A bill to diminish predatory lending by enhancing appraisal quality and standards, to improve appraisal oversight, to ensure mortgage appraiser independence, to provide for enhanced remedies and enforcement, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Value and Independent Appraisal 
Act''.

SEC. 2. PROPERTY APPRAISAL REQUIREMENTS.

    (a) In General.--Section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended by adding at the end the following new subsection:
    ``(m) Property Appraisal Requirements.--
            ``(1) In general.--A creditor may not extend credit in the 
        form of a mortgage referred to in section 103(aa) to any 
        consumer, without first obtaining a written appraisal of the 
        property to be mortgaged, prepared in accordance with the 
        requirements of this subsection.
            ``(2) Appraisal requirements.--
                    ``(A) Physical property visit.--An appraisal of 
                property to be secured by a mortgage referred to in 
                section 103(aa) does not meet the requirements of this 
                subsection unless it is performed by a qualified 
                appraiser who conducts a physical property visit of the 
                interior of the mortgaged property.
                    ``(B) Second appraisal under certain 
                circumstances.--
                            ``(i) In general.--If the purpose of a 
                        mortgage referred to in section 103(aa) is to 
                        finance the purchase or acquisition of the 
                        mortgaged property from a person within 180 
                        days of the date of purchase or acquisition of 
                        such property by that person at a price that 
                        was lower than the current sale price of the 
                        property, the creditor shall obtain a second 
                        appraisal from a different qualified appraiser. 
                        The second appraisal shall include an analysis 
                        of the difference in sale prices, changes in 
                        market conditions, and any improvements made to 
                        the property between the date of the previous 
                        sale and the current sale.
                            ``(ii) No cost to 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 the property to be appraised is 
                        located; and
                            ``(ii) performs each appraisal in 
                        conformity 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 title, as in 
                        effect on the date of the appraisal.
            ``(3) Free copy of appraisal.--A creditor shall provide 1 
        copy of each appraisal conducted in accordance with this 
        subsection in connection with a mortgage referred to in section 
        103(aa) to the consumer without charge, at least 3 days prior 
        to the transaction closing date.
            ``(4) Consumer notification.--At the time of the initial 
        mortgage application, the consumer shall be provided with a 
        statement by the creditor that any appraisal prepared for the 
        mortgage is for the sole use of the creditor, and that the 
        consumer may choose to have a separate appraisal conducted at 
        their own expense.
            ``(5) Violations.--In addition to any other liability 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.''.
    (b) Equal Credit Opportunity Act Amendment.--Section 701(e) of the 
Equal Credit Opportunity Act (15 U.S.C. 1691(e)) is amended to read as 
follows:
    ``(e) Copies Furnished to Applicants.--
            ``(1) In general.--Each creditor shall furnish to an 
        applicant, a copy of all appraisal reports and valuations 
        developed in connection with the applicant's application for a 
        loan that is or would have been secured by a lien on 
        residential real property.
            ``(2) Procedures.--Appraisal reports shall be furnished 
        under this subsection upon written request by the applicant, 
        made within a reasonable period of time of the application and 
        before closing.
            ``(3) Reimbursement.--The creditor may require the 
        applicant to pay a reasonable fee for the provision of copies 
        of appraisal reports under this subsection.
            ``(4) Notification to consumers.--The creditor shall notify 
        (pursuant to regulations prescribed by the Board) an applicant 
        in writing of the right to receive a copy of each appraisal 
        report, under this subsection.''.
    (c) Unfair and Deceptive Acts and Practices Relating to Certain 
Consumer Credit Transactions.--Chapter 2 of the Truth in Lending Act 
(15 U.S.C. 1631 et seq.) is amended by inserting after section 129 the 
following new section:

``SEC. 129A. UNFAIR AND DECEPTIVE ACTS AND PRACTICES RELATING TO 
              CERTAIN CONSUMER CREDIT TRANSACTIONS.

