1608 
HR 4173 RFS
‘‘(3) APPLICABILITY OF PAYMENT OF INTER-
EST.—If prescribed by applicable State or Federal 
law, each creditor shall pay interest to the consumer 
on the amount held in any impound, trust, or escrow 
account that is subject to this section in the manner 
as prescribed by that applicable State or Federal 
law. 
‘‘(4) PENALTY COORDINATION WITH RESPA.— 
Any action or omission on the part of any person 
which constitutes a violation of the Real Estate Set-
tlement Procedures Act of 1974 or any regulation 
prescribed under such Act for which the person has 
paid any fine, civil money penalty, or other damages 
shall not give rise to any additional fine, civil money 
penalty, or other damages under this section, unless 
the action or omission also constitutes a direct viola-
tion of this section. 
‘‘(g) DISCLOSURES RELATING TO MANDATORY ES-
CROW OR IMPOUND ACCOUNT.—In the case of any im-
pound, trust, or escrow account that is subject to this sec-
tion, the creditor shall disclose by written notice to the 
consumer at least 3 business days before the consumma-
tion of the consumer credit transaction giving rise to such 
account or in accordance with timeframes established in 
prescribed regulations the following information: 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01608
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1609 
HR 4173 RFS
‘‘(1) The fact that an escrow or impound ac-
count will be established at consummation of the 
transaction. 
‘‘(2) The amount required at closing to initially 
fund the escrow or impound account. 
‘‘(3) The amount, in the initial year after the 
consummation of the transaction, of the estimated 
taxes and hazard insurance, including flood insur-
ance, if applicable, and any other required periodic 
payments or premiums that reflects, as appropriate, 
either the taxable assessed value of the real property 
securing the transaction, including the value of any 
improvements on the property or to be constructed 
on the property (whether or not such construction 
will be financed from the proceeds of the trans-
action) or the replacement costs of the property. 
‘‘(4) The estimated monthly amount payable to 
be escrowed for taxes, hazard insurance (including 
flood insurance, if applicable) and any other re-
quired periodic payments or premiums. 
‘‘(5) The fact that, if the consumer chooses to 
terminate the account at the appropriate time in the 
future, the consumer will become responsible for the 
payment of all taxes, hazard insurance, and flood in-
surance, if applicable, as well as any other required 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01609
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1610 
HR 4173 RFS
periodic payments or premiums on the property un-
less a new escrow or impound account is established. 
‘‘(6) Such other information as the Federal 
banking agencies jointly determine necessary for the 
protection of the consumer. 
‘‘(h) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) FLOOD INSURANCE.—The term ‘flood in-
surance’ means flood insurance coverage provided 
under the national flood insurance program pursu-
ant to the National Flood Insurance Act of 1968. 
‘‘(2) HAZARD INSURANCE.—The term ‘hazard 
insurance’ shall have the same meaning as provided 
for ‘hazard insurance’, ‘casualty insurance’, ‘home-
owner’s insurance’, or other similar term under the 
law of the State where the real property securing the 
consumer credit transaction is located.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System, the Comptroller of the 
Currency, the Director of the Office of Thrift Super-
vision, the Federal Deposit Insurance Corporation, 
the National Credit Union Administration Board, 
(hereafter in this title referred to as the ‘‘Federal 
banking agencies’’) and the Federal Trade Commis-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01610
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1611 
HR 4173 RFS
sion shall prescribe, in final form, such regulations 
as determined to be necessary to implement the 
amendments made by subsection (a) before the end 
of the 180-day period beginning on the date of the 
enactment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply to covered mort-
gage loans consummated after the end of the 1-year 
period beginning on the date of the publication of 
final regulations in the Federal Register. 
(c) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129C (as 
added by section 9101) the following new item: 
‘‘129D. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 9402. DISCLOSURE NOTICE REQUIRED FOR CON-
SUMERS WHO WAIVE ESCROW SERVICES. 
(a) IN GENERAL.—Section 129D of the Truth in 
Lending Act (as added by section 9401) is amended by 
adding at the end the following new subsection: 
‘‘(i) DISCLOSURE NOTICE REQUIRED
FOR CON-
SUMERS WHO WAIVE ESCROW SERVICES.— 
‘‘(1) IN GENERAL.—If— 
‘‘(A) an impound, trust, or other type of 
account for the payment of property taxes, in-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01611
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1612 
HR 4173 RFS
surance premiums, or other purposes relating to 
real property securing a consumer credit trans-
action is not established in connection with the 
transaction; or 
‘‘(B) a consumer chooses, and provides 
written notice to the creditor or servicer of such 
choice, at any time after such an account is es-
tablished in connection with any such trans-
action and in accordance with any statute, reg-
ulation, or contractual agreement, to close such 
account, 
the creditor or servicer shall provide a timely and 
clearly written disclosure to the consumer that ad-
vises the consumer of the responsibilities of the con-
sumer and implications for the consumer in the ab-
sence of any such account. 
