144 
dates or period of payments scheduled to repay 
the total of payments shall take into account the 
amount of any monthly payment to such account 
for each such repayment in accordance with sec-
tion 10(a)(2) of the Real Estate Settlement Pro-
cedures Act of 1974. 
‘‘(B) ASSESSMENT
VALUE.—The amount 
taken into account under subparagraph (A) for 
the payment of property taxes, hazard and flood 
(if any) insurance premiums, or other periodic 
payments or premiums with respect to the prop-
erty shall reflect the taxable assessed value of the 
real property securing the transaction after the 
consummation of the transaction, including the 
value of any improvements on the property or to 
be constructed on the property (whether or not 
such construction will be financed from the pro-
ceeds of the transaction), if known, and the re-
placement costs of the property for hazard insur-
ance, in the initial year after the transaction.’’. 
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145 
TITLE VI—APPRAISAL 
ACTIVITIES 
SEC. 601. PROPERTY APPRAISAL REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (v) (as 
added by section 303(f)) the following new subsection: 
‘‘(w) PROPERTY APPRAISAL REQUIREMENTS.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit in the form of a subprime mortgage to any con-
sumer without first obtaining a written appraisal of 
the property to be mortgaged prepared in accordance 
with the requirements of this subsection. 
‘‘(2) APPRAISAL REQUIREMENTS.— 
‘‘(A) PHYSICAL PROPERTY VISIT.—An ap-
praisal of property to be secured by a subprime 
mortgage does not meet the requirement of this 
subsection unless it is performed by a qualified 
appraiser who conducts a physical property visit 
of the interior of the mortgaged property. 
‘‘(B) SECOND APPRAISAL UNDER CERTAIN 
CIRCUMSTANCES.— 
‘‘(i) IN GENERAL.—If the purpose of a 
subprime mortgage is to finance the pur-
chase or acquisition of the mortgaged prop-
erty from a person within 180 days of the 
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146 
purchase or acquisition 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 second appraisal 
from a different qualified appraiser. 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. 
‘‘(ii) NO
COST
TO
APPLICANT.—The 
cost of any second appraisal required under 
clause (i) may not be charged to the appli-
cant. 
‘‘(C) QUALIFIED APPRAISER DEFINED.—For 
purposes of this subsection, the term ‘qualified 
appraiser’ means a person who— 
‘‘(i) is, at a minimum, certified or li-
censed by the State in which the property to 
be appraised is located; and 
‘‘(ii) performs each appraisal in con-
formity with the Uniform Standards of 
Professional Appraisal Practice and title XI 
of the Financial Institutions Reform, Recov-
ery, and Enforcement Act of 1989, and the 
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147 
regulations prescribed under such title, as 
in effect on the date of the appraisal. 
‘‘(3) FREE
COPY
OF
APPRAISAL.—A creditor 
shall provide 1 copy of each appraisal conducted in 
accordance with this subsection in connection with a 
subprime mortgage to the applicant without charge, 
and at least 3 days prior to the transaction closing 
date. 
‘‘(4) CONSUMER NOTIFICATION.—At the time of 
the initial mortgage application, the applicant shall 
be provided with a statement by the creditor that any 
appraisal prepared for the mortgage is for the sole use 
of the creditor, and that the applicant may choose to 
have a separate appraisal conducted at their own ex-
pense. 
‘‘(5) VIOLATIONS.—In addition to any other li-
ability to any person under this title, a creditor 
found to have willfully failed to obtain an appraisal 
as required in this subsection shall be liable to the ap-
plicant or borrower for the sum of $2,000. 
‘‘(6) SUBPRIME MORTGAGE DEFINED.—For pur-
poses of this subsection, the term ‘subprime mortgage’ 
means a residential mortgage loan with an annual 
percentage rate that exceeds the average prime offer 
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148 
rate for a comparable transaction, as of the date the 
interest rate is set— 
‘‘(A) by 1.5 or more percentage points for a 
first lien residential mortgage loan; and 
‘‘(B) 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 Lending 
Act (15 U.S.C. 1631 et seq.) is amended by inserting after 
section 129D (as added by section 501(a)) the following new 
section: 
‘‘SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 
RELATING TO CERTAIN CONSUMER CREDIT 
TRANSACTIONS. 
‘‘(a) IN GENERAL.—It shall be unlawful, in extending 
credit or in providing any services for a consumer credit 
transaction secured by the principal dwelling of the con-
sumer, to engage in any unfair or deceptive act or practice 
as described in or pursuant to regulations prescribed under 
this section. 
