I 
108TH CONGRESS 
1ST SESSION 
H. R. 833
To combat unfair and deceptive practices in the high-cost mortgage market, 
establish a consumer mortgage protection board, and establish licensing 
and minimum standards for mortgage brokers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 13, 2003
Mr. NEY (for himself, Mr. LUCAS of Kentucky, Mr. GILLMOR, and Mr. GARY 
G. MILLER of California) introduced the following bill; which was referred 
to the Committee on Financial Services 
A BILL 
To combat unfair and deceptive practices in the high-cost 
mortgage market, establish a consumer mortgage protec-
tion board, and establish licensing and minimum stand-
ards for mortgage brokers, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Responsible Lending Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—HIGH-COST MORTGAGES 
Sec. 101. Definitions relating to high-cost mortgages. 
Sec. 102. Amendments to existing requirements for high-cost mortgages. 
Sec. 103. Amendments to liability provisions relating to high-cost mortgages. 
Sec. 104. Coordination with State law. 
Sec. 105. Continuation of identifications under the Alternative Mortgage Trans-
action Parity Act of 1982. 
Sec. 106. Effective date. 
TITLE II—CONSUMER MORTGAGE PROTECTION BOARD 
Sec. 201. Establishment. 
Sec. 202. Counseling procedures. 
Sec. 203. Grants for housing counseling assistance. 
Sec. 204. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 205. Updating and simplification of mortgage information booklet. 
TITLE III—REQUIREMENTS FOR MORTGAGE BROKERS 
Subtitle A—Licensing and Minimum Standards 
Sec. 301. State regulation of mortgage brokers. 
Sec. 302. Federal mortgage broker requirements. 
Sec. 303. Definitions. 
Subtitle B—Database of Licensed Mortgage Brokers 
Sec. 311. Establishment. 
Sec. 312. Database. 
Sec. 313. Fees. 
Sec. 314. Confidentiality of information. 
Sec. 315. Liability provisions.
TITLE I—HIGH-COST 
MORTGAGES 
SEC. 101. 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)(1)) is amended by striking all that precedes 
paragraph (2) and inserting the following: 
‘‘(aa) HIGH-COST MORTGAGE DEFINED.—
‘‘(1) IN GENERAL.—The term ‘high-cost mort-
gage’, and a mortgage referred to in this subsection,
means a consumer credit transaction that is secured 
by the consumer’s principal dwelling, other than a 
residential mortgage transaction, a reverse mortgage 
transaction, or a transaction under an open end 
credit plan, if any of the following apply with respect 
to such consumer credit transaction: 
‘‘(A) The transaction is secured by a first 
mortgage on the consumer’s principal dwelling 
and the annual percentage rate on the credit, at 
the consummation of the transaction, will ex-
ceed by more than 8 percentage points the yield 
on Treasury securities having comparable peri-
ods of maturity on the fifteenth day of the 
month immediately preceding the month in 
which the application for the extension of credit 
is received by the creditor. 
‘‘(B) The transaction is secured by a jun-
ior or subordinate mortgage on the consumer’s 
principal dwelling and the annual percentage 
rate on the credit, at the consummation of the 
transaction, will exceed by more than 10 per-
centage points the yield on Treasury securities 
having comparable periods of maturity on the 
fifteenth day of the month immediately pre-
ceding the month in which the application for
the extension of credit is received by the cred-
itor. 
‘‘(C) The total loan amount exceeds 
$30,000 and total points and fees payable on 
the transaction will exceed 6 percent of the 
total loan amount. 
‘‘(D) The total loan amount is $30,000 or 
less and total points and fees payable on the 
transaction will exceed 7 percent of the total 
loan amount.’’. 
(b) POINTS AND FEES DEFINED.—Section 103(aa) 
of the Truth in Lending Act (15 U.S.C. 1602(aa)) is 
amended—
(1) by striking paragraph (3); 
(2) by striking paragraph (4) and inserting the 
following new paragraph: 
‘‘(3) DEFINITION OF POINTS AND FEES.—
‘‘(A) IN GENERAL.—For purposes of sub-
paragraphs (C) and (D) of paragraph (1), the 
term ‘points and fees’ shall exclude prepayment 
fees, yield-spread premiums, and borrower cred-
its and shall include—
‘‘(i) all items included in the finance 
charge, except interest and the time-price 
differential;
‘‘(ii) all compensation paid directly to 
mortgage brokers by or on behalf of the 
consumer (other than borrower credits); 
and 
‘‘(iii) each of the charges listed in sec-
tion 106(e) (except an escrow for future 
payment of taxes or insurance), unless—
‘‘(I) the charge is reasonable and 
competitive; 
‘‘(II) the creditor receives no di-
rect compensation; and 
‘‘(III) the charge is paid to a 
third party; and 
‘‘(iv) such other charges as the Board 
determines to be appropriate. 
‘‘(B) BONA FIDE DISCOUNT POINTS EX-
CLUDABLE.—Not more than 2 bona fide loan 
discount points in connection with the loan 
transaction may be excluded from the amount 
of points and fees taken into account for pur-
poses of paragraph (1).
‘‘(C) BONA
FIDE
DISCOUNT
POINT
DE-
FINED.—For purposes of subparagraph (B), 
the term ‘bona fide discount point’ means any 
loan discount point which is paid for the pur-
pose of reducing, and which in fact results in 
a bona fide reduction of, the interest rate or 
time-price differential applicable to the loan if 
the amount of the interest rate reduction pur-
chased by the discount points is reasonably con-
sistent with established industry norms and 
practices for mortgage market transactions.’’; 
and 
(3) by redesignating paragraph (5) as para-
graph (4). 
(c) TECHNICAL AND CONFORMING AMENDMENT.—
Paragraph (2) of section 103(aa) of the Truth in Lending 
Act (15 U.S.C. 1602(aa)(2)) is amended by striking 
‘‘specified in paragraph (1)(A)’’ and inserting ‘‘specified 
in subparagraph (A) or (B) of paragraph (1)’’. 
SEC. 102. AMENDMENTS TO EXISTING REQUIREMENTS FOR 
HIGH-COST MORTGAGES. 
(a) PREPAYMENT PENALTIES.—Section 129(c)(2)(C) 
of the Truth in Lending Act (15 U.S.C. 1639(c)(2)(C)) 
is amended by striking ‘‘5-year period’’ and inserting ‘‘4-
year period’’. 
(b) BALLOON PAYMENTS.—Section 129(e) of the 
Truth in Lending Act (15 U.S.C. 1639(e)) is amended—
(1) by striking ‘‘PAYMENTS.—A mortgage’’ and 
inserting ‘‘PAYMENTS.—
‘‘(1) IN GENERAL.—A mortgage’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply when the payment schedule is adjusted to ac-
count for the seasonal or irregular income of the ob-
ligor or if the purpose of the loan is a bridge loan 
made in connection with the acquisition or construc-
tion of a dwelling intended to become the obligor’s 
principal dwelling. 
‘‘(3) NOTICE REQUIRED.—A creditor that offers 
a high-cost mortgage having a balloon payment term 
in accordance with paragraph (2) shall clearly dis-
close to the consumer that the loan contains such a 
term, the balloon payment amount that will be owed 
by the consumer, and that balloon payments are per-
missible under the circumstances described in para-
graph (2) but are not required for such types of 
mortgages.’’. 
(c) NEGATIVE AMORTIZATION.—Subsection (f) of 
section 129 of the Truth in Lending Act (15 U.S.C. 
1639(f)) is amended—
(1) by striking ‘‘AMORTIZATION.—A mortgage 
referred to in section 103 (aa)’’ and inserting ‘‘AM-
ORTIZATION.—
‘‘(1) IN GENERAL.—A high-cost mortgage’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) EXCEPTION
FOR
PERIOD
OF
FORBEAR-
ANCE.—Paragraph (1) shall not apply with respect 
to negative amortization resulting from periods of 
temporary forbearance allowed by the creditor.’’. 