‘‘(2) DISCLOSURE
REQUIREMENTS.—Any dis-
closure provided to a consumer under paragraph (1) 
shall include the following: 
‘‘(A) Information concerning any applica-
ble fees or costs associated with either the non- 
establishment of any such account at the time 
of the transaction, or any subsequent closure of 
any such account. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01612
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1613 
HR 4173 RFS
‘‘(B) A clear and prominent notice that the 
consumer is responsible for personally and di-
rectly paying the non-escrowed items, in addi-
tion to paying the mortgage loan payment, in 
the absence of any such account, and the fact 
that the costs for taxes, insurance, and related 
fees can be substantial. 
‘‘(C) A clear explanation of the con-
sequences of any failure to pay non-escrowed 
items, including the possible requirement for 
the forced placement of insurance by the cred-
itor or servicer and the potentially higher cost 
(including any potential commission payments 
to the servicer) or reduced coverage for the con-
sumer in the event of any such creditor-placed 
insurance. 
‘‘(D) Such other information as the Fed-
eral banking agencies jointly determine nec-
essary for the protection of the consumer.’’. 
(b) IMPLEMENTATION.— 
(1) REGULATIONS.—The Federal banking agen-
cies and the Federal Trade Commission shall pre-
scribe, in final form, such regulations as such agen-
cies determine to be necessary to implement the 
amendments made by subsection (a) before the end 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01613
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1614 
HR 4173 RFS
of the 180-day period beginning on the date of the 
enactment of this Act. 
(2) EFFECTIVE DATE.—The amendments made 
by subsection (a) shall only apply in accordance with 
the regulations established in paragraph (1) and be-
ginning on the date occurring 180-days after the 
date of the publication of final regulations in the 
Federal Register. 
SEC. 9403. REAL ESTATE SETTLEMENT PROCEDURES ACT 
OF 1974 AMENDMENTS. 
(a) SERVICER PROHIBITIONS.—Section 6 of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 
2605) is amended by adding at the end the following new 
subsections: 
‘‘(k) SERVICER PROHIBITIONS.— 
‘‘(1) IN GENERAL.—A servicer of a federally re-
lated mortgage shall not— 
‘‘(A) obtain force-placed hazard insurance 
unless there is a reasonable basis to believe the 
borrower has failed to comply with the loan 
contract’s requirements to maintain property 
insurance; 
‘‘(B) charge fees for responding to valid 
qualified written requests (as defined in regula-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01614
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1615 
HR 4173 RFS
tions which the Secretary shall prescribe) under 
this section; 
‘‘(C) fail to take timely action to respond 
to a borrower’s requests to correct errors relat-
ing to allocation of payments, final balances for 
purposes of paying off the loan, or avoiding 
foreclosure, or other standard servicer’s duties; 
‘‘(D) fail to respond within 10 business 
days to a request from a borrower to provide 
the identity, address, and other relevant contact 
information about the owner assignee of the 
loan; or 
‘‘(E) fail to comply with any other obliga-
tion found by the Secretary, by regulation, to 
be appropriate to carry out the consumer pro-
tection purposes of this Act. 
‘‘(2) FORCE-PLACED
INSURANCE
DEFINED.— 
For purposes of this subsection and subsections (l) 
and (m), the term ‘force-placed insurance’ means 
hazard insurance coverage obtained by a servicer of 
a federally related mortgage when the borrower has 
failed to maintain or renew hazard insurance on 
such property as required of the borrower under the 
terms of the mortgage. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01615
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1616 
HR 4173 RFS
‘‘(l) REQUIREMENTS
FOR FORCE-PLACED INSUR-
ANCE.—A servicer of a federally related mortgage shall 
not be construed as having a reasonable basis for obtain-
ing force-placed insurance unless the requirements of this 
subsection have been met. 
