To amend section 1451 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to establish programs to provide counseling to homebuyers regarding voluntary home inspections and to train counselors to provide such counseling, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Protection Home Inspection 
Counseling Act of 2012''.

SEC. 2. HOME INSPECTION COUNSELING.

    Section 1451 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (12 U.S.C. 1701x-1) is amended--
            (1) in subsection (b)--
                    (A) by striking the subsection designation and all 
                that follows through ``Each'' and inserting the 
                following:
    ``(b) Requirement for FHA-Approved Lenders.--
            ``(1) Requirement.--Each''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Effective date; mortgagee letter.--Not later than the 
        expiration of the 90-day period beginning upon the date of the 
        enactment of the Consumer Protection Home Inspection Counseling 
        Act of 2012, the Secretary shall publish a Mortgagee Letter 
        informing mortgagees of their obligation under paragraph 
        (1).'';
            (2) in subsection (c)--
                    (A) by striking the subsection designation and all 
                that follows through ``Each'' and inserting the 
                following:
    ``(c) Requirements for HUD-Approved Counseling Agencies.--
            ``(1) Provision of materials.--Each'';
                    (B) by striking ``subparagraphs (C) and (D) of''; 
                and
                    (C) by adding at the end the following new 
                paragraphs:
            ``(2) Requirements for housing counselors.--Each person 
        providing counseling for a housing counseling entity 
        authorized, certified, or funded in whole or in part under 
        section 106 of the Housing and Urban Development Act of 1968 
        (12 U.S.C. 1701x) shall be trained through the voluntary home 
        inspection training module established pursuant to subsection 
        (d), shall distribute the counseling aids to be developed under 
        this section, and shall explain the materials specified in 
        subsection (a)(1) and other aids and materials set forth in 
        this section.
            ``(3) Requirements for homeownership counseling programs.--
        Any homeownership counseling program required under, or 
        provided in connection with, any program administered by the 
        Department of Housing and Urban Development shall be provided 
        only by organizations or counselors certified by the Secretary 
        pursuant to this section as competent to provide voluntary home 
        inspection counseling.
            ``(4) Sanctions.--The Secretary may withhold, withdraw, or 
        suspend housing counseling certifications for any housing 
        counselor or counseling entity that fails to meet the 
        requirements of this section.'';
            (3) in subsection (d)--
                    (A) in paragraph (3), by striking ``and'' at the 
                end;
                    (B) in paragraph (4), by striking the period at the 
                end and inserting ``; and'';
                    (C) by redesignating paragraphs (1) through (4) (as 
                so amended) as subparagraphs (A) through (D), 
                respectively, and realigning such subparagraphs (as so 
                redesignated) so as to be indented 4 ems from the left 
                margin;
                    (D) by striking the subsection designation and all 
                that follows through ``shall include--'' and inserting 
                the following:
    ``(d) Training.--
            ``(1) Establishment.--The Secretary shall establish a 
        comprehensive program to train staff of the Department, 
        contractors, individuals, and entities that provide housing 
        counseling under programs authorized, certified, or funded 
        under section 106 of the Housing and Urban Development Act of 
        1968 (12 U.S.C. 1701x) to also provide counseling to consumers 
        on voluntary home inspection.
            ``(2) Requirements.--The training program established 
        pursuant to this subsection shall include development of a 
        training module to train counselors as well as counseling aids 
        to be used by housing counselors and suitable for distribution 
        to consumers. The training materials shall be written in plain 
        language and shall be comprehensible to untrained consumers 
        with or without ongoing assistance from housing counselors. 
        Training provided under the program shall include--'';
                    (E) in paragraph (2), as added by the amendment 
                made by subparagraph (D) of this paragraph, by adding 
                at the end the following new subparagraph:
                    ``(E) Internet website references and information 
                sufficient for counselors and homebuyers to locate and 
                select a local professional home inspector.''; and
                    (F) by adding at the end the following new 
                paragraphs:
            ``(3) Content.--At a minimum, the home inspection 
        counseling program established under this subsection, and the 
        training module and counseling aids developed under this 
        subsection, shall convey the following information:
                    ``(A) That a home inspection in connection with 
                purchase of a home is voluntary, but not mandatory, 
                which means that the homebuyer must make a personal 
                choice whether to obtain a home inspection.
                    ``(B) That the Department of Housing and Urban 
                Development recommends that homebuyers obtain a 
                voluntary home inspection.
                    ``(C) That a home inspection is an in-depth 
                technical and objective examination of the physical 
                structure and internal systems of the home, from the 
                foundation to the roof, and should be performed by a 
                trained and experienced professional home inspector.
                    ``(D) That a home inspection is not required in the 
                case of an FHA loan insured under title II of the 
                National Housing Act (12 U.S.C. 1707 et seq.) and that 
                a home inspection is not performed by FHA.
                    ``(E) That in most cases, no home inspection will 
                be performed unless the homebuyer requests one.
                    ``(F) That it is the burden of the homebuyer to 
                arrange for a home inspection if one is requested.
                    ``(G) That an appraisal is not equivalent to a home 
                inspection.
                    ``(H) That if the homebuyer chooses to obtain a 
                home inspection, it is generally to the homebuyer's 
                benefit to do so as early as possible.
                    ``(I) That the homebuyer may ask to make the 
                transaction contingent on the outcome of the home 
                inspection and that the homebuyer may realize 
                substantial financial benefits from the home 
                inspection, including from identifying possible repairs 
                that could be performed and paid for by the seller 
                prior to the closing.
                    ``(J) That the homebuyer should consider requesting 
                a voluntary home inspection.
            ``(4) Additional guidance materials.--The Secretary shall 
        develop, in consultation with national professional home 
        inspector associations, additional guidance materials to 
        educate housing counselors on how to advise consumers how to 
        locate, interview, and select a professional home inspector, 
        and on how consumers may independently locate, interview, and 
        select a professional home inspector. The Secretary shall 
        require that these materials be made available to counselors 
        providing housing counseling under the programs referred to in 
        this section.''; and
            (4) by adding at the end the following new subsections:
    ``(e) Certification of Counselors.--
            ``(1) Protocol.--The Secretary shall, in the discretion of 
        the Secretary, develop a new independent protocol, or amend 
        existing protocols, to certify that housing counselors whose 
        activities are authorized, certified, or funded in whole or in 
        part under section 106 of the Housing and Urban Development Act 
        of 1968 (12 U.S.C. 1701x) have successfully completed training 
        using the voluntary home inspection training module and 
        counseling aids established and developed pursuant to this 
        section.
            ``(2) Standards for materials and forms.--The Secretary 
        shall establish standards and requirements for voluntary home 
        inspection counseling materials and forms to be used, as 
        appropriate, by organizations providing voluntary home 
        inspection counseling. Such standards shall conform with the 
        content requirements under this section.
    ``(f) Report.--Not later than the expiration of the 12-month period 
beginning upon the date of the enactment of the Consumer Protection 
Home Inspection Counseling Act of 2012, the Secretary shall submit a 
report to the Congress describing the actions that have been undertaken 
to comply with this section, disclosing the actions that are required 
under this section but have not at such time been addressed, assessing 
the results of this section that have been achieved at such time, 
identifying areas for improvement in the implementation of this 
section, and making recommendations to enhance implementation of this 
section.''.

