U.S. Congress - Text of H.R.3012 as Introduced in House Expanding Housing Opportunities Through Education and Counseling Act
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Donate NowH.R.3012 - Expanding Housing Opportunities Through Education and Counseling Act
To amend the Truth in Lending Act to provide for the establishment of fair mortgage practices, generally, and for subprime mortgages in particular, to provide for a national system for licensing or registering residential mortgage loan originators, and for other purposes.
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HR 3012 IHCommentsClose CommentsPermalink
To amend the Truth in Lending Act to provide for the establishment of fair mortgage practices, generally, and for subprime mortgages in particular, to provide for a national system for licensing or registering residential mortgage loan originators, and for other purposes.CommentsClose CommentsPermalink
July 12, 2007
Mr. BACHUS (for himself, Mr. GILLMOR, Ms. PRYCE of Ohio, Mr. GARY G. MILLER of California, and Mr. LATOURETTE) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concernedCommentsClose CommentsPermalink
To amend the Truth in Lending Act to provide for the establishment of fair mortgage practices, generally, and for subprime mortgages in particular, to provide for a national system for licensing or registering residential mortgage loan originators, and for other purposes.CommentsClose CommentsPermalink
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Fair Mortgage Practices Act of 2007'.CommentsClose CommentsPermalink
(b) Table of Contents- The table of contents for this Act is as follows:CommentsClose CommentsPermalink
Sec. 1. Short title; table of contents.CommentsClose CommentsPermalink
Sec. 2. Definition.CommentsClose CommentsPermalink
TITLE I--LICENSING SYSTEM OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS
Sec. 101. Purposes and methods for establishing a mortgage licensing system.CommentsClose CommentsPermalink
Sec. 102. Definitions.CommentsClose CommentsPermalink
Sec. 103. License or registration required.CommentsClose CommentsPermalink
Sec. 104. License and registration application and issuance.CommentsClose CommentsPermalink
Sec. 105. Standards for license renewal.CommentsClose CommentsPermalink
Sec. 106. System of registration administration by Federal banking agencies.CommentsClose CommentsPermalink
Sec. 107. Secretary of housing and urban development backup authority to establish a loan originator licensing system.CommentsClose CommentsPermalink
Sec. 108. System for State-licensed loan originators.CommentsClose CommentsPermalink
Sec. 109. Fees.CommentsClose CommentsPermalink
Sec. 110. Mortgage professional background checks.CommentsClose CommentsPermalink
Sec. 111. Confidentiality of information.CommentsClose CommentsPermalink
Sec. 112. Liability provisions.CommentsClose CommentsPermalink
TITLE II--SIMPLIFIED DISCLOSURES
Sec. 201. Basic mortgage facts.CommentsClose CommentsPermalink
TITLE III--HOUSING COUNSELING
Subtitle A--Consumer Counseling
Sec. 301. Consumer counseling requirements.CommentsClose CommentsPermalink
Subtitle B--Expanded Housing Counseling Opportunities
Sec. 311. Short title.CommentsClose CommentsPermalink
Sec. 312. Establishment of Office of Housing Counseling.CommentsClose CommentsPermalink
Sec. 313. Counseling procedures.CommentsClose CommentsPermalink
Sec. 314. Grants for housing counseling assistance.CommentsClose CommentsPermalink
Sec. 315. Requirements to use HUD-certified counselors under HUD programs.CommentsClose CommentsPermalink
Sec. 316. Study of defaults and foreclosures.CommentsClose CommentsPermalink
Sec. 317. Definitions for counseling-related programs.CommentsClose CommentsPermalink
Sec. 318. Updating and simplification of mortgage information booklet.CommentsClose CommentsPermalink
TITLE IV--PROHIBITION ON ABUSIVE PRACTICES
Subtitle A--Mortgage Servicing
Sec. 401. Escrow and impound accounts relating to certain consumer credit transactions.CommentsClose CommentsPermalink
Sec. 402. Disclosure notice required for consumers who opt out of escrow services.CommentsClose CommentsPermalink
Subtitle B--Nontraditional Mortgage Provisions
Sec. 411. Prepayment penalties.CommentsClose CommentsPermalink
Sec. 412. Ability to repay.CommentsClose CommentsPermalink
TITLE V--MORTGAGE FRAUD
Sec. 501. Authorization of appropriations for mortgage fraud prevention, investigation, and prosecution.CommentsClose CommentsPermalink
TITLE VI--APPRAISAL ACTIVITIES
Sec. 601. Property appraisal requirements.CommentsClose CommentsPermalink
Sec. 602. Amendments relating to appraisal subcommittee of FIEC, appraiser independence, and approved appraiser education.CommentsClose CommentsPermalink
Sec. 603. Study required on improvements in appraisal process and compliance programs.CommentsClose CommentsPermalink
TITLE VII--INCENTIVES FOR BEST PRACTICES
Sec. 701. CRA credit for certain lender practices.CommentsClose CommentsPermalink
SEC. 2. DEFINITION.