(d) DISCLOSURE
OF FINANCING
OF POINTS
OR 
FEES.—Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(m) DISCLOSURE OF FINANCING OF POINTS OR 
FEES.—If, in connection with the formation or con-
summation of a high-cost mortgage, any portion of the 
points, fees, or other charges payable to the creditor or 
any third party are included, directly or indirectly, in the 
principal amount of the loan or otherwise financed by the 
creditor, the creditor shall disclose that fact to the con-
sumer together with a statement that such treatment of 
any such point, fee, or charge is not legally required.’’. 
(e) PROHIBITION
ON UNFAIR ARBITRATION RE-
QUIREMENTS.—Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended by inserting after subsection 
(m) (as added by subsection (d) of this section) the fol-
lowing new subsection:
‘‘(n) NO UNFAIR ARBITRATION CLAUSES.—
‘‘(1) IN GENERAL.—A high-cost mortgage may 
not be subject to a mandatory arbitration clause 
that is oppressive, unfair, unconscionable, or sub-
stantially in derogation of the rights of consumers. 
‘‘(2) SAFE HARBOR.—An arbitration clause 
that—
‘‘(A) establishes the venue for the arbitra-
tion in the Federal judicial district or division 
in which the real property that is the security 
for the high-cost mortgage is located; 
‘‘(B) complies with the standards set forth 
by a nationally recognized arbitration organiza-
tion, such as the Statement of Principles of the 
National Consumer Dispute Advisory Com-
mittee of the American Arbitration Association 
or any comparable standards of such other or-
ganization as may be approved by the Board of 
Governors of the Federal Reserve System, or 
any official or employee of the Board duly au-
thorized by the Board; and 
‘‘(C) requires the creditor to bear the rea-
sonable costs of all parties to the arbitration, 
including the production of fact witnesses and
tended under an open end consumer credit 
plan, or other form of credit for the purpose 
and with the intent of evading the provisions of 
this section when the loan would have been a 
high-cost mortgage if the loan had been struc-
tured as a consumer loan or as credit not ex-
tended under an open end consumer credit 
plan. 
‘‘(2) RECIPROCAL ARRANGEMENT DEFINED.—
For purposes of this subsection, the term ‘reciprocal 
arrangement’ means any agreement, understanding, 
or other arrangement under which—
‘‘(A) 1 creditor or affiliate of a creditor 
agrees to engage in a transaction with, or on 
behalf of, another creditor (or affiliate of such 
other creditor), in exchange for 
‘‘(B) the agreement of the second creditor 
referred to in subparagraph (A), or any affiliate 
of such company, to engage in a transaction 
with, or on behalf of, the first creditor referred 
to in such subparagraph, or any affiliate of 
such company, 
for the purpose of evading any requirement or prohi-
bition under this title, or any other provision of any
Federal law or regulation relating to high-cost mort-
gages. 
‘‘(3) REGULATIONS.—The Board shall prescribe 
such regulations as may be necessary to enforce the 
requirements of this subsection.’’. 
(g) NO ENCOURAGEMENT OF DEFAULT OR NON-
PAYMENT ON PRIOR EXISTING LOAN.—Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by 
inserting after subsection (o) (as added by subsection (f) 
of this section) the following new subsection: 
‘‘(p) NO
ENCOURAGEMENT
OF
DEFAULT
OR 
SKIPPED PAYMENT.—No creditor may recommend or en-
courage default or nonpayment (including nonpayment of 
any periodic payment) on an existing loan or other debt 
prior to and in connection with the closing or planned clos-
ing of a high-cost mortgage that refinances all or any por-
tion of such existing loan or debt.’’. 
(h) ABILITY TO REPAY.—Subsection (h) of section 
129 of the Truth in Lending Act (15 U.S.C. 1639(h)) is 
amended to read as follows: 
‘‘(h) PROHIBITION ON EXTENDING CREDIT WITH-
OUT REGARD TO PAYMENT ABILITY OF CONSUMER.—
‘‘(1) IN GENERAL.—A creditor shall not engage 
in a pattern or practice of extending credit to con-
sumers under high-cost mortgages based on the con-
sumers’ collateral without regard to the consumers’ 
repayment ability, including the consumers’ current 
and expected income, current obligations, and em-
ployment. 
‘‘(2) PRESUMPTION
OF
ABILITY.—Unless a 
creditor knows or has reason to know otherwise and 
except as provided in paragraphs (3) and (4), a 
creditor may presume that a consumer is able to 
make the scheduled payments to repay the high-cost 
mortgage, if, at the time the extension of credit is 
approved, the consumer’s total monthly payments 
due on outstanding obligations, including amounts 
owed under the high-cost mortgage, do not exceed 
53 percent of the consumer’s monthly gross income, 
as verified by the credit application, the consumer’s 
financial statement, a credit report, or any other 
reasonable means; except that if the consumer’s re-
payment ability is based substantially on fixed in-
come, then income verification shall include reason-
able documentation of such fixed income, in addition 
to any statement by the consumer. 
‘‘(3) PRESUMPTION NOT APPLICABLE IN CASE 
OF BALLOON PAYMENTS.—Paragraph (2) shall not 
apply in the case of any consumer who has an obli-
gation secured by real property (that would be taken
into account for purposes of such paragraph) for 
which the aggregate amount of the regular periodic 
payments would not fully amortize the obligation. 
‘‘(4) VERIFICATION OF INCOME REQUIRED IN 
CASE OF CONSUMER WITHOUT EARNED INCOME.—A 
creditor may not rely on a consumer’s statement of 
income for purposes of paragraph (2) if the con-
sumer has no earned income.’’. 
(i) PROHIBITION ON SINGLE PREMIUM CREDIT LIFE 
INSURANCE.—Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended by inserting after subsection 
(p) (as added by subsection (g) of this section) the fol-
lowing new subsection: 
‘‘(q) PROHIBITION
ON SINGLE PREMIUM CREDIT 
LIFE INSURANCE.—No consumer credit transaction in-
volving a high-cost mortgage may include the offer or sale 
of any insurance policy, on a single premium basis, that 
insures, guarantees, or indemnifies the repayment of the 
outstanding balance of the loan against death, illness, ac-
cident, disability, or unemployment of the consumer.’’. 
(j) LIMITATIONS ON REFINANCING.—Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (q) (as added by subsection 
(i) of this section) the following new subsection: 
‘‘(r) LIMITATIONS ON REFINANCING.—
‘‘(1) PROHIBITION DURING 1ST YEAR.—
‘‘(A) IN GENERAL.—No creditor may refi-
nance a high-cost mortgage loan with another 
high-cost mortgage during the 1-year period be-
ginning on the date of consummation of the 
prior high-cost mortgage loan. 
‘‘(B) ARRANGEMENTS
PROHIBITED.—No 
mortgage broker may arrange for the refi-
nancing of a high-cost mortgage with another 
high-cost mortgage during the 1-year period be-
ginning on the date of consummation of the 
prior high-cost mortgage. 
‘‘(2) 
EXCEPTION
FOR
LOWER
INTEREST 
LOAN.—Paragraph (1) shall not apply if the sched-
uled finance charge for the balance of the prior ex-
isting high-cost mortgage exceeds the scheduled fi-
nance charge for the subsequent high-cost mortgage
by an amount greater than the amount of the fees 
and charges imposed by the creditor for such subse-
quent mortgage. 
‘‘(3) REFINANCING OF CERTAIN LOW-INTEREST 
LOANS
PROHIBITED
FOR
YEARS.—A high-cost 
mortgage may not be made to refinance, and the 
proceeds of a high-cost mortgage may not be used 
to pay off, any below-market interest rate or sub-
sidized loan made by any government agency, gov-
ernment-sponsored enterprise, or nonprofit corpora-
tion (other than a mutual bank, mutual savings as-
sociation, or credit union) during the 10-year period 
beginning when such low-interest loan was con-
summated, without either the express written con-
sent of the holder of the loan or certification from 
a person or organization certified under section 
106(e) of the Housing and Urban Development Act 
of 1968 that the consumer has obtained credit coun-
seling.’’. 
