I
106TH CONGRESS
2D SESSION
H. R. 3901
To amend the Truth in Lending Act, the Revised Statutes of the United
States, the Home Mortgage Disclosure Act of 1975, the Home Ownership
and Equity Protection Act of 1994 to protect consumers from predatory
lending practices, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 9, 2000
Ms. SCHAKOWSKY introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To amend the Truth in Lending Act, the Revised Statutes
of the United States, the Home Mortgage Disclosure
Act of 1975, the Home Ownership and Equity Protection
Act of 1994 to protect consumers from predatory lending
practices, 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 ‘‘Anti-Predatory Lend-
ing Act of 2000’’.
SEC. 2. HOME MORTGAGE DISCLOSURE ACT AMENDMENTS.
(a) STATUTORY REPORTING REQUIREMENTS.—
(1) IN GENERAL.—Section 304(b) of the Home
Mortgage Disclosure Act of 1977 (12 U.S.C.
2803(b)) is amended—
(A) in paragraph (3), by striking ‘‘and’’
after the semicolon;
(B) in paragraph (4), by striking the pe-
riod at the end and inserting ‘‘; and’’; and
(C) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) the annual percentage rate of mortgage
loans and home improvement loans originated by the
institution grouped according to census tract, income
level, racial characteristics, and gender.’’.
(2) CONFORMING
AMENDMENTS.—The Home
Mortgage Disclosure Act of 1977 (12 U.S.C. 2801
et seq.) is amended—
(A) in section 304(i), by striking ‘‘sub-
section (b)(4)’’ and inserting ‘‘paragraphs (4)
and (5) of subsection (b)’’.
(B) in section 308, by striking ‘‘subsection
(b)(4)’’ and inserting ‘‘paragraphs (4) and (5)
of subsection (b)’’.
(b) PROHIBITION
ON REGULATORY EXEMPTIONS
FROM REPORTING REQUIREMENTS.—Section 304 of the
Home Mortgage Disclosure Act of 1977 (12 U.S.C. 2803)
is amended by adding at the end the following new sub-
section:
‘‘(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 Anti-Predatory Lending Act of 2000.’’
SEC. 3. TRUTH IN LENDING ACT AMENDMENTS.
(a) APPLYING HIGH-COST LOAN PROTECTIONS TO
HOME PURCHASE LOANS AND LOWERING THE THRESH-
OLD FOR HIGH-COST LOANS.—
(1) IN
GENERAL.—Section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(1)) is
amended by striking all that precedes paragraph (2)
and inserting the following:
‘‘(aa) HIGH-COST MORTGAGE DEFINED.—
‘‘(1) IN GENERAL.—The term ‘high-cost mort-
gage’, and a mortgage referred to in this subsection,
means a consumer credit transaction that is secured
by the consumer’s principal dwelling, other than a
reverse mortgage transaction or a transaction under
an open end credit plan, if any of the following apply
with respect to such consumer credit transaction:
‘‘(A) The annual percentage rate at con-
summation exceeds by 5 or more percentage
points the weekly average yield on United
States Treasury securities adjusted to a con-
stant maturity of 1 year (as made available by
the Board) as of the week immediately pre-
ceding the week in which the interest rate for
the loan is established.
‘‘(B) The mortgage is a variable-rate loan
in which the annual percentage rate can reason-
ably be expected to increase beyond the thresh-
old established in subparagraph (A).
‘‘(C) Potential or scheduled increases in
the annual percentage rate of the home loan are
controlled by the creditor and not directly tied
to changes in a publicly available rate not con-
trolled by the creditor.
‘‘(D) Subject to paragraph (5), the points
and fees on the loan cannot be financed.’’.
(2) TECHNICAL
AMENDMENT
RELATING
TO
POINTS AND FEES.—Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended—
(i) by redesignating paragraph (5) as
paragraph (6); and
(ii) by inserting after paragraph (4),
the following new paragraph:
‘‘(5) RULE RELATING TO DISCOUNT POINTS.—
For the purposes of paragraph (1)(D), the following
discount points shall be excluded from the calcula-
tion of the total points and fees:
‘‘(A) Up to and including 2 bona fide loan
discount points payable by the borrower in con-
nection with the loan transaction, but only if
the interest rate from which the loan’s interest
rate will be discounted does not exceed by more
than 1 percentage point the required net yield
for a 90-day standard mandatory delivery com-
mitment for a reasonably comparable loan from
either the Federal National Mortgage Associa-
tion or the Federal Home Loan Mortgage Cor-
poration, whichever is greater.
‘‘(B) Up to and including 1 bona fide loan
discount point payable by the borrower in con-
nection with the loan transaction, but only if
the interest rate from which the loan’s interest
rate will be discounted does not exceed by more
than 2 percentage points the required net yield
for a 90-day standard mandatory delivery com-
mitment for a reasonably comparable loan from
either the Federal National Mortgage Associa-
tion or the Federal Home Loan Mortgage Cor-
poration, whichever is greater.’’.
(b) MODIFICATION OF DEFINITION OF ‘‘POINTS AND
FEES’’.—Paragraph (4) of section 103(aa) of the Truth
in Lending Act (15 U.S.C. 1602(aa)) is amended to read
as follows:
‘‘(4) DEFINITION OF POINTS AND FEES.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(D), the term ‘points and fees’ shall
include—
‘‘(i) all compensation paid directly or
indirectly to a mortgage broker, including
a broker that originates a loan in its own
name in a table-funded transaction; and
‘‘(ii) such other charges as the Board
determines to be appropriate.