(a) Definition of Subprime Mortgage- Section 103 of the Truth in Lending Act (
`(cc) Subprime Mortgage- The term `subprime mortgage' means any consumer credit transaction secured by the principal dwelling of the consumer that bears or otherwise meets the terms and characteristics for such a transaction that the Board has defined as a subprime mortgage.'.CommentsClose CommentsPermalink
(b) Regulations- The Board shall prescribe regulations defining a subprime mortgage for purposes of the amendment made by subsection (a) before the end of the 90-day period beginning on the date of the enactment of this Act.CommentsClose CommentsPermalink
TITLE I--LICENSING SYSTEM OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS
SEC. 101. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE LICENSING SYSTEM.
In order to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud, the States, through the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are hereby encouraged to establish a Nationwide Mortgage Licensing System and registry for the residential mortgage industry that accomplishes all of the following objectives:CommentsClose CommentsPermalink
(1) Provides uniform mortgage applications and reporting requirements for State-licensed loan originators.CommentsClose CommentsPermalink
(2) Provides a comprehensive licensing and supervisory database.CommentsClose CommentsPermalink
(3) Aggregates and improves the flow of information to and between regulators.CommentsClose CommentsPermalink
(4) Provides increased licensee accountability and tracking.CommentsClose CommentsPermalink
(5) Streamlines the licensing process and reduces the regulatory burden.CommentsClose CommentsPermalink
(6) Enhances consumer protections and supports anti-fraud measures.CommentsClose CommentsPermalink
SEC. 102. DEFINITIONS.
For purposes of this title, the following definitions shall apply:CommentsClose CommentsPermalink
(1) FEDERAL BANKING AGENCIES- The term `Federal banking agencies' means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.CommentsClose CommentsPermalink
(2) LOAN ORIGINATOR-CommentsClose CommentsPermalink
(A) IN GENERAL- The term `loan originator'--CommentsClose CommentsPermalink
(i) means an individual who--CommentsClose CommentsPermalink
(I) takes a residential mortgage loan application;CommentsClose CommentsPermalink
(II) assists a consumer in obtaining or applying to obtain a residential mortgage loan; orCommentsClose CommentsPermalink
(III) offers or negotiates terms of a mortgage loan, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain;CommentsClose CommentsPermalink
(ii) includes any individual who represents 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 individual can or will provide or perform any of the activities described in clause (i); andCommentsClose CommentsPermalink
(iii) does not include any individual who performs purely administrative or clerical tasks and is not otherwise described in this subparagraph.CommentsClose CommentsPermalink
(B) OTHER DEFINITIONS RELATING TO LOAN ORIGINATOR- For purposes of this paragraph, a person `assists a consumer in obtaining or applying to obtain a residential mortgage loan' by, among other things, counseling on loan terms (rates, fees, other costs), preparing loan packages, or collecting enough information on behalf of the consumer to anticipate a credit decision.CommentsClose CommentsPermalink
(3) ADMINISTRATIVE OR CLERICAL TASKS- The term `administrative or clerical tasks' means the receipt, collection, and distribution 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 underwriting of a loan.CommentsClose CommentsPermalink
(4) LOAN PROCESSOR OR UNDERWRITER-CommentsClose CommentsPermalink
(A) IN GENERAL- The term `loan processor or underwriter' means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensed mortgage broker, lender, insured depository institution, or wholly-owned subsidiary of an insured depository institution.CommentsClose CommentsPermalink
(B) CLERICAL OR SUPPORT DUTIES- For purposes of subparagraph (A), the term `clerical or support duties' may include--CommentsClose CommentsPermalink
(i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a loan; andCommentsClose CommentsPermalink
(ii) communicating with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling borrowers about loan rates or terms.CommentsClose CommentsPermalink
(5) MORTGAGE BROKER OR MORTGAGE LENDER- The term `mortgage broker or mortgage lender' means any person who for compensation or gain, or in the expectation of compensation or gain--CommentsClose CommentsPermalink
(A) makes a residential mortgage loan or assists a person in obtaining or applying to obtain a residential mortgage loan; orCommentsClose CommentsPermalink
(B) represents 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 individual can or will make a residential mortgage loan or assist a consumer in obtaining or applying to obtain a residential mortgage loan.CommentsClose CommentsPermalink
(6) NATIONWIDE MORTGAGE LICENSING SYSTEM- The term `Nationwide Mortgage Licensing System' means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the State licensing of State-licensed loan originators.CommentsClose CommentsPermalink
(7) REGISTERED LOAN ORIGINATOR- The term `registered loan originator' means any individual who--CommentsClose CommentsPermalink
(A) meets the definition of loan originator and is an employee of an insured depository institution or a wholly-owned operating subsidiary of an insured depository institution; andCommentsClose CommentsPermalink
(B) is registered and maintains a unique identifier through the Nationwide Mortgage Licensing System or system.CommentsClose CommentsPermalink
(8) RESIDENTIAL MORTGAGE LOAN- The term `residential mortgage loan' means any loan primarily for personal, family, or household use that is secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling of 4 or fewer units.CommentsClose CommentsPermalink
