IB 
Union Calendar No. 272 
110TH CONGRESS 
1ST SESSION H. R. 3915 
[Report No. 110–441] 
To amend the Truth in Lending Act to reform consumer mortgage practices 
and provide accountability for such practices, to establish licensing and 
registration requirements for residential mortgage originators, to provide 
certain minimum standards for consumer mortgage loans, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 22, 2007 
Mr. MILLER of North Carolina (for himself, Mr. WATT, Mr. FRANK of Massa-
chusetts, Ms. WATERS, Mrs. MALONEY of New York, Mr. GUTIERREZ, 
Ms. CARSON, Mr. MEEKS of New York, Mr. CAPUANO, Mr. CLAY, Mr. 
AL GREEN of Texas, Mr. CLEAVER, Ms. BEAN, Ms. MOORE of Wisconsin, 
Mr. HODES, Mr. ELLISON, and Mr. MURPHY of Connecticut) introduced 
the following bill; which was referred to the Committee on Financial Serv-
ices 
NOVEMBER 9, 2007 
Additional sponsors: Ms. KAPTUR, Ms. SUTTON, Mr. WYNN, Mrs. JONES of 
Ohio, Mr. COHEN, Mr. LATOURETTE, Ms. GIFFORDS, Mr. BACA, Mr. 
CUMMINGS, Mr. SCOTT of Georgia, and Ms. CLARKE 
NOVEMBER 9, 2007 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
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[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on October 22, 2007] 
A BILL 
To amend the Truth in Lending Act to reform consumer 
mortgage practices and provide accountability for such 
practices, to establish licensing and registration require-
ments for residential mortgage originators, to provide 
certain minimum standards for consumer mortgage 
loans, 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 
‘‘Mortgage Reform and Anti-Predatory Lending Act of 
2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—RESIDENTIAL MORTGAGE LOAN ORIGINATION 
Subtitle A—Licensing System for Residential Mortgage Loan Originators 
Sec. 101. Purposes and methods for establishing a mortgage licensing system and 
registry. 
Sec. 102. Definitions. 
Sec. 103. License or registration required. 
Sec. 104. State license and registration application and issuance. 
Sec. 105. Standards for State license renewal. 
Sec. 106. System of registration administration by Federal banking agencies. 
Sec. 107. Secretary of Housing and Urban Development backup authority to es-
tablish a loan originator licensing system. 
Sec. 108. Backup authority to establish a nationwide mortgage licensing and reg-
istry system. 
Sec. 109. Fees. 
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Sec. 110. Background checks of loan originators. 
Sec. 111. Confidentiality of information. 
Sec. 112. Liability provisions. 
Sec. 113. Enforcement under HUD backup licensing system. 
Subtitle B—Residential Mortgage Loan Origination Standards 
Sec. 121. Definitions. 
Sec. 122. Residential mortgage loan origination. 
Sec. 123. Anti-steering. 
Sec. 124. Liability. 
Sec. 125. Regulations. 
TITLE II—MINIMUM STANDARDS FOR MORTGAGES 
Sec. 201. Ability to repay. 
Sec. 202. Net tangible benefit for refinancing of residential mortgage loans. 
Sec. 203. Safe harbor and rebuttable presumption. 
Sec. 204. Liability. 
Sec. 205. Defense to foreclosure. 
Sec. 206. Additional standards and requirements. 
Sec. 207. Rule of construction. 
Sec. 208. Effect on State laws. 
Sec. 209. Regulations. 
Sec. 210. Amendments to civil liability provisions. 
Sec. 211. Required disclosures. 
Sec. 212. Authorization of appropriations. 
Sec. 213. Effective date. 
TITLE III—HIGH-COST MORTGAGES 
Sec. 301. Definitions relating to high-cost mortgages. 
Sec. 302. Amendments to existing requirements for certain mortgages. 
Sec. 303. Additional requirements for certain mortgages. 
Sec. 304. Amendment to provision governing correction of errors. 
Sec. 305. Regulations. 
Sec. 306. Effective date. 
TITLE IV—OFFICE OF HOUSING COUNSELING 
Sec. 401. Short title. 
Sec. 402. Establishment of Office of Housing Counseling. 
Sec. 403. Counseling procedures. 
Sec. 404. Grants for housing counseling assistance. 
Sec. 405. Requirements to use HUD-certified counselors under HUD programs. 
Sec. 406. Study of defaults and foreclosures. 