‘‘(1) WRITTEN
NOTICES
TO
BORROWER.—A 
servicer may not impose any charge on any borrower 
for force-placed insurance with respect to any prop-
erty securing a federally related mortgage unless— 
‘‘(A) the servicer has sent, by first-class 
mail, a written notice to the borrower con-
taining— 
‘‘(i) a reminder of the borrower’s obli-
gation to maintain hazard insurance on the 
property securing the federally related 
mortgage; 
‘‘(ii) a statement that the servicer 
does not have evidence of insurance cov-
erage of such property; 
‘‘(iii) a clear and conspicuous state-
ment of the procedures by which the bor-
rower may demonstrate that the borrower 
already has insurance coverage; and 
‘‘(iv) a statement that the servicer 
may obtain such coverage at the borrower’s 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01616
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1617 
HR 4173 RFS
expense if the borrower does not provide 
such demonstration of the borrower’s exist-
ing coverage in a timely manner; 
‘‘(B) the servicer has sent, by first-class 
mail, a second written notice, at least 30 days 
after the mailing of the notice under subpara-
graph (A) that contains all the information de-
scribed in each clause of such subparagraph; 
and 
‘‘(C) the servicer has not received from the 
borrower any demonstration of hazard insur-
ance coverage for the property securing the 
mortgage by the end of the 15-day period be-
ginning on the date the notice under subpara-
graph (B) was sent by the servicer. 
‘‘(2) SUFFICIENCY
OF
DEMONSTRATION.—A 
servicer of a federally related mortgage shall accept 
any reasonable form of written confirmation from a 
borrower of existing insurance coverage, which shall 
include the existing insurance policy number along 
with the identity of, and contact information for, the 
insurance company or agent. 
‘‘(3) TERMINATION OF FORCE-PLACED INSUR-
ANCE.—Within 15 days of the receipt by a servicer 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01617
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1618 
HR 4173 RFS
of confirmation of a borrower’s existing insurance 
coverage, the servicer shall— 
‘‘(A) terminate the force-placed insurance; 
and 
‘‘(B) refund to the consumer all force- 
placed insurance premiums paid by the bor-
rower during any period during which the bor-
rower’s insurance coverage and the force-placed 
insurance coverage were each in effect, and any 
related fees charged to the consumer’s account 
with respect to the force-placed insurance dur-
ing such period. 
‘‘(4) CLARIFICATION WITH RESPECT TO FLOOD 
DISASTER PROTECTION ACT.—No provision of this 
section shall be construed as prohibiting a servicer 
from providing simultaneous or concurrent notice of 
a lack of flood insurance pursuant to section 102(e) 
of the Flood Disaster Protection Act of 1973. 
‘‘(m) LIMITATIONS ON FORCE-PLACED INSURANCE 
CHARGES.—All charges for force-placed insurance pre-
miums shall be bona fide and reasonable in amount.’’. 
(b) INCREASE IN PENALTY AMOUNTS.—Section 6(f) 
of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(f)) is amended— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01618
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1619 
HR 4173 RFS
(1) in paragraphs (1)(B) and (2)(B), by strik-
ing ‘‘$1,000’’ each place such term appears and in-
serting ‘‘$2,000’’; and 
(2) 
in 
paragraph 
(2)(B)(i), 
by 
striking 
‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 
(c) DECREASE IN RESPONSE TIMES.—Section 6(e) of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(e)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘20 days’’ 
and inserting ‘‘5 days’’; 
(2) in paragraph (2), by striking ‘‘60 days’’ and 
inserting ‘‘30 days’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(4) 
LIMITED
EXTENSION
OF
RESPONSE 
TIME.—The 30-day period described in paragraph 
(2) may be extended for not more than 15 days if, 
before the end of such 30-day period, the servicer 
notifies the borrower of the extension and the rea-
sons for the delay in responding.’’. 
(d) PROMPT REFUND OF ESCROW ACCOUNTS UPON 
PAYOFF.—Section 6(g) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(g)) is amended 
by adding at the end the following new sentence: ‘‘Any 
balance in any such account that is within the servicer’s 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01619
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1620 
HR 4173 RFS
control at the time the loan is paid off shall be promptly 
returned to the borrower within 20 business days or cred-
ited to a similar account for a new mortgage loan to the 
borrower with the same lender.’’. 
SEC. 9404. TRUTH IN LENDING ACT AMENDMENTS. 
(a) REQUIREMENTS
FOR PROMPT CREDITING
OF 
HOME LOAN PAYMENTS.—Chapter 2 of the Truth in 
Lending Act (15 U.S.C. 1631 et seq.) is amended by in-
serting after section 129E (as added by section 9502) the 
following new section (and by amending the table of con-
tents accordingly): 
‘‘SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF 
HOME LOAN PAYMENTS. 
‘‘(a) IN GENERAL.—In connection with a consumer 
credit transaction secured by a consumer’s principal dwell-
ing, no servicer shall fail to credit a payment to the con-
sumer’s loan account as of the date of receipt, except when 
a delay in crediting does not result in any charge to the 
consumer or in the reporting of negative information to 
a consumer reporting agency, except as required in sub-
section (b). 