(9) RESIDENTIAL REAL ESTATE- The term `residential real estate' means real property upon which is constructed or intended to be constructed, a 1- to 4-family residence, except that such term does not include any dwelling on leased or rented land or space unless the mortgage broker treats such property as residential real estate.CommentsClose CommentsPermalink
(10) STATE-LICENSED LOAN ORIGINATOR- The term `State-licensed loan originator' means any individual who--CommentsClose CommentsPermalink
(A) is a loan originator;CommentsClose CommentsPermalink
(B) is not an employee of an insured depository institution or any wholly-owned operating subsidiary of an insured depository institution; andCommentsClose CommentsPermalink
(C) is licensed as a loan originator through the Nationwide Mortgage Licensing System.CommentsClose CommentsPermalink
(11) UNIQUE IDENTIFIER- The term `unique identifier' means a number established as permanent identification of a loan originator.CommentsClose CommentsPermalink
SEC. 103. LICENSE OR REGISTRATION REQUIRED.
(a) In General- A person may not engage in the business of a loan originator without first obtaining and maintaining a registration as a registered loan originator or a license as a State-licensed loan originator.CommentsClose CommentsPermalink
(b) Loan Processors and Underwriters-CommentsClose CommentsPermalink
(1) SUPERVISED LOAN PROCESSORS AND UNDERWRITERS- A loan processor or underwriter who does not represent 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 individual can or will provide or perform any of the activities of a mortgage broker, mortgage provider, or loan originator shall not be required to have a loan originator license.CommentsClose CommentsPermalink
(2) INDEPENDENTS- A loan processor or underwriter may not work as an independent contractor unless licensed or registered as a mortgage broker.CommentsClose CommentsPermalink
SEC. 104. LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.
(a) Background Checks- As a part of or in connection with an application for any loan originator license or registration, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System or appropriate regulatory agency, information concerning the applicant's identity, including--CommentsClose CommentsPermalink
(1) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; andCommentsClose CommentsPermalink
(2) personal history and experience, including authorization for the System or regulator agency to obtain--CommentsClose CommentsPermalink
(A) an independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act; andCommentsClose CommentsPermalink
(B) information related to any administrative, civil or criminal findings by any governmental jurisdiction.CommentsClose CommentsPermalink
(b) Issuance of License- The minimum standards for license issuance shall include the following:CommentsClose CommentsPermalink
(1) The applicant has not had a loan originator or similar license revoked in any governmental jurisdiction during the 5-year period immediately preceding the filing of the present application.CommentsClose CommentsPermalink
(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 application.CommentsClose CommentsPermalink
(3) The applicant has demonstrated financial responsibility, 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 title.CommentsClose CommentsPermalink
(4) The applicant has completed pre-licensing education.CommentsClose CommentsPermalink
(5) The applicant has passed a written test.CommentsClose CommentsPermalink
(c) Pre-Licensing Education of Loan Originators-CommentsClose CommentsPermalink
(1) IN GENERAL- Before applying for a license, every loan originator shall complete an education requirement.CommentsClose CommentsPermalink
(2) APPROVED EDUCATIONAL COURSES- Satisfactory pre-licensing education courses shall be reviewed, approved and published by the Nationwide Mortgage Licensing System or the Secretary of Housing and Urban Development in consultation with the Nationwide Mortgage Licensing System.CommentsClose CommentsPermalink
(3) MINIMUM EDUCATIONAL REQUIREMENTS- The pre-licensing education requirement shall be at least 20 hours of approved education, which shall include at least 3 hours of Federal law and regulations and 3 hours of ethics.CommentsClose CommentsPermalink
(d) Testing of Loan Originators-CommentsClose CommentsPermalink
(1) IN GENERAL- No individual may be licensed as a loan originator unless the individual has passed a qualified written test developed and administered by the Nationwide Mortgage Licensing System or the Secretary of Housing and Urban Development in consultation with the Nationwide Mortgage Licensing System.CommentsClose CommentsPermalink
(2) QUALIFIED TEST- A written test shall not be treated as a qualified written test for purposes of paragraph (1) unless--CommentsClose CommentsPermalink
(A) the test consists of a minimum of 100 questions; andCommentsClose CommentsPermalink
(B) the test adequately measures the applicant's knowledge and comprehension in appropriate subject areas, including--CommentsClose CommentsPermalink
(i) ethics;CommentsClose CommentsPermalink
(ii) Federal law and regulation pertaining to mortgage origination; andCommentsClose CommentsPermalink
(iii) State law and regulation pertaining to mortgage origination.CommentsClose CommentsPermalink
(3) MINIMUM COMPETENCE-CommentsClose CommentsPermalink
(A) PASSING SCORE- A passing test score of 75 percent correct answers to questions shall be required before accepting and processing a license application.CommentsClose CommentsPermalink
(B) INITIAL RETESTS- A loan originator may retake a test 3 consecutive times with each consecutive taking occurring in less than 14 days after the preceding test.CommentsClose CommentsPermalink
(C) SUBSEQUENT RETESTS- After 3 consecutive tests, a loan originator shall wait at least 14 days before taking the test again.CommentsClose CommentsPermalink
(D) RETEST AFTER LAPSE OF LICENSE- A loan originator who fails to maintain a valid license for a period of 5 years or longer shall retake the test.CommentsClose CommentsPermalink
SEC. 105. STANDARDS FOR LICENSE RENEWAL.
