HR 1728 RFS 
grants for providing a full range of foreclosure legal assist-
ance to low- and moderate-income homeowners and ten-
ants related to home ownership preservation, home fore-
closure prevention, and tenancy associated with home fore-
closure. 
(b) COMPETITIVE ALLOCATION.—The Secretary shall 
allocate amounts made available for grants under this sec-
tion to State and local legal organizations on the basis 
of a competitive process. For purposes of this subsection 
‘‘State and local legal organizations’’ are those State and 
local organizations whose primary business or mission is 
to provide legal assistance. 
(c) PRIORITY
TO CERTAIN AREAS.—In allocating 
amounts in accordance with subsection (b), the Secretary 
shall give priority consideration to State and local legal 
organizations that are operating in the 100 metropolitan 
statistical areas (as that term is defined by the Director 
of the Office of Management and Budget) with the highest 
home foreclosure rates. 
(d) LEGAL ASSISTANCE.— 
(1) IN GENERAL.—Any State or local legal or-
ganization that receives financial assistance pursu-
ant to this section may use such amounts only to as-
sist— 
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(A) homeowners of owner-occupied homes 
with mortgages in default, in danger of default, 
or subject to or at risk of foreclosure; and 
(B) tenants at risk of or subject to eviction 
as a result of foreclosure of the property in 
which such tenant resides. 
(2) COMMENCE
USE
WITHIN
DAYS.—Any 
State or local legal organization that receives finan-
cial assistance pursuant to this section shall begin 
using any financial assistance received under this 
section within 90 days after receipt of the assist-
ance. 
(3) PROHIBITION
ON
CLASS
ACTIONS.—No 
funds provided to a State or local legal organization 
under this section may be used to support any class 
action litigation. 
(4) LIMITATION ON LEGAL ASSISTANCE.—Legal 
assistance funded with amounts provided under this 
section shall be limited to mortgage-related default, 
eviction, or foreclosure proceedings, without regard 
to whether such foreclosure is judicial or nonjudicial. 
(5) EFFECTIVE
DATE.—Notwithstanding sec-
tion 217, this subsection shall take effect on the 
date of the enactment of this Act. 
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(e) LIMITATION
ON
DISTRIBUTION
OF
ASSIST-
ANCE.— 
(1) IN GENERAL.—None of the amounts made 
available under this section shall be distributed to— 
(A) any organization which has been con-
victed for a violation under Federal law relating 
to an election for Federal office; or 
(B) any organization which employs appli-
cable individuals. 
(2) DEFINITION
OF
APPLICABLE
INDIVID-
UALS.—In this subsection, the term ‘‘applicable indi-
vidual’’ means an individual who— 
(A) is— 
(i) employed by the organization in a 
permanent or temporary capacity; 
(ii) contracted or retained by the or-
ganization; or 
(iii) acting on behalf of, or with the 
express or apparent authority of, the orga-
nization; and 
(B) has been convicted for a violation 
under Federal law relating to an election for 
Federal office. 
(f) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary 
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$35,000,000 for each of fiscal years 2009 through 2012 
for grants under this section. 
SEC. 217. EFFECTIVE DATE. 
The amendments made by this title shall apply to 
transactions consummated on or after the effective date 
of the regulations specified in section 209. 
SEC. 218. REPORT BY THE GAO. 
(a) REPORT REQUIRED.—The Comptroller General 
shall conduct a study to determine the effects the enact-
ment of this Act will have on the availability and afford-
ability of credit for consumers, small businesses, home-
buyers, and mortgage lending, including the effect— 
(1) on the mortgage market for mortgages that 
are not within the safe harbor provided in the 
amendments made by this title; 
(2) on the ability of prospective homebuyers to 
obtain financing; 
(3) on the ability of homeowners facing resets 
or adjustments to refinance—for example, do they 
have fewer refinancing options due to the unavail-
ability of certain loan products that were available 
before the enactment of this Act; 
(4) on minorities’ ability to access affordable 
credit compared with other prospective borrowers; 
(5) on home sales and construction; 
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(6) of extending the rescission right, if any, on 
adjustable rate loans and its impact on litigation; 
(7) of State foreclosure laws and, if any, an in-
vestor’s ability to transfer a property after fore-
closure; 
(8) of expanding the existing provisions of the 
Home Ownership and Equity Protection Act of 
1994; 
(9) of prohibiting prepayment penalties on 
high-cost mortgages; and 
(10) of establishing counseling services under 
the Department of Housing and Urban Development 
and offered through the Office of Housing Coun-
seling. 
(b) REPORT.—Before the end of the 1-year period be-
ginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report to the Congress 
containing the findings and conclusions of the Comptroller 
General with respect to the study conducted pursuant to 
subsection (a). 
(c) EXAMINATION RELATED TO CERTAIN CREDIT 
RISK RETENTION PROVISIONS.—The report required by 
subsection (b) shall also include an analysis by the Comp-
troller General of the effect on the capital reserves and 
funding of lenders of credit risk retention provisions for 
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non-qualified mortgages, including an analysis of the ex-
ceptions 
and 
adjustments 
authorized 
in 
section 
129C(l)(3)(A) of the Truth in Lending Act and a rec-
ommendation on whether a uniform standard is needed. 
(d) ANALYSIS OF CREDIT RISK RETENTION PROVI-
SIONS.—The report required by subsection (b) shall also 
include— 
(1) an analysis by the Comptroller General of 
whether the credit risk retention provisions have sig-
nificantly reduced risks to the larger credit market 
of the repackaging and selling of securitized loans on 
a secondary market; and 
(2) recommendations to the Congress on adjust-
ments that should be made, or additional measures 
that should be undertaken. 
SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AU-
THORITY. 
Section 130(e) of the Truth in Lending Act (15 
U.S.C. 1640(e)) is amended by striking ‘‘section 129 may 
also’’ and inserting ‘‘section 129, 129B, or 129C of this 
Act, section 220 of the Mortgage Reform and Anti-Preda-
tory Lending Act, or any amendment made by section 220 
of the Mortgage Reform and Anti-Predatory Lending Act 
may also’’. 
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SEC. 220. TENANT PROTECTION. 
(a) TENANT PROTECTION GENERALLY.— 
(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, the 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 date 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 
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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)(i) 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; and (ii) with respect to a single- 
family residence for which the borrower rented 
the unit in violation of the mortgage contract, 
such notice to vacate shall be provided by the 
purchaser to the tenant in such unit at least 30 
days before the effective date of such notice, 
and shall include a copy of the mortgage con-
tract prohibiting the rental of the unit. 
(3) BONA FIDE LEASE OR TENANCY.—For pur-
poses of this subsection, a lease or tenancy shall be 
considered bona fide only if— 
(A) the mortgagor under the contract is 
not the tenant; 
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(B) the lease or tenancy was the result of 
an arms-length transaction; and 
(C) the lease or tenancy requires the re-
ceipt of rent that is not substantially less than 
fair market rent for the property or the unit’s 
rent is reduced or subsidized due to a Federal, 
State, or local subsidy. 
(4) RULE OF CONSTRUCTION.—Except for the 
specific provisions of this subsection, no provision of 
this subsection shall be construed as affecting the 
requirements for termination of any Federal- or 
State-subsidized tenancy. The provisions of this sub-
section shall not be construed to limit any State or 
local law that provides 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 
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prior to sale shall not constitute good 
cause; and 
‘‘(ii) in subsequent lease terms of the 
tenant’s lease, who will occupy the unit as 
a primary residence, who sells the property 
to a purchaser who will occupy a unit of 
the property as a primary residence, or if 
the unit is unmarketable while occupied, 
such owner may terminate a lease relating 
to such unit for good cause on the effective 
date of the notice to vacate, where such 
notice is provided by the owner to the ten-
ant in such unit at least 90 days before the 
effective date of such notice;’’. 
(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-
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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 
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 
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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) LANDLORD NOTICE
TO TENANTS.—Notwith-
standing the law of any State or the terms of any con-
sumer residential lease, each person who owns a dwelling 
or residential real property— 
(1) which is leased to a bona fide tenant (in-
cluding a tenancy terminable at will), or which the 
landlord offers to lease to a prospective tenant; and 
(2) which, pursuant to the terms of a valid loan 
to such person which is secured by such dwelling or 
property, is or becomes subject to foreclosure or with 
respect to which the person is in default, 
shall promptly notify any such tenant or prospective ten-
ant of the circumstances prevailing with respect to such 
property and the effect of any such default or foreclosure. 
The requirements of this subsection shall have no effect 
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on any State or local law that provides additional notice 
or other additional protections for tenants. 
(d) EFFECTIVE
DATE.—Notwithstanding section 
217, this section and the amendments made by this sec-
tion shall take effect on the date of the enactment of this 
Act. 
TITLE III—HIGH-COST 
MORTGAGES 
SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORT-
GAGES. 
(a) 
HIGH-COST
MORTGAGE
DEFINED.—Section 
103(aa) of the Truth in Lending Act (15 U.S.C. 
1602(aa)) is amended by striking all that precedes para-
graph (2) and inserting the following: 
‘‘(aa) HIGH-COST MORTGAGE.— 
‘‘(1) DEFINITION.— 
‘‘(A) IN
GENERAL.—The term ‘high-cost 
mortgage’, and a mortgage referred to in this 
subsection, means a consumer credit trans-
action that is secured by the consumer’s prin-
cipal dwelling, other than a reverse mortgage 
transaction, if— 
‘‘(i) in the case of a credit transaction 
secured— 
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‘‘(I) by a first mortgage on the 
consumer’s principal dwelling, the an-
nual percentage rate at consummation 
of the transaction will exceed by more 
than 6.5 percentage points (8.5 per-
centage points, if the dwelling is per-
sonal property and the transaction is 
for less than $50,000) the average 
prime offer rate, as defined in section 
129C(c)(2)(B), 
for 
a 
comparable 
transaction; or 
‘‘(II) by a subordinate or junior 
mortgage on the consumer’s principal 
dwelling, the annual percentage rate 
at consummation of the transaction 
will exceed by more than 8.5 percent-
age points the average prime offer 
rate, 
as 
defined 
in 
section 
129C(c)(2)(B), 
for 
a 
comparable 
transaction; 
‘‘(ii) the total points and fees payable 
in connection with the transaction ex-
ceed— 
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‘‘(I) in the case of a transaction 
for $20,000 or more, 5 percent of the 
total transaction amount; or 
‘‘(II) in the case of a transaction 
for less than $20,000, the lesser of 8 
percent 
of 
the 
total 
transaction 
amount or $1,000 (or such other dol-
lar amount as the Board shall pre-
scribe by regulation); or 
‘‘(iii) the credit transaction documents 
permit the creditor to charge or collect pre-
payment fees or penalties more than 36 
months after the transaction closing or 
such fees or penalties exceed, in the aggre-
gate, more than 2 percent of the amount 
prepaid. 
‘‘(B) INTRODUCTORY RATES TAKEN INTO 
ACCOUNT.—For 
purposes 
of 
subparagraph 
(A)(i), the annual percentage rate of interest 
shall be determined based on the following in-
terest rate: 
‘‘(i) In the case of a fixed-rate trans-
action in which the annual percentage rate 
will not vary during the term of the loan, 
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the interest rate in effect on the date of 
consummation of the transaction. 
‘‘(ii) In the case of a transaction in 
which the rate of interest varies solely in 
accordance with an index, the interest rate 
determined by adding the index rate in ef-
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 
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(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 
points or greater than 12 percentage 
points.’’. 
(c) POINTS AND FEES DEFINED.— 
(1) IN
GENERAL.—Section 103(aa)(4) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is 
amended— 
(A) by striking subparagraph (B) and in-
serting the following: 
‘‘(B) all compensation paid directly or indi-
rectly by a consumer or creditor to a mortgage 
originator from any source, including a mort-
gage originator that originates a loan in the 
name of the creditor in a table-funded trans-
action;’’; 
(B) in subparagraph (C)(ii), by inserting 
‘‘except where applied to the charges set forth 
in section 106(e)(1) where a creditor may re-
ceive indirect compensation solely as a result of 
obtaining distributions of profits from an affili-
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ated entity based on its ownership interest in 
compliance with section 8(c)(4) of the Real Es-
tate Settlement Procedures Act of 1974’’ before 
the semicolon at the end; 
(C) in subparagraph (C)(iii), by striking ‘‘; 
and’’ and inserting ‘‘, except as provided for in 
clause (ii);’’; 
(D) by redesignating subparagraph (D) as 
subparagraph (G); and 
(E) by inserting after subparagraph (C) 
the following new subparagraphs: 
‘‘(D) premiums or other charges payable at 
or before closing for any credit life, credit dis-
ability, credit unemployment, or credit property 
insurance, or any other accident, loss-of-income, 
life or health insurance, or any payments di-
rectly or indirectly for any debt cancellation or 
suspension agreement or contract, except that 
insurance premiums or debt cancellation or sus-
pension fees calculated and paid in full on a 
monthly basis shall not be considered financed 
by the creditor; 
‘‘(E) except as provided in subsection (cc), 
the maximum prepayment fees and penalties 
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which may be charged or collected under the 
terms of the credit transaction; 
‘‘(F) all prepayment fees or penalties that 
are incurred by the consumer if the loan refi-
nances a previous loan made or currently held 
by the same creditor or an affiliate of the cred-
itor; and’’. 