‘‘(b) EXCEPTION.—If a servicer specifies in writing 
requirements for the consumer to follow in making pay-
ments, but accepts a payment that does not conform to 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01620
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1621 
HR 4173 RFS
the requirements, the servicer shall credit the payment as 
of 5 days after receipt.’’. 
(b) REQUESTS FOR PAYOFF AMOUNTS.—Chapter 2 
of such Act is further amended by inserting after section 
129F (as added by subsection (a)) the following new sec-
tion (and by amending the table of contents accordingly): 
‘‘SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME 
LOAN. 
‘‘A creditor or servicer of a home loan shall send an 
accurate payoff balance within a reasonable time, but in 
no case more than 7 business days, after the receipt of 
a written request for such balance from or on behalf of 
the borrower.’’. 
SEC. 9405. ESCROWS INCLUDED IN REPAYMENT ANALYSIS. 
Section 128(b) of the Truth in Lending Act (15 
U.S.C. 1638(b)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) REPAYMENT ANALYSIS REQUIRED TO IN-
CLUDE ESCROW PAYMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
consumer credit transaction secured by a first 
mortgage or lien on the principal dwelling of 
the consumer, other than a consumer credit 
transaction under an open end credit plan or a 
reverse mortgage, for which an impound, trust, 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01621
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1622 
HR 4173 RFS
or other type of account has been or will be es-
tablished in connection with the transaction for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property, the information required to be pro-
vided under subsection (a) with respect to the 
number, amount, and due dates or period of 
payments scheduled to repay the total of pay-
ments shall take into account the amount of 
any monthly payment to such account for each 
such repayment in accordance with section 
10(a)(2) of the Real Estate Settlement Proce-
dures Act of 1974. 
‘‘(B) ASSESSMENT
VALUE.—The amount 
taken into account under subparagraph (A) for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the 
property shall reflect the taxable assessed value 
of the real property securing the transaction 
after the consummation of the transaction, in-
cluding the value of any improvements on the 
property or to be constructed on the property 
(whether or not such construction will be fi-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01622
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1623 
HR 4173 RFS
nanced from the proceeds of the transaction), if 
known, and the replacement costs of the prop-
erty for hazard insurance, in the initial year 
after the transaction.’’. 
Subtitle F—Appraisal Activities 
SEC. 9501. PROPERTY APPRAISAL REQUIREMENTS. 
Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after 129G (as 
added by section 9404(b)) the following new section: 
‘‘SEC. 129H PROPERTY APPRAISAL REQUIREMENTS. 
‘‘(a) IN GENERAL.—A creditor may not extend credit 
in the form of a subprime mortgage to any consumer with-
out first obtaining a written appraisal of the property to 
be mortgaged prepared in accordance with the require-
ments of this section. 
‘‘(b) APPRAISAL REQUIREMENTS.— 
‘‘(1) PHYSICAL PROPERTY VISIT.—An appraisal 
of property to be secured by a subprime mortgage 
does not meet the requirement of this section unless 
it is performed by a qualified appraiser who con-
ducts a physical property visit of the interior of the 
mortgaged property. 
‘‘(2) SECOND APPRAISAL UNDER CERTAIN CIR-
CUMSTANCES.— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01623
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1624 
HR 4173 RFS
‘‘(A) IN GENERAL.—If the purpose of a 
subprime mortgage is to finance the purchase 
or acquisition of the mortgaged property from 
a person within 180 days of the purchase or ac-
quisition of such property by that person at a 
price that was lower than the current sale price 
of the property, the creditor shall obtain a sec-
ond appraisal from a different qualified ap-
praiser. The second appraisal shall include an 
analysis of the difference in sale prices, changes 
in market conditions, and any improvements 
made to the property between the date of the 
previous sale and the current sale. 
‘‘(B) NO COST TO APPLICANT.—The cost 
of any second appraisal required under sub-
paragraph (A) may not be charged to the appli-
cant. 
‘‘(3) QUALIFIED
APPRAISER
DEFINED.—For 
purposes of this section, the term ‘qualified ap-
praiser’ means a person who— 
‘‘(A) is, at a minimum, certified or licensed 
by the State in which the property to be ap-
praised is located; and 
‘‘(B) performs each appraisal in con-
formity with the Uniform Standards of Profes-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01624
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1625 
HR 4173 RFS
sional Appraisal Practice and title XI of the Fi-
nancial Institutions Reform, Recovery, and En-
forcement Act of 1989, and the regulations pre-
scribed under such title, as in effect on the date 
of the appraisal. 
‘‘(c) FREE COPY OF APPRAISAL.—A creditor shall 
provide 1 copy of each appraisal conducted in accordance 
with this section in connection with a subprime mortgage 
to the applicant without charge, and at least 3 days prior 
to the transaction closing date. 