Sec. 407. Definitions for counseling-related programs. 
Sec. 408. Updating and simplification of mortgage information booklet. 
TITLE V—MORTGAGE DISCLOSURES UNDER REAL ESTATE 
SETTLEMENT PROCEDURES ACT OF 1974 
Sec. 501. Universal mortgage disclosure in good faith estimate of settlement serv-
ices costs. 
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TITLE I—RESIDENTIAL 
MORTGAGE LOAN ORIGINATION 
Subtitle A—Licensing System for 
Residential 
Mortgage 
Loan 
Originators 
SEC. 101. PURPOSES AND METHODS FOR ESTABLISHING A 
MORTGAGE LICENSING SYSTEM AND REG-
ISTRY. 
In order to increase uniformity, reduce regulatory bur-
den, enhance consumer protection, and reduce fraud, the 
States, through the Conference of State Bank Supervisors 
and the American Association of Residential Mortgage Reg-
ulators, are hereby encouraged to establish a Nationwide 
Mortgage Licensing System and Registry for the residential 
mortgage industry that accomplishes all of the following ob-
jectives: 
(1) Provides uniform license applications and re-
porting requirements for State-licensed loan origina-
tors. 
(2) Provides a comprehensive licensing and su-
pervisory database. 
(3) Aggregates and improves the flow of informa-
tion to and between regulators. 
(4) Provides increased accountability and track-
ing of loan originators. 
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(5) Streamlines the licensing process and reduces 
the regulatory burden. 
(6) Enhances consumer protections and supports 
anti-fraud measures. 
(7) Provides consumers with easily accessible in-
formation regarding the employment history of, and 
publicly adjudicated disciplinary and enforcement ac-
tions against, loan originators. 
SEC. 102. DEFINITIONS. 
For purposes of this subtitle, the following definitions 
shall apply: 
(1) FEDERAL
BANKING
AGENCIES.—The term 
‘‘Federal banking agencies’’ means the Board of Gov-
ernors of the Federal Reserve System, the Comptroller 
of the Currency, the Director of the Office of Thrift 
Supervision, the National Credit Union Administra-
tion, and the Federal Deposit Insurance Corporation. 
(2) DEPOSITORY INSTITUTION.—The term ‘‘de-
pository institution’’ has the same meaning as in sec-
tion 3 of the Federal Deposit Insurance Act and in-
cludes any credit union. 
(3) LOAN ORIGINATOR.— 
(A) IN GENERAL.—The term ‘‘loan origi-
nator’’— 
(i) means an individual who— 
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(I) takes a residential mortgage 
loan application; 
(II) assists a consumer in obtain-
ing or applying to obtain a residential 
mortgage loan; or 
(III) offers or negotiates terms of 
a residential mortgage loan, for direct 
or indirect compensation or gain, or in 
the expectation of direct or indirect 
compensation or gain; 
(ii) includes any individual who rep-
resents to the public, through advertising or 
other means of communicating or providing 
information (including the use of business 
cards, stationery, brochures, signs, rate lists, 
or other promotional items), that such indi-
vidual can or will provide or perform any 
of the activities described in clause (i); 
(iii) does not include any individual 
who performs purely administrative or cler-
ical tasks and is not otherwise described in 
this subparagraph; and 
(iv) does not include a person or entity 
that only performs real estate brokerage ac-
tivities and is licensed or registered in ac-
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cordance with applicable State law, unless 
the person or entity is compensated by a 
lender, a mortgage broker, or other loan 
originator or by any agent of such lender, 
mortgage broker, or other loan originator. 
(B) OTHER
DEFINITIONS
RELATING
TO 
LOAN ORIGINATOR.—For purposes of this sub-
section, an individual ‘‘assists a consumer in ob-
taining or applying to obtain a residential mort-
gage loan’’ by, among other things, advising on 
loan terms (including rates, fees, other costs), 
preparing loan packages, or collecting informa-
tion on behalf of the consumer with regard to a 
residential mortgage loan. 
(C) 
ADMINISTRATIVE
OR
CLERICAL 
TASKS.—The term ‘‘administrative or clerical 
tasks’’ means the receipt, collection, and distribu-
tion of information common for the processing or 
underwriting of a loan in the mortgage industry 
and communication with a consumer to obtain 
information necessary for the processing or un-
derwriting of a residential mortgage loan. 