(2) CALCULATION OF POINTS AND FEES FOR 
OPEN-END
CONSUMER
CREDIT
PLANS.—Section 
103(aa) of the Truth in Lending Act (15 U.S.C. 
1602(aa)) is amended— 
(A) by redesignating paragraph (5) as 
paragraph (6); and 
(B) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) CALCULATION OF POINTS AND FEES FOR 
OPEN-END CONSUMER CREDIT PLANS.—In the case 
of open-end consumer credit plans, points and fees 
shall be calculated, for purposes of this section and 
section 129, by adding the total points and fees 
known at or before closing, including the maximum 
prepayment penalties which may be charged or col-
lected under the terms of the credit transaction, plus 
the minimum additional fees the consumer would be 
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required to pay to draw down an amount equal to 
the total credit line.’’. 
(d) BONA
FIDE
DISCOUNT
LOAN
DISCOUNT 
POINTS.—Section 103 of the Truth in Lending Act (15 
U.S.C. 1602) is amended by inserting after subsection (cc) 
(as added by section 101) the following new subsection: 
‘‘(dd) BONA FIDE DISCOUNT POINTS AND PREPAY-
MENT PENALTIES.—For the purposes of determining the 
amount of points and fees for purposes of subsection (aa), 
either the amounts described in paragraph (1) or (2) of 
the following paragraphs, but not both, shall be excluded: 
‘‘(1) Up to and including 2 bona fide discount 
points payable by the consumer in connection with 
the mortgage, but only if the interest rate from 
which the mortgage’s interest rate will be discounted 
does not exceed by more than 1 percentage point— 
‘‘(A) the required net yield for a 90-day 
standard mandatory delivery commitment for a 
reasonably comparable loan from either the 
Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation, 
whichever is greater; or 
‘‘(B) if secured by a personal property 
loan, the average rate on a loan in connection 
with which insurance is provided under title I 
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of the National Housing Act (12 U.S.C. 1702 
et seq.). 
‘‘(2) Unless 2 bona fide discount points have 
been excluded under paragraph (1), up to and in-
cluding 1 bona fide discount point payable by the 
consumer in connection with the mortgage, but only 
if the interest rate from which the mortgage’s inter-
est rate will be discounted does not exceed by more 
than 2 percentage points— 
‘‘(A) the required net yield for a 90-day 
standard mandatory delivery commitment for a 
reasonably comparable loan from either the 
Federal National Mortgage Association or the 
Federal Home Loan Mortgage Corporation, 
whichever is greater; or 
‘‘(B) if secured by a personal property 
loan, the average rate on a loan in connection 
with which insurance is provided under title I 
of the National Housing Act (12 U.S.C. 1702 
et seq.). 
‘‘(3) For purposes of paragraph (1), the term 
‘bona fide discount points’ means loan discount 
points which are knowingly paid by the consumer for 
the purpose of reducing, and which in fact result in 
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a bona fide reduction of, the interest rate or time- 
price differential applicable to the mortgage. 
‘‘(4) Paragraphs (1) and (2) shall not apply to 
discount points used to purchase an interest rate re-
duction unless the amount of the interest rate reduc-
tion purchased is reasonably consistent with estab-
lished industry norms and practices for secondary 
mortgage market transactions.’’. 
SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR 
CERTAIN MORTGAGES. 
(a) PREPAYMENT PENALTY PROVISIONS.—Section 
129(c)(2) of the Truth in Lending Act (15 U.S.C. 
1639(c)(2)) is hereby repealed. 
(b) NO BALLOON PAYMENTS.—Section 129(e) of the 
Truth in Lending Act (15 U.S.C. 1639(e)) is amended to 
read as follows: 
‘‘(e) NO BALLOON PAYMENTS.—No high-cost mort-
gage may contain a scheduled payment that is more than 
twice as large as the average of earlier scheduled pay-
ments. This subsection shall not apply when the payment 
schedule is adjusted to the seasonal or irregular income 
of the consumer.’’. 
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SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN 
MORTGAGES. 
(a) ADDITIONAL
REQUIREMENTS
FOR
CERTAIN 
MORTGAGES.—Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended— 
(1) by redesignating subsections (j), (k) and (l) 
as subsections (n), (o) and (p) respectively; and 
(2) by inserting after subsection (i) the fol-
lowing new subsections: 
‘‘(j) RECOMMENDED DEFAULT.—No creditor shall 
recommend or encourage default on an existing loan or 
other debt prior to and in connection with the closing or 
planned closing of a high-cost mortgage that refinances 
all or any portion of such existing loan or debt. 
‘‘(k) LATE FEES.— 
‘‘(1) IN GENERAL.—No creditor may impose a 
late payment charge or fee in connection with a 
high-cost mortgage— 
‘‘(A) in an amount in excess of 4 percent 
of the amount of the payment past due; 
‘‘(B) unless the loan documents specifically 
authorize the charge or fee; 
‘‘(C) before the end of the 15-day period 
beginning on the date the payment is due, or in 
the case of a loan on which interest on each in-
stallment is paid in advance, before the end of 
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the 30-day period beginning on the date the 
payment is due; or 
‘‘(D) more than once with respect to a sin-
gle late payment. 
‘‘(2) COORDINATION WITH SUBSEQUENT LATE 
FEES.—If a payment is otherwise a full payment for 
the applicable period and is paid on its due date or 
within an applicable grace period, and the only delin-
quency or insufficiency of payment is attributable to 
any late fee or delinquency charge assessed on any 
earlier payment, no late fee or delinquency charge 
may be imposed on such payment. 
‘‘(3) FAILURE
TO
MAKE
INSTALLMENT
PAY-
MENT.—If, in the case of a loan agreement the 
terms of which provide that any payment shall first 
be applied to any past due principal balance, the 
consumer fails to make an installment payment and 
the consumer subsequently resumes making install-
ment payments but has not paid all past due install-
ments, the creditor may impose a separate late pay-
ment charge or fee for any principal due (without 
deduction due to late fees or related fees) until the 
default is cured. 
‘‘(l) ACCELERATION OF DEBT.—No high-cost mort-
gage may contain a provision which permits the creditor 
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to accelerate the indebtedness, except when repayment of 
the loan has been accelerated by default in payment, or 
pursuant to a due-on-sale provision, or pursuant to a ma-
terial violation of some other provision of the loan docu-
ment unrelated to payment schedule. 
‘‘(m) RESTRICTION
ON FINANCING POINTS
AND 
FEES.—No creditor may directly or indirectly finance, in 
connection with any high-cost mortgage, any of the fol-
lowing: 
‘‘(1) Any prepayment fee or penalty payable by 
the consumer in a refinancing transaction if the 
creditor or an affiliate of the creditor is the 
noteholder of the note being refinanced. 
‘‘(2) Any points or fees.’’. 
(b) PROHIBITIONS ON EVASIONS.—Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (p) (as so redesignated by 
subsection (a)(1)) the following new subsection: 
‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF 
TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 
creditor may not take any action in connection with a 
high-cost mortgage— 
‘‘(1) to structure a loan transaction as an open- 
end credit plan or another form of loan for the pur-
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pose and with the intent of evading the provisions of 
this title; or 
‘‘(2) to divide any loan transaction into sepa-
rate parts for the purpose and with the intent of 
evading provisions of this title.’’. 
(c) MODIFICATION
OR DEFERRAL FEES.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (q) (as added by 
subsection (b) of this section) the following new sub-
section: 
‘‘(r) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.— 
‘‘(1) CREDITORS.—A creditor may not charge a 
consumer any fee to modify, renew, extend, or 
amend a high-cost mortgage, or to defer any pay-
ment due under the terms of such mortgage, unless 
the modification, renewal, extension or amendment 
results in a lower annual percentage rate on the 
mortgage for the consumer and then only if the 
amount of the fee is comparable to fees imposed for 
similar transactions in connection with consumer 
credit transactions that are secured by a consumer’s 
principal dwelling and are not high-cost mortgages. 
‘‘(2) THIRD PARTIES.—A third-party may not 
charge a consumer any fee to— 
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‘‘(A) modify, renew, extend, or amend a 
high-cost mortgage, or defer any payment due 
under the terms of such mortgage; 
‘‘(B) negotiate with a creditor on behalf of 
a consumer, the modification, renewal, exten-
sion, or amendment of a high-cost mortgage; or 
‘‘(C) negotiate with a creditor on behalf of 
a consumer, the deferral of any payment due 
under the terms of such mortgage, 
unless the modification renewal, extension or amend-
ment results in a significantly lower annual percent-
age rate on the mortgage, or a significant reduction 
in the amount of the outstanding principal on the 
mortgage, for the consumer and then only if the 
amount of the fee is comparable to fees imposed for 
similar transactions in connection with consumer 
credit transactions that are secured by a consumer’s 
principal dwelling and are not high-cost mortgages. 
‘‘(3) ENFORCEMENT.—Section 130 shall be ap-
plied for purposes of paragraph (2) by— 
‘‘(A) 
substituting 
‘third 
party’ 
for 
‘creditor’each place such term appears; and 
‘‘(B) substituting ‘any fee charged by a 
third party’ for ‘finance charge’ each place such 
term appears.’’. 
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(d) PAYOFF STATEMENT.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (r) (as added by subsection (c) of this 
section) the following new subsection: 
‘‘(s) PAYOFF STATEMENT.— 
‘‘(1) FEES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), no creditor or servicer may 
charge a fee for informing or transmitting to 
any person the balance due to pay off the out-
standing balance on a high-cost mortgage. 
‘‘(B) TRANSACTION FEE.—When payoff in-
formation referred to in subparagraph (A) is 
provided by facsimile transmission or by a cou-
rier service, a creditor or servicer may charge a 
processing fee to cover the cost of such trans-
mission or service in an amount not to exceed 
an amount that is comparable to fees imposed 
for similar services provided in connection with 
consumer credit transactions that are secured 
by the consumer’s principal dwelling and are 
not high-cost mortgages. 
‘‘(C) FEE DISCLOSURE.—Prior to charging 
a transaction fee as provided in subparagraph 
(B), a creditor or servicer shall disclose that 
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payoff balances are available for free pursuant 
to subparagraph (A). 
‘‘(D) MULTIPLE REQUESTS.—If a creditor 
or servicer has provided payoff information re-
ferred to in subparagraph (A) without charge, 
other than the transaction fee allowed by sub-
paragraph (B), on 4 occasions during a cal-
endar year, the creditor or servicer may there-
after charge a reasonable fee for providing such 
information during the remainder of the cal-
endar year. 
‘‘(2) PROMPT DELIVERY.—Payoff balances shall 
be provided within 5 business days after receiving a 
request by a consumer or a person authorized by the 
consumer to obtain such information. 
‘‘(3) SERVICES
CONSIDERED
ASSIGNEE.—For 
the purposes of this subsection, a servicer shall be 
considered an assignee under the Truth in Lending 
Act.’’. 
(e) PRE-LOAN COUNSELING REQUIRED.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (s) (as added by 
subsection (d) of this section) the following new sub-
section: 
‘‘(t) PRE-LOAN COUNSELING.— 
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‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a high-cost mortgage 
without first receiving certification from a counselor 
that is approved by the Secretary of Housing and 
Urban Development, or at the discretion of the Sec-
retary, a State housing finance authority, that the 
consumer has received counseling on the advisability 
of the mortgage. Such counselor shall not be em-
ployed by the creditor or an affiliate of the creditor 
or be affiliated with the creditor. 
‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUN-
SELING.—No counselor may certify that a consumer 
has received counseling on the advisability of the 
high-cost mortgage unless the counselor can verify 
that the consumer has received each statement re-
quired (in connection with such loan) by this section 
or the Real Estate Settlement Procedures Act of 
1974 with respect to the transaction. 
‘‘(3) REGULATIONS.—The Board may prescribe 
such regulations as the Board determines to be ap-
propriate to carry out the requirements of paragraph 
(1).’’. 
(f) FLIPPING PROHIBITED.—Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by 
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inserting after subsection (t) (as added by subsection (e)) 
the following new subsection: 
‘‘(u) FLIPPING.— 
‘‘(1) IN GENERAL.—No creditor may knowingly 
or intentionally engage in the unfair act or practice 
of flipping in connection with a high-cost mortgage. 
‘‘(2) FLIPPING DEFINED.—For purposes of this 
subsection, the term ‘flipping’ means the making of 
a loan or extension of credit in the form a high-cost 
mortgage to a consumer which refinances an existing 
mortgage when the new loan or extension of credit 
does not have reasonable, net tangible benefit (as de-
termined in accordance with regulations prescribed 
under section 129C(b)) to the consumer considering 
all of the circumstances, including the terms of both 
the new and the refinanced loans or credit, the cost 
of the new loan or credit, and the consumer’s cir-
cumstances. 
