified mortgage. 
‘‘(3) PROHIBITED AFTER INITIAL PERIOD ON 
LOANS WITH A RESET.—A qualified mortgage with 
a fixed interest rate for an introductory period that 
adjusts or resets after such period may not contain 
terms under which a consumer must pay a prepay-
ment penalty for paying all or part of the principal 
after the beginning of the 3-month period ending on 
the date of the adjustment or reset. 
‘‘(4) OPTION FOR NO PREPAYMENT PENALTY 
REQUIRED.—A creditor may not offer a consumer a 
residential mortgage loan product that has a prepay-
ment penalty for paying all or part of the principal 
after the loan is consummated as a term of the loan 
without offering the consumer a residential mort-
gage loan product that does not have a prepayment 
penalty as a term of the loan. 
‘‘(g) SINGLE PREMIUM CREDIT INSURANCE PROHIB-
ITED.—No creditor may finance, directly or indirectly, in 
connection with any residential mortgage loan or with any 
extension of credit under an open end consumer credit 
plan secured by the principal dwelling of the consumer 
(other than a reverse mortgage), any credit life, credit dis-
ability, credit unemployment or credit property insurance, 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
or any other accident, loss-of-income, life or health insur-
ance, or any payments directly or indirectly for any debt 
cancellation or suspension agreement or contract, except 
that— 
‘‘(1) insurance premiums or debt cancellation or 
suspension fees calculated and paid in full on a 
monthly basis shall not be considered financed by 
the creditor; and 
‘‘(2) this subsection shall not apply to credit 
unemployment insurance for which the unemploy-
ment insurance premiums are reasonable and at no 
additional cost to the consumer, the creditor receives 
no direct or indirect compensation in connection 
with the unemployment insurance premiums, and 
the unemployment insurance premiums are paid pur-
suant to another insurance contract and not paid to 
an affiliate of the creditor. 
‘‘(h) ARBITRATION.— 
‘‘(1) IN
GENERAL.—No residential mortgage 
loan and no extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer, other than a reverse mortgage, 
may include terms which require arbitration or any 
other nonjudicial procedure as the method for resolv-
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
ing any controversy 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, any assignee, or any securitizer to 
agree to arbitration or any other nonjudicial proce-
dure as the method for resolving any controversy at 
any time after a dispute or claim under the trans-
action arises. 
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any residential mortgage 
loan or of any extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer (other than a reverse mort-
gage), and no other agreement between the con-
sumer and the creditor relating to the residential 
mortgage loan or extension of credit referred to in 
paragraph (1), 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 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
violation of this section, any other provision of this 
title, or any other Federal law. 
‘‘(i) DUTY OF SECURITIZER TO RETAIN ACCESS TO 
LOANS.—Any securitizer shall reserve the right and pre-
serve an ability, in any document or contract establishing 
any pool of assets that includes any residential mortgage 
loan— 
‘‘(1) to identify and obtain access to any such 
loan in the pool; and 
‘‘(2) to provide for and obtain a remedy under 
this title for the obligor under any such loan. 
‘‘(j) MORTGAGES WITH NEGATIVE AMORTIZATION.— 
No creditor may extend credit to a borrower in connection 
with a consumer credit transaction under an open or 
closed end consumer credit plan secured by a dwelling or 
residential real property that includes a dwelling, other 
than a reverse mortgage, that provides or permits a pay-
ment plan that may, at any time over the term of the ex-
tension of credit, result in negative amortization unless, 
before such transaction is consummated— 
‘‘(1) the creditor provides the consumer with a 
statement that— 
‘‘(A) the pending transaction will or may, 
as the case may be, result in negative amortiza-
tion; 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(B) describes negative amortization in 
such manner as the Federal banking agencies 
shall prescribe; 
‘‘(C) negative amortization increases the 
outstanding principal balance of the account; 
and 
‘‘(D) negative amortization reduces the 
consumer’s equity in the dwelling or real prop-
erty; and 
‘‘(2) in the case of a first-time borrower with 
respect to a residential mortgage loan that is not a 
qualified mortgage, the first-time borrower provides 
the creditor with sufficient documentation to dem-
onstrate that the consumer received homeownership 
counseling from organizations or counselors certified 
by the Secretary of Housing and Urban Develop-
ment as competent to provide such counseling. 