(k) REQUIREMENTS RELATING TO HOME IMPROVE-
MENT CONTRACTS.—Section 129(i) of the Truth in Lend-
ing Act (15 U.S.C. 1639(i)) is amended—
(1) by striking ‘‘IMPROVEMENT CONTRACTS.—
A creditor’’ and inserting ‘‘IMPROVEMENT CON-
TRACTS.—
‘‘(1) IN GENERAL.—A creditor’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) NO PAYMENT IN FULL WITHOUT PROOF 
OF COMPLETION OF THE WORK.—
‘‘(A) IN GENERAL.—No creditor may use 
the proceeds of a high-cost mortgage to make 
a final payment or payment in full to a home
improvement contractor under a home improve-
ment contract without proof that the contractor 
has fully performed the obligations of the con-
tract. 
‘‘(B) 
SIGNED
STATEMENT
OF
CON-
SUMER.—A signed statement by the consumer 
who entered into the high-cost mortgage and 
home improvement contract referred to in sub-
paragraph (A) that the contractor has fully per-
formed the contract shall constitute proof for 
purposes of such subparagraph.’’. 
(l) ADDITIONAL SPECIFIC DISCLOSURES.—Section 
129(a)(1) of the Truth in Lending Act (15 U.S.C. 
1639(a)) is amended by adding at the end the following 
new subparagraphs: 
‘‘(C) ‘The rate of interest and the amount 
of fees you pay on a loan may vary depending 
on which lender or broker you select.’
‘‘(D) ‘The timing and amount of payments 
on debts you already are carrying contribute to 
the credit rating that is used to determine 
whether you may get a new loan and how much 
you will pay for that new loan. You should 
NOT accept any advice to ignore or delay mak-
ing any payments on loans you already have,
even if those loans will be paid off with the new 
loan.’
‘‘(E) ‘You may get into serious financial 
difficulties if you use this loan to pay off old 
debts and then run up other new debts.’ ’’. 
(m) CREDIT REPORTING REQUIREMENTS.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (r) (as added by 
subsection (j) of this section) the following new subsection: 
‘‘(s) CREDIT REPORTING REQUIREMENTS.—
‘‘(1) PERIODIC
FULL
FILE
REPORTING
RE-
QUIRED.—A creditor with respect to a high-cost 
mortgage (or the assignee or servicer of such mort-
gage) shall furnish, at least once in each calendar 
quarter, a full file credit report with respect to all 
high-cost mortgages held or serviced by such cred-
itor, assignee, or servicer to a consumer reporting 
agency that compiles and maintains files on con-
sumers on a nationwide basis (as defined in section 
603(p) of the Fair Credit Reporting Act), except for 
information deleted in connection with the settle-
ment of a dispute or consumer complaint. 
‘‘(2) RIGHT TO FREE CREDIT REPORTS IN CON-
NECTION
WITH
HIGH-COST
MORTGAGES.—Any ac-
ceptance by a creditor of an application for a con-
sumer credit transaction the terms of which would 
cause the transaction to be defined as a high-cost 
mortgage shall be treated as an adverse action with 
respect to the consumer for purposes of sections 
612(b) and 615(a) of the Fair Credit Reporting Act, 
except that, the creditor need not refer to such ac-
tion as adverse in any communication with the con-
sumer. 
‘‘(3) FULL FILE CREDIT REPORT DEFINED.—
For purposes of this subsection, the term ‘full file 
credit report’ means a report given to a consumer 
reporting agency on a regular basis reflecting the 
status of every loan in the server’s portfolio as of the 
report date.’’. 
(n) NO CALL PROVISION.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (s) (as added by subsection (m) of this 
section) the following new subsection: 
‘‘(t) NO CALL PROVISION.—
‘‘(1) IN GENERAL.—A high-cost mortgage may 
not include terms under which the indebtedness may 
be accelerated by the creditor, in the creditor’s sole 
discretion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply when repayment of the loan has been acceler-
ated—
‘‘(A) by default or pursuant to a due-on-
sale provision or some other provision of the 
loan documents unrelated to the payment 
schedule; or 
‘‘(B) due to any action or omission by the 
consumer that adversely affects the creditor’s 
security interest in the residence or any rights 
of the creditor in such security.’’. 
(o) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (t) 
(as added by subsection (n) of this section) the following 
new subsection:
‘‘(u) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—
‘‘(1) IN GENERAL.—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) EXCEPTION FOR CERTAIN WORKOUTS.—
Paragraph (1) shall not apply in the case of an ex-
isting high-cost mortgage that is in default or more 
than 60 days delinquent, if the modification, re-
newal, extension, or amendment is part of the reso-
lution or workout of the default or delinquency.’’. 
(p) PROFITING ON FORECLOSURES PROHIBITED.—
Section 129 of the Truth in Lending Act (15 U.S.C. 1639) 
is amended by inserting after subsection (u) (as added by 
subsection (o) of this section) the following new sub-
section: 
‘‘(v) LENDER PROFITS ON FORECLOSURES PROHIB-
ITED.—
‘‘(1) IN GENERAL.—
‘‘(A) CREDITOR, ASSIGNEE, OR AFFILIATE 
REACQUIRES
PROPERTY
INTEREST
AT
FORE-
CLOSURE SALE.—If the creditor, any assignee 
of the creditor, or any affiliate of such creditor 
or assignee is the successful bidder at a judicial 
or nonjudicial foreclosure sale of a residence of 
a consumer that was the security for a high-
cost mortgage, any profit realized by a creditor, 
any assignee of the creditor, or any affiliate of 
such creditor or assignee realized upon the sub-
sequent resale or other disposition of the prop-
erty that was the security for a high-cost mort-
gage shall be paid to the consumer. 
‘‘(B) CREDITOR, ASSIGNEE, OR AFFILIATE 
DOES NOT REACQUIRE PROPERTY INTEREST AT 
FORECLOSURE SALE.—If the creditor, any as-
signee of the creditor, or any affiliate of such 
creditor or assignee is not the successful bidder 
at a judicial or nonjudicial foreclosure sale of a 
residence of a consumer that was the security 
for a high cost mortgage, any surplus realized 
in excess of the sum of—
‘‘(i) the amount to which the creditor 
or assignee or affiliate or others have a 
right under the law of the State where the 
real property that was the security for a 
high-cost mortgage is located; and 
‘‘(ii) the amounts referred to in sub-
paragraphs (A), (B), and (C) of paragraph 
(4), 
shall be paid to the consumer.
‘‘(2) PROFIT DEFINED.—For purposes of this 
subsection, the term ‘profit’ means the amount 
which is equal to—
‘‘(A) the amount paid to the creditor, any 
assignee of the creditor, or any affiliate of such 
creditor or assignee by a third party for the 
sale of the property to the third party, minus 
‘‘(B) the amount to which the creditor or 
assignee has a right under the terms of the 
mortgage. 
‘‘(3) SURPLUS DEFINED.—
‘‘(A) IN GENERAL.—For the purposes of 
paragraph (1)(B), the term ‘surplus’ means the 
amount which is equal to—
‘‘(i) the amount derived from the sale 
as determined by the law of the State 
where the real property that was the secu-
rity for a high-cost mortgage is located; 
minus 
‘‘(ii) the amounts disbursed to others 
under the processes, priorities and proce-
dures for disbursement of surplus funds, 
and for determining the rights and prior-
ities between consumers and others who 
may have an interest in or claim to the
surplus funds, as determined by the law of 
the State where the real property that was 
the security for a high-cost mortgage is lo-
cated. 