‘‘(d) CONSUMER NOTIFICATION.—At the time of the 
initial mortgage application, the applicant shall be pro-
vided with a statement by the creditor that any appraisal 
prepared for the mortgage is for the sole use of the cred-
itor, and that the applicant may choose to have a separate 
appraisal conducted at their own expense. 
‘‘(e) VIOLATIONS.—In addition to any other liability 
to any person under this title, a creditor found to have 
willfully failed to obtain an appraisal as required in this 
section shall be liable to the applicant or borrower for the 
sum of $2,000. 
‘‘(f) SUBPRIME MORTGAGE DEFINED.—For purposes 
of this section, the term ‘subprime mortgage’ means a res-
idential mortgage loan, other than a reverse mortgage loan 
insured by the Federal Housing Administration, secured 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01625
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1626 
HR 4173 RFS
by a principal dwelling with an annual percentage rate 
that exceeds the average prime offer rate for a comparable 
transaction, as of the date the interest rate is set— 
‘‘(1) by 1.5 or more percentage points, in the 
case of a first lien residential mortgage loan having 
an original principal obligation amount that does not 
exceed the amount of the maximum limitation on the 
original principal obligation of mortgage in effect for 
a residence of the applicable size, as of the date of 
such interest rate set, pursuant to the sixth sentence 
of section 305(a)(2) the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1454(a)(2)); 
‘‘(2) by 2.5 or more percentage points, in the 
case of a first lien residential mortgage loan having 
an original principal obligation amount that exceeds 
the amount of the maximum limitation on the origi-
nal principal obligation of mortgage in effect for a 
residence of the applicable size, as of the date of 
such interest rate set, pursuant to the sixth sentence 
of section 305(a)(2) the Federal Home Loan Mort-
gage Corporation Act (12 U.S.C. 1454(a)(2)); and 
‘‘(3) by 3.5 or more percentage points for a 
subordinate lien residential mortgage loan.’’. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01626
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1627 
HR 4173 RFS
SEC. 9502. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 
RELATING TO CERTAIN CONSUMER CREDIT 
TRANSACTIONS. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after section 129D (as added by section 9401(a)) the fol-
lowing new section: 
‘‘SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 
RELATING TO CERTAIN CONSUMER CREDIT 
TRANSACTIONS. 
‘‘(a) IN GENERAL.—It shall be unlawful, in extending 
credit or in providing any services for a consumer credit 
transaction secured by the principal dwelling of the con-
sumer, to engage in any unfair or deceptive act or practice 
as described in or pursuant to regulations prescribed 
under this section. 
‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of 
subsection (a), unfair and deceptive practices shall in-
clude— 
‘‘(1) any appraisal of a property offered as se-
curity for repayment of the consumer credit trans-
action that is conducted in connection with such 
transaction in which a person with an interest in the 
underlying transaction compensates, coerces, extorts, 
colludes, instructs, induces, bribes, or intimidates a 
person conducting or involved in an appraisal, or at-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01627
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1628 
HR 4173 RFS
tempts, to compensate, coerce, extort, collude, in-
struct, induce, bribe, or intimidate such a person, 
for the purpose of causing the appraised value as-
signed, under the appraisal, to the property to be 
based on any factor other than the independent 
judgment of the appraiser; 
‘‘(2) 
mischaracterizing, 
or 
suborning 
any 
mischaracterization of, the appraised value of the 
property securing the extension of the credit; 
‘‘(3) seeking to influence an appraiser or other-
wise to encourage a targeted value in order to facili-
tate the making or pricing of the transaction; and 
‘‘(4) withholding or threatening to withhold 
timely payment for an appraisal report or for ap-
praisal services rendered. 
‘‘(c) EXCEPTIONS.—The requirements of subsection 
(b) shall not be construed as prohibiting a mortgage lend-
er, mortgage broker, mortgage banker, real estate broker, 
appraisal management company, employee of an appraisal 
management company, consumer, or any other person 
with an interest in a real estate transaction from asking 
an appraiser to provide 1 or more of the following services: 
‘‘(1) Consider additional, appropriate property 
information, including the consideration of addi-
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01628
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1629 
HR 4173 RFS
tional comparable properties to make or support an 
appraisal. 
‘‘(2) Provide further detail, substantiation, or 
explanation for the appraiser’s value conclusion. 
‘‘(3) Correct errors in the appraisal report. 