‘‘(v) CORRECTIONS
AND UNINTENTIONAL VIOLA-
TIONS.—A creditor or assignee in a high cost loan who, 
when acting in good faith, fails to comply with any re-
quirement under this section will not be deemed to have 
violated such requirement if the creditor or assignee estab-
lishes that either— 
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‘‘(1) within 30 days of the loan closing and 
prior to the institution of any action, the consumer 
is notified of or discovers the violation, appropriate 
restitution is made, and whatever adjustments are 
necessary are made to the loan to either, at the 
choice of the consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) in the case of a high-cost mortgage, 
change the terms of the loan in a manner bene-
ficial to the consumer so that the loan will no 
longer be a high-cost mortgage; or 
‘‘(2) within 60 days of the creditor’s discovery 
or receipt of notification of an unintentional viola-
tion or bona fide error as described in subsection (c) 
and prior to the institution of any action, the con-
sumer is notified of the compliance failure, appro-
priate restitution is made, and whatever adjustments 
are necessary are made to the loan to either, at the 
choice of the consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) in the case of a high-cost mortgage, 
change the terms of the loan in a manner bene-
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ficial so that the loan will no longer be a high- 
cost mortgage.’’. 
SEC. 304. REGULATIONS. 
(a) IN GENERAL.—The Board of Governors of the 
Federal Reserve System shall publish regulations imple-
menting this title and the amendments made by this title 
in final form before the end of the 6-month period begin-
ning on the date of the enactment of this Act. 
(b) CONSUMER MORTGAGE EDUCATION.— 
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System may prescribe regula-
tions requiring or encouraging creditors to provide 
consumer mortgage education to prospective cus-
tomers or direct such customers to qualified con-
sumer mortgage education or counseling programs 
in the vicinity of the residence of the consumer. 
(2) COORDINATION WITH STATE LAW.—No re-
quirement established by the Board of Governors of 
the Federal Reserve System pursuant to paragraph 
(1) shall be construed as affecting or superseding 
any requirement under the law of any State with re-
spect to consumer mortgage counseling or education. 
SEC. 305. EFFECTIVE DATE. 
The amendments made by this title shall take effect 
at the end of the 6-month period beginning on the date 
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of the enactment of this Act and shall apply to mortgages 
referred to in section 103(aa) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)) for which an application is re-
ceived by the creditor after the end of such period. 
TITLE IV—OFFICE OF HOUSING 
COUNSELING 
SEC. 401. SHORT TITLE. 
This title may be cited as the ‘‘Expand and Preserve 
Home Ownership Through Counseling Act’’. 
SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUN-
SELING. 
Section 4 of the Department of Housing and Urban 
Development Act (42 U.S.C. 3533) is amended by adding 
at the end the following new subsection: 
‘‘(g) OFFICE OF HOUSING COUNSELING.— 
‘‘(1) ESTABLISHMENT.—There is established, 
in the Department, the Office of Housing Coun-
seling. 
‘‘(2) DIRECTOR.—There is established the posi-
tion of Director of Housing Counseling. The Direc-
tor shall be the head of the Office of Housing Coun-
seling and shall be appointed by, and shall report to, 
the Secretary. Such position shall be a career-re-
served position in the Senior Executive Service. 
‘‘(3) FUNCTIONS.— 
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‘‘(A) IN
GENERAL.—The Director shall 
have primary responsibility within the Depart-
ment for all activities and matters relating to 
homeownership counseling and rental housing 
counseling, including— 
‘‘(i) research, grant administration, 
public outreach, and policy development re-
lating to such counseling; and 
‘‘(ii) establishment, coordination, and 
administration of all regulations, require-
ments, standards, and performance meas-
ures under programs and laws adminis-
tered by the Department that relate to 
housing counseling, homeownership coun-
seling (including maintenance of homes), 
mortgage-related 
counseling 
(including 
home equity conversion mortgages and 
credit protection options to avoid fore-
closure), and rental housing counseling, in-
cluding the requirements, standards, and 
performance measures relating to housing 
counseling. 
‘‘(B) SPECIFIC FUNCTIONS.—The Director 
shall carry out the functions assigned to the Di-
rector and the Office under this section and any 
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other provisions of law. Such functions shall in-
clude establishing rules necessary for— 
‘‘(i) the counseling procedures under 
section 106(g)(1) of the Housing and 
Urban Development Act of 1968 (12 
U.S.C. 1701x(h)(1)); 
‘‘(ii) carrying out all other functions 
of the Secretary under section 106(g) of 
the Housing and Urban Development Act 
of 1968, including the establishment, oper-
ation, and publication of the availability of 
the toll-free telephone number under para-
graph (2) of such section; 
‘‘(iii) contributing to the preparation 
and distribution of home buying informa-
tion booklets pursuant to section 5 of the 
Real Estate Settlement Procedures Act of 
1974 (12 U.S.C. 2604); 
‘‘(iv) carrying out the certification 
program under section 106(e) of the Hous-
ing and Urban Development Act of 1968 
(12 U.S.C. 1701x(e)); 
‘‘(v) carrying out the assistance pro-
gram under section 106(a)(4) of the Hous-
ing and Urban Development Act of 1968, 
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including criteria for selection of applica-
tions to receive assistance; 
‘‘(vi) carrying out any functions re-
garding abusive, deceptive, or unscrupulous 
lending practices relating to residential 
mortgage loans that the Secretary con-
siders appropriate, which shall include con-
ducting the study under section 6 of the 
Expand and Preserve Home Ownership 
Through Counseling Act; 
‘‘(vii) providing for operation of the 
advisory committee established under para-
graph (4) of this subsection; 
‘‘(viii) collaborating with community- 
based organizations with expertise in the 
field of housing counseling; and 
‘‘(ix) providing for the building of ca-
pacity to provide housing counseling serv-
ices in areas that lack sufficient services, 
including underdeveloped areas that lack 
basic water and sewer systems, electricity 
services, and safe, sanitary housing. 
‘‘(4) ADVISORY COMMITTEE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
appoint an advisory committee to provide advice 
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regarding the carrying out of the functions of 
the Director. 
‘‘(B) MEMBERS.—Such advisory committee 
shall consist of not more than 12 individuals, 
and the membership of the committee shall 
equally represent the mortgage and real estate 
industry, including consumers and housing 
counseling agencies certified by the Secretary. 
‘‘(C) TERMS.—Except as provided in sub-
paragraph (D), each member of the advisory 
committee shall be appointed for a term of 3 
years. Members may be reappointed at the dis-
cretion of the Secretary. 
‘‘(D) TERMS OF INITIAL APPOINTEES.—As 
designated by the Secretary at the time of ap-
pointment, of the members first appointed to 
the advisory committee, 4 shall be appointed for 
a term of 1 year and 4 shall be appointed for 
a term of 2 years. 
‘‘(E) PROHIBITION OF PAY; TRAVEL EX-
PENSES.—Members of the advisory committee 
shall serve without pay, but shall receive travel 
expenses, including per diem in lieu of subsist-
ence, in accordance with applicable provisions 
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under subchapter I of chapter 57 of title 5, 
United States Code. 
‘‘(F) ADVISORY
ROLE
ONLY.—The advi-
sory committee shall have no role in reviewing 
or awarding housing counseling grants. 
‘‘(5) 
SCOPE
OF
HOMEOWNERSHIP
COUN-
SELING.—In carrying out the responsibilities of the 
Director, the Director shall ensure that homeowner-
ship counseling provided by, in connection with, or 
pursuant to any function, activity, or program of the 
Department addresses the entire process of home-
ownership, including the decision to purchase a 
home, the selection and purchase of a home, issues 
arising during or affecting the period of ownership 
of a home (including refinancing, default and fore-
closure, and other financial decisions), and the sale 
or other disposition of a home.’’. 
SEC. 403. COUNSELING PROCEDURES. 
(a) IN GENERAL.—Section 106 of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x) is 
amended by adding at the end the following new sub-
section: 
‘‘(g) PROCEDURES AND ACTIVITIES.— 
‘‘(1) COUNSELING PROCEDURES.— 
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section (b), subsection (c)(2)(A), and 
subsection (r)(4); 
‘‘(II) subsections (a) and (c)(3) 
of section 237 (12 U.S.C. 1715z–2); 
and 
‘‘(III) subsections (d)(2)(B) and 
(m)(1) of section 255 (12 U.S.C. 
1715z–20); 
‘‘(xi) section 502(h)(4)(B) of the 
Housing 
Act 
of 
1949 
(42 
U.S.C. 
1472(h)(4)(B)); 
‘‘(xii) section 508 of the Housing and 
Urban Development Act of 1970 (12 
U.S.C. 1701z–7); and 
‘‘(xiii) section 106 of the Energy Pol-
icy Act of 1992 (42 U.S.C. 12712 note). 
‘‘(C) RENTAL
HOUSING
COUNSELING.— 
For purposes of this subsection, the term ‘rent-
al housing counseling’ means counseling related 
to rental of residential property, which may in-
clude counseling regarding future homeowner-
ship opportunities and providing referrals for 
renters and prospective renters to entities pro-
viding counseling and shall include counseling 
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related to such topics that is provided pursuant 
to— 
‘‘(i) section 105(a)(20) of the Housing 
and Community Development Act of 1974 
(42 U.S.C. 5305(a)(20)); 
‘‘(ii) in the United States Housing 
Act of 1937— 
‘‘(I) section 9(e) (42 U.S.C. 
1437g(e)); 
‘‘(II) section 18(a)(4)(D) (42 
U.S.C. 1437p(a)(4)(D)); 
‘‘(III) 
section 
23(c)(4) 
(42 
U.S.C. 1437u(c)(4)); 
‘‘(IV) section 32(e)(4) (42 U.S.C. 
1437z–4(e)(4)); 
‘‘(V) section 33(d)(2)(B) (42 
U.S.C. 1437z–5(d)(2)(B)); and 
‘‘(VI) 
section 
302(b)(6) 
(42 
U.S.C. 1437aaa–1(b)(6)); 
‘‘(iii) section 233(b)(2) of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12773(b)(2)); 
‘‘(iv) section 106 of the Housing and 
Urban Development Act of 1968 (12 
U.S.C. 1701x); 
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‘‘(v) section 422(b)(6) of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12872(b)(6)); 
‘‘(vi) section 491(b)(1)(F)(iii) of the 
McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11408(b)(1)(F)(iii)); 
‘‘(vii) 
sections 
202(3) 
and 
810(b)(2)(A) of the Native American 
Housing and Self-Determination Act of 
1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 
and 
‘‘(viii) the rental assistance program 
under section 8 of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437f). 
‘‘(2) STANDARDS FOR MATERIALS.—The Sec-
retary, in consultation with the advisory committee 
established under subsection (g)(4) of the Depart-
ment of Housing and Urban Development Act, shall 
establish standards for materials and forms to be 
used, as appropriate, by organizations providing 
homeownership counseling services, including any re-
cipients of assistance pursuant to subsection (a)(4). 
‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 
‘‘(A) CERTIFICATION.—The Secretary shall 
provide for the certification of various computer 
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software programs for consumers to use in eval-
uating different residential mortgage loan pro-
posals. The Secretary shall require, for such 
certification, that the mortgage software sys-
tems take into account— 
‘‘(i) the consumer’s financial situation 
and the cost of maintaining a home, in-
cluding insurance, taxes, and utilities; 
‘‘(ii) the amount of time the consumer 
expects to remain in the home or expected 
time to maturity of the loan; and 
‘‘(iii) such other factors as the Sec-
retary considers appropriate to assist the 
consumer in evaluating whether to pay 
points, to lock in an interest rate, to select 
an adjustable or fixed rate loan, to select 
a conventional or government-insured or 
guaranteed loan and to make other choices 
during the loan application process. 
If the Secretary determines that available exist-
ing software is inadequate to assist consumers 
during the residential mortgage loan application 
process, the Secretary shall arrange for the de-
velopment by private sector software companies 
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of new mortgage software systems that meet 
the Secretary’s specifications. 
‘‘(B) USE
AND
INITIAL
AVAILABILITY.— 
Such certified computer software programs 
shall be used to supplement, not replace, hous-
ing counseling. The Secretary shall provide that 
such programs are initially used only in connec-
tion with the assistance of housing counselors 
certified pursuant to subsection (e). 
‘‘(C) AVAILABILITY.—After a period of ini-
tial availability under subparagraph (B) as the 
Secretary considers appropriate, the Secretary 
shall take reasonable steps to make mortgage 
software systems certified pursuant to this 
paragraph widely available through the Internet 
and at public locations, including public librar-
ies, senior-citizen centers, public housing sites, 
offices of public housing agencies that admin-
ister rental housing assistance vouchers, and 
housing counseling centers. 
‘‘(D) BUDGET
COMPLIANCE.—This para-
graph shall be effective only to the extent that 
amounts to carry out this paragraph are made 
available in advance in appropriations Acts. 