‘‘(B) APPLICABLE
DEFINITION
IF
STATE 
LAW DOES NOT PROVIDE FOR THE DETERMINA-
TIONS OF AMOUNTS DESCRIBED IN SUBPARA-
GRAPH (A).—If the law of the State where the 
real property that was the security for a high-
cost mortgage is located does not provide for 
the determination of the amounts described in 
clauses (i) and (ii) of subparagraph (A), the 
term ‘surplus’ means that portion of the 
amount derived from the sale that exceeds the 
sum of the amounts described in subparagraphs 
(A), (B), and (C) of paragraph (4). 
‘‘(4) CREDITOR’S
AMOUNT.—The amount to 
which the creditor or assignee has a right under the 
terms of the mortgage, for purposes of this sub-
section, includes—
‘‘(A) all foreclosure expenses, including 
reasonable attorneys’ fees and expenses reason-
ably incurred to secure, market, and preserve 
the property through the date of the foreclosure 
sale, incurred by the creditor or assignee;
‘‘(B) all amounts due the creditor or as-
signee under the terms of the agreement 
through the date of the judicial or nonjudicial 
foreclosure sale referred to in paragraph (1); 
‘‘(C) all amounts paid by the creditor or 
assignee to other lien holders of record on the 
property; and 
‘‘(D) all postforeclosure expenses, including 
reasonable attorneys’ fees, commissions, ad-
vances, and expenses reasonably incurred to se-
cure, market, preserve, improve and sell the 
property to a third party referred to in para-
graph (1), incurred by the creditor or as-
signee.’’. 
(q) INCREASED INTEREST RATE UPON DEFAULT 
PROHIBITED.—Section 129 of the Truth in Lending Act
(15 U.S.C. 1639) is amended by inserting after subsection 
(v) (as added by subsection (p) of this section) the fol-
lowing new subsection: 
‘‘(w) APPLICABILITY OF LIMITATIONS ON VARIABLE 
RATE CHANGES.—In the case of a high-cost mortgage 
that is subject to a variable rate of interest based on an 
index or rate of interest which is publicly available and 
is not under the control of the creditor, subsection (d) 
shall not apply to changes in the rate of interest due to
any change in such index, to the extent the change of in-
terest is not due in any part to a default by the consumer 
or a permissible acceleration by the creditor.’’. 
(r) PREPAYMENT
OF PERIODIC PAYMENTS FROM 
PROCEEDS PROHIBITED.—Section 129(g) of the Truth in 
Lending Act (15 U.S.C. 1639) is amended to read as fol-
lows: 
‘‘(g) PREPAYMENT OF PERIODIC PAYMENTS FROM 
PROCEEDS PROHIBITED.—No high-cost mortgage may in-
clude terms under which any periodic payments of interest 
or principal due under such mortgage may be paid in ad-
vance or otherwise deducted from the proceeds of the 
loan.’’. 
(s) PAYOFF STATEMENTS.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (w) (as added by subsection (q) of this 
section) the following new subsection: 
‘‘(x) 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 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 residential mort-
gage transactions or high-cost mortgages. 
‘‘(C) 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 a reasonable time but in any 
event no more than 5 business days after receiving 
a request by a consumer or a person authorized by 
the consumer to obtain such information.’’.
SEC. 103. AMENDMENTS TO LIABILITY PROVISIONS RELAT-
ING TO HIGH-COST MORTGAGES. 
(a) RIGHT TO CURE.—Section 130(b) of the Truth 
in Lending Act (15 U.S.C. 1640(b)) is amended—
(1) by striking ‘‘(b) A creditor or assignee’’ and 
inserting ‘‘(b) RIGHT TO CURE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a 
creditor or assignee’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) HIGH-COST MORTGAGES.—In addition to 
the provisions of paragraph (1), a creditor or as-
signee shall have no liability under this section for 
any failure to comply with any requirement imposed 
under section 129 with respect to a high-cost mort-
gage, if within 60 days after discovering an error, 
and prior to the institution of an action under this 
section, the creditor or assignee notifies the con-
sumer of the error and makes appropriate restitu-
tion to the consumer or modifies the terms of the 
credit transaction in such a way that the transaction 
is no longer a high-cost mortgage within the mean-
ing of this title.’’. 
(b) COORDINATION
OF CLASS ACTION DAMAGES 
WITH ACTUAL DAMAGES.—Section 130 of the Truth in
Lending Act (15 U.S.C. 1640) is amended by adding at 
the end the following new subsection: 
‘‘(j) CLASS
ACTIONS
RELATING
TO
HIGH-COST 
MORTGAGES.—
‘‘(1) COORDINATION
OF
CLASS
ACTION
DAM-
AGES
WITH
ACTUAL
DAMAGES.—The maximum 
amount of general damages which may otherwise be 
imposed on any person under subsection (a)(2)(B) 
for violations of section 129 in a class action shall 
be reduced by the aggregate amount of actual dam-
ages for which such person is liable to members of 
the class under subsection (a)(1). 
‘‘(2) PATTERN AND PRACTICE.—In determining 
the amount of any liability of any person under sub-
section (a)(2)(B) for violations of section 129 in a 
class action, the court shall consider the pattern and 
practices of the person giving rise to the violations.’’. 
(c) AMENDMENT RELATING TO LIABILITY OF AS-
SIGNEES.—
(1) IN
GENERAL.—Paragraph (4) of section 
131(d) of the Truth in Lending Act (15 U.S.C. 
1641(d)) is amended by striking ‘‘mortgage referred 
to in section 103(aa)’’ and inserting ‘‘high-cost 
mortgage’’.
(2) RIGHTS UPON ASSIGNMENT OF HIGH-COST 
MORTGAGES.—Section 131(d) of the Truth in Lend-
ing Act (15 U.S.C. 1641(d)) is amended—
(A) by redesignating paragraphs (2), (3), 
and (4) as paragraphs (5), (6), and (7), respec-
tively; and 
(B) striking paragraph (1) and inserting 
the following new paragraphs: 
‘‘(1) IN GENERAL.—Any person who purchases 
or is otherwise assigned a high-cost mortgage shall 
be subject to an action under this title only if the 
violation for which such action or proceeding is 
brought is apparent on the face of the disclosure 
statement or the underlying promissory note. 
‘‘(2) AFFIRMATIVE CLAIMS AND DEFENSES.—
Any person who purchases or is otherwise assigned 
a high-cost mortgage that was made, arranged, or 
assigned by a person financing home improvements
to the dwelling of a consumer shall be subject to 
all affirmative claims and defenses which the con-
sumer may have against the seller, home improve-
ment contractor, broker, or creditor with respect to 
such mortgage or home improvements. 
‘‘(3) SAFE HARBOR.—A person who maintains 
and exercises procedures that are reasonably adapt-
ed to prevent the acquisition of high-cost mortgages 
containing violations of this title, which procedures 
are consistent with established industry norms and 
practices for secondary mortgage market trans-
actions, shall not be liable for any such violations in 
connection with any loan acquired pursuant to such 
procedures. 
‘‘(4) CLARIFICATION OF TERMS.—For purposes 
of this title, the terms ‘purchaser’, ‘assignee’, and 
‘person who purchases or is otherwise assigned’ in-
cludes—
‘‘(A) any person acting on behalf of the 
purchaser or assignee; and 
‘‘(B) with regard to credit obligations se-
cured by consumers’ dwellings included in a 
pool for the purpose of issuing asset-backed se-
curities, the issuer of the asset-backed security, 
the depositor entity holding such pool, and any 
affiliate of such issuer or depository entity.’’. 
SEC. 104. COORDINATION WITH STATE LAW. 
