105
Committee on Banking, Housing, and Urban Affairs 
of the Senate. 
(b) MORTGAGE SERVICING IMPROVEMENTS.—
(1) STUDY.—The Secretary of Housing and 
Urban Development, in consultation with the Board 
of Governors of the Federal Reserve System and the 
Federal Trade Commission, shall conduct a com-
prehensive study on means to improve the best prac-
tices of the mortgage servicing industry, and Federal 
and State laws governing such industry. 
(2) REPORT.—Before the end of the 24-month 
period beginning on the date of the enactment of 
this Act, the Secretary of Housing and Urban Devel-
opment shall submit a report on the study conducted 
under this subsection to the Committee on Financial 
Services 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 as the Sec-
retary, in consultation with the Board and the Com-
mission, may determine to be appropriate.
106
TITLE IV—APPRAISAL 
ACTIVITIES 
SEC. 401. PROPERTY APPRAISAL REQUIREMENTS. 
Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by inserting after subsection (y) (as 
added by section 201 of this Act) the following new sub-
section: 
‘‘(z) PROPERTY APPRAISAL REQUIREMENTS.—
‘‘(1) IN GENERAL.—A creditor may not extend 
credit in the form of a higher-cost mortgage to any 
consumer without first obtaining a written appraisal 
of the property to be mortgaged prepared in accord-
ance with the requirements of this subsection. 
‘‘(2) APPRAISAL REQUIREMENTS.—
‘‘(A) 
PHYSICAL
INSPECTION.—An 
ap-
praisal of property to be secured by a higher-
cost mortgage does not meet the requirement of 
this subsection unless it is performed by a 
qualified appraiser who conducts a physical in-
spection of the mortgaged property. 
‘‘(B) SECOND APPRAISAL UNDER CERTAIN 
CIRCUMSTANCES.—
‘‘(i) IN GENERAL.—If the purpose of 
the higher-cost mortgage is to finance the 
purchase or acquisition of the mortgaged
107
property from a person within 180 days of 
the purchase or acquisition of such prop-
erty 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 second qualified appraiser 
that supports the current sale price of the 
property. 
‘‘(ii) NO COST TO CONSUMER.—The 
cost of any second appraisal required 
under clause (i) may not be charged to the 
consumer. 
‘‘(C) QUALIFIED
APPRAISER
DEFINED.—
For purposes of this subsection, the term 
‘qualified appraiser’ means a person who—
‘‘(i) is certified or licensed by the 
State in which 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, 
Recovery, and Enforcement Act of 1989, 
and the regulations prescribed under such
108
title, as in effect on the date of the ap-
praisal. 
‘‘(3) FREE
COPY
OF
APPRAISAL.—A creditor 
shall provide 1 copy of each appraisal conducted in 
accordance with this subsection in connection with a 
higher-cost mortgage to the consumer without 
charge. 
‘‘(4) 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 
consumer for the sum of $2,000.’’. 
SEC. 402. AMENDMENTS RELATING TO APPRAISAL SUB-
COMMITTEE OF FIEC, APPRAISER INDEPEND-
ENCE, 
AND 
APPROVED 
APPRAISER 
EDU-
CATION. 
(a) 
ANNUAL
REPORT
OF
APPRAISAL
SUB-
COMMITTEE.—Section 1103(a)(4) of Financial Institu-
tions Reform, Recovery, and Enforcement Act of 1989 (12 
U.S.C. 3332(a)(4)) is amended by inserting ‘‘in detail the 
activities of the Appraisal Subcommittee and’’ after 
‘‘which describes’’. 
(b) OPEN MEETINGS.—Section 1104(b) of the Fi-
nancial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3333(b)) is amended by inserting
109
‘‘in public session after notice to the general public’’ after 
‘‘shall meet’’. 
(c) REGULATIONS.—Section 1106 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3335) is amended by inserting ‘‘prescribe 
regulations after notice and opportunity for comment,’’ 
after ‘‘hold hearings’’. 
(d) CRITERIA.—Section 1116 of the Financial Insti-
tutions 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 Appraiser Qualifications Board of The Ap-
praiser Foundation for the licensing of real estate 
appraisers’’ before the period at the end; and 
(2) by striking subsection (e). 
(e) TEMPORARY PRACTICE.—Section 1122(a)(1) of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3351(a)(1)) is amended—
(1) by striking subparagraph (A); 
(2) by redesignating subparagraphs (B) and 
(C) as subparagraphs (A) and (B), respectively; and 
(3) by moving the left margin of such subpara-
graphs 2 ems to the right.
110
(f) 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: 
‘‘(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 the requirements for certification and 
licensing as established by the Appraiser Qualifica-
tions Board of The Appraisal Foundation.’’. 
(g) 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 adding at the end the 
following new sentence: ‘‘Consideration may be given for 
professional appraisal designations conferred by spon-
soring organizations of The Appraisal Foundation as an 
indication of proficiency in addition to the criteria estab-
lished by certification or licensing.’’.
111
(h) APPRAISER INDEPENDENCE.—Section 1122 of 
the Financial Institutions Reform, Recovery, and Enforce-
ment Act of 1989 (12 U.S.C. 3351) is amended by adding 
at the end the following new subsection: 
‘‘(g) APPRAISER INDEPENDENCE.—
‘‘(1) IN GENERAL.—No mortgage lender, mort-
gage broker or mortgage banker, real estate broker, 
nor any other person with an interest in a real es-
tate transaction involving an appraisal shall improp-
erly influence or attempt to improperly influence, 
through coercion, extortion, or bribery, the develop-
ment, reporting, result, or review of a real estate ap-
praisal sought in connection with a mortgage loan. 