‘‘(k) ANNUAL CONTACT INFORMATION.—At least 
once annually and whenever there is a change in owner-
ship of a residential mortgage loan, the servicer with re-
spect to a residential mortgage loan shall provide a written 
notice to the consumer identifying the name of the creditor 
or any assignee or securitizer who should be contacted by 
the consumer for any reason concerning the consumer’s 
rights with respect to the loan. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(l) TENANT PROTECTION.— 
‘‘(1) IN GENERAL.—In the case of any fore-
closure on any dwelling or residential real property, 
after the date of the enactment of the Mortgage Re-
form and Anti-Predatory Lending Act, any imme-
diate successor in interest in such property pursuant 
to the foreclosure shall assume such interest subject 
to— 
‘‘(A) except as provided in paragraph (2), 
the rights of any bona fide tenant, as of the 
date of foreclosure under any bona fide lease 
entered into before the notice of foreclosure, to 
occupy the premises until the end of the re-
maining term of the lease; and 
‘‘(B) the rights of any bona fide tenant, as 
of the date of foreclosure, without a lease or 
with a lease terminable at will under State law, 
subject to the provision by the immediate suc-
cessor in interest and the receipt by the tenant 
in the unit, of a notice to vacate at least 90 
days before the effective date of such notice. 
‘‘(2) EXCEPTION FOR SUBSEQUENT OWNER-OC-
CUPANT.—Notwithstanding paragraph (1), if the im-
mediate successor in interest of any dwelling or resi-
dential real property that is otherwise subject to 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
paragraph (1) is a purchaser who will occupy a unit 
of the dwelling or residential real property as a pri-
mary residence, or such successor in interest sells 
the dwelling or residential real property to a pur-
chaser who will occupy a unit of the dwelling or resi-
dential real property, as a primary residence— 
‘‘(A) such purchaser may terminate a lease 
relating to such unit on the effective date of a 
notice to vacate; and 
‘‘(B) such notice to vacate shall be pro-
vided by the purchaser to the tenant in such 
unit at least 90 days before the effective date 
of such notice. 
‘‘(3) BONA
FIDE
LEASE
OR
TENANCY.—For 
purposes of this section, a lease or tenancy shall be 
considered bona fide only if— 
‘‘(A) the mortgagor under the contract is 
not the tenant; 
‘‘(B) the lease or tenancy was the result of 
an arms-length transaction; or 
‘‘(C) the lease or tenancy requires the re-
ceipt of rent that is not substantially less than 
fair market rent for the property. 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
‘‘(4) RULE OF CONSTRUCTION.—No provision 
of this subsection shall be construed as affecting the 
requirements— 
‘‘(A) for termination of any Federal- or 
State-subsidized tenancy; or 
‘‘(B) of any State or local law that pro-
vides longer time periods or other additional 
protections for tenants.’’. 