(D) REAL
ESTATE
BROKERAGE
ACTIVITY 
DEFINED.—The term ‘‘real estate brokerage ac-
tivity’’ means any activity that involves offering 
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or providing real estate brokerage services to the 
public, including— 
(i) acting as a real estate agent or real 
estate broker for a buyer, seller, lessor, or 
lessee of real property; 
(ii) listing or advertising real property 
for sale, purchase, lease, rental, or exchange; 
(iii) providing advice in connection 
with sale, purchase, lease, rental, or ex-
change of real property; 
(iv) bringing together parties interested 
in the sale, purchase, lease, rental, or ex-
change of real property; 
(v) negotiating, on behalf of any party, 
any portion of a contract relating to the 
sale, purchase, lease, rental, or exchange of 
real property (other than in connection 
with providing financing with respect to 
any such transaction); 
(vi) engaging in any activity for which 
a person engaged in the activity is required 
to be registered or licensed as a real estate 
agent or real estate broker under any appli-
cable law; and 
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(vii) offering to engage in any activity, 
or act in any capacity, described in clause 
(i), (ii), (iii), (iv), (v), or (vi). 
(4) LOAN PROCESSOR OR UNDERWRITER.— 
(A) IN GENERAL.—The term ‘‘loan processor 
or underwriter’’ means an individual who per-
forms clerical or support duties at the direction 
of and subject to the supervision and instruction 
of— 
(i) a State-licensed loan originator; or 
(ii) a registered loan originator. 
(B) CLERICAL OR SUPPORT DUTIES.—For 
purposes of subparagraph (A), the term ‘‘clerical 
or support duties’’ may include— 
(i) the receipt, collection, distribution, 
and analysis of information common for the 
processing or underwriting of a residential 
mortgage loan; and 
(ii) communicating with a consumer to 
obtain the information necessary for the 
processing or underwriting of a loan, to the 
extent that such communication does not in-
clude offering or negotiating loan rates or 
terms, or counseling consumers about resi-
dential mortgage loan rates or terms. 
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(5) NATIONWIDE MORTGAGE LICENSING SYSTEM 
AND REGISTRY.—The term ‘‘Nationwide Mortgage Li-
censing System and Registry’’ means a mortgage li-
censing system developed and maintained by the Con-
ference of State Bank Supervisors and the American 
Association of Residential Mortgage Regulators for the 
State licensing and registration of State-licensed loan 
originators and the registration of registered loan 
originators or any system established by the Secretary 
under section 108. 
(6) REGISTERED LOAN ORIGINATOR.—The term 
‘‘registered loan originator’’ means any individual 
who— 
(A) meets the definition of loan originator 
and is an employee of a depository institution or 
a subsidiary of a depository institution; and 
(B) is registered with, and maintains a 
unique identifier through, the Nationwide Mort-
gage Licensing System and Registry. 
(7) RESIDENTIAL MORTGAGE LOAN.—The term 
‘‘residential mortgage loan’’ means any loan pri-
marily for personal, family, or household use that is 
secured by a mortgage, deed of trust, or other equiva-
lent consensual security interest on a dwelling (as de-
fined in section 103(v) of the Truth in Lending Act) 
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or residential real estate upon which is constructed or 
intended to be constructed a dwelling (as so defined). 
(8) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(9) STATE-LICENSED
LOAN
ORIGINATOR.—The 
term ‘‘State-licensed loan originator’’ means any in-
dividual who— 
(A) is a loan originator; 
(B) is not an employee of a depository in-
stitution or any subsidiary of a depository insti-
tution; and 
(C) is licensed by a State or by the Sec-
retary under section 107 and registered as a loan 
originator with, and maintains a unique identi-
fier through, the Nationwide Mortgage Licensing 
System and Registry. 
(10) UNIQUE
IDENTIFIER.—The term ‘‘unique 
identifier’’ means a number or other identifier that— 
(A) permanently identifies a loan origi-
nator; and 
(B) is assigned by protocols established by 
the Nationwide Mortgage Licensing System and 
Registry and the Federal banking agencies to fa-
cilitate electronic tracking of loan originators 
and uniform identification of, and public access 
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to, the employment history of and the publicly 
adjudicated disciplinary and enforcement actions 
against loan originators. 
SEC. 103. LICENSE OR REGISTRATION REQUIRED. 
(a) IN GENERAL.—An individual may not engage in 
the business of a loan originator without first— 
(1) obtaining and maintaining— 
(A) a registration as a registered loan origi-
nator; or 
(B) a license and registration as a State-li-
censed loan originator; and 
(2) obtaining a unique identifier. 