(a) In General- The minimum standards for license renewal shall include the following:CommentsClose CommentsPermalink
(1) The loan originator continues to meet the minimum standards for license issuance.CommentsClose CommentsPermalink
(2) The loan originator has satisfied the annual continuing education requirements set forth below.CommentsClose CommentsPermalink
(b) Continuing Education for State-Licensed Loan Originators-CommentsClose CommentsPermalink
(1) IN GENERAL- Every loan originator shall complete an annual continuing education requirement in order to renew their loan originator license or registration each year. Satisfactory continuing education courses shall be reviewed, approved and published by the Nationwide Mortgage Licensing System or the Secretary of Housing and Urban Development. The annual continuing education requirement shall be at least 8 hours of approved continuing education each year. Beginning with the loan originator's first year and repeated each year thereafter the annual continuing education requirement shall include at least 3 hours of Federal law and regulations. Beginning with the loan originator's first year and repeated each third year thereafter, the annual continuing education requirement shall include at least 2 hours of ethics.CommentsClose CommentsPermalink
(c) Application- Calculation of continuing education credits. Continuing education credits apply only to the year in which they are taken. A loan originator may not take the same approved course in the same or successive years to meet the annual requirements for continuing education. A loan originator, approved as an instructor of an approved continuing education course may receive credit for the annual education requirement at the rate of 2 hours credit for every 1 hour taught.CommentsClose CommentsPermalink
SEC. 106. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL BANKING AGENCIES.
(a) Development- The Federal banking agencies shall have sole responsibility for developing and maintaining a system of registration for registered loan originators.CommentsClose CommentsPermalink
(b) Unique Identifier- The Federal banking agencies, through the Financial Institutions Examination Council, shall coordinate with the Nationwide Mortgage Licensing System to establish a unique identifier for all Loan Originators.CommentsClose CommentsPermalink
(c) Linkage With State-Licenced Loan Originators- To facilitate tracking and identification of, and public access to publicly-adjudicated disciplinary and enforcement actions against, loan originators alternating between registration and licensing, the unique identifier used to register loan originators shall link electronically with the unique identifier used to license State-licensed loan originators.CommentsClose CommentsPermalink
(d) Administration- The Federal banking agencies may enter into a contract with the Nationwide Mortgage Licensing System to administer the registration of registered loan originators.CommentsClose CommentsPermalink
SEC. 107. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP AUTHORITY TO ESTABLISH A LOAN ORIGINATOR LICENSING SYSTEM.
(a) In General- The provisions of this section and section 408 shall take effect for States that do not meet the minimum standards set forth in this title for State-licensed loan originators, if and only if, by the end of a 3-year period beginning on the date of the enactment of this Act the State does not have in place by law or regulation the minimum requirements for licensing State-licensed loan originators that meet the specifications of this title and does not participate in the Nationwide Mortgage Licensing System.CommentsClose CommentsPermalink
(b) Back up Licensing System- The Secretary of Housing and Urban Development (hereafter in this title referred to as the `Secretary') shall provide for the establishment and maintenance of a system of licensed loan originators.CommentsClose CommentsPermalink
(c) Administration-CommentsClose CommentsPermalink
(1) IN GENERAL- The Secretary shall either maintain and administer the system established under this title or enter into a contract with the Nationwide Mortgage Licensing System to administer the system.CommentsClose CommentsPermalink
(2) CONSULTATION- The Secretary shall consult with the American Association of Residential Mortgage Regulators, the Conference of State Bank Supervisors, and other appropriate organizations in determining the information to be maintained in the System.CommentsClose CommentsPermalink
SEC. 108. SYSTEM FOR STATE-LICENSED LOAN ORIGINATORS.