‘‘(d) PROHIBITIONS ON CONFLICTS OF INTEREST.— 
No certified or licensed appraiser conducting, and no ap-
praisal management company procuring or facilitating, an 
appraisal in connection with a consumer credit transaction 
secured by the principal dwelling of a consumer may have 
a direct or indirect interest, financial or otherwise, in the 
property or transaction involving the appraisal. 
‘‘(e) MANDATORY REPORTING.—Any mortgage lend-
er, mortgage broker, mortgage banker, real estate broker, 
appraisal management company, employee of an appraisal 
management company, or any other person involved in a 
real estate transaction involving an appraisal in connection 
with a consumer credit transaction secured by the prin-
cipal dwelling of a consumer who has a reasonable basis 
to believe an appraiser is failing to comply with the Uni-
form Standards of Professional Appraisal Practice, is vio-
lating applicable laws, or is otherwise engaging in uneth-
ical or unprofessional conduct, shall refer the matter to 
the applicable State appraiser certifying and licensing 
agency. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01629
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1630 
HR 4173 RFS
‘‘(f) NO EXTENSION OF CREDIT.—In connection with 
a consumer credit transaction secured by a consumer’s 
principal dwelling, a creditor who knows, at or before loan 
consummation, of a violation of the appraisal independ-
ence standards established in subsections (b) or (d) shall 
not extend credit based on such appraisal unless the cred-
itor documents that the creditor has acted with reasonable 
diligence to determine that the appraisal does not materi-
ally misstate or misrepresent the value of such dwelling. 
‘‘(g) RULEMAKING PROCEEDINGS.—The Board, the 
Comptroller of the Currency, the Director of the Office 
of Thrift Supervision, the Federal Deposit Insurance Cor-
poration, the National Credit Union Administration 
Board, and the Federal Trade Commission— 
‘‘(1) shall, for purposes of this section, jointly 
prescribe regulations no later than 180 days after 
the date of the enactment of this section, and where 
such regulations have an effective date of no later 
than 1 year after the date of the enactment of this 
section, defining with specificity acts or practices 
which are unfair or deceptive in the provision of 
mortgage lending services for a consumer credit 
transaction secured by the principal dwelling of the 
consumer or mortgage brokerage services for such a 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01630
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1631 
HR 4173 RFS
transaction and defining any terms in this section or 
such regulations; and 
‘‘(2) may jointly issue interpretive guidelines 
and general statements of policy with respect to un-
fair or deceptive acts or practices in the provision of 
mortgage lending services for a consumer credit 
transaction secured by the principal dwelling of the 
consumer and mortgage brokerage services for such 
a transaction, within the meaning of subsections (a), 
(b), (c), (d), (e), and (f). 
‘‘(h) PENALTIES.— 
‘‘(1) FIRST VIOLATION.—In addition to the en-
forcement provisions referred to in section 130, each 
person who violates this section shall forfeit and pay 
a civil penalty of not more than $10,000 for each 
day any such violation continues. 
‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of 
any person on whom a civil penalty has been im-
posed under paragraph (1), paragraph (1) shall be 
applied by substituting ‘$20,000’ for ‘$10,000’ with 
respect to all subsequent violations. 
‘‘(3) ASSESSMENT.—The agency referred to in 
subsection (a) or (c) of section 108 with respect to 
any person described in paragraph (1) shall assess 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01631
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1632 
HR 4173 RFS
any penalty under this subsection to which such per-
son is subject.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 129D (as 
added by section 9401(c)) the following new item: 
‘‘129E. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions.’’. 
SEC. 9503. AMENDMENTS RELATING TO APPRAISAL SUB-
COMMITTEE OF FIEC, APPRAISER INDEPEND-
ENCE MONITORING, APPROVED APPRAISER 
EDUCATION, APPRAISAL MANAGEMENT COM-
PANIES, APPRAISER COMPLAINT HOTLINE, 
AUTOMATED 
VALUATION 
MODELS, 
AND 
BROKER PRICE OPINIONS. 
(a) CONSUMER PROTECTION MISSION.— 
(1) PURPOSES.—Section 1101 of the Financial 
Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3331) is amended by inserting 
‘‘and to provide the Appraisal Subcommittee with a 
consumer protection mandate’’ before the period at 
the end. 
(2) 
FUNCTIONS
OF
APPRAISAL
SUB-
COMMITTEE.—Section 1103(a) of the Financial In-
stitutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3332(a)) is amended— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01632
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1633 
HR 4173 RFS
(A) by striking ‘‘and’’ at the end of para-
graph (3); and 
(B) by amending paragraph (4) to read as 
follows: 
‘‘(4) monitor the efforts of, and requirements 
established by, States and the Federal financial in-
stitutions regulatory agencies to protect consumers 
from improper appraisal practices and the preda-
tions of unlicensed appraisers in consumer credit 
transactions that are secured by a consumer’s prin-
cipal dwelling; and’’. 
