ing the 6-year period beginning when the loan 
is entered into; and 
‘‘(B) without regard to the 6-year limita-
tion in subparagraph (A) if raised by the con-
sumer at any time during the term of the 
loan— 
‘‘(i) as a defense, claim, or counter-
claim, including a claim for a violation of 
subsection (a) or (b), with respect to a res-
idential mortgage loan after foreclosure 
has commenced on the loan, the obligation 
to pay the balance due on the loan is accel-
erated, or the obligor has been in default 
on any payment for 60 days or more; or 
‘‘(ii) in any action to enjoin fore-
closure or to preserve or obtain possession 
of the residence securing a residential 
mortgage loan. 
‘‘(6) POOLS
AND
INVESTORS
IN
POOLS
EX-
CLUDED.—In the case of residential mortgage loans 
acquired or aggregated for the purpose of including 
such loans in a pool of assets for the purpose of 
issuing or selling instruments representing interests 
in such pools, the terms ‘assignee’ and ‘securitizer’, 
as used in this section, do not include the pools of 
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such loans or any original or subsequent purchaser 
of any instrument representing an interest in such 
pool.’’. 
SEC. 205. DEFENSE TO FORECLOSURE. 
Section 129B of the Truth in Lending Act is amend-
ed by inserting after subsection (d) (as added by section 
204) the following new subsection: 
‘‘(e) DEFENSE TO FORECLOSURE.—Notwithstanding 
any other provision of law— 
‘‘(1) when the holder of a residential mortgage 
loan or anyone acting for such holder initiates a ju-
dicial or non-judicial foreclosure, a consumer who 
has the right to rescind under this section with re-
spect to such loan may exercise such right; and 
‘‘(2) a third party may sell, transfer, convey, or 
assign a residential mortgage loan to an assignee, 
including a securitizer, to effect a rescission or a 
cure.’’. 
SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS. 
(a) IN GENERAL.—Section 129B of the Truth in 
Lending Act is amended by inserting after subsection (e) 
(as added by section 205) the following new subsections: 
‘‘(f) PROHIBITION ON CERTAIN PREPAYMENT PEN-
ALTIES.— 
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‘‘(1) PROHIBITED ON CERTAIN LOANS.—A resi-
dential mortgage loan that is not a qualified mort-
gage (as defined in subsection (c)) may not contain 
terms under which a consumer must pay a prepay-
ment penalty for paying all or part of the principal 
after the loan is consummated. 
‘‘(2) PROHIBITED AFTER INITIAL PERIOD ON 
LOANS WITH A RESET.—A residential mortgage loan 
with a fixed interest rate for an introductory period 
that adjusts or resets to a variable interest rate 
after such period may not contain terms under 
which a consumer must pay a prepayment penalty 
for paying all or part of the principal after the be-
ginning of the 3-month period ending on the date of 
the adjustment or reset. 
‘‘(g) SINGLE PREMIUM CREDIT INSURANCE PROHIB-
ITED.—No creditor may finance, directly or indirectly, in 
connection with any residential mortgage loan or with any 
extension of credit under an open end consumer credit 
plan secured by the principal dwelling of the consumer 
(other than a reverse mortgage), any credit life, credit dis-
ability, credit unemployment or credit property insurance, 
or any other accident, loss-of-income, life or health insur-
ance, or any payments directly or indirectly for any debt 
cancellation or suspension agreement or contract, except 
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that insurance premiums or debt cancellation or suspen-
sion fees calculated and paid in full on a monthly basis 
shall not be considered financed by the creditor. 
‘‘(h) ARBITRATION.— 
‘‘(1) IN
GENERAL.—No residential mortgage 
loan and no extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer (other than a reverse mortgage) 
may include terms which require arbitration or any 
other nonjudicial procedure as the method for resolv-
ing any controversy or settling any claims arising 
out of the transaction. 
‘‘(2) POST-CONTROVERSY AGREEMENTS.—Sub-
ject to paragraph (3), paragraph (1) shall not be 
construed as limiting the right of the consumer and 
the creditor or an assignee, including a securitizer, 
to agree to arbitration or any other nonjudicial pro-
cedure as the method for resolving any controversy 
at any time after a dispute or claim under the trans-
action arises. 