‘‘(B) ITEMS EXCLUDED.—For purposes of
paragraph (1)(D), the term ‘points and fees’
shall not include the following:
‘‘(i) Taxes, filing fees, recording and
other charges and fees paid or to be paid
to public officials for determining the exist-
ence of or for perfecting, releasing, or sat-
isfying a security interest.
‘‘(ii) Fees paid to a person other than
a creditor or an affiliate of the creditor or
to the mortgage broker or an affiliate of
the mortgage broker for any of the fol-
lowing:
‘‘(I) Fees for flood certification.
‘‘(II) Fees for pest infestation
and flood determinations.
‘‘(III) Appraisal fees.
‘‘(IV) Fees for inspections per-
formed prior to closing.
‘‘(V) Credit reports.
‘‘(VI) Surveys.
‘‘(VII) Attorneys’ fees (if the bor-
rower has the right to select the attor-
ney from an approved list or other-
wise).
‘‘(VIII) Notary fees.
‘‘(IX) Escrow charges, so long as
not otherwise included under subpara-
graph (A).
‘‘(X) Title insurance premiums.
‘‘(XI) Fire insurance and flood
insurance premiums, to the extent
that 
the 
conditions 
in 
section
226.4(d)(2) of title 12 of the Code of
Federal Regulations, as in effect on
the date of the enactment of the Anti-
Predatory Lending Act of 2000, are
met.’’.
(c) COVERAGE OF MORTGAGE BROKERS.—The last
sentence of section 103(f) of the Truth in Lending Act
(15 U.S.C. 1602(f)) is amended—
(1) by striking ‘‘or any person who’’ and insert-
ing a comma;
(2) by inserting after ‘‘through a mortgage
broker’’ the following: ‘‘, or acted as a mortgage
broker between originators and borrowers on more
than 5 home loans within the past 12-month pe-
riod’’.
(d) PROHIBITED PRACTICES FOR HIGH-COST HOME
LOANS.—Section 129 of the Home Ownership and Equity
Protection Act of 1994 (15 U.S.C. 1639) is amended—
(1) in subsection (e), by striking ‘‘of less than
five years’’;
(2) by striking subsections (c), (f), and (h);
(3) by redesignating subsections (d), (e), (g),
and (i) as subsections (c), (d), (e), and (f), respec-
tively; and
(4) by inserting after subsection (f) (as so re-
designated by paragraph (3) of this subsection) the
following new subsections:
‘‘(g) NO CALL PROVISION.—
‘‘(1) IN GENERAL.—A high-cost mortgage may
not include terms under which the indebtedness may
be accelerated by the creditor, in the creditor’s sole
discretion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply when repayment of the loan has been acceler-
ated by default or made pursuant to a due-on-sale
provision or some other provision of the loan docu-
ments unrelated to the payment schedule.
‘‘(h) NO MODIFICATION OR DEFERRAL FEES.—A
creditor shall not charge a borrower any fees or other
charges to modify, renew, extend, or amend a high-cost
home mortgage or to defer any payment due under any
such mortgage.
‘‘(i) NO
LENDING
WITHOUT
HOME-OWNERSHIP
COUNSELING.—A creditor shall not enter into a high-cost
mortgage without having received certification from a
housing counseling agency (which is certified by the De-
partment of Housing and Urban Development) that the
borrower has received counseling on the advisability of the
loan transaction and the appropriateness of the loan for
the borrower.
‘‘(j) NO MANDATORY ARBITRATION CLAUSE.—A
high-cost mortgage may not include terms under which a
mandatory arbitration clause limits in any way the right
of the borrower to seek relief through the judicial process.
‘‘(k) ATTEMPTED EVASION OF COVERAGE.—The pro-
visions of this section shall apply to any person who in
bad faith attempts to avoid its application by—
‘‘(1) structuring a loan transaction as an open-
end credit plan for the purpose and with the intent
of evading the provisions of this section when the
loan would have been a high-cost mortgage if the
loan had been structured as a closed-end loan;
‘‘(2) dividing any loan transaction into separate
parts for the purpose and with the intent of evading
the provisions of this section; or
‘‘(3) by engaging in any other such subterfuge
for the purpose of evading the provisions of this sec-
tion.
‘‘(l) CORRECTIONS
AND UNINTENTIONAL VIOLA-
TIONS.—
‘‘(1) IN GENERAL.—A creditor with respect to
a high-cost mortgage who, when acting in good
faith, fails to comply with this section, shall not be
deemed to have violated this section if the creditor
establishes that either—
‘‘(A) within 30 days of the loan closing
and prior to the institution of any action under
this section, the borrower is notified of the com-
pliance failure, appropriate restitution is made,
and whatever adjustments are necessary are
made to the loan to either, at the choice of the
borrower—
‘‘(i) make the high-cost home loan
satisfy the requirements of this section; or
‘‘(ii) change the terms of the loan in
a manner beneficial to the borrower so that
the loan will no longer be considered a
high-cost mortgage subject to the provi-
sions of this section; or