(a) IN GENERAL.—Section 111 of the Truth in Lend-
ing Act (15 U.S.C. 1610) is amended—
(1) by adding at the end the following new sub-
section: 
‘‘(f) HIGH-COST MORTGAGES.—
‘‘(1) IN GENERAL.—To the extent that any law 
of any State—
‘‘(A) imposes any requirement, limitation, 
or prohibition on any mortgage lending activi-
ties in connection with an extension of con-
sumer credit secured by a lien against a con-
sumer’s dwelling in whole or in part because the 
actual or contingent costs and finance charges 
to the consumer associated with such extension 
of credit exceed any particular threshold for 
such costs, however such threshold may be de-
fined; or 
‘‘(B) attempts to regulate such mortgage 
lending activities—
‘‘(i) through limitations or prohibi-
tions in connection with contracts for other 
business with any such State or political 
subdivision thereof; 
‘‘(ii) by making any conduct in con-
nection with any such activities subject to 
criminal penalties; or 
‘‘(iii) by making activities regulated 
under real estate, foreclosure, or other 
laws of such State or political subdivision
contingent upon the manner in which 
mortgage lending activities are conducted, 
this title shall preempt such law, irrespective of 
whether such law affords greater protection, sub-
stantive or otherwise, to consumers. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
‘‘(A) MORTGAGE
LENDING
ACTIVITIES.—
The term ‘mortgage lending activities’ includes 
any advertisement, solicitation, offer, negotia-
tion, application, processing, underwriting, orig-
inating, closing, funding, recording, assignment, 
securitization, servicing, collection, modification, 
satisfaction, or foreclosure (including the dis-
position of foreclosed property) for or of any ex-
tension of consumer credit secured by a lien 
against a consumer’s dwelling. 
‘‘(B) LAW OF ANY STATE.—The term ‘law 
of any State’ includes any statute, rule, regula-
tion, or ordinance of any State or any political 
subdivision of any State. 
‘‘(3) CLARIFICATION
OF
PREEMPTION.—Laws 
preempted under paragraph (1) of this subsection 
shall, without in any way limiting the effect of para-
graph (1) of this subsection, include—
‘‘(A) any law of any State that directly or 
indirectly limits a creditor’s ability to extend 
new credit to a consumer for the purpose of re-
financing an existing extension of consumer 
credit in whole or in part because the actual or 
contingent costs and finance charges to the con-
sumer associated with either the existing or the 
new extension of consumer credit are lower 
than or in excess of any particular threshold; or 
‘‘(B) any law of any State that directly or 
indirectly limits the claims, defenses, or other 
remedies at law or equity available to a cred-
itor, its agent, or its direct or indirect assignee 
in connection with an extension of consumer 
credit secured by a lien against a consumer’s 
dwelling in whole or in part because the actual 
or contingent costs and finance charges to the
consumer associated with such extension of con-
sumer credit are in excess of any particular 
threshold. 
‘‘(4) 
EXCLUSIONS.—Notwithstanding 
para-
graphs (1) and (2), the following laws are expressly 
excluded from the preemption set forth in paragraph 
(1):
‘‘(A) Any law of any State, not otherwise 
preempted under Federal law, limiting the rate 
of interest reflected in the note or other instru-
ment evidencing an extension of consumer cred-
it secured by a lien against a consumer’s dwell-
ing, to the extent that such law does not re-
quire compliance with any law that is otherwise 
preempted under paragraphs (1) and (2) as a 
condition of contracting for, charging, or col-
lecting any rate of interest otherwise permitted 
by such law. 
‘‘(B) Any law of any State requiring the li-
censing, registration, or authorization of any 
person engaged in mortgage lending activities, 
to the extent that such law does not condition 
the issuance of such a license, registration or 
other authorization, or the authority granted 
thereby, on compliance with any law that is oth-
erwise preempted under paragraphs (1) and 
(2). 
‘‘(5) PROMPT DETERMINATION BY BOARD OF 
GOVERNORS.—
‘‘(A) IN GENERAL.—In response to a re-
quest from any person, the Board of Governors 
of the Federal Reserve System, or any official
discontinuing the identification of regulations of the Direc-
tor relating to late fees and prepayment penalties as appli-
cable to State housing creditors and no regulation of the 
Director that was prescribed in final form before the en-
actment of this Act and that would discontinue such iden-
tification shall be effective on or after such date of enact-
ment, unless permitted by a subsequent Act of the Con-
gress. 
SEC. 106. EFFECTIVE DATE. 
(a) IN GENERAL.—This Act, and the amendments 
made by this Act, shall take effect at the end of the 1-
year period beginning on the date of the enactment of this 
Act. 
(b) SCOPE
OF APPLICATION.—This Act, and the 
amendments made by this Act, shall apply with respect 
to applications for high-cost mortgages received on or 
after the effective date of this Act. 
(c) VOLUNTARY COMPLIANCE.—No creditor or as-
signee shall be subject to civil liability in any action 
brought under the Truth in Lending Act with respect to 
provisions of such Act that are amended by this Act, if 
the creditor or assignee voluntarily complies with the re-
quirements of such amendments during the 1-year period 
referred to in subsection (a).
TITLE 
II—CONSUMER 
MORT-
GAGE PROTECTION BOARD 
SEC. 201. ESTABLISHMENT. 
(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) CONSUMER MORTGAGE PROTECTION BOARD.—
‘‘(1) ESTABLISHMENT.—There is established in 
the Department of Housing and Urban Development 
the Consumer Mortgage Protection Board (in this 
section referred to as the ‘Board’). 
‘‘(2) FUNCTIONS.—The Board shall carry out 
the functions assigned to the Board under this sec-
tion and any other provisions of law. Such functions 
shall include establishing rules necessary—
‘‘(A) for the counseling procedures under 
subsection (h)(1); 
‘‘(B) under section 5 of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C.
2604) for mortgage information booklets pre-
pared pursuant to such section; 
‘‘(C) for the operation and administration 
of the Board; and
‘‘(D) for the establishment and mainte-
nance of the national database of mortgage bro-
kers under subtitle B of title II of the Respon-
sible Lending Act. 
‘‘(3) MEMBERS.—The Board shall be composed 
of 15 members, who shall be appointed by the Sec-
retary, as follows: 
‘‘(A) 4 members shall be individuals who 
represent consumers of settlement services. 
‘‘(B) 3 members shall be individuals who 
represent originators of federally related mort-
gage loans (as such term is defined in section 
3 of the Real Estate Settlement Procedures Act 
of 1974 (12 U.S.C. 2602), including at least 2 
individuals who are associated with lenders that 
fund and close loans with their own funds and 
are capable of servicing such loans. 
‘‘(C) 1 member shall be an individual who 
represents real estate sales professionals. 
‘‘(D) 1 member shall be an individual who 
represents real estate appraisers. 
‘‘(E) 1 member shall be an individual who 
represents private mortgage insurers. 
‘‘(F) 1 member shall be an individual who 
represents title insurance providers.
‘‘(G) 1 member shall be an individual who 
represents settlement service management com-
panies. 
‘‘(H) 1 member shall be an individual who 
represents providers of electronic delivery mech-
anisms that facilitate home purchases and home 
financings. 
‘‘(I) 1 member shall be an individual who 
is a practicing attorney specializing in residen-
tial mortgage finance or settlement services. 
‘‘(J) 1 member shall be an individual who 
represents mortgage brokers (as such term is 
defined in section 303 of the Responsible Lend-
ing Act). 
‘‘(4) TERMS AND VACANCIES.—Each member of 
the Board shall be appointed for a term of three 
years. Any member appointed to fill a vacancy oc-
curring before the expiration of the term for which 
the member’s predecessor was appointed shall be ap-
pointed only for the remainder of that term. A mem-
ber may serve after the expiration of that member’s 
term until a successor has taken office. A vacancy 
in the Board shall be filled in the manner in which 
the original appointment was made.
‘‘(5) SERVICE
WITHOUT
PAY; TRAVEL
EX-
PENSES.—Members of the Board shall serve without 
pay, but each member of the Board shall receive 
travel expenses, including per diem in lieu of subsist-
ence, in accordance with applicable provisions under 
subchapter I of chapter 57 of title 5, United States 
Code. 