Summary: Consumer Protection Home Inspection Counseling Act of 2012 - Amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to direct the Secretary of Housing and Urban Development (HUD) to publish a Mortgagee Letter informing mortgagees of their obligation to provide prospective homebuyers with specified HUD public outreach publications concerning the importance of obtaining independent home inspections.

Requires persons providing housing counseling for HUD-approved counseling agencies to: (1) be trained through a certain voluntary home inspection training module, and (2) distribute and explain certain counseling aids. Requires any homeownership counseling program under HUD auspices or administration to be provided only by organizations or counselors HUD-certified as competent to provide voluntary home inspection counseling. Authorizes HUD to withhold, withdraw, or suspend housing counseling certifications for any non-compliant housing counselor or counseling entity. Requires HUD to establish a comprehensive program to train HUD staff, contractors, individuals, and entities that provide housing counseling under specified HUD-funded programs also to provide counseling to consumers on voluntary home inspection. Requires such training program to include development of a training module to: (1) train counselors as well as counseling aids for use by housing counselors and suitable for distribution to consumers; and (2) be comprehensible to untrained consumers with or without ongoing assistance from housing counselors.

Requires HUD, at the Secretary's discretion, to develop a new independent protocol, or amend existing protocols, to certify that such housing counselors have successfully completed training using the voluntary home inspection training module and counseling aids established under this Act.