(3) THRESHOLD LEVELS.—Section 1112(b) of 
the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (12 U.S.C. 3341(b)) is 
amended by inserting before the period the fol-
lowing: ‘‘, and that such threshold level provides rea-
sonable protection for consumers who purchase 1–4 
unit single-family residences. In determining whether 
a threshold level provides reasonable protection for 
consumers, each Federal financial institutions regu-
latory agency shall consult with consumer groups 
and convene a public hearing’’. 
(b) 
ANNUAL
REPORT
OF
APPRAISAL
SUB-
COMMITTEE.—Section 1103(a) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 (12 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01633
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1634 
HR 4173 RFS
U.S.C. 3332(a)) is amended at the end by inserting the 
following new paragraph: 
‘‘(5) transmit an annual report to the Congress 
not later than January 31 of each year that de-
scribes the manner in which each function assigned 
to the Appraisal Subcommittee has been carried out 
during the preceding year. The report shall also de-
tail the activities of the Appraisal Subcommittee, in-
cluding the results of all audits of State appraiser 
regulatory agencies, and provide an accounting of 
disapproved actions and warnings taken in the pre-
vious year, including a description of the conditions 
causing the disapproval and actions taken to achieve 
compliance.’’. 
(c) OPEN MEETINGS.—Section 1104(b) of the Finan-
cial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3333(b)) is amended by inserting ‘‘in 
public session after notice in the Federal Register’’ after 
‘‘shall meet’’. 
(d) REGULATIONS.—Section 1106 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3335) is amended— 
(1) by inserting ‘‘prescribe regulations after no-
tice and opportunity for comment,’’ after ‘‘hold 
hearings’’; and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01634
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1635 
HR 4173 RFS
(2) at the end by inserting ‘‘Any regulations 
prescribed by the Appraisal Subcommittee shall (un-
less otherwise provided in this title) be limited to the 
following functions: temporary practice, national reg-
istry, information sharing, and enforcement. For 
purposes of prescribing regulations, the Appraisal 
Subcommittee shall establish an advisory committee 
of industry participants, including appraisers, lend-
ers, consumer advocates, and government agencies, 
and hold meetings as necessary to support the devel-
opment of regulations.’’. 
(e) APPRAISALS AND APPRAISAL REVIEWS.—Section 
1113 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (12 U.S.C. 3342) is amended— 
(1) by striking ‘‘In determining’’ and inserting 
‘‘(a) IN GENERAL.—In determining’’; 
(2) in subsection (a) (as designated by para-
graph (1)), by inserting before the period the fol-
lowing: ‘‘, where a complex 1-to-4 unit single family 
residential appraisal means an appraisal for which 
the property to be appraised, the form of ownership, 
the property characteristics, or the market condi-
tions are atypical’’; and 
(3) by adding at the end the following new sub-
section: 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01635
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1636 
HR 4173 RFS
‘‘(b) APPRAISALS AND APPRAISAL REVIEWS.—All ap-
praisals performed at a property within a State shall be 
prepared by appraisers licensed or certified in the State 
where the property is located. All appraisal reviews, in-
cluding appraisal reviews by a lender, appraisal manage-
ment company, or other third party organization, shall be 
performed by an appraiser who is duly licensed or certified 
by a State appraisal board.’’. 
(f) APPRAISAL MANAGEMENT SERVICES.— 
(1) SUPERVISION OF THIRD PARTY PROVIDERS 
OF
APPRAISAL
MANAGEMENT
SERVICES.—Section 
1103(a) of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989 (12 U.S.C. 
3332(a)) (as previously amended by this section) is 
further amended— 
(A) by amending paragraph (1) to read as 
follows: 
‘‘(1) monitor the requirements established by 
States— 
‘‘(A) for the certification and licensing of 
individuals who are qualified to perform ap-
praisals in connection with federally related 
transactions, including a code of professional 
responsibility; and 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01636
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1637 
HR 4173 RFS
‘‘(B) for the registration and supervision 
of the operations and activities of an appraisal 
management company;’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(7) maintain a national registry of appraisal 
management companies that either are registered 
with and subject to supervision of a State appraiser 
certifying and licensing agency or are operating sub-
sidiaries of a Federally regulated financial institu-
tion.’’. 
(2) APPRAISAL
MANAGEMENT
COMPANY
MIN-
IMUM QUALIFICATIONS.—Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3331 et seq.) is amended by 
adding at the end the following new section (and 
amending the table of contents accordingly): 
‘‘SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM 
QUALIFICATIONS. 