(b) CORRESPONDING PROVISION RELATING TO EF-
FECT OF FORECLOSURES ON SECTION 8 TENANCIES.— 
Paragraph (7) of section 8(o) of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended— 
(1) in subparagraph (C), by inserting before the 
semicolon at the end the following: ‘‘, and in the 
case of an owner who is an immediate successor in 
interest pursuant to foreclosure— 
‘‘(i) during the initial term of the ten-
ant’s lease having the property vacant 
prior to sale shall not constitute good 
cause; and 
‘‘(ii) in subsequent lease terms, having 
the property vacant prior to sale may con-
stitute good cause if the property is un-
marketable while occupied, or if such 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
owner will occupy the unit as a primary 
residence’’; 
(2) in subparagraph (E), by striking ‘‘and’’ at 
the end; 
(3) by redesignating subparagraph (F) as sub-
paragraph (G); and 
(4) by inserting after subparagraph (E) the fol-
lowing: 
‘‘(F) shall provide that in the case of any 
foreclosure on any residential real property in 
which a recipient of assistance under this sub-
section resides, the immediate successor in in-
terest in such property pursuant to the fore-
closure shall assume such interest subject to the 
lease between the prior owner and the tenant 
and to the housing assistance payments con-
tract between the prior owner and the public 
housing agency for the occupied unit; if a public 
housing agency is unable to make payments 
under the contract to the immediate successor 
in interest after foreclosure, due to action or in-
action by the successor in interest, including 
the rejection of payments or the failure of the 
successor to maintain the unit in compliance 
with paragraph (8) or an inability to identify 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
the successor, the agency may use funds that 
would have been used to pay the rental amount 
on behalf of the family— 
‘‘(i) to pay for utilities that are the 
responsibility of the owner under the lease 
or applicable law, after taking reasonable 
steps to notify the owner that it intends to 
make payments to a utility provider in lieu 
of payments to the owner, except prior no-
tification shall not be required in any case 
in which the unit will be or has been ren-
dered uninhabitable due to the termination 
or threat of termination of service, in 
which case the public housing agency shall 
notify the owner within a reasonable time 
after making such payment; or 
‘‘(ii) for the family’s reasonable mov-
ing costs, including security deposit costs; 
except that this subparagraph and the provi-
sions related to foreclosure in subparagraph (C) 
shall not affect any State or local law that pro-
vides longer time periods or other additional 
protections for tenants.’’. 
(c) CONFORMING AMENDMENT RELATING TO EN-
FORCEMENT.—Section 108(a) of the Truth in Lending 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
Act (15 U.S.C. 1607(a)) is amended by inserting after 
paragraph (6) the following new paragraph: 
‘‘(7) sections 21B and 21C of the Securities 
Exchange Act of 1934, in the case of a broker or 
dealer, other than a depository institution, by the 
Securities and Exchange Commission.’’. 
SEC. 207. RULE OF CONSTRUCTION. 
Except as otherwise expressly provided in section 
129B or 129C of the Truth in Lending Act (as added by 
this Act), no provision of such section 129B or 129C shall 
be construed as superseding, repealing, or affecting any 
duty, right, obligation, privilege, or remedy of any person 
under any other provision of the Truth in Lending Act 
or any other provision of Federal or State law. 
SEC. 208. EFFECT ON STATE LAWS. 
(a) IN GENERAL.—Section 129C(d) of the Truth in 
Lending Act (as added by section 204) shall supersede any 
State law or application thereof that provides additional 
remedies 
against 
any 
assignee, 
securitizer, 
or 
securitization vehicle, and the remedies described in such 
section shall constitute the sole remedies against any as-
signee, securitizer, or securitization vehicle, for a violation 
of subsection (a) or (b) of section 129C of such Act or 
any other State law the terms of which address the specific 
subject matter of subsection (a) (determination of ability 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
to repay) or (b) (requirement of a net tangible benefit) 
of such section 129C. 
(b) RULES OF CONSTRUCTION.—No provision of this 
section shall be construed as limiting— 
(1) the application of any State law against a 
creditor for a particular residential mortgage loan 
regardless of whether such creditor also acts as as-
signee, securitizer, or securitization vehicle for such 
mortgage; or 
(2) availability of remedies based upon fraud, 
misrepresentation, deceptive acts or practices, false 
advertising, or civil rights laws— 
(A) against any assignee, securitizer, or 
securitization vehicle for its own conduct relat-
ing to the making of a residential mortgage 
loan to a consumer; or 
(B) against any assignee, securitizer, or 
securitization vehicle in the sale or purchase of 
residential mortgage loans or securities. 
(c) DEFINITION.—For purposes of subsection (b)(2), 
acts or practices are deceptive if— 
(1) there is a representation, omission, or prac-
tice that misleads or is likely to mislead a consumer; 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
(2) from the consumer’s perspective, the inter-
pretation of the representation, omission, or practice 
is reasonable under the circumstances; and 
(3) the representation, omission or practice is 
material so that it is likely to affect the consumer’s 
conduct or decision with regard to a product or serv-
ice. 