‘‘(2) EXCEPTIONS.—The requirements of para-
graph (1) shall not be construed as prohibiting a 
mortgage lender, mortgage broker, mortgage banker, 
real estate broker, or any other person with an inter-
est in a real estate transaction from asking an ap-
praiser to provide 1 or more of the following serv-
ices: 
‘‘(A) 
Consider 
additional, 
appropriate 
property information. 
‘‘(B) Provide further detail, substantiation, 
or explanation for the appraiser’s value conclu-
sion.
112
‘‘(C) Correct errors in the appraisal re-
port.’’. 
(i) APPRAISER EDUCATION.—Section 1122 of the Fi-
nancial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3351) is amended by inserting 
after subsection (g) (as added by subsection (h) of this 
section) the following new subsection: 
‘‘(h) APPROVED EDUCATION.—A State certifying or 
licensing agency shall accept courses and seminars ap-
proved by the Appraiser Qualification Board’s Course Ap-
proval Program.’’. 
SEC. 403. 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 Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989. 
(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-
113
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. 
TITLE V—REQUIREMENTS FOR 
MORTGAGE BROKERS 
Subtitle A—Licensing and 
Minimum Standards 
SEC. 501. 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 State 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 the issuance 
of a license, that an applicant submit a written 
application for a license;
114
(C) require, as a condition of the issuance 
of a license, that an applicant complete at least 
24 hours of education on primary and subordi-
nate mortgage financing and pass a written ex-
amination upon the completion of such training; 
(D) require a criminal background check 
to be performed on the applicant; 
(E) establish minimum testing standards 
for mortgage brokers; 
(F) require continuing education of mort-
gage brokers, including at least 12 hours of 
education on a biennial basis, a minimum of 2 
hours of which shall address ethics education; 
(G) require the public agency or official in 
the State that is responsible for the licensing of 
mortgage brokers to provide, directly or other-
wise to the national mortgage database estab-
lished under subtitle B, such information as 
may be necessary to ensure that such database 
is effective for the purposes for which it is es-
tablished; and 
(H) comply with such standards regarding 
uniformity of information submitted to the na-
tional database of mortgage brokers established 
under subtitle B as the Secretary of Housing
115
and Urban Development considers necessary to 
facilitate the operation of the database. 
(2) EXEMPTIONS.—For purposes of this sub-
section, the term ‘‘mortgage broker’’ has the mean-
ing provided in section 503(3), except that the laws 
and regulations of a State shall exempt from treat-
ment as mortgage brokers the following persons: 
(A) Any bank, savings bank, savings and 
loan association, or credit union organized 
under the laws of a State or the United States, 
or a subsidiary or affiliate of a bank, savings 
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.
116
(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, services, buys, or sells 
mortgage 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 
or servicer; 
(III) has been approved by the Fed-
eral Home Loan Mortgage Corporation as 
a seller or 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-
117
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. 
(H) Any officer or employee of any of the 
persons described in a preceding subparagraph 
of this paragraph while such officer or employee 
is acting within the the scope of the office or 
employment. 
(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 Federal banking agencies (as defined in
118
section 3 of the Federal Deposit Insurance Act) and 
the National Credit Union Administration, 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
119
referred to in subsection (a) for purposes of making deter-
minations under subsection (d). 
SEC. 502. 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 Federal banking agencies (as defined 
in section 3 of the Federal Deposit Insurance Act) and 
the National Credit Union Administration, establish Fed-
eral mortgage broker requirements under this section that 
meet the requirements established in section 501(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. 503. 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.
120
(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.—The term ‘‘mortgage 
broker’’ means a person who engages for compensa-
tion, either directly or indirectly, in the acceptance 
of applications for mortgage loans for others, solici-
tation of mortgage loans on behalf of borrowers, or 
negotiation of terms or conditions of loans on behalf 
of borrowers or lenders. 
(4) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
Subtitle B—Database of Licensed 
Mortgage Brokers 
SEC. 511. ESTABLISHMENT. 
(a) IN GENERAL.—The Secretary of Housing and 
Urban Development (hereafter in this subtitle referred to 
as the ‘‘Secretary’’) shall provide for the establishment 
and maintenance of a national database of mortgage bro-
kers. 
(b) ADMINISTRATION.—The Secretary shall either 
maintain and administrate the database established under 
this subtitle or enter into a contract with a private regu-
latory organization to maintain and administrate the data-
base. The Secretary shall consult with the American Asso-
121
ciation of Residential Mortgage Regulators, the Con-
ference of State Bank Supervisors, and other appropriate 
organizations in determining the information to be main-
tained in the database and, if the Secretary provides for 
any other organization to maintain and administrate the 
database, in selecting such organization. 
(c) COMPETITIVELY PROCURED CONTRACT.—If the 
Secretary decides to select a private regulatory organiza-
tion to maintain and administrate the database, the Sec-
retary 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 Procure-
ment Policy Act). 
(d) PERFORMANCE REVIEW.—The Secretary—
(1) shall periodically review the performance of 
any organization 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.
122
SEC. 512. 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 502 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 501(b) such information regarding mortgage 
brokers as the Secretary, by regulation, considers 
appropriate 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 histories 
and criminal backgrounds of mortgage brokers; 
(4) make available to persons employing or 
using the services of mortgage brokers such informa-
tion regarding mortgage brokers as the Secretary, by 
regulation, considers appropriate; and
123
(5) provide for the maintenance of such other 
information as the Secretary considers appropriate. 
SEC. 513. FEES. 
The Secretary 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 to the extent such fees are not charged 
to the general public. 
SEC. 514. 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 
Secretary or any other organization serving as the 
administrator of the database, and any privilege 
arising 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 informa-
tion 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—
124
(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 Sec-
retary 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. 515. 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,
125
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 Secretary and the person who is a mort-
gage broker or is applying for licensing as a 
mortgage 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
126
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