I
107TH CONGRESS
1ST SESSION
H. R. 1053
To amend the Equal Credit Opportunity Act and the Home Mortgage Disclo-
sure Act of 1975 to reduce the disparate impact of predatory lending
on minorities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 15, 2001
Mr. LAFALCE (for himself, Mr. GUTIERREZ, Ms. LEE, Mrs. JONES of Ohio,
Mr. CAPUANO, Mr. CLAY, Mr. HINCHEY, and Ms. SCHAKOWSKY) intro-
duced the following bill; which was referred to the Committee on Finan-
cial Services
A BILL
To amend the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act of 1975 to reduce the disparate
impact of predatory lending on minorities, 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 ‘‘Equal Credit Enhance-
ment and Neighborhood Protection Act of 2001’’.
SEC. 2. COMBATING DISCRIMINATORY STEERING AND RE-
VERSE REDLINING.
(a) DISCRIMINATORY STEERING AND REVERSE RED-
LINING PROHIBITED.—Section 701 of the Equal Credit
Opportunity Act (15 U.S.C. 1691) is amended—
(1) by striking ‘‘(a) It shall be unlawful’’ and
inserting ‘‘(a) IN GENERAL.—It shall be unlawful’’;
(2) by redesignating subsections (b), (c), (d),
and (e) as subsections (d), (e), (f), and (g), respec-
tively; and
(3) by inserting after subsection (a) the fol-
lowing new subsections:
‘‘(b) MOST FAVORABLE CREDIT TERMS.—
‘‘(1) IN GENERAL.—It shall be unlawful for a
creditor to fail to extend credit to an applicant
under the most favorable terms available from the
creditor, or an affiliate of the creditor, for which the
applicant qualifies.
‘‘(2) AFFILIATE
DEFINED.—For purposes of
this subsection, the term ‘affiliate’ has the same
meaning given such term in section 2(k) of the Bank
Holding Company Act of 1956.
‘‘(c) TARGETING HIGH-COST MORTGAGES PROHIB-
ITED.—
‘‘(1) IN GENERAL.—It shall be unlawful for any
creditor to adversely target an applicant or group of
applicants on the basis of race, color, religion, na-
tional origin, sex, marital status or age, with respect
to a high cost mortgage.
‘‘(2) HIGH COST MORTGAGE DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
title, the term ‘high cost mortgage’ means a
consumer credit transaction—
‘‘(i) that is secured by the consumer’s
principal dwelling, other than a reverse
mortgage transaction; and
‘‘(ii) the terms of which are described
in at least 1 of the following subclauses:
‘‘(I) The transaction is secured
by a first mortgage on the consumer’s
principal dwelling and the annual per-
centage rate on the credit, at the con-
summation of the transaction, will ex-
ceed by more than 6 percentage
points the yield on Treasury securities
having comparable periods of maturity
on the 15th day of the month imme-
diately preceding the month in which
the application for the extension of
credit is received by the creditor;
‘‘(II) The transaction is secured
by a junior or subordinate mortgage
on the consumer’s principal dwelling
and the annual percentage rate on the
credit, at the consummation of the
transaction, will exceed by more than
8 percentage points the yield on
Treasury securities having comparable
periods of maturity on the 15th day of
the month immediately preceding the
month in which the application for the
extension of credit is received by the
creditor.
‘‘(III) The total points and fees
payable on the transaction will exceed
the greater of 5 percent of the total
loan amount or $1,000.
‘‘(B) INTRODUCTORY RATES NOT TAKEN
INTO ACCOUNT.—If the terms of any consumer
credit transaction that is secured by the con-
sumer’s principal dwelling offer, for any initial
or introductory period, an annual percentage
rate of interest which—
‘‘(i) is less than the annual percentage
rate of interest which will apply after the
end of such initial or introductory period;
or
‘‘(ii) in the case of an annual percent-
age rate which varies in accordance with
an index, which is less than the current
annual percentage rate under the index
which will apply after the end of such pe-
riod,
the annual percentage rate of interest that shall
be taken into account for purposes of sub-
clauses (I) and (II) of subparagraph (A)(ii)
shall be the rate described in clause (i) or (ii)
of this subparagraph rather than any rate in ef-
fect during the initial or introductory period.