‘‘(b) APPRAISAL INDEPENDENCE.—For purposes of 
subsection (a), unfair and deceptive practices shall in-
clude— 
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149 
‘‘(1) any appraisal of a property offered as secu-
rity for repayment of the consumer credit transaction 
that is conducted in connection with such transaction 
in which a person with an interest in the underlying 
transaction compensates, coerces, extorts, colludes, in-
structs, induces, bribes, or intimidates a person con-
ducting or involved in an appraisal, or attempts, to 
compensate, coerce, extort, collude, instruct, induce, 
bribe, or intimidate such a person, for the purpose of 
causing the appraised value assigned, under the ap-
praisal, to the property to be based on any factor 
other than the independent judgment of the appraiser; 
‘‘(2) 
mischaracterizing, 
or 
suborning 
any 
mischaracterization of, the appraised value of the 
property securing the extension of the credit; 
‘‘(3) seeking to influence an appraiser or other-
wise to encourage a targeted value in order to facili-
tate the making or pricing of the transaction; and 
‘‘(4) withholding or threatening to withhold 
timely payment for an appraisal report or for ap-
praisal services rendered. 
‘‘(c) EXCEPTIONS.—The requirements of subsection (b) 
shall not be construed as prohibiting a mortgage lender, 
mortgage broker, mortgage banker, real estate broker, ap-
praisal management company, employee of an appraisal 
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151 
ards of Professional Appraisal Practice, is violating appli-
cable laws, or is otherwise engaging in unethical or unpro-
fessional 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 independence 
standards established in subsections (b) or (d) shall not ex-
tend credit based on such appraisal unless the creditor docu-
ments that the creditor has acted with reasonable diligence 
to determine that the appraisal does not materially 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 Corpora-
tion, the National Credit Union Administration Board, 
and the Federal Trade Commission— 
‘‘(1) shall, for purposes of this section, jointly 
prescribe regulations no later than 180 days after the 
date of the enactment of this section, and where such 
regulations have an effective date of no later than 1 
year after the date of the enactment of this section, 
defining with specificity acts or practices which are 
unfair or deceptive in the provision of mortgage lend-
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152 
ing 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 trans-
action secured by the principal dwelling of the con-
sumer and mortgage brokerage services for such a 
transaction, within the meaning of subsections (a), 
(b), (c), (d), (e), and (f). 
‘‘(h) PENALTIES.— 
‘‘(1) FIRST VIOLATION.—In addition to the en-
forcement provisions referred to in section 130, each 
person who violates this section shall forfeit and pay 
a civil penalty of not more than $10,000 for each day 
any such violation continues. 
‘‘(2) SUBSEQUENT VIOLATIONS.—In the case of 
any person on whom a civil penalty has been imposed 
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 
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153 
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 insert-
ing 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 cred-
it transactions.’’. 
SEC. 603. AMENDMENTS RELATING TO APPRAISAL SUB-
COMMITTEE OF FIEC, APPRAISER INDEPEND-
ENCE, 
AND 
APPROVED 
APPRAISER 
EDU-
CATION. 
(a) CONSUMER PROTECTION MISSION.— 
(1) PURPOSES.—Section 1101 of the Financial 
Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3331) is amended by inserting 
‘‘and to provide the Appraisal Subcommittee with a 
consumer protection mandate’’ before the period at the 
end. 
(2) FUNCTIONS OF APPRAISAL SUBCOMMITTEE.— 
Section 1103(a) of the Financial Institutions 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); 
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154 
(B) by striking the period at the end of 
paragraph (4) and inserting ‘‘;’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(5) monitor the efforts of, and requirements es-
tablished by, States and the Federal financial institu-
tions regulatory agencies to protect consumers from 
improper appraisal practices and the predations of 
unlicensed appraisers in consumer credit transactions 
that are secured by a consumer’s principal dwelling; 
and’’. 
(3) THRESHOLD LEVELS.—Section 1112(b) of the 
Financial Institutions Reform, Recovery, and En-
forcement Act of 1989 (12 U.S.C. 3341(b)) is amended 
by inserting before the period the following: ‘‘, and 
that such threshold level provides reasonable protec-
tion for consumers who purchase 1–4 unit single-fam-
ily residences. In determining whether a threshold 
level provides reasonable protection for consumers, 
each Federal financial institutions regulatory agency 
shall consult with consumer groups and convene a 
public hearing’’. 
(b) 
ANNUAL
REPORT
OF
APPRAISAL
SUB-
COMMITTEE.— 
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155 
(1) IN GENERAL.—Section 1103(a) of the Finan-
cial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3332(a)) is amended at the 
end by inserting the following new paragraph: 
‘‘(6) transmit an annual report to the Congress 
not later than January 31 of each year that describes 
the manner in which each function assigned to the 
Appraisal Subcommittee has been carried out during 
the preceding year. The report shall also detail the ac-
tivities of the Appraisal Subcommittee, including the 
results of all audits of State appraiser regulatory 
agencies, and provide an accounting of disapproved 
actions and warnings taken in the previous year, in-
cluding a description of the conditions causing the 
disapproval and actions taken to achieve compli-
ance.’’. 
(c) OPEN MEETINGS.—Section 1104(b) of the Finan-
cial Institutions Reform, Recovery, and Enforcement Act 
of 1989 (12 U.S.C. 3333(b)) is amended by inserting ‘‘in 
public session after notice in the Federal Register’’ after 
‘‘shall meet’’. 
(d) REGULATIONS.—Section 1106 of the Financial In-
stitutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3335) is amended— 
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