(a) In General- In order to facilitate the requirements of section 407, the Secretary shall develop and maintain a system for State-licensed mortgage originators.CommentsClose CommentsPermalink
(b) Requirements for System- The system established under subsection (a) shall, at a minimum, meet the following requirements:CommentsClose CommentsPermalink
(1) UNIQUE IDENTIFIER- The system shall include a unique identifier listing each State-licensed loan originator as follows:CommentsClose CommentsPermalink
(A) The Federal banking agencies, through the Financial Institutions Examination Council, shall coordinate with the Nationwide Mortgage Licensing System to establish a unique identifier for all loan originators.CommentsClose CommentsPermalink
(B) To facilitate tracking and identification of loan originators alternating between registration and licensing, the unique identifier used to register loan originators shall link electronically with the unique identifier used to license State-licensed loan originators.CommentsClose CommentsPermalink
(2) AVAILABILITY OF ADVERSE INFORMATION ABOUT ORIGINATORS- The system shall make available to the public information regarding publicly-adjudicated disciplinary and enforcement actions taken against each State-licensed loan originator.CommentsClose CommentsPermalink
(3) REGULATORY INFORMATION- The system shall make available to the Secretary and to each public agency or official in a State responsible for regulating State-licensed loan originators such information regarding State-licensed loan originators as the Secretary, by regulation, considers appropriate for the Secretary and such agencies and officials to carry out their functions regarding regulation of State-licensed loan originators, including information regarding employment histories and criminal backgrounds.CommentsClose CommentsPermalink
(4) AVAILABILITY OF OTHER INFORMATION TO CONSUMERS- The system shall make available to persons employing or using the services of State-licensed loan originators such information regarding State-licensed loan originators as the Secretary, by regulation, considers appropriate.CommentsClose CommentsPermalink
(5) RECORDKEEPING- The system shall provide for the maintenance of such other information as the Secretary considers appropriate.CommentsClose CommentsPermalink
(c) Name of System- In the event the Secretary contracts with the Nationwide Mortgage Licensing System to administer the licensing of State-licensed loan originators, the system referenced in this subsection shall be known by the name Nationwide Mortgage Licensing System.CommentsClose CommentsPermalink
SEC. 109. FEES.
The Federal banking agencies, the Secretary of Housing and Urban Development, and the Nationwide Mortgage Licensing System may charge reasonable fees to cover the costs of maintaining and providing access to information from the system to the extent such fees are not charged to the general public.CommentsClose CommentsPermalink
SEC. 110. MORTGAGE PROFESSIONAL BACKGROUND CHECKS.
(a) Access to Records- Notwithstanding any other provision of the law, in providing identification and processing functions, the Attorney General shall provide access to all criminal history information to the appropriate State officials responsible for regulating mortgage professionals if required under the laws of the State.CommentsClose CommentsPermalink
(b) Agent- For the purposes of this section and in order to reduce the points of contact with which the Federal Bureau of Investigation may have to maintain for purposes of subsection (a), the Conference of State Bank Supervisors or a wholly owned subsidiary may be used as a channeling agent of the States for requesting and distributing information between the Department of Justice and the appropriate State agencies.CommentsClose CommentsPermalink
SEC. 111. CONFIDENTIALITY OF INFORMATION.
(a) System Confidentiality- 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 system proposed in this title, 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 information or material has been disclosed to the system. Information in the system may be shared with all State and Federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by the Federal and State laws of the States that have ownership of that information.CommentsClose CommentsPermalink
(b) Nonapplicability of Certain Requirements- Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to--CommentsClose CommentsPermalink
(1) disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; orCommentsClose CommentsPermalink
(2) subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Secretary with respect to such information or material, the participant waives, in whole or in part, in the discretion of the participant, such privilege.CommentsClose CommentsPermalink
(c) Preemption of State Law- Any State law, including any State open record law, relating to the disclosure of confidential supervisory information or any information or material described in subsection (a) that is inconsistent with subsection (a) shall be superseded by the requirements of such provision to the extent State law provides less confidentiality or a weaker privilege.CommentsClose CommentsPermalink
SEC. 112. LIABILITY PROVISIONS.
The Secretary of Housing and Urban Development or any State official or agency, or organization serving as the administrator of the system proposed in this title, 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, furnishing, or disseminating of information concerning persons who are mortgage professionals or are applying for licensing or registration as mortgage professionals or licensed loan officers or mortgage branches or mortgage companies, whether directly or through the system established under this title.CommentsClose CommentsPermalink
TITLE II--SIMPLIFIED DISCLOSURES
SEC. 201. BASIC MORTGAGE FACTS.