‘‘(3) NO
NEGATIVE
IMPLICATION.—No provi-
sion of this subsection shall be construed as prohib-
iting a nonprofit entity or government agency from
promoting a program that enhances the availability
of mortgage credit on fair terms, as defined in regu-
lations that the Secretary shall prescribe, to under-
served persons and communities.’’.
(b) ENHANCED GENERAL DAMAGES FOR REVERSE
REDLINING.—Section 706 of the Equal Credit Oppor-
tunity Act (15 U.S.C. 1691e) is amended—
‘‘(ii) the amount equal to 2 percent of
the net worth of the creditor.’’.
SEC. 3. APPLICABILITY OF EQUAL CREDIT OPPORTUNITY
ACT TO REQUESTS FOR PREAPPROVALS.
Section 702(b) of the Equal Credit Opportunity Act
(15 U.S.C. 1691a(b)) is amended by inserting the fol-
lowing before the period at the end: ‘‘and includes any per-
son who requests a written commitment from a creditor
for a home purchase loan, even if the person requests a
commitment to be issued subject to the identification of
a suitable property or other condition’’.
SEC. 4. PROHIBITION ON CERTAIN REGULATORY EXEMP-
TIONS UNDER THE HOME MORTGAGE DIS-
CLOSURE ACT OF 1977.
Section 304 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2803) is amended by adding at the
end the following new subsection:
‘‘(n) PROHIBITION ON REGULATORY EXEMPTIONS
FROM
REPORTING
REQUIREMENTS.—Subject to sub-
section (i)—
‘‘(1) no provision of this title may be construed
as authorizing the Board, the Secretary, or any
other Federal agency to exempt any depository insti-
tution from the requirements of this title; and
‘‘(2) any exemption from the requirements of
this title provided in any regulation, such as the ex-
emption provided in Appendix A to part 203 of the
Code of Federal Regulations for lending institutions
described in section 303(2)(B) whose total dollar
amount of purchase loans originated in any year did
not exceed 10 percent of the total dollar amount of
all loan originations by such institution in such year,
shall cease to be effective as of the date of the enact-
ment of the Equal Credit Enhancement and Neigh-
borhood Protection Act.’’.
SEC. 5. ADDITIONAL DISCLOSURES UNDER THE HOME
MORTGAGE DISCLOSURE ACT OF 1977.
(a) REASON FOR DENIAL.—Paragraph (4) of section
304(b) of the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2803(b)(4)) is amended by inserting ‘‘(and the rea-
sons for denial of a loan in the case of completed applica-
tion, as appropriate)’’ after ‘‘completed applications’’.
(b) APR AND FEES.—Section 304(b) of the Home
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is
amended—
(1) by striking ‘‘and’’ at the end of 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
paragraph:
‘‘(5) annual percentage rate (as determined
under section 107 of the Truth in Lending Act) of
mortgage loans, along with all costs of credit, which
shall include all finance charges (as determined
under section 106 of the Truth in Lending Act),
costs of all insurance premiums paid within 90 days
of a loan’s origination, fees and amounts imposed by
third party closing agents and all fees collected by
mortgage brokers, and an indication of whether a
loan is subject to the Homeownership Equity Protec-
tion Act of 1994, grouped according to census tract,
income level, racial characteristics and gender;’’.
(c) DEBT-TO-INCOME RATIO FOR CERTAIN LOANS.—
Section 304(b) of the Home Mortgage Disclosure Act of
1975 (12 U.S.C. 2803(b)) is amended by inserting after
paragraph (5) (as added by subsection (b)(3) of this sec-
tion) the following new paragraph:
‘‘(6) for each mortgage loan, the ratio of the
mortgagor’s debt to the mortgagor’s income;’’.
(d) MANUFACTURED HOUSING.—Section 304(b) of
the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2803(b)) is amended by inserting after paragraph (6) (as
added by subsection (c) of this section) the following new
paragraph:
‘‘(7) for each mortgage loan, indication of
whether repayment of the loan is secured by a lien
on a manufactured home;’’.