‘‘(3) NO WAIVER OF STATUTORY CAUSE OF AC-
TION.—No provision of any residential mortgage 
loan or of any extension of credit under an open end 
consumer credit plan secured by the principal dwell-
ing of the consumer (other than a reverse mort-
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gage), and no other agreement between the con-
sumer and the creditor, shall be applied or inter-
preted so as to bar a consumer from bringing an ac-
tion in an appropriate district court of the United 
States, or any other court of competent jurisdiction, 
pursuant to section 130 or any other provision of 
law, for damages or other relief in connection with 
any alleged violation of this section, any other provi-
sion of this title, or any other Federal law. 
‘‘(i) DUTY OF SECURITIZER TO RETAIN ACCESS TO 
LOANS.—Any securitizer shall reserve the right and pre-
serve an ability, in any document or contract establishing 
any pool of assets that includes any residential mortgage 
loan— 
‘‘(1) to identify and obtain access to any such 
loan in the pool; and 
‘‘(2) to provide for and obtain a remedy under 
this title for the obligor under any such loan. 
‘‘(j) EFFECT
OF FORECLOSURE
ON PREEXISTING 
LEASE.—In the case of any foreclosure on any residential 
real property securing an extension of credit made under 
a contract entered into after the date of the enactment 
of the Mortgage Reform and Anti-Predatory Lending Act 
of 2007, any successor in interest in such property pursu-
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ant to the foreclosure shall assume such interest subject 
to— 
‘‘(1) any bona fide lease made to a bona fide 
tenant entered into before the notice of foreclosure; 
and 
‘‘(2) the rights of any bona fide tenant without 
a lease or with a lease terminable at will under State 
law and the provision, by the successor in interest, 
of a notice to vacate to the tenant at least 90 days 
before the effective date of the notice. 
‘‘(k) MORTGAGES
WITH
NEGATIVE
AMORTIZA-
TION.—No creditor may extend credit to a first-time bor-
rower in connection with a consumer credit transaction 
under an open or closed end consumer credit plan secured 
by a dwelling or residential real property that includes a 
dwelling, other than a reverse mortgage, that provides or 
permits a payment plan that may, at any time over the 
term of the extension of credit, result in negative amorti-
zation unless, before such transaction is consummated— 
‘‘(1) the creditor provides the consumer with a 
statement that— 
‘‘(A) the pending transaction will or may, 
as the case may be, result in negative amortiza-
tion; 
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‘‘(B) describes negative amortization in 
such manner as the Federal banking agencies 
shall prescribe; 
‘‘(C) negative amortization increases the 
outstanding principal balance of the account; 
and 
‘‘(D) negative amortization reduces the 
consumer’s equity in the real property; and 
‘‘(2) the consumer provides the creditor with 
sufficient documentation to demonstrate that the 
consumer received homeownership counseling from 
organizations or counselors certified by the Sec-
retary of Housing and Urban Development as com-
petent to provide such counseling.’’. 
(b) CONFORMING AMENDMENT RELATING TO EN-
FORCEMENT .—Section 108(a) of the Truth in Lending 
Act (15 U.S.C. 1607(a)) is amended by inserting after 
paragraph (6) the following new paragraph: 
‘‘(7) sections 21B and 21C of the Securities 
Exchange Act of 1934, in the case of an entity that 
is subject to consolidated supervision by the Securi-
ties and Exchange Commission, other than a deposi-
tory institution, by the Securities and Exchange 
Commission.’’. 
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SEC. 207. AMENDMENT TO PROVISION GOVERNING COR-
RECTION OF ERRORS. 
Section 130(b) of the Truth in Lending Act (15 
U.S.C. 1640(b)) is amended to read as follows: 
‘‘(b) CORRECTION OF ERRORS.—A creditor has no li-
ability under this section or section 108 or 112 for any 
failure to comply with any requirement imposed under this 
chapter or chapter 5, if— 
‘‘(1) within 30 days of the loan closing and 
prior to the institution of any action, the consumer 
is notified of or discovers the violation, appropriate 
restitution is made, and whatever adjustments are 
necessary are made to the loan to either, at the 
choice of the consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) change the terms of the loan in a 
manner beneficial to the consumer so that the 
loan will no longer be a high-cost mortgage; or 
‘‘(2) within 60 days of the creditor’s discovery 
or receipt of notification of an unintentional viola-
tion or bona fide error as described in subsection (c) 
and prior to the institution of any action, the con-
sumer is notified of the compliance failure, appro-
priate restitution is made, and whatever adjustments 
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are necessary are made to the loan to either, at the 
choice of the consumer— 
‘‘(A) make the loan satisfy the require-
ments of this chapter; or 
‘‘(B) change the terms of the loan in a 
manner beneficial so that the loan will no 
longer be a high-cost mortgage.’’. 