‘‘(6) STAFF.—Subject to the rules prescribed by 
the Board, the Board may appoint and fix the pay 
of personnel as the Board considers appropriate to 
carry out the Board’s functions. Such personnel may 
be appointed without regard to the provisions of title 
5, United States Code, governing appointments in 
the competitive service, and may be paid without re-
gard to the provisions of chapter 51 and subchapter 
III of chapter 53 of that title relating to classifica-
tion and General Schedule pay rates. The Board 
may provide reasonable additional compensation and 
benefits to employees of the Board if the same type 
of compensation or benefits are then being provided 
by any Federal bank regulatory agency or, if not 
then being provided, could be provided by such an 
agency under applicable provisions of law, rule, or 
regulation.
‘‘(7) EXEMPTION
FROM
FEDERAL
ADVISORY 
COMMITTEE ACT PROVISIONS.—The provisions of the 
Federal Advisory Committee Act (5 U.S.C. App.) 
shall not apply to the Board.’’. 
(b) INITIAL
APPOINTMENTS.—The Secretary of 
Housing and Urban Development shall appoint the initial 
members of the Consumer Mortgage Protection Board, 
pursuant to section 106(g) of the Housing and Urban De-
velopment Act of 1968 (12 U.S.C. 1701x(g)), not later 
than 20 days after the date of the enactment of this Act. 
SEC. 202. COUNSELING PROCEDURES. 
(a) IN GENERAL.—Section 106 of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x), as 
amended by the preceding provisions of this Act, is further 
amended by adding at the end the following new sub-
section: 
‘‘(h) BOARD RESPONSIBILITIES.—
‘‘(1) COUNSELING PROCEDURES.—
‘‘(A) IN
GENERAL.—Subject to the ap-
proval of the Secretary, the Board shall estab-
lish, coordinate, and monitor the administration 
by the Department of Housing and Urban De-
velopment of the counseling procedures for 
homeownership counseling and rental housing 
counseling provided in connection with any pro-
gram of the Department, including all require-
ments, standards, and performance measures 
that relate to homeownership counseling. 
‘‘(B) HOMEOWNERSHIP
COUNSELING.—
For purposes of this subsection, the term 
‘homeownership counseling’ means counseling 
related to homeownership and residential mort-
gage loans, and includes counseling 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. 42 5305(a)(20)); 
‘‘(ii) in the United States Housing 
Act of 1937—
‘‘(I) section 9(e) (42 U.S.C. 
1437g(e)); 
‘‘(II) 
section 
8(y)(1)(D) 
(42 
U.S.C. 1437f(y)(1)(D)); 
‘‘(III) 
section 
23(c)(4) 
(42 
U.S.C. 1437u(c)(4)); 
‘‘(IV) sections 302(b)(6) and 
303(b)(7) 
(42 
U.S.C. 
1437aaa–
1(b)(6), 1437aaa–2(b)(7)); and
‘‘(V) 
section 
304(c)(4) 
(42 
U.S.C. 1437aaa–3(c)(4)).
Housing and Self-Determination Act of 
1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 
‘‘(x) in the National Housing Act—
‘‘(I) in section 203 (12 U.S.C. 
1709), the penultimate undesignated 
paragraph of paragraph (2) of sub-
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)); and 
‘‘(xii) section 508 of the Housing and 
Urban Development Act of 1970 (12 
U.S.C. 1701z–7). 
‘‘(C) RENTAL
HOUSING
COUNSELING.—
For purposes of this subsection, the term ‘rent-
al housing counseling’ means counseling related 
to rental of residential property, and includes
counseling related to such topics that is pro-
vided pursuant to—
‘‘(i) section 105(a)(20) of the Housing 
and Community Development Act of 1974 
(42 U.S.C. 42 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);
‘‘(vii) section 422(b)(6) of the Cran-
ston-Gonzalez National Affordable Housing 
Act (42 U.S.C. 12872(b)(6)); 
‘‘(viii) section 491(b)(1)(F)(iii) of the 
McKinney-Vento Homeless Assistance Act 
(42 U.S.C. 11408(b)(1)(F)(iii)); and 
‘‘(ix) 
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)). 
‘‘(2) TOLL-FREE
TELEPHONE
NUMBER
AND 
WEB SITE.—The Board shall establish and operate 
a toll-free telephone number and a World Wide Web 
site through which persons interested in homeowner-
ship counseling services may locate and obtain 
names and contact information of persons and orga-
nizations certified under section 106(e) of the Hous-
ing and Urban Development Act of 1968 to provide 
such services. 
‘‘(3) UNIFORM MATERIALS.—The Board shall 
ensure the uniformity of 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). 
‘‘(4) MORTGAGE SOFTWARE SYSTEMS.—
‘‘(A) CERTIFICATION.—The Board shall 
provide for the certification of various computer 
software programs for consumers to use in eval-
uating different residential mortgage loan pro-
posals. The Board shall require, for such certifi-
cation, that the mortgage software systems that 
take into account—
‘‘(i) the consumer’s financial situa-
tion; 
‘‘(ii) the amount of time the consumer 
expects to remain in the home or expected 
time to maturity of the loan; 
‘‘(iii) such other factors as the Board 
considers appropriate to assist the con-
sumer in evaluating whether to pay points, 
to lock in an interest rate, to select an ad-
justable or fixed rate loan, to select a con-
ventional or government-insured or guar-
anteed loan and to make other choices dur-
ing the loan application process. 
If the Board determines that available existing 
software is inadequate to assist consumers dur-
ing the residential mortgage loan application 
process, the Board shall arrange for the devel-
opment by private sector software companies of
new mortgage software systems that meet the 
Board’s specifications. 
‘‘(B) AVAILABILITY.—The Board shall 
take reasonable steps to make mortgage soft-
ware systems certified pursuant to this para-
graph widely available through the Internet and 
at public locations, including public libraries, 
senior-citizen centers, and homeownership coun-
seling centers. 
‘‘(5) 
OUTREACH
TO
VULNERABLE
POPU-
LATIONS.—The Board shall develop a media pro-
gram designed to make elderly persons, illiterate 
persons, low-income persons, and other potentially 
vulnerable consumers aware that it is advisable, be-
fore seeking a residential mortgage loan, to obtain 
homeownership counseling from an unbiased and re-
liable source and that such homeownership coun-
seling is available, including through programs of 
the Department of Housing and Urban Develop-
ment.’’. 
(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 (II), by striking ‘‘and’’ at the 
end; 
(2) in subclause (III) by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after subclause (III) the fol-
lowing new subclause: 
‘‘(IV) notify the homeowner or 
mortgage applicant of the availability 
of mortgage software systems pro-
vided pursuant to subsection (h)(4).’’. 
SEC. 203. GRANTS FOR HOUSING COUNSELING ASSIST-
ANCE. 
(a) AUTHORIZATION OF APPROPRIATIONS.—Section 
106(a) of the Housing and Urban Development Act of 
1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at 
the end the following new paragraph: 
‘‘(4) HOMEOWNERSHIP COUNSELING ASSISTANCE.—
‘‘(A) 
IN
GENERAL.—The 
Secretary 
shall, 
through the Consumer Mortgage Protection Board 
established under subsection (g), make financial as-
sistance available under this paragraph to entities 
providing homeownership counseling (as such term 
is defined in subsection (h)(1)(B)). 
‘‘(B) QUALIFIED
ENTITIES.—The Consumer 
Mortgage Protection Board shall establish standards
and guidelines for eligibility of organizations (includ-
ing governmental and nonprofit organizations) to re-
ceive assistance under this paragraph. 
‘‘(C) DISTRIBUTION.—Assistance made avail-
able under this paragraph shall be distributed in a 
manner that encourages efficient and successful 
counseling programs. 
‘‘(D) AUTHORIZATION OF APPROPRIATIONS.—
There are authorized to be appropriated, to the Con-
sumer Mortgage Protection Board established under 
subsection (g), $50,000,000 for each of fiscal years 
2003 through 2007 for—
‘‘(i) the operations of the Board; and 
‘‘(ii) assistance under this paragraph 
(1)(iii) for entities providing homeownership 
counseling.’’. 