(a) In General- Chapter 2 of the Truth in Lending Act (
`Sec. 127B. Disclosure requirements required for all consumer credit plans secured by the consumer's principal dwelling.
`(a) Simplified Disclosure of Basic Mortgage Facts Required- No consumer credit transaction secured by the principal dwelling of the consumer (hereafter in this section referred to as the `mortgage') may be consummated unless--CommentsClose CommentsPermalink
`(1) the mortgagee under the mortgage has provided to the consumer the written disclosures required under subsection (b) at least 3 days before the date of the settlement and execution of the mortgage; andCommentsClose CommentsPermalink
`(2) the consumer has signed the disclosure under subsection (b)(1) and returned such disclosure to the mortgagee.CommentsClose CommentsPermalink
`(b) Contents- With respect to a mortgage, the written disclosures required under this subsection are as follows:CommentsClose CommentsPermalink
`(1) STATEMENT OF MORTGAGE FACTS- A single page, written disclosure regarding the mortgage with the heading `Your Basic Mortgage Facts' that sets forth, in accordance with such requirements as the Board shall, by regulation, establish--CommentsClose CommentsPermalink
`(A) the amount of the principal obligation under the mortgage;CommentsClose CommentsPermalink
`(B) the loan-to-value ratio for the mortgage;CommentsClose CommentsPermalink
`(C) the final maturity date for the mortgage;CommentsClose CommentsPermalink
`(D) the amount and due date for any balloon payment under the mortgage;CommentsClose CommentsPermalink
`(E) the amount of any prepayment fee to be charged if the mortgage is paid in full before the final maturity date for the mortgage;CommentsClose CommentsPermalink
`(F) the initial interest rate under the mortgage expressed as an annual percentage rate, and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink
`(G) the duration during which such initial interest rate will be charged;CommentsClose CommentsPermalink
`(H) the fully indexed rate of interest under the mortgage expressed as an annual percentage rate and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink
`(I) the maximum possible rate of interest under the mortgage expressed as an annual percentage rate and the amount of the monthly payment due under such rate;CommentsClose CommentsPermalink
`(J) the monthly household income of the mortgagor upon which the mortgage is based;CommentsClose CommentsPermalink
`(K) the amount of initial monthly payment due under the mortgage, and the amount of such initial monthly payment plus monthly amounts due for taxes and insurance on the property subject to the mortgage, both expressed as a percentage of the monthly household income of the mortgagor;CommentsClose CommentsPermalink
`(L) the amount of the fully indexed monthly payment due under the mortgage, and the amount of such fully indexed monthly payment plus monthly amounts due for taxes and insurance on the property subject to the mortgage, both expressed as a percentage of the monthly household income of the mortgagor;CommentsClose CommentsPermalink
`(M) the amount of any points to be paid by the mortgagor under the mortgage and the aggregate amount of any other closing costs in connection with the mortgage;CommentsClose CommentsPermalink
`(N) the amount of any late payment fees and a brief description of the consequences of making any payment late or defaulting on the mortgage, including foreclosure;CommentsClose CommentsPermalink
`(O) a name, telephone number, and electronic mail address that may be used by the mortgagor to obtain information regarding the mortgage;CommentsClose CommentsPermalink
`(P) an authorized signature of the originator of the mortgage;CommentsClose CommentsPermalink
`(Q) a blank space for the signature of the borrower; andCommentsClose CommentsPermalink
`(R) immediately above such blank space, a conspicuous statement in bold typeface, in all capital letters, in a font at least equal in size to the largest font otherwise used in the disclosure, as follows: `DO NOT SIGN THIS IF YOU DON'T UNDERSTAND IT!'.CommentsClose CommentsPermalink
`(2) STATEMENT OF DEFINITIONS AND EXPLANATIONS- A 2-page written disclosure that sets forth, in accordance with such requirements as the Board shall, by regulation in accordance with section 105, establish, basic easy-to-understand definitions or explanations, for purposes of residential mortgages, for all of the following terms: appraised value, types of loans, initial interest rate, fully indexed rate of interest, maximum possible rate of interest, monthly household income, monthly mortgage payment including taxes and insurance, fully indexed housing expense ratio, prepayment fee, balloon payment, payment option loan, points, closing costs, and default and foreclosure.CommentsClose CommentsPermalink
`(c) Preemption- The provisions of this section relating to the disclosure of basic mortgage facts to a consumer in connection with any mortgage shall supersede the provisions of the law of any State relating to the disclosure of such facts.'.CommentsClose CommentsPermalink
(b) 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 127A the following new item:CommentsClose CommentsPermalink
`127B. Disclosure requirements required for all consumer credit plans secured by the consumer's principal dwelling.'.CommentsClose CommentsPermalink
TITLE III--HOUSING COUNSELING
Subtitle A--Consumer Counseling
SEC. 301. CONSUMER COUNSELING REQUIREMENTS.