SEC. 208. AMENDMENT RELATING TO RIGHT OF RESCIS-
SION. 
Section 130(e) of the Truth in Lending Act (15 
U.S.C. 1640(e)) is amended by inserting after the second 
sentence the following new sentence: ‘‘This subsection also 
shall not bar a person from asserting a right to rescission 
under section 125, in an action to collect the debt or as 
a defense to a judicial or nonjudicial foreclosure after the 
expiration of the time periods for affirmative actions set 
forth in this section and section 125.’’. 
SEC. 209. AMENDMENTS TO CIVIL LIABILITY PROVISIONS. 
(a) INCREASE IN AMOUNT OF CIVIL MONEY PEN-
ALTIES FOR CERTAIN VIOLATIONS.—Section 130(a) of 
the Truth in Lending Act (15 U.S.C. 1640(a)) is amend-
ed, in the matter preceding paragraph (1), by striking ‘‘an 
amount equal to the sum’’ and inserting ‘‘an amount equal 
to twice the sum’’. 
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(b) STATUTE OF LIMITATIONS EXTENDED FOR SEC-
TION 129 VIOLATIONS.—Section 130(e) of the Truth in 
Lending Act (15 U.S.C. 1640(e)) (as amended by section 
207 of this title) is amended— 
(1) in the first sentence, by striking ‘‘Any ac-
tion’’ and inserting ‘‘Except as provided in the sub-
sequent sentence, any action’’; and 
(2) by inserting after the first sentence the fol-
lowing new sentence: ‘‘Any action under this section 
with respect to any violation of section 129 may be 
brought in any United States district court, or in 
any other court of competent jurisdiction, before the 
end of the 3-year period beginning on the date of the 
occurrence of the violation.’’. 
SEC. 210. RULE OF CONSTRUCTION. 
Except as otherwise expressly provided in section 
129A or 129B of the Truth in Lending Act (as added by 
this Act), no provision of such section 129A or 129B shall 
be construed as superseding, repealing, or affecting any 
duty, right, obligation, privilege, or remedy of any person 
under any other provision of the Truth in Lending Act. 
SEC. 211. REGULATIONS. 
Regulations required or authorized to be prescribed 
under this title or the amendments made by this title— 
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(1) shall be prescribed in final form before the 
end of the 12-month period beginning on the date of 
the enactment of this Act; and 
(2) shall take effect not later than 18 months 
after the date of the enactment of this Act. 
TITLE III—HIGH-COST 
MORTGAGES 
SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORT-
GAGES. 
(a) 
HIGH-COST
MORTGAGE
DEFINED.—Section 
103(aa) of the Truth in Lending Act (15 U.S.C. 