SEC. 204. REQUIREMENTS TO USE HUD-CERTIFIED COUN-
SELORS UNDER HUD PROGRAMS. 
(a) BOARD RESPONSIBILITY.—Section 106(e) of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 
1701x(e)) is amended—
(1) in paragraph (1), by striking ‘‘Secretary’’ 
and inserting ‘‘Consumer Mortgage Protection 
Board established under subsection (g)’’; and
(2) in paragraphs (2) and (3), by striking ‘‘Sec-
retary’’ each place such term appears and inserting 
‘‘Board’’. 
(b) REQUIREMENT
TO
USE
CERTIFIED
COUN-
SELORS.—Section 106(e) of the Housing and Urban De-
velopment Act of 1968 (12 U.S.C. 1701x(e)) is amend-
ed—
(1) in paragraph (1)—
(A) by inserting ‘‘(a)(4),’’ after ‘‘(a)(2),’’; 
(B) by inserting ‘‘of this section, or under 
section 101(e)’’ after ‘‘or (d)’’; and 
(C) by striking ‘‘, to the extent prac-
ticable,’’ and inserting ‘‘only’’; 
(2) by redesignating paragraph (3) as para-
graph (4); and 
(3) by inserting after paragraph (2) the fol-
lowing new paragraph: 
‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.—
Any homeownership counseling or rental housing 
counseling (as such terms are defined in subsection 
(h)(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 counselors certified by the Board
under this subsection as competent to provide such 
counseling.’’. 
SEC. 205. 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 ‘‘MORTGAGE’’; 
(2) by striking subsections (a) and (b) and in-
serting the following new subsections: 
‘‘(a) PREPARATION AND DISTRIBUTION.—Subject to 
the approval of the Secretary, the Consumer Mortgage 
Protection Board established under section 106(g) of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 
1701x(g)) (in this section referred to as the ‘Board’) shall 
prepare 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 dis-
tribute such booklets to all lenders that make federally re-
lated mortgage loans. 
‘‘(b) CONTENTS.—Each booklet shall be in such form 
and detail as the Board shall prescribe and, in addition 
to such other information as the Board may provide, shall 
include in plain and understandable language the following 
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; and 
‘‘(C) the tradeoff 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 common unfair, 
deceptive, or fraudulent lending practices, including 
those prohibited by the Truth in Lending Act or 
other applicable Federal law, and of other unfair 
practices and unreasonable or unnecessary 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 (15 U.S.C. 1635, 
1639). 
‘‘(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 
pamphlet required to be provided under section 
127A of the Truth in Lending Act (15 U.S.C. 
1637a(e)). 
‘‘(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)) and a rec-
ommendation that the consumer use such services.
‘‘(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 incident to a real estate 
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. 
The booklet prepared pursuant to this section shall take 
into consideration differences in real estate settlement pro-
cedures which may exist among the several States and ter-
ritories of the United States and among separate political 
subdivisions within the same State and territory.’’; 
(3) in subsection (c), by striking the last sen-
tence; and 
(4) in subsection (e), by striking ‘‘Secretary’’ 
and inserting ‘‘Board’’.
TITLE III—REQUIREMENTS FOR 
MORTGAGE BROKERS 
Subtitle A—Licensing and 
Minimum Standards 
SEC. 301. STATE REGULATION OF MORTGAGE BROKERS. 
(a) IN GENERAL.—The Federal mortgage broker re-
quirements established pursuant to this title shall apply 
only with respect to States that, upon the expiration of 
the 3-year period beginning on the date of the enactment 
of this Act, have not enacted and do not have in effect 
uniform laws and regulations described in subsection (b). 
(b) UNIFORM STATE LAWS.—
(1) IN
GENERAL.—Laws and regulations de-
scribed in this subsection are laws and regulations 
that—
(A) require licensing for mortgage brokers; 
(B) require, as a condition of issuance of 
a license, that an applicant comply with pre-li-
censing education requirements and submit a 
written application for a license, and that a 
criminal background check be performed on the 
applicant;
(C) establish minimum testing standards 
for mortgage brokers;
bank, savings and loan association, or credit 
union. 
(B) Any budget or debt counseling service, 
as defined by the Secretary, that is a nonprofit 
organization exempt from taxation under sec-
tion 501(c)(3) of the Internal Revenue Code of 
1986 (26 U.S.C. 501(c)(3)); 
(C) Any consumer reporting agency that is 
in substantial compliance with the Fair Credit 
Reporting Act (15 U.S.C. 1681 et seq.). 
(D) Any political subdivision, or any gov-
ernmental or other public entity, corporation, or 
agency, in or of the United States or any State. 
(E) Any college or university, or entity 
that is controlled by a college or university, as 
determined by the Secretary. 
(F) Any person who—
(i) makes, service, buys, or sells mort-
gage loans; 
(ii) underwrites the loans; and 
(iii)(I) has been approved by the Sec-
retary of Housing and Urban Development 
as a nonsupervised mortgagee with partici-
pation in the direct endorsement program,
but not including a mortgagee approved as 
a loan correspondent; 
(II) has been approved by the Federal 
National Mortgage Association as a seller/
servicer; 
(III) has been approved by the Fed-
eral Home Loan Mortgage Corporation as 
a seller/servicer; 
(IV) has been approved by the Sec-
retary of Veterans Affairs as a nonsuper-
vised automatic lender, but not including a 
person approved by the Secretary as a non-
supervised lender, an agent of a nonsuper-
vised automatic lender, or an agent of a 
nonsupervised lender; or 
(V) is a creditor (as defined in section 
103(f) of the Truth in Lending Act) who 
makes or invests in residential real estate 
loans aggregating more than $1,000,000 
per year, and irrespective of whether such 
creditor is licensed or supervised by an 
agency of a State. 
(G) Any person created solely for the pur-
pose of packaging and selling, as a unit of sale 
as investment securities, mortgage loans that
are secured by an interest in real estate, if the 
person does not service the loans. 
(c) DETERMINATION.—
(1) HUD DETERMINATION.—At the end of the 
3-year period beginning on the date of the enact-
ment of this Act, the Secretary of Housing and 
Urban Development shall determine, in consultation 
with the Board of Governors of the Federal Reserve 
System, whether the uniformity necessary to comply 
with subsection (a) has been achieved. 
(2) 
JUDICIAL
REVIEW.—The 
appropriate 
United States district court shall have exclusive ju-
risdiction over any challenge to the determination 
pursuant to paragraph (1) and such court shall 
apply the standards set forth in section 706 of title 
5, United States Code, when reviewing any such 
challenge. 
(d) CONTINUED APPLICATION.—If, at any time, the 
Secretary determines that a State no longer has in effect 
laws and regulations described in subsection (a) or the 
uniformity necessary to comply with subsection (a) no 
longer exists with respect to a State, the Federal mortgage 
broker requirements shall take effect with respect to such 
State 2 years after the date on which such determination
was made, unless the State has in effect such laws or regu-
lations, or the uniformity necessary to comply with sub-
section (a) is satisfied, before the expiration of such 2-
year period. 
(e) MONITORING.—The Secretary shall monitor the 
laws and regulations of the States governing the matters 
referred to in subsection (a) for purposes of making deter-
minations under subsection (d). 
SEC. 302. FEDERAL MORTGAGE BROKER REQUIREMENTS. 
(a) IN GENERAL.—Not later than 3 years after the 
date of the enactment of this Act, the Secretary of Hous-
ing and Urban Development shall, by regulation and in 
consultation with the Board of Governors of the Federal 
Reserve System, establish Federal mortgage broker re-
quirements under this section that meet the requirements 
set forth in subparagraphs (A) through (F) of section 
301(b)(1). 
