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SEC. 2. CERTAIN CHARGES.
(a) THIRD PARTY FEES.—Section 106(a) of the
Truth in Lending Act (15 U.S.C. 1605(a)) is amended
by adding after the 2d sentence the following new sen-
tence: ‘‘The finance charge shall not include fees and
amounts imposed by third party closing agents (including
settlement agents, attorneys, and escrow and title compa-
nies) if the creditor does not require the imposition of the
charges or the services provided and does not retain the
charges.’’.
(b) BORROWER-PAID MORTGAGE BROKER FEES.—
(1) INCLUSION IN FINANCE CHARGE.—Section
106(a) of the Truth in Lending Act (15 U.S.C.
1605(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(6) Borrower-paid mortgage broker fees, in-
cluding fees paid directly to the broker or the lender
(for delivery to the broker) whether such fees are
paid in cash or financed.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the earlier of—
(A) 60 days after the date on which the
Board of Governors of the Federal Reserve Sys-
tem issues final regulations under paragraph
(3); or
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(B) the date that is 12 months after the
date of the enactment of this Act.
(3) REGULATIONS IMPLEMENTING BORROWER-
PAID MORTGAGE BROKER FEES.—The Board of Gov-
ernors of the Federal Reserve System shall promul-
gate regulations implementing the amendment made
by paragraph (1) by no later than 6 months after
the date of the enactment of this Act.
(c) TAXES
ON SECURITY INSTRUMENTS
OR EVI-
DENCES
OF
INDEBTEDNESS.—Section 106(d) of the
Truth in Lending Act (15 U.S.C. 1605(d)) is amended
by adding at the end the following new paragraph:
‘‘(3) Any tax levied on security instruments or
on documents evidencing indebtedness if the pay-
ment of such taxes is a precondition for recording
the instrument securing the evidence of indebted-
ness.’’.
(d) PREPARATION OF LOAN DOCUMENTS.—Section
106(e)(2) of the Truth in Lending Act (15 U.S.C.
1605(e)(2)) is amended to read as follows:
‘‘(2) Fees for preparation of loan-related docu-
ments.’’.
(e) FEES RELATING TO PEST INFESTATIONS, IN-
SPECTIONS, AND HAZARDS.—Section 106(e)(5) of the
Truth in Lending Act (15 U.S.C. 1605(e)(5)) is amended
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by inserting ‘‘, including fees related to any pest infesta-
tion or flood hazard inspections conducted prior to clos-
ing’’ before the period.
(f) ENSURING FINANCE CHARGES REFLECT COST OF
CREDIT.—
(1) REPORT.—
(A) IN
GENERAL.—Not later than 6
months after the date of the enactment of this
Act, the Board of Governors of the Federal Re-
serve System shall submit to the Congress a re-
port containing recommendations on any regu-
latory or statutory changes necessary—
(i) to ensure that finance charges im-
posed in connection with consumer credit
transactions more accurately reflect the
cost of providing credit; and
(ii) to address abusive refinancing
practices engaged in for the purpose of
avoiding rescission.
(B) REPORT REQUIREMENTS.—In prepar-
ing the report under this paragraph, the Board
shall—
(i) consider the extent to which it is
feasible to include in finance charges all
charges payable directly or indirectly by
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the consumer to whom credit is extended,
and imposed directly or indirectly by the
creditor as an incident to the extension of
credit (especially those charges excluded
from finance charges under section 106 of
the Truth in Lending Act as of the date of
the enactment of this Act), excepting only
those charges which are payable in a com-
parable cash transaction; and
(ii) consult with and consider the
views of affected industries and consumer
groups.
(2) REGULATIONS.—The Board of Governors of
the Federal Reserve System shall prescribe any ap-
propriate regulation in order to effect any change in-
cluded in the report under paragraph (1), and shall
publish the regulation in the Federal Register before
the end of the 1-year period beginning on the date
of enactment of this Act.
SEC. 3. TOLERANCES; BASIS OF DISCLOSURES.
(a) TOLERANCES FOR ACCURACY.—Section 106 of
the Truth in Lending Act (15 U.S.C. 1605) is amended
by adding at the end the following new subsection:
‘‘(f) TOLERANCES FOR ACCURACY.—In connection
with credit transactions not under an open end credit plan
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that are secured by real property or a dwelling, the disclo-
sure of the finance charge and other disclosures affected
by any finance charge—
‘‘(1) shall be treated as being accurate for pur-
poses of this title if the amount disclosed as the fi-
nance charge—
‘‘(A) does not vary from the actual finance
charge by more than $100; or
‘‘(B) is greater than the amount required
to be disclosed under this title; and
‘‘(2) shall be treated as being accurate for pur-
poses of section 125 if—
‘‘(A) except as provided in subparagraph
(B), the amount disclosed as the finance charge
does not vary from the actual finance charge by
more than an amount equal to one-half of one
percent of the total amount of credit extended;
or
‘‘(B) in the case of a transaction, other
than a mortgage referred to in section 103(aa),
which—
‘‘(i) is a refinancing of the principal
balance then due and any accrued and un-
paid finance charges of a residential mort-
gage transaction as defined in section
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103(w), or is any subsequent refinancing
of such a transaction; and
‘‘(ii) does not provide any new consoli-
dation or new advance;
if the amount disclosed as the finance charge
does not vary from the actual finance charge by
more than an amount equal to one percent of
the total amount of credit extended.’’.