(a) In General- Chapter 2 of the Truth in Lending Act (
`Sec. 129A. Provisions applicable to nontraditional mortgages
`(a) Consumer Counseling Requirements-CommentsClose CommentsPermalink
`(1) IN GENERAL- A creditor may not extend any credit in the form of a subprime mortgage to any consumer unless the creditor has provided to the consumer, at such time before the consummation of the mortgage and in such manner as the Board shall provide by regulation--CommentsClose CommentsPermalink
`(A) a separate written statement recommending that the consumer take advantage of available home ownership or credit counseling services before agreeing to the terms of any subprime mortgage; andCommentsClose CommentsPermalink
`(B) a written statement containing the names, addresses and telephone numbers of counseling agencies or programs reasonably available to the consumer that have been certified or approved and made publicly available by the Secretary of Housing and Urban Development, a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989), or the agency referred to in subsection (a) or (c) of section 108 with jurisdiction over the creditor as qualified to provide counseling on--CommentsClose CommentsPermalink
`(i) the advisability of a subprime mortgage transaction; andCommentsClose CommentsPermalink
`(ii) the appropriateness of a subprime mortgage for the consumer.CommentsClose CommentsPermalink
`(2) COMPLETE AND UPDATED LISTS REQUIRED- A creditor shall be deemed to be in compliance with the requirements of this subsection if the creditor provides the consumer with a reasonably complete or updated list of counseling agencies required by section 5(a) of the Real Estate Settlement Procedures Act of 1974.'.CommentsClose CommentsPermalink
(b) 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:CommentsClose CommentsPermalink
`129A. Provisions applicable to nontraditional mortgages.'.CommentsClose CommentsPermalink
Subtitle B--Expanded Housing Counseling Opportunities
SEC. 311. SHORT TITLE.
This subtitle may be cited as the `Expanding Housing Opportunities Through Education and Counseling Act'.CommentsClose CommentsPermalink
SEC. 312. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.
Section 4 of the Department of Housing and Urban Development Act (
`(g) Office of Housing Counseling-CommentsClose CommentsPermalink
`(1) ESTABLISHMENT- There is established, in the Office of the Secretary, the Office of Housing Counseling.CommentsClose CommentsPermalink
`(2) DIRECTOR- There is established the position of Director of Housing Counseling. The Director shall be the head of the Office of Housing Counseling and shall be appointed by the Secretary. Such position shall be a career-reserved position in the Senior Executive Service.CommentsClose CommentsPermalink
`(3) FUNCTIONS-CommentsClose CommentsPermalink
`(A) IN GENERAL- The Director shall have ultimate responsibility within the Department, except for the Secretary, for all activities and matters relating to homeownership counseling and rental housing counseling, including--CommentsClose CommentsPermalink
`(i) research, grant administration, public outreach, and policy development relating to such counseling; andCommentsClose CommentsPermalink
`(ii) establishment, coordination, and administration of all regulations, requirements, standards, and performance measures under programs and laws administered by the Department that relate to housing counseling, homeownership counseling (including maintenance of homes), mortgage-related counseling (including home equity conversion mortgages and credit protection options to avoid foreclosure), and rental housing counseling, including the requirements, standards, and performance measures relating to housing counseling.CommentsClose CommentsPermalink
`(B) SPECIFIC FUNCTIONS- The Director shall carry out the functions assigned to the Director and the Office under this section and any other provisions of law. Such functions shall include establishing rules necessary for--CommentsClose CommentsPermalink
`(i) the counseling procedures under section 106(h)(1) of the Housing and Urban Development Act of 1968 (
`(ii) carrying out all other functions of the Secretary under section 106(h) of the Housing and Urban Development Act of 1968, including the establishment, operation, and publication of the availability of the toll-free telephone number under paragraph (2) of such section;CommentsClose CommentsPermalink
`(iii) carrying out section 5 of the Real Estate Settlement Procedures Act of 1974 (
`(iv) carrying out the certification program under section 106(e) of the Housing and Urban Development Act of 1968 (
`(v) carrying out the assistance program under section 106(a)(4) of the Housing and Urban Development Act of 1968, including criteria for selection of applications to receive assistance;CommentsClose CommentsPermalink
`(vi) providing for operation of the advisory committee established under paragraph (4) of this subsection; andCommentsClose CommentsPermalink
`(vii) collaborating with community-based organizations with expertise in the field of housing counseling.CommentsClose CommentsPermalink