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‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA 
CAMPAIGNS TO PROMOTE HOUSING COUNSELING.— 
‘‘(A) IN GENERAL.—The Director of Hous-
ing Counseling shall develop, implement, and 
conduct national public service multimedia cam-
paigns designed to make persons facing mort-
gage 
foreclosure, 
persons 
considering 
a 
subprime mortgage loan to purchase a home, el-
derly persons, persons who face language bar-
riers, low-income persons, minorities, and other 
potentially vulnerable consumers aware that it 
is advisable, before seeking or maintaining a 
residential mortgage loan, to obtain homeowner-
ship counseling from an unbiased and reliable 
sources and that such homeownership coun-
seling is available, including through programs 
sponsored by the Secretary of Housing and 
Urban Development. 
‘‘(B) CONTACT INFORMATION.—Each seg-
ment of the multimedia campaign under sub-
paragraph (A) shall publicize the toll-free tele-
phone number and website of the Department 
of Housing and Urban Development through 
which persons seeking housing counseling can 
locate a housing counseling agency in their 
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State that is certified by the Secretary of Hous-
ing and Urban Development and can provide 
advice on buying a home, renting, defaults, 
foreclosures, credit issues, and reverse mort-
gages. 
‘‘(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.—There are authorized to be appro-
priated to the Secretary, not to exceed 
$3,000,000 for fiscal years 2009, 2010, and 
2011, for the development, implementation, and 
conduct of national public service multimedia 
campaigns under this paragraph. 
‘‘(D) FORECLOSURE
RESCUE
EDUCATION 
PROGRAMS.— 
‘‘(i) IN
GENERAL.—Ten percent of 
any funds appropriated pursuant to the 
authorization under subparagraph (C) 
shall be used by the Director of Housing 
Counseling to conduct an education pro-
gram in areas that have a high density of 
foreclosure. Such program shall involve di-
rect mailings to persons living in such 
areas describing— 
‘‘(I) tips on avoiding foreclosure 
rescue scams; 
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‘‘(II) tips on avoiding predatory 
lending mortgage agreements; 
‘‘(III) tips on avoiding for-profit 
foreclosure counseling services; and 
‘‘(IV) local counseling resources 
that are approved by the Department 
of Housing and Urban Development. 
‘‘(ii) PROGRAM
EMPHASIS.—In con-
ducting the education program described 
under clause (i), the Director of Housing 
Counseling shall also place an emphasis on 
serving communities that have a high per-
centage of retirement communities or a 
high percentage of low-income minority 
communities. 
‘‘(iii) TERMS
DEFINED.—For pur-
poses of this subparagraph: 
‘‘(I) HIGH
DENSITY
OF
FORE-
CLOSURES.—An area has a ‘high den-
sity of foreclosures’ if such area is one 
of the metropolitan statistical areas 
(as that term is defined by the Direc-
tor of the Office of Management and 
Budget) with the highest home fore-
closure rates. 
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‘‘(II) HIGH PERCENTAGE OF RE-
TIREMENT
COMMUNITIES.—An area 
has a ‘high percentage of retirement 
communities’ if such area is one of 
the metropolitan statistical areas (as 
that term is defined by the Director of 
the Office of Management and Budg-
et) with the highest percentage of 
residents aged 65 or older. 
‘‘(III) HIGH
PERCENTAGE
OF 
LOW-INCOME
MINORITY
COMMU-
NITIES.—An area has a ‘high percent-
age of low-income minority commu-
nities’ if such area contains a higher- 
than-normal percentage of residents 
who are both minorities and low-in-
come, as defined by the Director of 
Housing Counseling. 
‘‘(5) EDUCATION
PROGRAMS.—The Secretary 
shall provide advice and technical assistance to 
States, units of general local government, and non-
profit organizations regarding the establishment and 
operation of, including assistance with the develop-
ment of content and materials for, educational pro-
grams to inform and educate consumers, particularly 
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HR 1728 RFS 
those most vulnerable with respect to residential 
mortgage loans (such as elderly persons, persons 
facing language barriers, low-income persons, mi-
norities, and other potentially vulnerable con-
sumers), regarding home mortgages, mortgage refi-
nancing, home equity loans, home repair loans, and 
where appropriate by region, any requirements and 
costs associated with obtaining flood or other dis-
aster-specific insurance coverage.’’. 
(b) CONFORMING AMENDMENTS
TO GRANT PRO-
GRAM
FOR HOMEOWNERSHIP COUNSELING ORGANIZA-
TIONS.—Section 106(c)(5)(A)(ii) of the Housing and 
Urban 
Development 
Act 
of 
1968 
(12 
U.S.C. 
1701x(c)(5)(A)(ii)) is amended— 
(1) in subclause (III), by striking ‘‘and’’ at the 
end; 
(2) in subclause (IV) by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after subclause (IV) the fol-
lowing new subclause: 
‘‘(V) notify the housing or mort-
gage applicant of the availability of 
mortgage software systems provided 
pursuant to subsection (g)(3).’’. 
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SEC. 404. GRANTS FOR HOUSING COUNSELING ASSIST-
ANCE. 
Section 106(a) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended 
by adding at the end the following new paragraph: 
‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING 
ASSISTANCE.— 
‘‘(A) IN GENERAL.—The Secretary shall make 
financial assistance available under this paragraph 
to HUD-approved housing counseling agencies and 
State housing finance agencies. 
‘‘(B) QUALIFIED
ENTITIES.—The Secretary 
shall establish standards and guidelines for eligibility 
of organizations (including governmental and non-
profit organizations) to receive assistance under this 
paragraph, in accordance with subparagraph (D). 
‘‘(C) DISTRIBUTION.—Assistance made avail-
able under this paragraph shall be distributed in a 
manner that encourages efficient and successful 
counseling programs and that ensures adequate dis-
tribution of amounts for rural areas having tradi-
tionally low levels of access to such counseling serv-
ices, including areas with insufficient access to the 
Internet. In distributing such assistance, the Sec-
retary may give priority consideration to entities 
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128 
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serving areas with the highest home foreclosure 
rates. 
‘‘(D) LIMITATION ON DISTRIBUTION OF ASSIST-
ANCE.— 
‘‘(i) IN GENERAL.—None of the amounts 
made available under this paragraph shall be 
distributed to— 
‘‘(I) any organization which has been 
convicted for a violation under Federal law 
relating to an election for Federal office; or 
‘‘(II) any organization which employs 
applicable individuals. 
‘‘(ii) DEFINITION OF APPLICABLE INDIVID-
UALS.—In this subparagraph, the term ‘appli-
cable individual’ means an individual who— 
‘‘(I) is— 
‘‘(aa) employed by the organiza-
tion in a permanent or temporary ca-
pacity; 
‘‘(bb) contracted or retained by 
the organization; or 
‘‘(cc) acting on behalf of, or with 
the express or apparent authority of, 
the organization; and 
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129 
HR 1728 RFS 
‘‘(II) has been convicted for a viola-
tion under Federal law relating to an elec-
tion for Federal office. 
‘‘(E) GRANTMAKING PROCESS.—In making as-
sistance available under this paragraph, the Sec-
retary shall consider appropriate ways of stream-
lining and improving the processes for grant applica-
tion, review, approval, and award. 
‘‘(F) AUTHORIZATION
OF
APPROPRIATIONS.— 
There 
are 
authorized 
to 
be 
appropriated 
$45,000,000 for each of fiscal years 2009 through 
2012 for— 
‘‘(i) the operations of the Office of Hous-
ing Counseling of the Department of Housing 
and Urban Development; 
‘‘(ii) the responsibilities of the Director of 
Housing Counseling under paragraphs (2) 
through (5) of subsection (g); and 
‘‘(iii) assistance pursuant to this para-
graph for entities providing homeownership and 
rental counseling.’’. 
SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUN-
SELORS UNDER HUD PROGRAMS. 
Section 106(e) of the Housing and Urban Develop-
ment Act of 1968 (12 U.S.C. 1701x(e)) is amended— 
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130 
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(1) by striking paragraph (1) and inserting the 
following new paragraph: 
‘‘(1) REQUIREMENT FOR ASSISTANCE.—An or-
ganization may not receive assistance for counseling 
activities under subsection (a)(1)(iii), (a)(2), (a)(4), 
(c), or (d) of this section, or under section 101(e), 
unless the organization, or the individuals through 
which the organization provides such counseling, has 
been certified by the Secretary under this subsection 
as competent to provide such counseling.’’; 
(2) in paragraph (2)— 
(A) by inserting ‘‘and for certifying organi-
zations’’ before the period at the end of the 
first sentence; and 
(B) in the second sentence by striking ‘‘for 
certification’’ and inserting ‘‘, for certification 
of an organization, that each individual through 
which the organization provides counseling shall 
demonstrate, and, for certification of an indi-
vidual,’’; 
(3) in paragraph (3), by inserting ‘‘organiza-
tions and’’ before ‘‘individuals’’; 
(4) by redesignating paragraph (3) as para-
graph (5); and 
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(5) by inserting after paragraph (2) the fol-
lowing new paragraphs: 
‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.— 
Any homeownership counseling or rental housing 
counseling (as such terms are defined in subsection 
(g)(1)) required under, or provided in connection 
with, any program administered by the Department 
of Housing and Urban Development shall be pro-
vided only by organizations or counselors certified by 
the Secretary under this subsection as competent to 
provide such counseling. 
‘‘(4) OUTREACH.—The Secretary shall take 
such actions as the Secretary considers appropriate 
to ensure that individuals and organizations pro-
viding homeownership or rental housing counseling 
are aware of the certification requirements and 
standards of this subsection and of the training and 
certification programs under subsection (f).’’. 
SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES. 
The Secretary of Housing and Urban Development 
shall conduct an extensive study of the root causes of de-
fault and foreclosure of home loans, using as much empir-
ical data as are available. The study shall also examine 
the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures, and the role 
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132 
HR 1728 RFS 
of computer registries of mortgages, including those used 
for trading mortgage loans. Not later than 12 months 
after the date of the enactment of this Act, the Secretary 
shall submit to the Congress a preliminary report regard-
ing the study. Not later than 24 months after such date 
of enactment, the Secretary shall submit a final report re-
garding the results of the study, which shall include any 
recommended legislation relating to the study, and rec-
ommendations for best practices and for a process to iden-
tify populations that need counseling the most. 
SEC. 407. DEFAULT AND FORECLOSURE DATABASE. 
(a) ESTABLISHMENT.—The Secretary of Housing 
and Urban Development, in consultation with the Federal 
agencies responsible for regulation of banking and finan-
cial institutions involved in residential mortgage lending 
and servicing, shall establish and maintain a database of 
information on foreclosures and defaults on mortgage 
loans for one- to four-unit residential properties and shall 
make such information publicly available. 
(b) CENSUS TRACT DATA.—Information in the data-
base shall be collected, aggregated, and made available on 
a census tract basis. 
(c) REQUIREMENTS.—Information collected and 
made available through the database shall include— 
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133 
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(1) the number and percentage of such mort-
gage loans that are delinquent by more than 30 
days; 
(2) the number and percentage of such mort-
gage loans that are delinquent by more than 90 
days; 
(3) the number and percentage of such prop-
erties that are real estate-owned; 
(4) number and percentage of such mortgage 
loans that are in the foreclosure process; 
(5) the number and percentage of such mort-
gage loans that have an outstanding principal obli-
gation amount that is greater than the value of the 
property for which the loan was made; and 
(6) such other information as the Secretary 
considers appropriate. 
SEC. 408. DEFINITIONS FOR COUNSELING-RELATED PRO-
GRAMS. 
Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following new subsection: 
‘‘(h) DEFINITIONS.—For purposes of this section: 
‘‘(1) NONPROFIT
ORGANIZATION.—The term 
‘nonprofit organization’ has the meaning given such 
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134 
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term in section 104(5) of the Cranston-Gonzalez Na-
tional 
Affordable 
Housing 
Act 
(42 
U.S.C. 
12704(5)), except that subparagraph (D) of such 
section shall not apply for purposes of this section. 
‘‘(2) STATE.—The term ‘State’ means each of 
the several States, the Commonwealth of Puerto 
Rico, the District of Columbia, the Commonwealth 
of the Northern Mariana Islands, Guam, the Virgin 
Islands, American Samoa, the Trust Territories of 
the Pacific, or any other possession of the United 
States. 
‘‘(3) UNIT
OF
GENERAL
LOCAL
GOVERN-
MENT.—The term ‘unit of general local government’ 
means any city, county, parish, town, township, bor-
ough, village, or other general purpose political sub-
division of a State. 
‘‘(4) HUD-APPROVED COUNSELING AGENCY.— 
The term ‘HUD-approved counseling agency’ means 
a private or public nonprofit organization that is— 
‘‘(A) exempt from taxation under section 
501(c) of the Internal Revenue Code of 1986; 
and 
‘‘(B) certified by the Secretary to provide 
housing counseling services. 
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‘‘(5) STATE HOUSING FINANCE AGENCY.—The 
term ‘State housing finance agency’ means any pub-
lic body, agency, or instrumentality specifically cre-
ated under State statute that is authorised to fi-
nance activities designed to provide housing and re-
lated facilities throughout an entire State through 
land acquisition, construction, or rehabilitation.’’. 
SEC. 409. ACCOUNTABILITY AND TRANSPARENCY FOR 
GRANT RECIPIENTS. 
Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x), as amended by the pre-
ceding provisions of this title, is further amended by add-
ing at the end the following: 
‘‘(i) ACCOUNTABILITY FOR RECIPIENTS OF COVERED 
ASSISTANCE.— 
‘‘(1) TRACKING
OF
FUNDS.—The Secretary 
shall— 
‘‘(A) develop and maintain a system to en-
sure that any organization or entity that re-
ceives any covered assistance uses all amounts 
of covered assistance in accordance with this 
section or section 216 of the Mortgage Reform 
and Anti-Predatory Lending Act, as applicable, 
the regulations issued under this section or 
such section 216, as applicable, and any re-
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136 
HR 1728 RFS 
quirements or conditions under which such 
amounts were provided; and 
‘‘(B) require any organization or entity, as 
a condition of receipt of any covered assistance, 
to agree to comply with such requirements re-
garding covered assistance as the Secretary 
shall establish, which shall include— 
‘‘(i) appropriate periodic financial and 
grant activity reporting, record retention, 
and audit requirements for the duration of 
the covered assistance to the organization 
or entity to ensure compliance with the 
limitations and requirements of this section 
or section 216 of the Mortgage Reform 
and Anti-Predatory Lending Act, as appli-
cable, the regulations under this section or 
such section 216, as applicable, and any 
requirements or conditions under which 
such amounts were provided; and 
‘‘(ii) any other requirements that the 
Secretary determines are necessary to en-
sure appropriate administration and com-
pliance. 
‘‘(2) MISUSE OF FUNDS.—If any organization 
or entity that receives any covered assistance is de-
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137 
HR 1728 RFS 
termined by the Secretary to have used any covered 
assistance in a manner that is materially in violation 
of this section or section 216 of the Mortgage Re-
form and Anti-Predatory Lending Act, as applicable, 
the regulations issued under this section or such sec-
tion 216, as applicable, or any requirements or con-
ditions under which such assistance was provided— 
‘‘(A) the Secretary shall require that, with-
in 12 months after the determination of such 
misuse, the organization or entity shall reim-
burse the Secretary for such misused amounts 
and return to the Secretary any such amounts 
that remain unused or uncommitted for use; 
and 
‘‘(B) such organization or entity shall be 
ineligible, at any time after such determination, 
to apply for or receive any further covered as-
sistance. 
The remedies under this paragraph are in addition 
to any other remedies that may be available under 
law. 
‘‘(3) COVERED ASSISTANCE.—For purposes of 
this subsection, the term ‘covered assistance’ means 
any grant or other financial assistance provided 
under— 
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‘‘(A) this section; or 
‘‘(B) section 216 of the Mortgage Reform 
and Anti-Predatory Lending Act.’’. 
SEC. 410. UPDATING AND SIMPLIFICATION OF MORTGAGE 
INFORMATION BOOKLET. 
Section 5 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2604) is amended— 
(1) in the section heading, by striking ‘‘SPE-
CIAL’’ and inserting ‘‘HOME BUYING’’; 
(2) by striking subsections (a) and (b) and in-
serting the following new subsections: 
‘‘(a) PREPARATION AND DISTRIBUTION.—The Sec-
retary shall prepare, at least once every 5 years, a booklet 
to help consumers applying for federally related mortgage 
loans to understand the nature and costs of real estate 
settlement services. The Secretary shall prepare the book-
let in various languages and cultural styles, as the Sec-
retary determines to be appropriate, so that the booklet 
is understandable and accessible to homebuyers of dif-
ferent ethnic and cultural backgrounds. The Secretary 
shall distribute such booklets to all lenders that make fed-
erally related mortgage loans. The Secretary shall also dis-
tribute to such lenders lists, organized by location, of 
homeownership counselors certified under section 106(e) 
of the Housing and Urban Development Act of 1968 (12 
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139 
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U.S.C. 1701x(e)) for use in complying with the require-
ment under subsection (c) of this section. 
‘‘(b) CONTENTS.—Each booklet shall be in such form 
and detail as the Secretary shall prescribe and, in addition 
to such other information as the Secretary may provide, 
shall include in plain and understandable language the fol-
lowing information: 
‘‘(1) A description and explanation of the na-
ture and purpose of the costs incident to a real es-
tate settlement or a federally related mortgage loan. 
The description and explanation shall provide gen-
eral information about the mortgage process as well 
as specific information concerning, at a minimum— 
‘‘(A) balloon payments; 
‘‘(B) prepayment penalties; 
‘‘(C) the advantages of prepayment; and 
‘‘(D) the trade-off between closing costs 
and the interest rate over the life of the loan. 
‘‘(2) An explanation and sample of the uniform 
settlement statement required by section 4. 
‘‘(3) A list and explanation of lending practices, 
including those prohibited by the Truth in Lending 
Act or other applicable Federal law, and of other un-
fair practices and unreasonable or unnecessary 
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140 
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charges to be avoided by the prospective buyer with 
respect to a real estate settlement. 
‘‘(4) A list and explanation of questions a con-
sumer obtaining a federally related mortgage loan 
should ask regarding the loan, including whether the 
consumer will have the ability to repay the loan, 
whether the consumer sufficiently shopped for the 
loan, whether the loan terms include prepayment 
penalties or balloon payments, and whether the loan 
will benefit the borrower. 
‘‘(5) An explanation of the right of rescission as 
to certain transactions provided by sections 125 and 
129 of the Truth in Lending Act. 
‘‘(6) A brief explanation of the nature of a vari-
able rate mortgage and a reference to the booklet 
entitled ‘Consumer Handbook on Adjustable Rate 
Mortgages’, published by the Board of Governors of 
the Federal Reserve System pursuant to section 
226.19(b)(1) of title 12, Code of Federal Regula-
tions, or to any suitable substitute of such booklet 
that such Board of Governors may subsequently 
adopt pursuant to such section. 
‘‘(7) A brief explanation of the nature of a 
home equity line of credit and a reference to the 
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pamphlet required to be provided under section 
127A of the Truth in Lending Act. 
‘‘(8) Information about homeownership coun-
seling services made available pursuant to section 
106(a)(4) of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x(a)(4)), a rec-
ommendation that the consumer use such services, 
and notification that a list of certified providers of 
homeownership counseling in the area, and their 
contact information, is available. 
‘‘(9) An explanation of the nature and purpose 
of escrow accounts when used in connection with 
loans secured by residential real estate and the re-
quirements under section 10 of this Act regarding 
such accounts. 
‘‘(10) An explanation of the choices available to 
buyers of residential real estate in selecting persons 
to provide necessary services incidental to a real es-
tate settlement. 
‘‘(11) An explanation of a consumer’s respon-
sibilities, liabilities, and obligations in a mortgage 
transaction. 
‘‘(12) An explanation of the nature and purpose 
of real estate appraisals, including the difference be-
tween an appraisal and a home inspection. 
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‘‘(13) Notice that the Office of Housing of the 
Department of Housing and Urban Development has 
made publicly available a brochure regarding loan 
fraud and a World Wide Web address and toll-free 
telephone number for obtaining the brochure. 
The booklet prepared pursuant to this section shall take 
into consideration differences in real estate settlement pro-
cedures that may exist among the several States and terri-
tories of the United States and among separate political 
subdivisions within the same State and territory.’’; 
(3) in subsection (c), by inserting at the end 
the following new sentence: ‘‘Each lender shall also 
include with the booklet a reasonably complete or 
updated list of homeownership counselors who are 
certified pursuant to section 106(e) of the Housing 
and Urban Development Act of 1968 (12 U.S.C. 
1701x(e)) and located in the area of the lender.’’; 
and 
(4) in subsection (d), by inserting after the pe-
riod at the end of the first sentence the following: 
‘‘The lender shall provide the HUD-issued booklet in 
the version that is most appropriate for the person 
receiving it.’’. 
SEC. 411. HOME INSPECTION COUNSELING. 
(a) PUBLIC OUTREACH.— 
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(1) IN GENERAL.—The Secretary of Housing 
and Urban Development (in this section referred to 
as the ‘‘Secretary’’) shall take such actions as may 
be necessary to inform potential homebuyers of the 
availability and importance of obtaining an inde-
pendent home inspection. Such actions shall in-
clude— 
(A) publication of the HUD/FHA form 
HUD 92564–CN entitled ‘‘For Your Protec-
tion: Get a Home Inspection’’, in both English 
and Spanish languages; 
(B) publication of the HUD/FHA booklet 
entitled ‘‘For Your Protection: Get a Home In-
spection’’, in both English and Spanish lan-
guages; 
(C) development and publication of a HUD 
booklet entitled ‘‘For Your Protection—Get a 
Home Inspection’’ that does not reference 
FHA-insured homes, in both English and Span-
ish languages; and 
(D) publication of the HUD document en-
titled ‘‘Ten Important Questions To Ask Your 
Home Inspector’’, in both English and Spanish 
languages. 
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(2) AVAILABILITY.—The Secretary shall make 
the materials specified in paragraph (1) available for 
electronic access and, where appropriate, inform po-
tential homebuyers of such availability through home 
purchase counseling public service announcements 
and toll-free telephone hotlines of the Department of 
Housing and Urban Development. The Secretary 
shall give special emphasis to reaching first-time and 
low-income homebuyers with these materials and ef-
forts. 
(3) UPDATING.—The Secretary may periodi-
cally update and revise such materials, as the Sec-
retary determines to be appropriate. 
(b) REQUIREMENT
FOR
FHA-APPROVED
LEND-
ERS.—Each mortgagee approved for participation in the 
mortgage insurance programs under title II of the Na-
tional Housing Act shall provide prospective homebuyers, 
at first contact, whether upon pre-qualification, pre-ap-
proval, or initial application, the materials specified in 
subparagraphs (A), (B), and (D) of subsection (a)(1). 
(c) REQUIREMENTS
FOR HUD-APPROVED COUN-
SELING AGENCIES.—Each counseling agency certified 
pursuant by the Secretary to provide housing counseling 
services shall provide each of their clients, as part of the 
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home purchase counseling process, the materials specified 
in subparagraphs (C) and (D) of subsection (a)(1). 
(d) TRAINING.—Training provided the Department 
of Housing and Urban Development for housing coun-
seling agencies, whether such training is provided directly 
by the Department or otherwise, shall include— 
(1) providing information on counseling poten-
tial homebuyers of the availability and importance of 
getting an independent home inspection; 
(2) providing information about the home in-
spection process, including the reasons for specific 
inspections such as radon and lead-based paint test-
ing; 
(3) providing information about advising poten-
tial homebuyers on how to locate and select a quali-
fied home inspector; and 
(4) review of home inspection public outreach 
materials of the Department. 
SEC. 412. WARNINGS TO HOMEOWNERS OF FORECLOSURE 
RESCUE SCAMS. 
(a) ASSISTANCE
TO NRC.—Notwithstanding any 
other provision of law, of any amounts made available for 
any fiscal year pursuant to section 106(a)(4)(F) of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 
1701x(a)(4)(F)) (as added by section 404 of this Act), 10 
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percent shall be used only for assistance to the Neighbor-
hood Reinvestment Corporation for activities, in consulta-
tion with servicers of residential mortgage loans, to pro-
vide notice to borrowers under such loans who are delin-
quent with respect to payments due under such loans that 
makes such borrowers aware of the dangers of fraudulent 
activities associated with foreclosure. 
(b) NOTICE.—The Neighborhood Reinvestment Cor-
poration, in consultation with servicers of residential mort-
gage loans, shall use the amounts provided pursuant to 
subsection (a) to carry out activities to inform borrowers 
under residential mortgage loans— 
(1) that the foreclosure process is complex and 
can be confusing; 
(2) that the borrower may be approached dur-
ing the foreclosure process by persons regarding sav-
ing their home and they should use caution in any 
such dealings; 
(3) that there are Federal Government and 
nonprofit agencies that may provide information 
about the foreclosure process, including the Depart-
ment of Housing and Urban Development; 
(4) that they should contact their lender imme-
diately, contact the Department of Housing and 
Urban Development to find a housing counseling 
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agency certified by the Department to assist in 
avoiding foreclosure, or visit the Department’s 
website regarding tips for avoiding foreclosure; and 
(5) of the telephone number of the loan servicer 
or successor, the telephone number of the Depart-
ment of Housing and Urban Development housing 
counseling line, and the Uniform Resource Locators 
(URLs) for the Department of Housing and Urban 
Development websites for housing counseling and for 
tips for avoiding foreclosure. 
TITLE V—MORTGAGE SERVICING 
SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
(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 129C (as added by section 201) the following 
new section: 
‘‘SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING 
TO 
CERTAIN 
CONSUMER 
CREDIT 
TRANS-
ACTIONS. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), (c), or (d) , a creditor, in connection with the forma-
tion or consummation of a consumer credit transaction se-
cured by a first lien on the principal dwelling of the con-
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sumer, other than a consumer credit transaction under an 
open end credit plan or a reverse mortgage, shall establish, 
before the consummation of such transaction, an escrow 
or impound account for the payment of taxes and hazard 
insurance, and, if applicable, flood insurance, mortgage in-
surance, ground rents, and any other required periodic 
payments or premiums with respect to the property or the 
loan terms, as provided in, and in accordance with, this 
section. 