(b) BASIS OF DISCLOSURE FOR PER DIEM INTER-
EST.—Section 121(c) of the Truth in Lending Act (15
U.S.C. 1631(c)) is amended by adding at the end the fol-
lowing new sentence: ‘‘In the case of any consumer credit
transaction a portion of the interest on which is deter-
mined on a per diem basis and is to be collected upon
the consummation of such transaction, any disclosure with
respect to such portion of interest shall be deemed to be
accurate for purposes of this title if the disclosure is based
on information actually known to the creditor at the time
that the disclosure documents are being prepared for the
consummation of the transaction.’’.
SEC. 4. LIMITATION ON LIABILITY.
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by adding
at the end the following new section:
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‘‘SEC. 139. CERTAIN LIMITATIONS ON LIABILITY.
‘‘(a) 
LIMITATIONS
ON
LIABILITY.—For 
any
consumer credit transaction subject to this title that is
consummated before the date of the enactment of the
Truth in Lending Act Amendments of 1995, a creditor
or any assignee of a creditor shall have no civil, adminis-
trative, or criminal liability under this title for, and a
consumer shall have no extended rescission rights under
section 125(f) with respect to—
‘‘(1) the creditor’s treatment, for disclosure
purposes, of—
‘‘(A) taxes described in section 106(d)(3);
‘‘(B) fees described in section 106(e)(2)
and (5);
‘‘(C) fees and amounts referred to in the
3rd sentence of section 106(a); or
‘‘(D) borrower-paid mortgage broker fees
referred to in section 106(a)(6);
‘‘(2) the form of written notice used by the
creditor to inform the obligor of the rights of the ob-
ligor under section 125 if the creditor provided the
obligor with a properly dated form of written notice
published and adopted by the Board or a comparable
written notice, and otherwise complied with all the
requirements of this section regarding notice; or
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‘‘(3) any disclosure relating to the finance
charge imposed with respect to the transaction if the
amount or percentage actually disclosed—
‘‘(A) may be treated as accurate for pur-
poses of this title if the amount disclosed as the
finance charge does not vary from the actual fi-
nance charge by more than $200;
‘‘(B) may, under section 106(f)(2), be
treated as accurate for purposes of section 125;
or
‘‘(C) is greater than the amount or per-
centage required to be disclosed under this title.
‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply
to—
‘‘(1) any individual action or counterclaim
brought under this title which was filed before June
1, 1995;
‘‘(2) any class action brought under this title
for which a final order certifying a class was entered
before January 1, 1995;
‘‘(3) the named individual plaintiffs in any class
action brought under this title which was filed before
June 1, 1995; or
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‘‘(4) any consumer credit transaction with re-
spect to which a timely notice of rescission was sent
to the creditor before June 1, 1995.’’.
(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 138 the fol-
lowing new item:
‘‘139. Certain limitations on liability.’’.
SEC. 5. LIMITATION ON RESCISSION LIABILITY.
Section 125 of the Truth in Lending Act (15 U.S.C.
1635) is further amended by adding at the end the follow-
ing new subsection:
‘‘(h) LIMITATION ON RESCISSION.—An obligor shall
have no rescission rights arising solely from the form of
written notice used by the creditor to inform the obligor
of the rights of the obligor under this section, if the credi-
tor provided the obligor the appropriate form of written
notice published and adopted by the Board, or a com-
parable written notice of the rights of the obligor, that
was properly completed by the creditor, and otherwise
complied with all other requirements of this section re-
garding notice.’’.
SEC. 6. CALCULATION OF DAMAGES.
Section 130(a)(2)(A) of the Truth in Lending Act
(15 U.S.C. 1640(a)(2)(A)) is amended—
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(1) by striking ‘‘or (ii)’’ and inserting ‘‘(ii)’’;
and
(2) by inserting before the semicolon at the end
the following: ‘‘, or (iii) in the case of an individual
action relating to a credit transaction not under an
open end credit plan that is secured by real property
or a dwelling, not less than $200 or greater than
$2,000’’.
SEC. 7. ASSIGNEE LIABILITY.