(b) LOAN PROCESSORS AND UNDERWRITERS.— 
(1) SUPERVISED LOAN PROCESSORS AND UNDER-
WRITERS.—A loan processor or underwriter who does 
not represent to the public, through advertising or 
other means of communicating or providing informa-
tion (including the use of business cards, stationery, 
brochures, signs, rate lists, or other promotional 
items), that such individual can or will perform any 
of the activities of a loan originator shall not be re-
quired to be a State-licensed loan originator or a reg-
istered loan originator. 
(2) INDEPENDENT CONTRACTORS.—A loan proc-
essor or underwriter may not work as an independent 
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contractor unless such processor or underwriter is a 
State-licensed loan originator or a registered loan 
originator. 
SEC. 104. STATE LICENSE AND REGISTRATION APPLICA-
TION AND ISSUANCE. 
(a) BACKGROUND CHECKS.—In connection with an 
application to any State for licensing and registration as 
a State-licensed loan originator, the applicant shall, at a 
minimum, furnish to the Nationwide Mortgage Licensing 
System and Registry information concerning the appli-
cant’s identity, including— 
(1) fingerprints for submission to the Federal 
Bureau of Investigation, and any governmental agen-
cy or entity authorized to receive such information for 
a State and national criminal history background 
check; and 
(2) personal history and experience, including 
authorization for the System to obtain— 
(A) an independent credit report obtained 
from a consumer reporting agency described in 
section 603(p) of the Fair Credit Reporting Act; 
and 
(B) information related to any administra-
tive, civil or criminal findings by any govern-
mental jurisdiction. 
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(b) ISSUANCE OF LICENSE.—The minimum standards 
for licensing and registration as a State-licensed loan origi-
nator shall include the following: 
(1) The applicant has not had a loan originator 
or similar license revoked in any governmental juris-
diction during the 5-year period immediately pre-
ceding the filing of the present application. 
(2) The applicant has not been convicted, pled 
guilty or nolo contendere in a domestic, foreign, or 
military court of a felony during the 7-year period 
immediately preceding the filing of the present appli-
cation. 
(3) The applicant has demonstrated financial re-
sponsibility, character, and general fitness such as to 
command the confidence of the community and to 
warrant a determination that the loan originator will 
operate honestly, fairly, and efficiently within the 
purposes of this subtitle. 
(4) The applicant has completed the pre-licens-
ing education requirement described in subsection (c). 
(5) The applicant has passed a written test that 
meets the test requirement described in subsection (d). 
(c) PRE-LICENSING EDUCATION OF LOAN ORIGINA-
TORS.— 
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(1) MINIMUM EDUCATIONAL REQUIREMENTS.—In 
order to meet the pre-licensing education requirement 
referred to in subsection (b)(4), a person shall com-
plete at least 20 hours of education approved in ac-
cordance with paragraph (2), which shall include at 
least 3 hours of Federal law and regulations and 3 
hours of ethics. 
(2) APPROVED
EDUCATIONAL
COURSES.—For 
purposes of paragraph (1), pre-licensing education 
courses shall be reviewed, approved and published by 
the Nationwide Mortgage Licensing System and Reg-
istry. 
(d) TESTING OF LOAN ORIGINATORS.— 
(1) IN GENERAL.—In order to meet the written 
test requirement referred to in subsection (b)(5), an 
individual shall pass, in accordance with the stand-
ards established under this subsection, a qualified 
written test developed and administered by the Na-
tionwide Mortgage Licensing System and Registry. 
(2) QUALIFIED TEST.—A written test shall not 
be treated as a qualified written test for purposes of 
paragraph (1) unless— 
(A) the test consists of a minimum of 100 
questions; and 
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(B) the test adequately measures the appli-
cant’s knowledge and comprehension in appro-
priate subject areas, including— 
(i) ethics; 
(ii) Federal law and regulation per-
taining to mortgage origination; and 
(iii) State law and regulation per-
taining to mortgage origination. 
(3) MINIMUM COMPETENCE.— 
(A) PASSING SCORE.—An individual shall 
not be considered to have passed a qualified 
written test unless the individual achieves a test 
score of not less than 75 percent correct answers 
to questions. 
(B) INITIAL RETESTS.—An individual may 
retake a test 3 consecutive times with each con-
secutive taking occurring in less than 14 days 
after the preceding test. 