‘‘(b) WHEN REQUIRED.—No impound, trust, or other 
type of account for the payment of property taxes, insur-
ance premiums, or other purposes relating to the property 
may be required as a condition of a real property sale con-
tract or a loan secured by a first deed of trust or mortgage 
on the principal dwelling of the consumer, other than a 
consumer credit transaction under an open end credit plan 
or a reverse mortgage, except when— 
‘‘(1) any such impound, trust, or other type of 
escrow or impound account for such purposes is re-
quired by Federal or State law; 
‘‘(2) a loan is made, guaranteed, or insured by 
a State or Federal governmental lending or insuring 
agency; 
‘‘(3) the transaction is secured by a first mort-
gage or lien on the consumer’s principal dwelling 
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having an original principal obligation amount 
that— 
‘‘(A) 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 such inter-
est rate set, pursuant to the sixth sentence of 
section 305(a)(2) the Federal Home Loan 
Mortgage 
Corporation 
Act 
(12 
U.S.C. 
1454(a)(2)), and the annual percentage rate 
will exceed the average prime offer rate for a 
comparable transaction by 1.5 or more percent-
age points; or 
‘‘(B) exceeds the amount of the maximum 
limitation on the original principal obligation of 
mortgage in effect for a residence of the appli-
cable size, as of the date such interest rate set, 
pursuant to the sixth sentence of section 
305(a)(2) the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1454(a)(2)), and 
the annual percentage rate will exceed the aver-
age prime offer rate for a comparable trans-
action by 2.5 or more percentage points; or 
‘‘(4) so required pursuant to regulation. 
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‘‘(c) DURATION OF MANDATORY ESCROW OR IM-
POUND ACCOUNT.—An escrow or impound account estab-
lished pursuant to subsection (b), shall remain in existence 
for a minimum period of 5 years, beginning with the date 
of the consummation of the loan, and until such borrower 
has sufficient equity in the dwelling securing the consumer 
credit transaction so as to no longer be required to main-
tain private mortgage insurance, or such other period as 
may be provided in regulations to address situations such 
as borrower delinquency, unless the underlying mortgage 
establishing the account is terminated. 
‘‘(d) LIMITED EXEMPTIONS FOR LOANS SECURED BY 
SHARES IN A COOPERATIVE AND FOR CERTAIN CONDO-
MINIUM UNITS.—Escrow accounts need not be established 
for loans secured by shares in a cooperative. Insurance 
premiums need not be included in escrow accounts for 
loans secured by condominium units, where the condo-
minium association has an obligation to the condominium 
unit owners to maintain a master policy insuring condo-
minium units. 
‘‘(e) CLARIFICATION
ON ESCROW ACCOUNTS
FOR 
LOANS NOT MEETING STATUTORY TEST.—For mort-
gages not covered by the requirements of subsection (b), 
no provision of this section shall be construed as pre-
cluding the establishment of an impound, trust, or other 
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type of account for the payment of property taxes, insur-
ance premiums, or other purposes relating to the prop-
erty— 
‘‘(1) on terms mutually agreeable to the parties 
to the loan; 
‘‘(2) at the discretion of the lender or servicer, 
as provided by the contract between the lender or 
servicer and the borrower; or 
‘‘(3) pursuant to the requirements for the 
escrowing of flood insurance payments for regulated 
lending institutions in section 102(d) of the Flood 
Disaster Protection Act of 1973. 
‘‘(f) ADMINISTRATION OF MANDATORY ESCROW OR 
IMPOUND ACCOUNTS.— 
‘‘(1) IN GENERAL.—Except as may otherwise 
be provided for in this title or in regulations pre-
scribed by the Board, escrow or impound accounts 
established pursuant to subsection (b) shall be estab-
lished in a federally insured depository institution. 
‘‘(2) ADMINISTRATION.—Except as provided in 
this section or regulations prescribed under this sec-
tion, an escrow or impound account subject to this 
section shall be administered in accordance with— 
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‘‘(A) the Real Estate Settlement Proce-
dures Act of 1974 and regulations prescribed 
under such Act; 
‘‘(B) the Flood Disaster Protection Act of 
1973 and regulations prescribed under such 
Act; and 
‘‘(C) the law of the State, if applicable, 
where the real property securing the consumer 
credit transaction is located. 
‘‘(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 
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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: 
‘‘(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 
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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 
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-
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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 Act referred to as the ‘‘Federal 
banking agencies’’) and the Federal Trade Commis-
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 201) the following new item: 
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‘‘129D. Escrow or impound accounts relating to certain consumer credit trans-
actions.’’. 
SEC. 502. 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 501) is amended by add-
ing 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-
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-
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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. 
‘‘(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-
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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 
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. 503. 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: 
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‘‘(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-
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 
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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. 
‘‘(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 
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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 
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-
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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 
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 
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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— 
(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: 
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‘‘(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 
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. 504. 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 602) the 
following new section (and by amending the table of con-
tents accordingly): 
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‘‘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 
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.’’. 
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SEC. 505. 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, 
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. 
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‘‘(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-
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.’’. 
TITLE VI—APPRAISAL 
ACTIVITIES 
SEC. 601. 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 504) 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 
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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.— 
‘‘(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. 
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‘‘(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-
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 
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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 secured 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 
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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.’’. 
SEC. 602. 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 501(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. 
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‘‘(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-
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. 
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‘‘(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-
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 
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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. 
‘‘(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 
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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 
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. 
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‘‘(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 
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 501(c)) the following new item: 
‘‘129E. Unfair and deceptive practices and acts relating to certain consumer 
credit transactions.’’. 
SEC. 603. 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 
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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— 
(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 
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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 
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 
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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 
(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’’; 
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(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: 
‘‘(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— 
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(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 
‘‘(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 
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HR 1728 RFS 
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— 
‘‘(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. 
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‘‘(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; 
‘‘(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 
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HR 1728 RFS 
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 
the State appraiser certifying and licensing agencies. The 
Appraisal Subcommittee shall also promulgate regulations 
for the reporting of the activities of appraisal management 
companies in determining the payment of the annual reg-
istry fee. 
‘‘(e) EFFECTIVE DATE.— 
‘‘(1) IN GENERAL.—No appraisal management 
company may perform services related to a federally 
related transaction in a State after the date that is 
36 months after the date of the enactment of this 
section unless such company is registered with such 
State or subject to oversight by a federal financial 
institutions regulatory agency. 
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‘‘(2) EXTENSION OF EFFECTIVE DATE.—Sub-
ject to the approval of the Council, the Appraisal 
Subcommittee may extend by an additional 12 
months the requirements for the registration and su-
pervision of appraisal management companies if it 
makes a written finding that a State has made sub-
stantial progress in establishing a State appraisal 
management company registration and supervision 
system that appears to conform with the provisions 
of this title.’’. 
(3) STATE
APPRAISER
CERTIFYING
AND
LI-
CENSING AGENCY AUTHORITY.—Section 1117 of the 
Financial Institutions Reform, Recovery, and En-
forcement Act of 1989 (12 U.S.C. 3346) is amended 
by adding at the end the following: ‘‘The duties of 
such agency may additionally include the registra-
tion and supervision of appraisal management com-
panies.’’. 
(4) APPRAISAL MANAGEMENT COMPANY DEFI-
NITION.—Section 1121 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3350) is amended by adding at the end 
the following: 
‘‘(11) APPRAISAL
MANAGEMENT
COMPANY.— 
The term ‘appraisal management company’ means, 
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HR 1728 RFS 
in connection with valuing properties collateralizing 
mortgage loans or mortgages incorporated into a 
securitization, any external third party authorized ei-
ther by a creditor of a consumer credit transaction 
secured by a consumer’s principal dwelling or by an 
underwriter of or other principal in the secondary 
mortgage markets, that oversees a network or panel 
of more than 15 certified or licensed appraisers in 
a State or 25 or more nationally within a given 
year— 
‘‘(A) to recruit, select, and retain apprais-
ers; 
‘‘(B) to contract with licensed and certified 
appraisers to perform appraisal assignments; 
‘‘(C) to manage the process of having an 
appraisal performed, including providing admin-
istrative duties such as receiving appraisal or-
ders and appraisal reports, submitting com-
pleted appraisal reports to creditors and under-
writers, collecting fees from creditors and un-
derwriters for services provided, and reimburs-
ing appraisers for services performed; or 
‘‘(D) to review and verify the work of ap-
praisers.’’. 
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(g) STATE AGENCY REPORTING REQUIREMENT.— 
Section 1109(a) of the Financial Institutions Reform, Re-
covery, and Enforcement Act of 1989 (12 U.S.C. 3338(a)) 
is amended— 
(1) by striking ‘‘and’’ after the semicolon in 
paragraph (1); 
(2) by redesignating paragraph (2) as para-
graph (4); and 
(3) by inserting after paragraph (1) the fol-
lowing new paragraphs: 
‘‘(2) transmit reports on sanctions, disciplinary 
actions, license and certification revocations, and li-
cense and certification suspensions on a timely basis 
to the national registry of the Appraisal Sub-
committee; 
‘‘(3) transmit reports on a timely basis of su-
pervisory activities involving appraisal management 
companies or other third-party providers of apprais-
als and appraisal management services, including in-
vestigations initiated and disciplinary actions taken; 
and’’. 
(h) REGISTRY FEES MODIFIED.— 
(1) IN GENERAL.—Section 1109(a) of the Fi-
nancial Institutions Reform, Recovery, and Enforce-
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HR 1728 RFS 
ment Act of 1989 (12 U.S.C. 3338(a)) is amend-
ed— 
(A) by amending paragraph (4) (as modi-
fied by section 603(g) of this Act) to read as 
follows: 
‘‘(4) collect— 
‘‘(A) from such individuals who perform or 
seek to perform appraisals in federally related 
transactions, an annual registry fee of not more 
than $40, such fees to be transmitted by the 
State agencies to the Council on an annual 
basis; and 
‘‘(B) from an appraisal management com-
pany that either has registered with a State ap-
praiser certifying and licensing agency in ac-
cordance with this title or operates as a sub-
sidiary of a federally regulated financial institu-
tion, an annual registry fee of— 
‘‘(i) in the case of such a company 
that has been in existence for more than a 
year, $25 multiplied by the number of ap-
praisers working for or contracting with 
such company in such State during the 
previous year, but where such $25 amount 
may be adjusted, up to a maximum of $50, 
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HR 1728 RFS 
at the discretion of the Appraisal Sub-
committee, if necessary to carry out the 
Subcommittee’s functions under this title; 
and 
‘‘(ii) in the case of such a company 
that has not been in existence for more 
than a year, $25 multiplied by an appro-
priate number to be determined by the Ap-
praisal Subcommittee, and where such 
number will be used for determining the 
fee of all such companies that were not in 
existence for more than a year, but where 
such $25 amount may be adjusted, up to 
a maximum of $50, at the discretion of the 
Appraisal Subcommittee, if necessary to 
carry out the Subcommittee’s functions 
under this title.’’; and 
(B) by amending the matter following 
paragraph (4), as redesignated, to read as fol-
lows: 
‘‘Subject to the approval of the Council, the Appraisal 
Subcommittee may adjust the dollar amount of registry 
fees under paragraph (4)(A), up to a maximum of $80 
per annum, as necessary to carry out its functions under 
this title. The Appraisal Subcommittee shall consider at 
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HR 1728 RFS 
least once every 5 years whether to adjust the dollar 
amount of the registry fees to account for inflation. In 
implementing any change in registry fees, the Appraisal 
Subcommittee shall provide flexibility to the States for 
multi-year certifications and licenses already in place, as 
well as a transition period to implement the changes in 
registry fees. In establishing the amount of the annual 
registry fee for an appraisal management company, the 
Appraisal Subcommittee shall have the discretion to im-
pose a minimum annual registry fee for an appraisal man-
agement company to protect against the under reporting 
of the number of appraisers working for or contracted by 
the appraisal management company.’’. 
(2) 
INCREMENTAL
REVENUES.—Incremental 
revenues collected pursuant to the increases required 
by this subsection shall be placed in a separate ac-
count at the United States Treasury, entitled the 
‘‘Appraisal Subcommittee Account’’. 
(i) GRANTS AND REPORTS.—Section 1109(b) of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3348(b)) is amended— 
(1) by striking ‘‘and’’ after the semicolon in 
paragraph (3); 
(2) by striking the period at the end of para-
graph (4) and inserting a semicolon; 
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(3) by adding at the end the following new 
paragraphs: 
‘‘(5) to make grants to State appraiser certi-
fying and licensing agencies to support the efforts of 
such agencies to comply with this title, including— 
‘‘(A) the complaint process, complaint in-
vestigations, and appraiser enforcement activi-
ties of such agencies; and 
‘‘(B) the submission of data on State li-
censed and certified appraisers and appraisal 
management companies to the National ap-
praisal registry, including information affirming 
that the appraiser or appraisal management 
company meets the required qualification cri-
teria and formal and informal disciplinary ac-
tions; and 
‘‘(6) to report to all State appraiser certifying 
and licensing agencies when a license or certification 
is surrendered, revoked, or suspended.’’. 