1602(aa)) is amended by striking all that precedes para-
graph (2) and inserting the following: 
‘‘(aa) HIGH-COST MORTGAGE.— 
‘‘(1) DEFINITION.— 
‘‘(A) IN
GENERAL.—The term ‘high-cost 
mortgage’, and a mortgage referred to in this 
subsection, means a consumer credit trans-
action that is secured by the consumer’s prin-
cipal dwelling, other than a reverse mortgage 
transaction, if— 
‘‘(i) in the case of a loan secured— 
‘‘(I) by a first mortgage on the 
consumer’s principal dwelling, the an-
nual percentage rate at consummation 
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of the transaction will exceed by more 
than 8 percentage points the yield on 
Treasury securities having comparable 
periods of maturity on the 15th day of 
the month immediately preceding the 
month in which the application for the 
extension of credit is received by the 
creditor; or 
‘‘(II) by a subordinate or junior 
mortgage on the consumer’s principal 
dwelling, the annual percentage rate 
at consummation of the transaction 
will exceed by more than 10 percent-
age points the yield on Treasury secu-
rities having comparable periods of 
maturity on the 15th day of the 
month 
immediately 
preceding 
the 
month in which the application for the 
extension of credit is received by the 
creditor; 
‘‘(ii) the total points and fees payable 
in connection with the loan exceed— 
‘‘(I) in the case of a loan for 
$20,000 or more, 5 percent of the 
total loan amount; or 
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(1) IN
GENERAL.—Section 103(aa)(4) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is 
amended— 
(A) by striking subparagraph (B) and in-
serting the following: 
‘‘(B) all compensation paid directly or indi-
rectly by a consumer or creditor to a mortgage 
broker from any source, including a mortgage 
broker that originates a loan in the name of the 
broker in a table-funded transaction;’’; 
(B) in subparagraph (C)(ii), by striking 
‘‘and’’ after the semicolon at the end; 
(C) by redesignating subparagraph (D) as 
subparagraph (G); and 
(D) by inserting after subparagraph (C) 
the following new subparagraphs: 
‘‘(D) premiums or other charges payable at 
or before closing for any credit life, credit dis-
ability, credit unemployment, or credit property 
insurance, or any other accident, loss-of-income, 
life or health insurance, or any payments di-
rectly or indirectly for any debt cancellation or 
suspension agreement or contract, except that 
insurance premiums or debt cancellation or sus-
pension fees calculated and paid in full on a 
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monthly basis shall not be considered financed 
by the creditor; 
‘‘(E) except as provided in subsection (cc), 
the maximum prepayment fees and penalties 
which may be charged or collected under the 
terms of the loan documents; 
‘‘(F) all prepayment fees or penalties that 
are incurred by the consumer if the loan refi-
nances a previous loan made or currently held 
by the same creditor or an affiliate of the cred-
itor; and’’. 
(2) CALCULATION OF POINTS AND FEES FOR 
OPEN-END LOANS.—Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended— 
(A) by redesignating paragraph (5) as 
paragraph (6); and 
(B) by inserting after paragraph (4) the 
following new paragraph: 
‘‘(5) CALCULATION OF POINTS AND FEES FOR 
OPEN-END LOANS.—In the case of open-end loans, 
points and fees shall be calculated, for purposes of 
this section and section 129, by adding the total 
points and fees known at or before closing, including 
the maximum prepayment penalties which may be 
charged or collected under the terms of the loan doc-
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uments, plus the minimum additional fees the con-
sumer would be required to pay to draw down an 
amount equal to the total credit line.’’. 
(d) HIGH
COST
MORTGAGE
LENDER.—Section 
103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) 
is amended by striking the last sentence and inserting the 
following new sentence: ‘‘Any person who originates or 
brokers 2 or more mortgages referred to in subsection (aa) 
in any 12-month period, any person who originates 1 or 
more such mortgages through a mortgage broker in any 
12-month period, or, in connection with a table funding 
transaction of such a mortgage, and any person to whom 
the obligation is initially assigned at or after settlement 
shall be considered to be a creditor for purposes of this 
title.’’. 
(e) BONA FIDE DISCOUNT LOAN DISCOUNT POINTS 
AND
PREPAYMENT
PENALTIES.—Section 103 of the 
Truth in Lending Act (15 U.S.C. 1602) is amended by 
adding at the end the following new subsection: 
‘‘(cc) BONA FIDE DISCOUNT POINTS AND PREPAY-
MENT PENALTIES.—For the purposes of determining the 
amount of points and fees for purposes of subsection (aa), 
either the amounts described in paragraphs (1) or (4) of 
the following paragraphs, but not both, may be excluded: 
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‘‘(1) EXCLUSION
OF
BONA
FIDE
DISCOUNT 
POINTS.—The discount points described in 1 of the 
following subparagraphs shall be excluded from de-
termining the amounts of points and fees with re-
spect to a high-cost mortgage for purposes of sub-
section (aa): 
‘‘(A) Up to and including 2 bona fide dis-
count points payable by the consumer in con-
nection with the mortgage, but only if the inter-
est rate from which the mortgage’s interest rate 
will be discounted does not exceed by more than 
1 percentage point the required net yield for a 
90-day standard mandatory delivery commit-
ment for a reasonably comparable loan from ei-
ther the Federal National Mortgage Association 
or the Federal Home Loan Mortgage Corpora-
tion, whichever is greater. 