(C) SUBSEQUENT RETESTS.—After 3 con-
secutive tests, an individual shall wait at least 
14 days before taking the test again. 
(D) RETEST AFTER LAPSE OF LICENSE.—A 
State-licensed loan originator who fails to main-
tain a valid license for a period of 5 years or 
longer shall retake the test, not taking into ac-
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count any time during which such individual is 
a registered loan originator. 
SEC. 105. STANDARDS FOR STATE LICENSE RENEWAL. 
(a) IN GENERAL.—The minimum standards for license 
renewal for State-licensed loan originators shall include the 
following: 
(1) The loan originator continues to meet the 
minimum standards for license issuance. 
(2) The loan originator has satisfied the annual 
continuing education requirements described in sub-
section (b). 
(b) CONTINUING EDUCATION
FOR STATE-LICENSED 
LOAN ORIGINATORS.— 
(1) IN GENERAL.—In order to meet the annual 
continuing education requirements referred to in sub-
section (a)(2), a State-licensed loan originator shall 
complete at least 8 hours of education approved in ac-
cordance with paragraph (2), which shall include at 
least 3 hours of Federal law and regulations and 2 
hours of ethics. 
(2) APPROVED
EDUCATIONAL
COURSES.—For 
purposes of paragraph (1), continuing education 
courses shall be reviewed, approved, and published by 
the Nationwide Mortgage Licensing System and Reg-
istry. 
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(3) CALCULATION
OF
CONTINUING
EDUCATION 
CREDITS.—A State-licensed loan originator— 
(A) may only receive credit for a continuing 
education course in the year in which the course 
is taken; and 
(B) may not take the same approved course 
in the same or successive years to meet the an-
nual requirements for continuing education. 
(4) INSTRUCTOR CREDIT.—A State-licensed loan 
originator who is approved as an instructor of an ap-
proved continuing education course may receive credit 
for the originator’s own annual continuing education 
requirement at the rate of 2 hours credit for every 1 
hour taught. 
SEC. 106. SYSTEM OF REGISTRATION ADMINISTRATION BY 
FEDERAL BANKING AGENCIES. 
(a) DEVELOPMENT.— 
(1) IN GENERAL.—The Federal banking agencies 
shall jointly develop and maintain a system for reg-
istering employees of depository institutions or sub-
sidiaries of depository institutions as registered loan 
originators with the Nationwide Mortgage Licensing 
System and Registry. The system shall be imple-
mented before the end of the 1-year period beginning 
on the date of the enactment of this Act. 
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(2) REGISTRATION REQUIREMENTS.—In connec-
tion with the registration of any loan originator who 
is an employee of a depository institution or a sub-
sidiary of a depository institution with the Nation-
wide Mortgage Licensing System and Registry, the 
appropriate Federal banking agency shall, at a min-
imum, furnish or cause to be furnished to the Nation-
wide Mortgage Licensing System and Registry infor-
mation concerning the employees’s identity, includ-
ing— 
(A) fingerprints for submission to the Fed-
eral Bureau of Investigation, and any govern-
mental agency or entity authorized to receive 
such information for a State and national crimi-
nal history background check; and 
(B) personal history and experience, includ-
ing— 
(i) an independent credit report ob-
tained from a consumer reporting agency 
described in section 603(p) of the Fair 
Credit Reporting Act; and 
(ii) information related to any admin-
istrative, civil or criminal findings by any 
governmental jurisdiction. 
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(b) UNIQUE IDENTIFIER.—The Federal banking agen-
cies, through the Financial Institutions Examination 
Council, shall coordinate with the Nationwide Mortgage Li-
censing System and Registry to establish protocols for as-
signing a unique identifier to each registered loan origi-
nator that will facilitate electronic tracking and uniform 
identification of, and public access to, the employment his-
tory of and publicly adjudicated disciplinary and enforce-
ment actions against loan originators. 
(c) CONSIDERATION OF FACTORS AND PROCEDURES.— 
In establishing the registration procedures under subsection 
(a) and the protocols for assigning a unique identifier to 
a registered loan originator, the Federal banking agencies 
shall make such de minimis exceptions as may be appro-
priate to paragraphs (1)(A) and (2) of section 103(a), shall 
make reasonable efforts to utilize existing information to 
minimize the burden of registering loan originators, and 
shall consider methods for automating the process to the 
greatest extent practicable consistent with the purposes of 
this subtitle. 