Obligations authorized under this subsection may not ex-
ceed 75 percent of the fiscal year total of incremental in-
crease in fees collected and deposited in the ‘‘Appraisal 
Subcommittee Account’’ pursuant to subsection (h). 
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(j) CRITERIA.—Section 1116 of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 (12 
U.S.C. 3345) is amended— 
(1) in subsection (c), by inserting ‘‘whose cri-
teria for the licensing of a real estate appraiser cur-
rently meet or exceed the minimum criteria issued 
by the Appraisal Qualifications Board of The Ap-
praisal Foundation for the licensing of real estate 
appraisers’’ before the period at the end; and 
(2) by striking subsection (e) and inserting the 
following new subsection: 
‘‘(e) MINIMUM QUALIFICATION REQUIREMENTS.— 
Any requirements established for individuals in the posi-
tion of ‘Trainee Appraiser’ and ‘Supervisory Appraiser’ 
shall meet or exceed the minimum qualification require-
ments of the Appraiser Qualifications Board of The Ap-
praisal Foundation. The Appraisal Subcommittee shall 
have the authority to enforce these requirements.’’. 
(k) MONITORING OF STATE APPRAISER CERTIFYING 
AND LICENSING AGENCIES.—Section 1118 of the Finan-
cial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3347) is amended— 
(1) by amending subsection (a) to read as fol-
lows: 
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‘‘(a) IN GENERAL.—The Appraisal Subcommittee 
shall monitor each State appraiser certifying and licensing 
agency for the purposes of determining whether such 
agency— 
‘‘(1) has policies, practices, funding, staffing, 
and procedures that are consistent with this title; 
‘‘(2) processes complaints and completes inves-
tigations in a reasonable time period; 
‘‘(3) appropriately disciplines sanctioned ap-
praisers and appraisal management companies; 
‘‘(4) maintains an effective regulatory program; 
and 
‘‘(5) reports complaints and disciplinary actions 
on a timely basis to the national registries on ap-
praisers and appraisal management companies main-
tained by the Appraisal Subcommittee. 
The Appraisal Subcommittee shall have the authority to 
remove a State licensed or certified appraiser or a reg-
istered appraisal management company from a national 
registry on an interim basis pending State agency action 
on licensing, certification, registration, and disciplinary 
proceedings. The Appraisal Subcommittee and all agen-
cies, instrumentalities, and Federally recognized entities 
under this title shall not recognize appraiser certifications 
and licenses from States whose appraisal policies, prac-
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HR 1728 RFS 
tices, funding, staffing, or procedures are found to be in-
consistent with this title. The Appraisal Subcommittee 
shall have the authority to impose sanctions, as described 
in this section, against a State agency that fails to have 
an effective appraiser regulatory program. In determining 
whether such a program is effective, the Appraisal Sub-
committee shall include an analyses of the licensing and 
certification of appraisers, the registration of appraisal 
management companies, the issuance of temporary li-
censes and certifications for appraisers, the receiving and 
tracking of submitted complaints against appraisers and 
appraisal management companies, the investigation of 
complaints, and enforcement actions against appraisers 
and appraisal management companies. The Appraisal 
Subcommittee shall have the authority to impose interim 
actions and suspensions against a State agency as an al-
ternative to, or in advance of, the derecognition of a State 
agency.’’. 
(2) in subsection (b)(2), by inserting after ‘‘au-
thority’’ the following: ‘‘or sufficient funding’’. 
(l) RECIPROCITY.—Subsection (b) of section 1122 of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3351(b)) is amended to read 
as follows: 
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‘‘(b) RECIPROCITY.—A State appraiser certifying or 
licensing agency shall issue a reciprocal certification or li-
cense for an individual from another State when— 
‘‘(1) the appraiser licensing and certification 
program of such other State is in compliance with 
the provisions of this title; and 
‘‘(2) the appraiser holds a valid certification 
from a State whose requirements for certification or 
licensing meet or exceed the licensure standards es-
tablished by the State where an individual seeks ap-
praisal licensure.’’. 
(m) CONSIDERATION OF PROFESSIONAL APPRAISAL 
DESIGNATIONS.—Section 1122(d) of the Financial Insti-
tutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3351(d)) is amended by striking ‘‘shall not ex-
clude’’ and all that follows through the end of the sub-
section and inserting the following: ‘‘may include edu-
cation achieved, experience, sample appraisals, and ref-
erences from prior clients. Membership in a nationally rec-
ognized professional appraisal organization may be a cri-
teria considered, though lack of membership therein shall 
not be the sole bar against consideration for an assign-
ment under these criteria.’’. 
(n) APPRAISER INDEPENDENCE.—Section 1122 of 
the Financial Institutions Reform, Recovery, and Enforce-
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HR 1728 RFS 
ment Act of 1989 (12 U.S.C. 3351) is amended by adding 
at the end the following new subsection: 
‘‘(g) APPRAISER INDEPENDENCE MONITORING.— 
The Appraisal Subcommittee shall monitor each State ap-
praiser certifying and licensing agency for the purpose of 
determining whether such agency’s policies, practices, and 
procedures are consistent with the purposes of maintain-
ing appraiser independence and whether such State has 
adopted and maintains effective laws, regulations, and 
policies aimed at maintaining appraiser independence.’’. 
(o) APPRAISER EDUCATION.—Section 1122 of the 
Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3351) is amended by insert-
ing after subsection (g) (as added by subsection (l) of this 
section) the following new subsection: 
‘‘(h) APPROVED EDUCATION.—The Appraisal Sub-
committee shall encourage the States to accept courses ap-
proved by the Appraiser Qualification Board’s Course Ap-
proval Program.’’. 
(p) APPRAISAL COMPLAINT HOTLINE.—Section 1122 
of the Financial Institutions Reform, Recovery, and En-
forcement Act of 1989 (12 U.S.C. 3351), as amended by 
this section, is further amended by adding at the end the 
following new subsection: 
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‘‘(i) APPRAISAL COMPLAINT NATIONAL HOTLINE.— 
If, 1 year after the date of the enactment of this sub-
section, the Appraisal Subcommittee determines that no 
national hotline exists to receive complaints of non-compli-
ance with appraisal independence standards and Uniform 
Standards of Professional Appraisal Practice, including 
complaints from appraisers, individuals, or other entities 
concerning the improper influencing or attempted im-
proper influencing of appraisers or the appraisal process, 
the Appraisal Subcommittee shall establish and operate 
such a national hotline, which shall include a toll-free tele-
phone number and an email address. If the Appraisal Sub-
committee operates such a national hotline, the Appraisal 
Subcommittee shall refer complaints for further action to 
appropriate governmental bodies, including a State ap-
praiser certifying and licensing agency, a financial institu-
tion regulator, or other appropriate legal authorities. For 
complaints referred to State appraiser certifying and li-
censing agencies or to Federal regulators, the Appraisal 
Subcommittee shall have the authority to follow up such 
complaint referrals in order to determine the status of the 
resolution of the complaint.’’. 
(q) AUTOMATED VALUATION MODELS.—Title XI of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3331 et seq.), as amended 
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by this section, is further amended by adding at the end 
the following new section (and amending the table of con-
tents accordingly): 
‘‘SEC. 1125. AUTOMATED VALUATION MODELS USED TO 
VALUE CERTAIN MORTGAGES. 
‘‘(a) IN GENERAL.—Automated valuation models 
shall adhere to quality control standards designed to— 
‘‘(1) ensure a high level of confidence in the es-
timates produced by automated valuation models; 
‘‘(2) protect against the manipulation of data; 
‘‘(3) seek to avoid conflicts of interest; and 
‘‘(4) require random sample testing and re-
views, where such testing and reviews are performed 
by an appraiser who is licensed or certified in the 
State where the testing and reviews take place. 
‘‘(b) ADOPTION OF REGULATIONS.—The Appraisal 
Subcommittee and its member agencies, in consultation 
with the Appraisal Standards Board of the Appraisal 
Foundation and other interested parties, shall promulgate 
regulations to implement the quality control standards re-
quired under this section. 
‘‘(c) ENFORCEMENT.—Compliance with regulations 
issued under this subsection shall be enforced by— 
‘‘(1) with respect to a financial institution, or 
subsidiary owned and controlled by a financial insti-
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tution and regulated by a Federal financial institu-
tion regulatory agency, the Federal financial institu-
tion regulatory agency that acts as the primary Fed-
eral supervisor of such financial institution or sub-
sidiary; and 
‘‘(2) with respect to other persons, the Ap-
praisal Subcommittee. 
‘‘(d) AUTOMATED VALUATION MODEL DEFINED.— 
For purposes of this section, the term ‘automated valu-
ation model’ means any computerized model used by mort-
gage originators and secondary market issuers to deter-
mine the collateral worth of a mortgage secured by a con-
sumer’s principal dwelling.’’. 
(r) BROKER PRICE OPINIONS.—Title XI of the Fi-
nancial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3331 et seq.), as amended by this 
section, is further amended by adding at the end the fol-
lowing new section (and amending the table of contents 
accordingly): 
‘‘SEC. 1126. BROKER PRICE OPINIONS. 
‘‘(a) GENERAL PROHIBITION.—In conjunction with 
the purchase of a consumer’s principal dwelling, broker 
price opinions may not be used as the primary basis to 
determine the value of a piece of property for the purpose 
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HR 1728 RFS 
of a loan origination of a residential mortgage loan se-
cured by such piece of property. 
‘‘(b) BROKER PRICE OPINION DEFINED.—For pur-
poses of this section, the term ‘broker price opinion’ means 
an estimate prepared by a real estate broker, agent, or 
sales person that details the probable selling price of a 
particular piece of real estate property and provides a 
varying level of detail about the property’s condition, mar-
ket, and neighborhood, and information on comparable 
sales, but does not include an automated valuation model, 
as defined in section 1125(c).’’. 
(s) AMENDMENTS TO APPRAISAL SUBCOMMITTEE.— 
Section 1011 of the Federal Financial Institutions Exam-
ination Council Act of 1978 (12 U.S.C. 3310) is amend-
ed— 
(1) in the first sentence, by adding before the 
period the following: ‘‘and the Federal Housing Fi-
nance Agency’’; and 
(2) by inserting at the end the following: ‘‘At 
all times at least one member of the Appraisal Sub-
committee shall have demonstrated knowledge and 
competence through licensure, certification, or pro-
fessional designation within the appraisal profes-
sion.’’. 
(t) TECHNICAL CORRECTIONS.— 
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(1) Section 1119(a)(2) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3348(a)(2)) is amended by striking 
‘‘council,’’ and inserting ‘‘Council,’’. 
(2) Section 1121(6) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3350(6)) is amended by striking 
‘‘Corporations,’’ and inserting ‘‘Corporation,’’. 
(3) Section 1121(8) of the Financial Institu-
tions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3350(8)) is amended by striking 
‘‘council’’ and inserting ‘‘Council’’. 
(4) Section 1122 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3351) is amended— 
(A) in subsection (a)(1) by moving the left 
margin of subparagraphs (A), (B), and (C) 2 
ems to the right; and 
(B) in subsection (c)— 
(i) by striking ‘‘Federal Financial In-
stitutions Examination Council’’ and in-
serting ‘‘Financial Institutions Examina-
tion Council’’; and 
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(ii) by striking ‘‘the council’s func-
tions’’ and inserting ‘‘the Council’s func-
tions’’. 
SEC. 604. STUDY REQUIRED ON IMPROVEMENTS IN AP-
PRAISAL PROCESS AND COMPLIANCE PRO-
GRAMS. 
(a) STUDY.—The Comptroller General shall conduct 
a comprehensive study on possible improvements in the 
appraisal process generally, and specifically on the consist-
ency in and the effectiveness of, and possible improve-
ments in, State compliance efforts and programs in ac-
cordance with title XI of the Financial Institutions Re-
form, Recovery, and Enforcement Act of 1989. In addi-
tion, this study shall examine the existing exemptions to 
the use of certified appraisers issued by Federal financial 
institutions regulatory agencies. The study shall also re-
view the threshold level established by Federal regulators 
for compliance under title XI and whether there is a need 
to revise them to reflect the addition of consumer protec-
tion to the purposes and functions of the Appraisal Sub-
committee. The study shall additionally examine the qual-
ity of different types of mortgage collateral valuations pro-
duced by broker price opinions, automated valuation mod-
els, licensed appraisals, and certified appraisals, among 
others, and the quality of appraisals provided through dif-
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ferent distribution channels, including appraisal manage-
ment companies, independent appraisal operations within 
a mortgage originator, and fee-for-service appraisals. The 
study shall also include an analysis and statistical break-
down of enforcement actions taken during the last 10 
years against different types of appraisers, including cer-
tified, licensed, supervisory, and trainee appraisers. Fur-
thermore, the study shall examine the benefits and costs, 
as well as the advantages and disadvantages, of estab-
lishing a national repository to collect data related to real 
estate property collateral valuations performed in the 
United States. 