‘‘(B) Unless 2 bona fide discount points 
have been excluded under subparagraph (A), up 
to and including 1 bona fide discount points 
payable by the consumer in connection with the 
mortgage, but only if the interest rate from 
which the mortgage’s interest rate will be dis-
counted does not exceed by more than 2 per-
centage points the required net yield for a 90- 
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day standard mandatory delivery commitment 
for a reasonably comparable loan from either 
the Federal National Mortgage Association or 
the Federal Home Loan Mortgage Corporation, 
whichever is greater. 
‘‘(2) DEFINITION.—For purposes of paragraph 
(1), the term ‘bona fide discount points’ means loan 
discount points which are knowingly paid by the con-
sumer for the purpose of reducing, and which in fact 
result in a bona fide reduction of, the interest rate 
or time-price differential applicable to the mortgage. 
‘‘(3) EXCEPTION FOR INTEREST RATE REDUC-
TIONS
INCONSISTENT
WITH
INDUSTRY
NORMS.— 
Paragraph (1) shall not apply to discount points 
used to purchase an interest rate reduction unless 
the amount of the interest rate reduction purchased 
is reasonably consistent with established industry 
norms and practices for secondary mortgage market 
transactions. 
‘‘(4) ALLOWANCE OF CONVENTIONAL PREPAY-
MENT PENALTY.—Subsection (aa)(1)(4)(E) shall not 
apply so as to include a prepayment penalty or fee 
that is authorized by law other than this title and 
may be imposed pursuant to the terms of a high-cost 
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mortgage (or other consumer credit transaction se-
cured by the consumer’s principal dwelling) if— 
‘‘(A) the annual percentage rate applicable 
with respect to such mortgage or transaction 
(as determined for purposes of subsection 
(aa)(1)(A)(i))— 
‘‘(i) in the case of a first mortgage on 
the consumer’s principal dwelling, does not 
exceed by more than 2 percentage points 
the yield on Treasury securities having 
comparable periods of maturity on the 
15th day of the month immediately pre-
ceding the month in which the application 
for the extension of credit is received by 
the creditor; or 
‘‘(ii) in the case of a subordinate or 
junior mortgage on the consumer’s prin-
cipal dwelling, does not exceed by more 
than 4 percentage points the yield on such 
Treasury securities; and 
‘‘(B) the total amount of any prepayment 
fees or penalties permitted under the terms of 
the high-cost mortgage or transaction does not 
exceed 2 percent of the amount prepaid.’’. 
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SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR 
CERTAIN MORTGAGES. 
(a) PREPAYMENT PENALTY PROVISIONS.—Section 
129(c)(2) of the Truth in Lending Act (15 U.S.C. 
1639(c)(2)) is amended— 
(1) by striking ‘‘and’’ after the semicolon at the 
end of subparagraph (C); 
(2) by redesignating subparagraph (D) as sub-
paragraph (E); and 
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
‘‘(D) the amount of the principal obliga-
tion of the mortgage exceeds the maximum 
principal obligation limitation (for the applica-
ble size residence) under section 203(b)(2) of 
the National Housing Act for the area in which 
the residence subject to the mortgage is located; 
and’’. 
(b) NO BALLOON PAYMENTS.—Section 129(e) of the 
Truth in Lending Act (15 U.S.C. 1639(e)) is amended to 
read as follows: 
‘‘(e) NO BALLOON PAYMENTS.—No high-cost mort-
gage may contain a scheduled payment that is more than 
twice as large as the average of earlier scheduled pay-
ments. This subsection shall not apply when the payment 
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schedule is adjusted to the seasonal or irregular income 
of the consumer.’’. 