SEC. 209. REGULATIONS. 
Regulations required or authorized to be prescribed 
under this title or the amendments made by this title— 
(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a)(2) of 
the Truth in Lending Act (15 U.S.C. 1640(a)(2)) is 
amended— 
(1) by striking ‘‘$100’’ and inserting ‘‘$200’’; 
(2) 
by 
striking 
‘‘$1,000’’ 
and 
inserting 
‘‘$2,000’’; 
(3) by striking ‘‘$200’’ and inserting ‘‘$400’’; 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
(4) 
by 
striking 
‘‘$2,000’’ 
and 
inserting 
‘‘$4,000’’; and 
(5) by striking ‘‘$500,000’’ and inserting 
‘‘$1,000,000’’. 
(b) STATUTE OF LIMITATIONS EXTENDED FOR SEC-
TION 129 VIOLATIONS.—Section 130(e) of the Truth in 
Lending Act (15 U.S.C. 1640(e)) is amended— 
(1) in the first sentence, by striking ‘‘Any ac-
tion’’ and inserting ‘‘Except as provided in the sub-
sequent sentence, any action’’; and 
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘Any action under this section 
with respect to any violation of section 129 may be 
brought in any United States district court, or in 
any other court of competent jurisdiction, before the 
end of the 3-year period beginning on the date of the 
occurrence of the violation.’’. 
SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER 
DECEPTION. 
Section 130 of the Truth in Lending Act is amended 
by adding at the end the following new subsection: 
‘‘(j) EXEMPTION FROM LIABILITY AND RESCISSION 
IN CASE OF BORROWER FRAUD OR DECEPTION.—In ad-
dition to any other remedy available by law or contract, 
no creditor, assignee, or securitizer shall be liable to an 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
obligor under this section, nor shall it be subject to the 
right of rescission of any obligor under 129B, if such obli-
gor, or co-obligor, knowingly, or willfully and with actual 
knowledge furnished material information known to be 
false for the purpose of obtaining such residential mort-
gage loan.’’. 
SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF 
HYBRID ADJUSTABLE RATE MORTGAGES. 
(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 128 the following new section: 
‘‘§ 128A. Reset of hybrid adjustable rate mortgages 
‘‘(a) HYBRID ADJUSTABLE RATE MORTGAGES DE-
FINED.—For purposes of this section, the term ‘hybrid ad-
justable rate mortgage’ means a consumer credit trans-
action secured by the consumer’s principal residence with 
a fixed interest rate for an introductory period that ad-
justs or resets to a variable interest rate after such period. 
‘‘(b) NOTICE OF RESET AND ALTERNATIVES.—Dur-
ing the 1-month period that ends 6 months before the date 
on which the interest rate in effect during the introductory 
period of a hybrid adjustable rate mortgage adjusts or 
resets to a variable interest rate, the creditor or servicer 
of such loan shall provide a written notice, separate and 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS
fect on the date of consummation of the 
transaction to the maximum margin per-
mitted at any time during the transaction 
agreement. 
‘‘(iii) In the case of any other trans-
action in which the rate may vary at any 
time during the term of the loan for any 
reason, the interest charged on the trans-
action at the maximum rate that may be 
charged during the term of the trans-
action.’’. 
(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 
103(aa)(2) of the Truth in Lending Act (15 U.S.C. 
1602(aa)(2)) is amended by striking subparagraph (B) 
and inserting the following new subparagraph: 
‘‘(B) An increase or decrease under sub-
paragraph (A)— 
‘‘(i) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(I) being less than 6 percentage 
points or greater than 10 percentage 
points; and 
‘‘(ii) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(II) being less than 8 percentage 
VerDate Nov 24 2008 
01:03 Mar 27, 2009
Jkt 079200
PO 00000
Frm 00063
Fmt 6652
Sfmt 6201
E:\BILLS\H1728.IH
H1728
rfrederick on PROD1PC67 with BILLS