‘‘(a) IN GENERAL.—The Appraiser Qualifications 
Board of the Appraisal Foundation shall establish min-
imum qualifications to be applied by a State in the reg-
istration of appraisal management companies. Such quali-
fications shall include a requirement that such compa-
nies— 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01637
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1638 
HR 4173 RFS
‘‘(1) register with and be subject to supervision 
by a State appraiser certifying and licensing agency 
in each State in which such company operates; 
‘‘(2) verify that only licensed or certified ap-
praisers are used for federally related transactions; 
‘‘(3) require that appraisals coordinated by an 
appraisal management company comply with the 
Uniform Standards of Professional Appraisal Prac-
tice; and 
‘‘(4) require that appraisals are conducted inde-
pendently and free from inappropriate influence and 
coercion pursuant to the appraisal independence 
standards established under section 129E of the 
Truth in Lending Act. 
‘‘(b) EXCEPTION FOR FEDERALLY REGULATED FI-
NANCIAL INSTITUTIONS.—The requirements of subsection 
(a) shall not apply to an appraisal management company 
that is a subsidiary owned and controlled by a financial 
institution and regulated by a federal financial institution 
regulatory agency. In such case, the appropriate federal 
financial institutions regulatory agency shall, at a min-
imum, develop regulations affecting the operations of the 
appraisal management company to— 
‘‘(1) verify that only licensed or certified ap-
praisers are used for federally related transactions; 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01638
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1639 
HR 4173 RFS
‘‘(2) require that appraisals coordinated by an 
institution or subsidiary providing appraisal manage-
ment services comply with the Uniform Standards of 
Professional Appraisal Practice; and 
‘‘(3) require that appraisals are conducted inde-
pendently and free from inappropriate influence and 
coercion pursuant to the appraisal independence 
standards established under section 129E of the 
Truth in Lending Act. 
‘‘(c) REGISTRATION
LIMITATIONS.—An appraisal 
management company shall not be registered by a State 
if such company, in whole or in part, directly or indirectly, 
is owned by any person who has had an appraiser license 
or certificate refused, denied, cancelled, surrendered in 
lieu of revocation, or revoked in any State. Additionally, 
each person that owns more than 10 percent of an ap-
praisal management company shall be of good moral char-
acter, as determined by the State appraiser certifying and 
licensing agency, and shall submit to a background inves-
tigation carried out by the State appraiser certifying and 
licensing agency. 
‘‘(d) REGULATIONS.—The Appraisal Subcommittee 
shall promulgate regulations to implement the minimum 
qualifications developed by the Appraiser Qualifications 
Board under this section, as such qualifications relate to 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01639
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1662 
HR 4173 RFS
automated valuation model, a broker price opinion, 
or other methodology or mechanism.’’. 
SEC. 9506. REAL ESTATE SETTLEMENT PROCEDURES ACT 
OF 1974 AMENDMENT RELATING TO CERTAIN 
APPRAISAL FEES. 
Section 4 of the Real Estate Settlement Procedures 
Act of 1974 is amended by adding at the end the following 
new subsection: 
‘‘(c) The standard form described in subsection (a) 
shall include, in the case of an appraisal coordinated by 
an appraisal management company (as such term is de-
fined in section 1121(11) of the Financial Institutions Re-
form, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3350(11))), a clear disclosure of— 
‘‘(1) the fee paid directly to the appraiser by 
such company; and 
‘‘(2) the administration fee charged by such 
company.’’. 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01662
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS
1674 
HR 4173 RFS
servicer and lender participating in the Program is made 
public in accordance with subsection (b). 
(b) PUBLIC AVAILABILITY.—Data shall be made 
available according to the following guidelines: 
(1) Not more than 14 days after each monthly 
deadline for submission of data by mortgage 
servicers and lenders participating in the Program, 
reports shall be made publicly available by means of 
a World Wide Web site of the Secretary, and by sub-
mitting a report to the Congress, that shall includes 
the following information: 
(A) The number of requests for mortgage 
modifications under the Program that the 
servicer or lender has received. 
(B) The number of requests for mortgage 
modifications under the Program that the 
servicer or lender has processed. 
(C) The number of requests for mortgage 
modifications under the Program that the 
servicer or lender has approved. 
(D) The number of requests for mortgage 
modifications under the Program that the 
servicer or lender has denied. 
(2) Not more than 60 days after each monthly 
deadline for submission of data by mortgage 
VerDate Nov 24 2008 
04:13 Jan 21, 2010
Jkt 089200
PO 00000
Frm 01674
Fmt 6652
Sfmt 6201
E:\BILLS\H4173.RFS
H4173
SMARTINEZ on DSKH9S0YB1PROD with BILLS