(e) LOAN-TO-VALUE RATIO.—Section 304(b) of the
Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2803(b)) is amended by inserting after paragraph (7) (as
added by subsection (d) of this section) the following new
paragraph:
‘‘(8) for each mortgage loan, the ratio of the
value of the real estate (including a manufactured
home, as appropriate) that secures repayment of the
loan to the principal amount of the loan at the time
of origination; and’’
(f) RACE, AGE, AND GENDER
OF ALL APPLI-
CANTS.—Section 304(b) of the Home Mortgage Disclosure
Act of 1975 (12 U.S.C. 2803(b)) is amended by inserting
after paragraph (8) (as added by subsection (e) of this
section) the following new paragraph:
‘‘(9) for each completed application, including
applications taken by telephone or electronically, the
racial characteristics, age, and gender of each appli-
cant.’’
(g) INVOLVEMENT OF MORTGAGE BROKERS.—Sec-
tion 304(b) of the Home Mortgage Disclosure Act of 1975
(12 U.S.C. 2803(b)) is amended by inserting after para-
graph (9) (as added by subsection (f) of this section) the
following new paragraph:
‘‘(9) the number and dollar amounts of mort-
gage loans and loan applications (whether completed
or not) with respect to which a mortgage broker (as
defined in regulations prescribed under the Real Es-
tate Settlement Procedures Act of 1974) was in-
volved at any stage of the loan process.’’.
(h) TECHNICAL AND CONFORMING AMENDMENTS.—
Section 304(h) of the Home Mortgage Disclosure Act of
1975 (12 U.S.C. 2803(b)) is amended by striking ‘‘sub-
section (b)(4)’’ each place such term appears and inserting
‘‘paragraph (4), (5), (6), (7), (8), (9), or (10) of sub-
section (b)’’.
SEC. 6. DISCLOSURE OF PARENT COMPANY.
Section 304 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2803) is amended by inserting after
subsection (n) (as added by section 4 of this Act) the fol-
lowing new subsection:
‘‘(o) OBLIGATION TO IDENTIFY PARENT.—
‘‘(1) IN GENERAL.—In each disclosure and sub-
mission required by this title, each depository insti-
tution shall clearly identify the company that con-
trols the depository institution and any affiliate of
the depository institution that makes mortgage loans
or provides financing for such loans.
‘‘(2) CONTROL DEFINED.—For purposes of this
subsection, the term ‘control’ shall have the same
meaning given such term in section 2 of the Bank
Holding Company Act of 1956.’’.
SEC. 
7. 
APPLICATION 
INCLUDES 
REQUESTS 
FOR
PREAPPROVAL.
Section 303(3) of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2802(3)) is amended by inserting
‘‘and includes any request for a written commitment from
a depository institution for a home purchase loan, even
if the applicant requests a commitment to be issued sub-
ject to the identification of a suitable property or other
condition’’ before the semicolon at the end.
SEC. 8. SANCTIONS AGAINST MORTGAGE LENDERS NOT AF-
FILIATED WITH DEPOSITORY INSTITUTIONS.
Section 305 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2804) is amended—
(1) in subsection (b)—
(A) by inserting ‘‘and’’ after the semicolon
at the end of paragraph (2);
(B) by striking ‘‘; and’’ at the end of para-
graph (3) and inserting a period; and
(C) by striking paragraph (4);
(2) by redesignating subsection (c) as sub-
section (e); and
(3) by inserting after subsection (b), the fol-
lowing new subsection:
‘‘(c) POWERS OF THE SECRETARY OF HOUSING AND
URBAN DEVELOPMENT.—
‘‘(1) IN GENERAL.—The Secretary of Housing
and Urban Development (hereafter in this sub-
section referred to as ‘the Secretary’) shall enforce
compliance with the requirements imposed under
this title with regard to other lending institutions
not described in subsection (b).
‘‘(2) CIVIL
MONEY
PENALTIES.—Pursuant to
paragraph (1) of this subsection, the Secretary may
impose a civil money penalty for failure to comply
with the requirements of this Act.