(a) VIOLATIONS APPARENT ON THE FACE OF TRANS-
ACTION DOCUMENTS.—Section 131 of the Truth in Lend-
ing Act (15 U.S.C. 1641) is amended by adding at the
end the following new subsection:
‘‘(e) LIABILITY OF ASSIGNEE FOR CONSUMER CRED-
IT TRANSACTIONS SECURED BY REAL PROPERTY.—
‘‘(1) IN GENERAL.—Except as otherwise specifi-
cally provided in this title, any civil action against
a creditor for a violation of this title, and any pro-
ceeding under section 108 against a creditor, with
respect to a consumer credit transaction secured by
real property may be maintained against any as-
signee of such creditor only if—
‘‘(A) the violation for which such action or
proceeding is brought is apparent on the face of
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the disclosure statement provided in connection
with such transaction pursuant to this title; and
‘‘(B) the assignment to the assignee was
voluntary.
‘‘(2) VIOLATION APPARENT ON THE FACE OF
THE DISCLOSURE DESCRIBED.—For the purpose of
this section, a violation is apparent on the face of
the disclosure statement if—
‘‘(A) the disclosure can be determined to
be incomplete or inaccurate by a comparison
among the disclosure statement, any itemization
of the amount financed, the note, or any other
disclosure of disbursement; or
‘‘(B) the disclosure statement does not use
the terms or format required to be used by this
title.’’.
(b) SERVICER NOT TREATED AS ASSIGNEE.—Section
131 of the Truth in Lending Act (15 U.S.C. 1641) is fur-
ther amended by adding after subsection (e) (as added by
subsection (a) of this section) the following new sub-
section:
‘‘(f) TREATMENT OF SERVICER.—
‘‘(1) IN GENERAL.—A servicer of a consumer
obligation arising from a consumer credit trans-
action shall not be treated as an assignee of such ob-
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ligation for purposes of this section unless the
servicer is or was the owner of the obligation.
‘‘(2) SERVICER NOT TREATED AS OWNER ON
BASIS OF ASSIGNMENT FOR ADMINISTRATIVE CON-
VENIENCE.—A servicer of a consumer obligation
arising from a consumer credit transaction shall not
be treated as the owner of the obligation for pur-
poses of this section on the basis of an assignment
of the obligation from the creditor or another as-
signee to the servicer solely for the administrative
convenience of the servicer in servicing the obliga-
tion. Upon written request by the obligor, the
servicer shall provide the obligor, to the best knowl-
edge of the servicer, with the name, address, and
telephone number of the owner of the obligation or
the master servicer of the obligation.
‘‘(3) SERVICER DEFINED.—For purposes of this
subsection, the term ‘servicer’ has the same meaning
as in section 6(i)(2) of the Real Estate Settlement
Procedures Act of 1974.
‘‘(4) APPLICABILITY.—This subsection shall
apply to all consumer credit transactions in existence
or consummated on or after the date of the enact-
ment of the Truth in Lending Act Amendments of
1995.’’.
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SEC. 8. RESCISSION RIGHTS IN FORECLOSURE.
Section 125 of the Truth in Lending Act (15 U.S.C.
1635) is amended by inserting after subsection (h) (as
added by section 5 of this Act) the following new sub-
section:
‘‘(i) RESCISSION RIGHTS IN FORECLOSURE.—
‘‘(1) IN
GENERAL.—Notwithstanding section
139, and subject to the time period provided in sub-
section (f), in addition to any other right of rescis-
sion available under this section for a transaction,
after the initiation of any judicial or nonjudicial
foreclosure process on the primary dwelling of an ob-
ligor securing an extension of credit, the obligor
shall have a right to rescind the transaction equiva-
lent to other rescission rights provided by this sec-
tion, if—
‘‘(A) a mortgage broker fee is not included
in the finance charge in accordance with the
laws and regulations in effect at the time the
consumer credit transaction was consummated;
or
‘‘(B) the form of notice of rescission for
the transaction is not the appropriate form of
written notice published and adopted by the
Board or a comparable written notice, and oth-
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erwise complied with all the requirements of
this section regarding notice.
‘‘(2) TOLERANCE FOR DISCLOSURES.—Notwith-
standing section 106(f), and subject to the time pe-
riod provided in subsection (f), for the purposes of
exercising any rescission rights after the initiation of
any judicial or nonjudicial foreclosure process on the
principal dwelling of the obligor securing an exten-
sion of credit, the disclosure of the finance charge
and other disclosures affected by any finance charge
shall be treated as being accurate for purposes of
this section if the amount disclosed as the finance
charge does not vary from the actual finance charge
by more than $35 or is greater than the amount re-
quired to be disclosed under this title.
‘‘(3) RIGHT
OF
RECOUPMENT
UNDER
STATE
LAW.—Nothing in this subsection affects a consum-
er’s right of rescission in recoupment under State
law.
‘‘(4) APPLICABILITY.—This subsection shall
apply to all consumer credit transactions in existence
or consummated on or after the date of the enact-
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ment of the Truth in Lending Act Amendments of
1995.’’.
Passed the House of Representatives September 27,
1995.
Attest:
ROBIN H. CARLE,
Clerk.
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