(b) RULEMAKING.—The regulations required under 
subsection (a) shall be issued after notice and opportunity 
for public comment pursuant to the provisions of section 
553 of title 5, United States Code (notwithstanding sub-
sections (a)(2), (b)(B), and (d)(3) of such section). 
SEC. 303. DEFINITIONS. 
For purposes of this title, the following definitions 
shall apply:
(1) BUYER.—the term ‘‘buyer’’ means an indi-
vidual who is solicited to purchase, or who pur-
chases, the services of a mortgage broker for pur-
poses other than obtaining a business loan. 
(2) MORTGAGE.—The term ‘‘mortgage’’ means 
any indebtedness secured by a deed of trust, security 
deed, or other lien on real property. 
(3) MORTGAGE BROKER.—
(A) IN
GENERAL.—The term ‘‘mortgage 
broker’’ means a person that—
(i) holds such person out as being able 
to assist a buyer in obtaining a mortgage 
and charges or receives, from the buyer or 
lender for the mortgage, money or other 
valuable consideration readily convertible 
into money for providing such assistance; 
or 
(ii) is engaged in table-funding mort-
gage loans that are first lien mortgage 
loans. 
(B) SOLICITATION
OF
INFORMATION.—
Such term includes any person that solicits fi-
nancial and mortgage information from the 
public, provides such information to a mortgage 
broker, as defined in subparagraph (A), and
charges or receives from the mortgage broker 
money or other valuable consideration readily 
convertible into money for providing the infor-
mation; 
(C) EXCEPTIONS.—Such term does not in-
clude the persons referred to in subparagraphs 
(A) through (H) of section 301(b)(2). 
(4) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(5) TABLE-FUNDING
MORTGAGE
LOAN.—The 
term ‘‘table-funding mortgage loan’’ means a mort-
gage loan transaction in which the mortgage is ini-
tially payable to the mortgage broker, the mortgage 
broker does not use the mortgage broker’s own 
funds to fund the transaction, and, by the terms of 
the mortgage or other agreement, the mortgage is 
simultaneously assigned to another person. 
Subtitle B—Database of Licensed 
Mortgage Brokers 
SEC. 311. ESTABLISHMENT. 
(a) IN GENERAL.—The Consumer Mortgage Protec-
tion Board established under section 106(g) of the Hous-
ing and Urban Development Act of 1968 (12 U.S.C. 
1701x(g)) (in this subtitle referred to as the ‘‘Board’’)
shall provide for the establishment and maintenance of a 
national database of mortgage brokers. 
(b) ADMINISTRATION.—The Board may maintain 
and administrate the database established under this sub-
title or may enter into a contract with a private regulatory 
organization to maintain and administrate the database. 
The Board shall consult with the American Association 
of Residential Mortgage Regulators, the Conference of 
State Bank Supervisors, and other appropriate organiza-
tions in determining the information to be maintained in 
the database and, if the Board provides for any other or-
ganization to maintain and administrate the database, in 
selecting such organization. 
(c) COMPETITIVELY PROCURED CONTRACT.—The 
Secretary shall enter into any contract for administration 
of the database using competitive procedures (as such 
term is defined in section 4 of the Office of Federal Pro-
curement Policy Act). 
(d) PERFORMANCE REVIEW.—The Secretary—
(1) shall periodically review the performance of 
the Board, or such other organization, in serving as 
administrator of the database; and 
(2) may replace any such other organization 
with another qualified organization, pursuant to 
competitive procedures if the Secretary determines
in writing that the organization serving as adminis-
trator is not fulfilling the terms of the contract or 
upon the expiration of the contract. 
SEC. 312. DATABASE. 
The national database of mortgage brokers main-
tained pursuant to this title shall—
(1) include a listing of each person licensed 
under State law or regulation or under Federal 
mortgage broker requirements under section 302 to 
act as a mortgage broker; 
(2) make available to the public information re-
garding complaints made, and final disciplinary and 
enforcement actions taken, against each licensed 
mortgage broker; 
(3) make available to the Secretary of Housing 
and Urban Development and to each public agency 
or official in a State responsible for licensing or test-
ing under the laws or regulations referred to in sec-
tion 301(b) such information regarding mortgage 
brokers as the Board, by regulation, considers ap-
propriate for the Secretary and such agencies and 
officials to carry out their functions regarding regu-
lation, licensing, or testing of mortgage brokers, in-
cluding information regarding employment history 
and criminal background of mortgage brokers;
(4) make available to persons employing or 
using the services of mortgage brokers such informa-
tion regarding mortgage brokers as the Board, by 
regulation, considers appropriate; and 
(5) provide for the maintenance of such other 
information as the Board considers appropriate. 
SEC. 313. FEES. 
The Board may provide for the national database of 
mortgage brokers to charge reasonable fees to cover costs 
of maintaining and providing access to information from 
the database. 
SEC. 314. CONFIDENTIALITY OF INFORMATION. 
(a) IN GENERAL.—
(1) DATABASE.—Except as otherwise provided 
in this section, any requirement under Federal or 
State law regarding the privacy or confidentiality of 
any information or material in the possession of the 
Board or any other organization serving as the ad-
ministrator of the database, and any privilege aris-
ing under Federal or State law (including the rules 
of any Federal or State court) with respect to such 
information or material, shall continue to apply to 
such information or material after the information 
or material has been disclosed to the database.
(2) NONAPPLICABILITY OF CERTAIN REQUIRE-
MENTS.—Information or material that is subject to 
a privilege or confidentiality under any other para-
graph of this subsection shall not be subject to—
(A) disclosure under any Federal or State 
law governing the disclosure to the public of in-
formation held by an officer or an agency of the 
Federal Government or the respective State; or 
(B) subpoena or discovery, or admission 
into evidence, in any private civil action or ad-
ministrative process, 
unless with respect to any privilege held by the 
Board with respect to such information or material, 
the participant waives, in whole or in part, in the 
discretion of the participant, such privilege. 
(b) PREEMPTION OF STATE LAW.—Any State law, 
including any State open record law, relating to the disclo-
sure of confidential supervisory information or any infor-
mation or material described in subsection (a) that is in-
consistent with subsection (a) shall be superseded by the 
requirements of such provision to the extent State law pro-
vides less confidentiality or a weaker privilege. 
SEC. 315. LIABILITY PROVISIONS. 
(a) NO
LIABILITY
FOR
GOOD
FAITH
DISCLO-
SURES.—Any State official or agency, or employee thereof,
shall not be subject to any civil action or proceeding for 
monetary damages by reason of the good faith action or 
omission of any officer or employee, while acting within 
the scope of office or employment, relating to collecting, 
furnishing, or disseminating of information concerning 
persons who are mortgage brokers or are applying for li-
censing as mortgage brokers, whether directly or through 
the national database established under this subtitle. 
(b) CRIMINAL LIABILITY FOR INTENTIONAL UNLAW-
FUL DISCLOSURES.—
(1) IN GENERAL.—It shall be unlawful to will-
fully disclose to any person any information con-
cerning any person who is a mortgage broker or is 
applying for licensing as a mortgage broker knowing 
the disclosure to be in violation of any provision of 
this title—
(A) requiring the confidentiality of such in-
formation; or 
(B) establishing a privilege from disclosure 
for such information that has not been waived 
by the Board and the person who is a mortgage 
broker or is applying for licensing as a mort-
gage broker. 
(2) PENALTY.—Notwithstanding section 3571 
of title 18, United States Code, any person who vio-
lates paragraph (1) shall be fined an amount not to 
exceed the greater of $100,000 or the amount of the 
actual damages sustained by any person as a result 
of such violation, or imprisoned not more than 5 
years, or both. 
(c) FULL, CONTINUED PROTECTION UNDER THE SO-
CALLED ‘‘FEDERAL TORT CLAIMS ACT’’.—No provision 
of this Act shall be construed as reducing or limiting any 
protection provided for any Federal agency, or any officer 
or employee of any Federal agency, under section 2679 
of title 28, United States Code.
Æ