(b) REPORT.—Before the end of the 18-month period 
beginning on the date of the enactment of this Act, the 
Comptroller General shall submit a report on the study 
under subsection (a) to the Committee on Financial Serv-
ices of the House of Representatives and the Committee 
on Banking, Housing, and Urban Affairs of the Senate, 
together with such recommendations for administrative or 
legislative action, at the Federal or State level, as the 
Comptroller General may determine to be appropriate. 
(c) ADDITIONAL STUDY REQUIRED.—The Comp-
troller General shall conduct an additional study to deter-
mine the effects that the changes to the seller-guide ap-
praisal requirements of Fannie Mae and Freddie Mac con-
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tained in the Home Valuation Code of Conduct have on 
small business, like mortgage brokers and independent ap-
praisers, and consumers, including the effect on the— 
(1) quality and costs of appraisals; 
(2) length of time for obtaining appraisals; 
(3) impact on consumer protection, especially 
regarding maintaining appraisal independence, abat-
ing appraisal inflation, and mitigating acts of ap-
praisal fraud; 
(4) structure of the appraisal industry, espe-
cially regarding appraisal management companies, 
fee-for-service appraisers, and the regulation of ap-
praisal management companies by the states; and 
(5) impact on mortgage brokers and other small 
business professionals in the financial services indus-
try. 
(d) ADDITIONAL REPORT.—Before the end of the 6- 
month period beginning on the date of the enactment of 
this Act, the Comptroller General shall submit an addi-
tional report to the Committee on Financial Services of 
the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate con-
taining the findings and conclusions of the Comptroller 
General with respect to the study conducted pursuant to 
subsection (c). Such additional report shall take into con-
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sideration the Small Business Administration’s views on 
how small businesses are affected by the Home Valuation 
Code of Conduct. 
SEC. 605. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT. 
Subsection (e) of section 701 of the Equal Credit Op-
portunity Act ( U.S.C. 1691) is amended to read as fol-
lows: 
‘‘(e) COPIES FURNISHED TO APPLICANTS.— 
‘‘(1) IN GENERAL.—Each creditor shall furnish 
to an applicant a copy of any and all written ap-
praisals and valuations developed in connection with 
the applicant’s application for a loan that is secured 
or would have been secured by a first lien on a 
dwelling promptly upon completion, but in no case 
later than 3 days prior to the closing of the loan, 
whether the creditor grants or denies the applicant’s 
request for credit or the application is incomplete or 
withdrawn. 
‘‘(2) WAIVER.—The applicant may waive the 3 
day requirement provided for in paragraph (1), ex-
cept where otherwise required in law. 
‘‘(3) REIMBURSEMENT.—The applicant may be 
required to pay a reasonable fee to reimburse the 
creditor for the cost of the appraisal, except where 
otherwise required in law. 
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‘‘(4) FREE COPY.—Notwithstanding paragraph 
(3), the creditor shall provide a copy of each written 
appraisal or valuation at no additional cost to the 
applicant. 
‘‘(5) NOTIFICATION
TO
APPLICANTS.—At the 
time of application, the creditor shall notify an ap-
plicant in writing of the right to receive a copy of 
each written appraisal and valuation under this sub-
section. 
‘‘(6) REGULATIONS.—The Board shall prescribe 
regulations to implement this subsection within 1 
year of the date of the enactment of this subsection. 
‘‘(7) VALUATION
DEFINED.—For purposes of 
this subsection, the term ‘valuation’ shall include 
any estimate of the value of a dwelling developed in 
connection with a creditor’s decision to provide cred-
it, including those values developed pursuant to a 
policy of a government sponsored enterprise or by an 
automated valuation model, a broker price opinion, 
or other methodology or mechanism.’’. 
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SEC. 606. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 
1974 AMENDMENT RELATING TO CERTAIN AP-
PRAISAL 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.’’. 
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TITLE VII—SENSE OF CONGRESS 
REGARDING 
THE 
IMPOR-
TANCE 
OF 
GOVERNMENT 
SPONSORED 
ENTERPRISES 
REFORM 
SEC. 701. SENSE OF CONGRESS REGARDING THE IMPOR-
TANCE OF GOVERNMENT-SPONSORED EN-
TERPRISES REFORM TO ENHANCE THE PRO-
TECTION, LIMITATION, AND REGULATION OF 
THE TERMS OF RESIDENTIAL MORTGAGE 
CREDIT. 
(a) FINDINGS.—The Congress finds as follows: 
(1) The Government-sponsored enterprises, 
Federal National Mortgage Association (Fannie 
Mae) and the Federal Home Loan Mortgage Cor-
poration (Freddie Mac), were chartered by Congress 
to ensure a reliable and affordable supply of mort-
gage funding, but enjoy a dual legal status as pri-
vately owned corporations with Government man-
dated affordable housing goals. 
(2) In 1996, the Department of Housing and 
Urban Development required that 42 percent of 
Fannie Mae’s and Freddie Mac’s mortgage financing 
should go to borrowers with income levels below the 
median for a given area. 
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(3) In 2004, the Department of Housing and 
Urban Development revised those goals, increasing 
them to 56 percent of their overall mortgage pur-
chases by 2008, and additionally mandated that 12 
percent of all mortgage purchases by Fannie Mae 
and Freddie Mac be ‘‘special affordable’’ loans made 
to borrowers with incomes less than 60 percent of an 
area’s median income, a target that ultimately in-
creased to 28 percent for 2008. 
(4) To help fulfill those mandated affordable 
housing goals, in 1995 the Department of Housing 
and Urban Development authorized Fannie Mae and 
Freddie Mac to purchase subprime securities that 
included loans made to low-income borrowers. 
(5) After this authorization to purchase 
subprime securities, subprime and near-prime loans 
increased from 9 percent of securitized mortgages in 
2001 to 40 percent in 2006, while the market share 
of conventional mortgages dropped from 78.8 per-
cent in 2003 to 50.1 percent by 2007 with a cor-
responding increase in subprime and Alt-A loans 
from 10.1 percent to 32.7 percent over the same pe-
riod. 
(6) In 2004 alone, Fannie Mae and Freddie 
Mac purchased $175,000,000,000 in subprime mort-
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gage securities, which accounted for 44 percent of 
the market that year, and from 2005 through 2007, 
Fannie Mae and Freddie Mac purchased approxi-
mately $1,000,000,000,000 in subprime and Alt-A 
loans, while Fannie Mae’s acquisitions of mortgages 
with less than 10 percent down payments almost tri-
pled. 
(7) According to data from the Federal Hous-
ing Finance Agency (FHFA) for the fourth quarter 
of 2008, Fannie Mae and Freddie Mac own or guar-
antee 75 percent of all newly originated mortgages, 
and Fannie Mae and Freddie Mac currently own 
13.3 percent of outstanding mortgage debt in the 
United States and have issued mortgage-backed se-
curities for 31.0 percent of the residential debt mar-
ket, a combined total of 44.3 percent of outstanding 
mortgage debt in the United States. 
(8) On September 7, 2008, the FHFA placed 
Fannie Mae and Freddie Mac into conservatorship, 
with the Treasury Department subsequently agree-
ing to purchase at least $200,000,000,000 of pre-
ferred stock from each enterprise in exchange for 
warrants for the purchase of 79.9 percent of each 
enterprise’s common stock. 
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(9) The conservatorship for Fannie Mae and 
Freddie Mac has potentially exposed taxpayers to 
upwards of $5,300,000,000,000 worth of risk. 
(10) The hybrid public-private status of Fannie 
Mae and Freddie Mac is untenable and must be re-
solved to assure that consumers are offered and re-
ceive residential mortgage loans on terms that rea-
sonably reflect their ability to repay the loans and 
that are understandable and not unfair, deceptive, or 
abusive. 
(b) SENSE OF THE CONGRESS.—It is the sense of 
the Congress that efforts to enhance by the protection, 
limitation, and regulation of the terms of residential mort-
gage credit and the practices related to such credit would 
be incomplete without enactment of meaningful structural 
reforms of Fannie Mae and Freddie Mac. 
TITLE VIII—REPORTS 
SEC. 801. GAO STUDY REPORT ON GOVERNMENT EFFORTS 
TO COMBAT MORTGAGE FORECLOSURE RES-
CUE 
SCAMS 
AND 
LOAN 
MODIFICATION 
FRAUD. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study of the current inter-agency 
efforts of the Secretary of the Treasury, the Secretary of 
Housing and Urban Development, the Attorney General, 
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and the Federal Trade Commission to crackdown on mort-
gage foreclosure rescue scams and loan modification fraud 
in order to advise the Congress to the risks and 
vulnerabilities of emerging schemes in the loan modifica-
tion arena. 
(b) REPORT.— 
(1) IN
GENERAL.—The Comptroller General 
shall submit a report to the Congress on the study 
conducted under subsection (a) containing such rec-
ommendations for legislative and administrative ac-
tions as the Comptroller General may determine to 
be appropriate in addition to the recommendations 
required under paragraph (2). 
(2) SPECIFIC TOPICS.—The report made under 
paragraph (1) shall include— 
(A) an evaluation of the effectiveness of 
the inter-agency task force current efforts to 
combat mortgage foreclosure rescue scams and 
loan modification fraud scams; 
(B) specific recommendations on agency or 
legislative action that are essential to properly 
protect homeowners from mortgage foreclosure 
rescue scams and loan modification fraud 
scams; and 
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(C) the adequacy of financial resources 
that the Federal Government is allocating to— 
(i) crackdown on loan modification 
and foreclosure rescue scams; and 
(ii) the education of homeowners 
about fraudulent scams relating to loan 
modification and foreclosure rescues. 
TITLE IX—MULTIFAMILY 
MORTGAGE RESOLUTION 
SEC. 901. MULTIFAMILY MORTGAGE RESOLUTION PRO-
GRAM. 
(a) ESTABLISHMENT.—Subject to subsection (e), the 
Secretary of the Treasury, in consultation with the Sec-
retary of Housing and Urban Development, shall develop 
a program to stabilize multifamily properties which are de-
linquent, at risk of default or disinvestment, or in fore-
closure. 
(b) FOCUS OF PROGRAM.—The program developed 
under this section shall be used to ensure the protection 
of current and future tenants of at risk multifamily prop-
erties, where feasible, by— 
(1) creating sustainable financing of such prop-
erties that is based on— 
(A) the current rental income generated by 
such properties; and 
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(B) the preservation of adequate operating 
reserves; 
(2) maintaining the level of Federal, State, and 
city subsidies in effect as of the date of enactment 
of this Act; and 
(3) facilitating the transfer, when necessary, of 
such properties to responsible new owners. 
(c) COORDINATION.—The Secretary of the Treasury 
shall in carrying out the program developed under this sec-
tion coordinate with the Secretary of Housing and Urban 
Development, the Federal Deposit Insurance Corporation, 
the Board of Governors of the Federal Reserve System, 
the Federal Housing Finance Agency, and any other Fed-
eral Government agency that the Secretary considers ap-
propriate. 
(d) DEFINITION.—For purposes of this section, the 
term ‘‘multifamily properties’’ means a residential struc-
ture that consists of 5 or more dwelling units. 
(e) AUTHORITY.—This section shall not limit the 
ability of the Secretary of the Treasury to use any existing 
authority to carry out the program under this section. 
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TITLE X—STUDY OF EFFECT OF 
DRYWALL 
PRESENCE 
ON 
FORECLOSURES 
SEC. 1001. STUDY OF EFFECT OF DRYWALL PRESENCE ON 
FORECLOSURES. 
(a) STUDY.—The Secretary of Housing and Urban 
Development, in consultation with the Secretary of the 
Treasury, shall conduct a study of the effect on residential 
mortgage loan foreclosures of— 
(1) the presence in residential structures sub-
ject to such mortgage loans of drywall that was im-
ported from China during the period beginning with 
2004 and ending at the end of 2007; and 
(2) the availability of property insurance for 
residential structures in which such drywall is 
present. 
(b) REPORT.—Not later than the expiration of the 
120-day period beginning on the date of the enactment 
of this Act, the Secretary of Housing and Urban Develop-
ment shall submit to the Congress a report on the study 
conducted under subsection (a) containing its findings, 
conclusions, and recommendations. 
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TITLE XI—FANNIE MAE GUIDE-
LINES 
FOR 
PURCHASE 
OF 
CONDOMINIUM AND COOPER-
ATIVE HOUSING MORTGAGES 
SEC. 1101. GUIDELINES FOR PURCHASE OF CONDOMINIUM 
AND COOPERATIVE HOUSING MORTGAGES. 
The Federal National Mortgage Association and the 
Federal Home Loan Mortgage Corporation shall take ac-
tions as are appropriate to establish and revise fee sched-
ules, occupancy and pre-sale guidelines, and other relevant 
underwriting standards for the purchase of condominium 
and cooperative housing, consistent with appropriate levels 
of credit risk. In setting such fees, guidelines, and stand-
ards, each association may consider factors such as the 
relative health of the local or regional housing market in 
which such housing is located, and whether the housing 
is in a new or existing development. 
Passed the House of Representatives May 7, 2009. 
Attest: 
LORRAINE C. MILLER, 
Clerk. 
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