    ``(a) In General.--It shall be unlawful, in providing any mortgage 
lending services for a consumer credit transaction secured by the 
principal dwelling of the consumer or any mortgage brokerage services 
for such a transaction, to engage in any unfair or deceptive act or 
practice.
    ``(b) Appraisal Independence.--For purposes of subsection (a), 
unfair and deceptive acts or practices shall include--
            ``(1) any appraisal of a property offered as security for 
        repayment of the consumer credit transaction that is conducted 
        in connection with such transaction, in which a person with an 
        interest in the underlying transaction coerces, bribes, 
        extorts, colludes, or otherwise improperly influences a person 
        conducting or involved in an appraisal, or attempts to coerce, 
        bribe, extort, collude, or otherwise improperly influence such 
        a person, for the purpose of causing the appraised value 
        assigned under the appraisal to the property to be based on any 
        factor other than the independent judgment of the appraiser;
            ``(2) mischaracterizing or suborning any 
        mischaracterization of, the appraised value of the property 
        securing the extension of credit;
            ``(3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the making or 
        pricing of the transaction; and
            ``(4) failing to timely compensate an appraiser for a 
        completed appraisal, regardless of whether the transaction 
        closes.
    ``(c) Exceptions.--The requirements of subsection (b) may not be 
construed as prohibiting a mortgage lender, mortgage broker, mortgage 
banker, real estate broker, or any other person with an interest in a 
real estate transaction from asking an appraiser to correct errors in 
the appraisal report.
    ``(d) Rulemaking Proceedings.--The Board and the Federal Trade 
Commission--
            ``(1) shall jointly prescribe regulations defining with 
        specificity acts or practices which are unfair or deceptive in 
        the provision of mortgage lending services for a consumer 
        credit transaction secured by the principal dwelling of the 
        consumer or mortgage brokerage services for such a transaction, 
        within the meaning of subsections (a), (b), and (c); and
            ``(2) may jointly issue interpretive guidelines and general 
        statements of policy with respect to unfair or deceptive acts 
        or practices in the provision of mortgage lending services for 
        a consumer credit transaction secured by the principal dwelling 
        of the consumer and mortgage brokerage services for such a 
        transaction, within the meaning of subsections (a), (b), and 
        (c).
    ``(e) Definitions.--For purposes of this section--
            ``(1) the terms `mortgage brokerage services' and `mortgage 
        lending services', have the meanings given such terms in 
        section 13(f) of the Real Estate Settlement Procedures Act of 
        1974 (12 U.S.C. 2611(f)); and
            ``(2) the term `improperly influence' means any attempt to 
        manipulate, through coercion, extortion, collusion, 
        intimidation, non-payment for services rendered, direct or 
        indirect compensation, or bribery, the development, reporting, 
        result, or review of a property appraisal.
    ``(f) Penalties.--
            ``(1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who violates 
        this section shall forfeit and pay a civil penalty of not more 
        than $10,000 for each day during which any such violation 
        continues.
            ``(2) Subsequent violations.--In the case of any person on 
        whom a civil penalty has been imposed under paragraph (1), 
        paragraph (1) shall be applied by substituting `$20,000' for 
        `$10,000' with respect to all subsequent violations.
            ``(3) Assessment.--The agency referred to in subsection (a) 
        or (c) of section 108 with respect to any person described in 
        paragraph (1) shall assess any penalty under this subsection to 
        which such person is subject.''.
    (d) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129 the following new item:

``Sec. 129A. Unfair and deceptive practices and acts relating to 
                            certain consumer credit transactions.''.

Summary: Fair Value and Independent Appraisal Act - Amends the Truth in Lending Act to prohibit a creditor from extending a mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged, prepared in accordance with specified requirements.

Requires a creditor to provide a copy of each such appraisal to the consumer without charge, at least three days prior to the transaction closing date.

Declares unfair or deceptive specified property appraisal practices in the provision of: (1) mortgage lending services for a consumer credit transaction secured by the consumer's principal dwelling; or (2) any mortgage brokerage services for such a transaction. Establishes civil monetary penalties for such practices.



Directs the Board of Governors of the Federal Reserve System and the Federal Trade Commission to jointly prescribe regulations defining such unfair or deceptive acts or practices.