(c) NO LENDING WITHOUT DUE REGARD TO ABIL-
ITY TO REPAY.—Section 129(h) of the Truth in Lending 
Act (15 U.S.C. 1639(h)) is amended— 
(1) by striking ‘‘PAYMENT ABILITY OF CON-
SUMER.—A creditor shall not’’ and inserting ‘‘PAY-
MENT ABILITY OF CONSUMER.— 
‘‘(1) PATTERN OR PRACTICE.— 
‘‘(A) IN GENERAL.—A creditor shall not’’; 
(2) by inserting after subparagraph (A) (as so 
designated by paragraph (1) of this subsection) the 
following new subparagraph: 
‘‘(B) 
PRESUMPTION
OF
VIOLATION.— 
There shall be a presumption that a creditor 
has violated this subsection if the creditor en-
gages in a pattern or practice of making high- 
cost mortgages without verifying or docu-
menting the repayment ability of consumers 
with respect to such loans.’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) PROHIBITION
ON
EXTENDING
CREDIT 
WITHOUT REGARD TO PAYMENT ABILITY OF CON-
SUMER.— 
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‘‘(A) IN
GENERAL.—A creditor may not 
extend credit to a consumer under a high-cost 
mortgage unless a reasonable creditor would be-
lieve at the time the loan is closed that the con-
sumer or consumers that are residing or will re-
side in the residence subject to the mortgage 
will be able to make the scheduled payments as-
sociated with the loan, based upon a consider-
ation of current and expected income, current 
obligations, employment status, and other fi-
nancial resources, other than equity in the resi-
dence. 
‘‘(B) PRESUMPTION
OF
ABILITY.—For 
purposes of this subsection, there shall be a re-
buttable presumption that a consumer is able to 
make the scheduled payments to repay the obli-
gation if, at the time the loan is consummated, 
the consumer’s total monthly debts, including 
amounts under the loan, do not exceed 50 per-
cent of his or her monthly gross income as 
verified by tax returns, payroll receipts, or other 
third-party income verification.’’. 
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SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN 
MORTGAGES. 
(a) ADDITIONAL
REQUIREMENTS
FOR
CERTAIN 
MORTGAGES.—Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended— 
(1) by redesignating subsections (j), (k) and (l) 
as subsections (n), (o) and (p) respectively; and 
(2) by inserting after subsection (i) the fol-
lowing new subsections: 
‘‘(j) RECOMMENDED DEFAULT.—No creditor shall 
recommend or encourage default on an existing loan or 
other debt prior to and in connection with the closing or 
planned closing of a high-cost mortgage that refinances 
all or any portion of such existing loan or debt. 
‘‘(k) LATE FEES.— 
‘‘(1) IN GENERAL.—No creditor may impose a 
late payment charge or fee in connection with a 
high-cost mortgage— 
‘‘(A) in an amount in excess of 4 percent 
of the amount of the payment past due; 
‘‘(B) unless the loan documents specifically 
authorize the charge or fee; 
‘‘(C) before the end of the 15-day period 
beginning on the date the payment is due, or in 
the case of a loan on which interest on each in-
stallment is paid in advance, before the end of 
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the 30-day period beginning on the date the 
payment is due; or 
‘‘(D) more than once with respect to a sin-
gle late payment. 
‘‘(2) COORDINATION WITH SUBSEQUENT LATE 
FEES.—If a payment is otherwise a full payment for 
the applicable period and is paid on its due date or 
within an applicable grace period, and the only delin-
quency or insufficiency of payment is attributable to 
any late fee or delinquency charge assessed on any 
earlier payment, no late fee or delinquency charge 
may be imposed on such payment. 
‘‘(3) FAILURE
TO
MAKE
INSTALLMENT
PAY-
MENT.—If, in the case of a loan agreement the 
terms of which provide that any payment shall first 
be applied to any past due principal balance, the 
consumer fails to make an installment payment and 
the consumer subsequently resumes making install-
ment payments but has not paid all past due install-
ments, the creditor may impose a separate late pay-
ment charge or fee for any principal due (without 
deduction due to late fees or related fees) until the 
default is cured. 
‘‘(l) ACCELERATION OF DEBT.—No high-cost mort-
gage may contain a provision which permits the creditor, 
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in its sole discretion, to accelerate the indebtedness. This 
provision shall not apply when repayment of the loan has 
been accelerated by default, pursuant to a due-on-sale pro-
vision, or pursuant to a material violation of some other 
provision of the loan documents unrelated to the payment 
schedule. 
‘‘(m) RESTRICTION
ON FINANCING POINTS
AND 
FEES.—No creditor may directly or indirectly finance, in 
connection with any high-cost mortgage, any of the fol-
lowing: 
‘‘(1) Any prepayment fee or penalty payable by 
the consumer in a refinancing transaction if the 
creditor or an affiliate of the creditor is the 
noteholder of the note being refinanced. 