SEC. 107. SECRETARY OF HOUSING AND URBAN DEVELOP-
MENT BACKUP AUTHORITY TO ESTABLISH A 
LOAN ORIGINATOR LICENSING SYSTEM. 
(a) BACK UP LICENSING SYSTEM.—If, by the end of 
the 1-year period, or the 2-year period in the case of a State 
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whose legislature meets only biennially, beginning on the 
date of the enactment of this Act or at any time thereafter, 
the Secretary determines that a State does not have in place 
by law or regulation a system for licensing and registering 
loan originators that meets the requirements of sections 104 
and 105 and subsection (d) or does not participate in the 
Nationwide Mortgage Licensing System and Registry, the 
Secretary shall provide for the establishment and mainte-
nance of a system for the licensing and registration by the 
Secretary of loan originators operating in such State as 
State-licensed loan originators. 
(b) LICENSING AND REGISTRATION REQUIREMENTS.— 
The system established by the Secretary under subsection 
(a) for any State shall meet the requirements of sections 
104 and 105 for State-licensed loan originators. 
(c) UNIQUE IDENTIFIER.—The Secretary shall coordi-
nate with the Nationwide Mortgage Licensing System and 
Registry to establish protocols for assigning a unique iden-
tifier to each loan originator licensed by the Secretary as 
a State-licensed loan originator that will facilitate elec-
tronic tracking and uniform identification of, and public 
access to, the employment history of and the publicly adju-
dicated disciplinary and enforcement actions against loan 
originators. 
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(d) STATE LICENSING LAW REQUIREMENTS.—For 
purposes of this section, the law in effect in a State meets 
the requirements of this subsection if the Secretary deter-
mines the law satisfies the following minimum require-
ments: 
(1) A State loan originator supervisory author-
ity is maintained to provide effective supervision and 
enforcement of such law, including the suspension, 
termination, or nonrenewal of a license for a viola-
tion of State or Federal law. 
(2) The State loan originator supervisory au-
thority ensures that all State-licensed loan originators 
operating in the State are registered with Nationwide 
Mortgage Licensing System and Registry. 
(3) The State loan originator supervisory au-
thority is required to regularly report violations of 
such law, as well as enforcement actions and other 
relevant information, to the Nationwide Mortgage Li-
censing System and Registry. 
(e) TEMPORARY EXTENSION OF PERIOD.—The Sec-
retary may extend, by not more than 6 months, the 1-year 
or 2-year period, as the case may be, referred to in sub-
section (a) for the licensing of loan originators in any State 
under a State licensing law that meets the requirements of 
sections 104 and 105 and subsection (d) if the Secretary 
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percent of the total transaction amount 
or $1,000; or 
‘‘(iii) the credit transaction documents 
permit the creditor to charge or collect pre-
payment fees or penalties more than 36 
months after the transaction closing or such 
fees or penalties exceed, in the aggregate, 
more than 2 percent of the amount prepaid. 
‘‘(B) INTRODUCTORY
RATES
TAKEN
INTO 
ACCOUNT.—For purposes of subparagraph (A)(i), 
the annual percentage rate of interest shall be de-
termined based on the following interest rate: 
‘‘(i) In the case of a fixed-rate trans-
action in which the annual percentage rate 
will not vary during the term of the loan, 
the interest rate in effect on the date of con-
summation of the transaction. 
‘‘(ii) In the case of a transaction in 
which the rate of interest varies solely in 
accordance with an index, the interest rate 
determined by adding the index rate in ef-
fect on the date of consummation of the 
transaction to the maximum margin per-
mitted at any time during the transaction 
agreement. 
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‘‘(iii) In the case of any other trans-
action in which the rate may vary at any 
time during the term of the loan for any 
reason, the interest charged on the trans-
action at the maximum rate that may be 
charged during the term of the trans-
action.’’. 
(b) ADJUSTMENT OF PERCENTAGE POINTS.—Section 
103(aa)(2) of the Truth in Lending Act (15 U.S.C. 
1602(aa)(2)) is amended by striking subparagraph (B) and 
inserting the following new subparagraph: 
‘‘(B) An increase or decrease under sub-
paragraph (A)— 
‘‘(i) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(I) being less than 6 percentage 
points or greater than 10 percentage points; 
and 
‘‘(ii) may not result in the number of 
percentage points referred to in paragraph 
(1)(A)(i)(II) being less than 8 percentage 
points or greater than 12 percentage 
points.’’. 
(c) POINTS AND FEES DEFINED.— 
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