‘‘(3) AMOUNT OF PENALTY.—The amount of
the penalty, as determined by the Secretary, may
not exceed $5,000 for each violation, except that the
maximum penalty for all violations by any particular
lending institution during any 1-year period shall
not exceed $1,000,000.
‘‘(4) VIOLATIONS FOR WHICH PENALTY MAY BE
IMPOSED.—A civil money penalty may be imposed
for the late submission of a report, failure to submit
a report, submission of an illegible report, submis-
sion of an erroneous report, and failure to submit
corrections to a report that was illegible or erro-
neous.
‘‘(5) AGENCY PROCEDURES.—
‘‘(A) 
ESTABLISHMENT.—The 
Secretary
shall establish standards and procedures gov-
erning the imposition of civil money penalties
under this section. These standards and proce-
dures shall provide for the Secretary to make
the determination to impose the penalty or to
use in administrative entity (such as the Mort-
gagee Review Board, established pursuant to
section 202(c) of the National Housing Act) to
make the determination, shall provide for the
imposition of a penalty only after the lending
institution has been given an opportunity for a
hearing on a record, and may provide for review
by the Secretary of a determination on order, or
interlocutory ruling, arising from a hearing.
‘‘(B) FINAL ORDERS.—If no hearing is re-
quested within 15 days of receipt of the notice
of opportunity for hearing, the imposition of the
penalty 
shall 
constitute 
a 
final 
and
unappealable determination. If the Secretary re-
views the determination or order, the Secretary
may affirm, modify, or reverse that determina-
tion or order. If the Secretary does not review
the determination or order within 90 days of
the issuance of the determination or order, the
determination or order shall be final.
‘‘(C) FACTORS IN DETERMINING AMOUNT
OF PENALTY.—In determining the amount of a
penalty under this subsection, consideration
shall be given to such factors as the gravity of
the offense, any history of prior offenses, ability
to pay the penalty, deterrence of future viola-
tions, and such other factors as the Secretary
may determine to be appropriate.
‘‘(D) REVIEWABILITY OF IMPOSITION OF
PENALTY.—The Secretary’s determination or
order imposing a penalty under this subsection
shall not be subject to review, except as pro-
vided in this subsection.
‘‘(6) JUDICIAL
REVIEW
OF
AGENCY
DETER-
MINATION.—
‘‘(A) IN GENERAL.—After exhausting all
administrative remedies established by the Sec-
retary under this subsection, a lending institu-
tion against whom the Secretary has imposed a
civil money penalty under this subsection may
obtain a review of the penalty as may be ad-
dressed in the notice of determination to impose
a penalty in the appropriate court of appeals of
the United States, by filing in such court, with-
in 20 days after the entry of such order or de-
termination, a written petition praying that the
Secretary’s determination or order be modified
or set aside in whole or in part.
‘‘(B) OBJECTIONS NOT RAISED IN HEAR-
ING.—
‘‘(i) IN
GENERAL.—The court shall
not consider any objection that was not
raised in the hearing conducted pursuant
to this subsection unless a demonstration
is made of extraordinary circumstances
causing the failure to raise the objection.
‘‘(ii) REMAND OF NEW EVIDENCE.—If
any party demonstrates to the satisfaction
of the court that additional evidence not
presented at the hearing is material and
that there were reasonable grounds for the
failure to present such evidence at the
hearing, the court shall remand the matter
to the Secretary for consideration of the
additional evidence.
‘‘(C) SCOPE OF REVIEW.—The decisions,
findings, and determinations of the Secretary
shall be reviewed pursuant to section 706 of
title 5, United States Code.
‘‘(D) ORDER TO PAY PENALTY.—Notwith-
standing any other provision of law, in any such
review, the court shall have the power to order
payment of the penalty imposed by the Sec-
retary.
‘‘(7) ACTION TO COLLECT PENALTY.—
‘‘(A) ACTION BY ATTORNEY GENERAL.—If
a lending institution fails to comply with the
Secretary’s determination or order imposing a
civil money penalty under this subsection, after
the determination or order is no longer subject
to review as provided by this subsection, the
Secretary may request the Attorney General to
bring an action in an appropriate United States
district court to obtain a monetary judgment
against the lending institution.