‘‘(2) Any points or fees.’’. 
(b) PROHIBITIONS ON EVASIONS.—Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (p) (as so redesignated by 
subsection (a)(1)) the following new subsection: 
‘‘(q) PROHIBITIONS ON EVASIONS, STRUCTURING OF 
TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.—A 
creditor may not take any action in connection with a 
high-cost mortgage— 
‘‘(1) to structure a loan transaction as an open- 
end credit plan or another form of loan for the pur-
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pose and with the intent of evading the provisions of 
this title; or 
‘‘(2) to divide any loan transaction into sepa-
rate parts for the purpose and with the intent of 
evading provisions of this title.’’. 
(c) MODIFICATION
OR DEFERRAL FEES.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (q) (as added by 
subsection (b) of this section) the following new sub-
section: 
‘‘(r) MODIFICATION AND DEFERRAL FEES PROHIB-
ITED.—A creditor may not charge a consumer any fee to 
modify, renew, extend, or amend a high-cost mortgage, or 
to defer any payment due under the terms of such mort-
gage, 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 simi-
lar transactions in connection with consumer credit trans-
actions that are secured by a consumer’s principal dwell-
ing and are not high-cost mortgages.’’. 
(d) PAYOFF STATEMENT.—Section 129 of the Truth 
in Lending Act (15 U.S.C. 1639) is amended by inserting 
after subsection (r) (as added by subsection (c) of this 
section) the following new subsection: 
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‘‘(s) PAYOFF STATEMENT.— 
‘‘(1) FEES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), no creditor or servicer may 
charge a fee for informing or transmitting to 
any person the balance due to pay off the out-
standing balance on a high-cost mortgage. 
‘‘(B) TRANSACTION FEE.—When payoff in-
formation referred to in subparagraph (A) is 
provided by facsimile transmission or by a cou-
rier service, a creditor or servicer may charge a 
processing fee to cover the cost of such trans-
mission or service in an amount not to exceed 
an amount that is comparable to fees imposed 
for similar services provided in connection with 
consumer credit transactions that are secured 
by the consumer’s principal dwelling and are 
not high-cost mortgages. 
‘‘(C) FEE DISCLOSURE.—Prior to charging 
a transaction fee as provided in subparagraph 
(B), a creditor or servicer shall disclose that 
payoff balances are available for free pursuant 
to subparagraph (A). 
‘‘(D) MULTIPLE REQUESTS.—If a creditor 
or servicer has provided payoff information re-
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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.’’. 
(e) PRE-LOAN COUNSELING REQUIRED.—Section 
129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (s) (as added by 
subsection (d) of this section) the following new sub-
section: 
‘‘(t) PRE-LOAN COUNSELING.— 
‘‘(1) IN GENERAL.—A creditor may not extend 
credit to a consumer under a high-cost mortgage 
without first receiving certification from a counselor 
that is approved by the Secretary of Housing and 
Urban Development, or at the discretion of the Sec-
retary, a state housing finance authority, that the 
consumer has received counseling on the advisability 
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of the loan transaction. Such counselor shall not be 
employed by the creditor or an affiliate of the cred-
itor or be affiliated with the creditor. 
‘‘(2) DISCLOSURES REQUIRED PRIOR TO COUN-
SELING.—No counselor may certify that a consumer 
has received counseling on the advisability of the 
loan transaction unless the counselor can verify that 
the consumer has received each statement required 
(in connection with such loan) by section 129 of this 
title or by the Real Estate Settlement Procedures 
Act of 1974 with respect to the transaction. 
‘‘(3) REGULATIONS.—The Secretary of Housing 
and Urban Development may prescribe such regula-
tions as the Secretary determines to be appropriate 
to carry out the requirements of paragraph (1).’’. 
SEC. 304. REGULATIONS. 
(a) IN GENERAL.—The Board of Governors of the 
Federal Reserve System shall publish regulations imple-
menting this title and the amendments made by this title 
in final form before the end of the 6-month period begin-
ning on the date of the enactment of this Act. 
(b) CONSUMER MORTGAGE EDUCATION.— 
(1) REGULATIONS.—The Board of Governors of 
the Federal Reserve System may prescribe regula-
tions requiring or encouraging creditors to provide 
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