`(4) ADVISORY COMMITTEE-CommentsClose CommentsPermalink
`(A) IN GENERAL- The Secretary shall appoint an advisory committee to provide advice and oversight regarding the carrying out of the functions of the Director.CommentsClose CommentsPermalink
`(B) MEMBERS- Such advisory committee shall consist of not more than 12 individuals, and the membership of the committee shall equally represent all aspects of the mortgage and real estate industry, including consumers.CommentsClose CommentsPermalink
`(C) TERMS- Except as provided in subparagraph (D), each member of the advisory committee shall be appointed for a term of 3 years. Members may be reappointed at the discretion of the Secretary.CommentsClose CommentsPermalink
`(D) TERMS OF INITIAL APPOINTEES- As designated by the Secretary at the time of appointment, of the members first appointed to the advisory committee, 4 shall be appointed for a term of 1 year and 4 shall be appointed for a term of 2 years.CommentsClose CommentsPermalink
`(E) PROHIBITION OF PAY; TRAVEL EXPENSES- Members of the advisory committee shall serve without pay, but shall receive travel expenses, including per diem in lieu of subsistence, in accordance with applicable provisions under subchapter I of chapter 57 of title 5, United States Code.CommentsClose CommentsPermalink
`(F) ADVISORY ROLE ONLY- The advisory committee shall have no role in reviewing or awarding housing counseling grants.CommentsClose CommentsPermalink
`(5) SCOPE OF HOMEOWNERSHIP COUNSELING- In carrying out the responsibilities of the Director, the Director shall ensure that homeownership counseling provided by, in connection with, or pursuant to any function, activity, or program of the Department addresses the entire process of homeownership, including the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period of ownership of a home (including refinancing, default and foreclosure, and other financial decisions), and the sale or other disposition of a home.'.CommentsClose CommentsPermalink
SEC. 313. COUNSELING PROCEDURES.
(a) In General- Section 106 of the Housing and Urban Development Act of 1968 (
`(h) Procedures and Activities-CommentsClose CommentsPermalink
`(1) COUNSELING PROCEDURES-CommentsClose CommentsPermalink
`(A) IN GENERAL- The Secretary shall establish, coordinate, and monitor the administration by the Department of Housing and Urban Development of the counseling procedures for homeownership counseling and rental housing counseling provided in connection with any program of the Department, including all requirements, standards, and performance measures that relate to homeownership and rental housing counseling.CommentsClose CommentsPermalink
`(B) HOMEOWNERSHIP COUNSELING- For purposes of this subsection and as used in the provisions referred to in this subparagraph, the term `homeownership counseling' means counseling related to homeownership and residential mortgage loans. Such term includes counseling related to homeownership and residential mortgage loans that is provided pursuant to--CommentsClose CommentsPermalink
`(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (
`(ii) in the United States Housing Act of 1937--CommentsClose CommentsPermalink
`(I) section 9(e) (
`(II) section 8(y)(1)(D) (
`(III) section 18(a)(4)(D) (
`(IV) section 23(c)(4) (
`(V) section 32(e)(4) (
`(VI) section 33(d)(2)(B) (
`(VII) sections 302(b)(6) and 303(b)(7) (
`(VIII) section 304(c)(4) (
`(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (
`(iv) sections 233(b)(2) and 258(b) of the Cranston-Gonzalez National Affordable Housing Act (
`(v) this section and section 101(e) of the Housing and Urban Development Act of 1968 (
`(vi) section 220(d)(2)(G) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (
`(vii) sections 422(b)(6), 423(b)(7), 424(c)(4), 442(b)(6), and 443(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (
`(viii) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (
`(ix) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (
`(x) in the National Housing Act--CommentsClose CommentsPermalink
`(I) in section 203 (
`(II) subsections (a) and (c)(3) of section 237 (
`(III) subsections (d)(2)(B) and (m)(1) of section 255 (
`(xi) section 502(h)(4)(B) of the Housing Act of 1949 (
`(xii) section 508 of the Housing and Urban Development Act of 1970 (
`(C) RENTAL HOUSING COUNSELING- For purposes of this subsection, the term `rental housing counseling' means counseling related to rental of residential property, which may include counseling regarding future homeownership opportunities and providing referrals for renters and prospective renters to entities providing counseling and shall include counseling related to such topics that is provided pursuant to--CommentsClose CommentsPermalink
`(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (
`(ii) in the United States Housing Act of 1937--CommentsClose CommentsPermalink
`(I) section 9(e) (
`(II) section 18(a)(4)(D) (
`(III) section 23(c)(4) (
`(IV) section 32(e)(4) (
`(V) section 33(d)(2)(B) (
`(VI) section 302(b)(6) (
`(iii) section 233(b)(2) of the Cranston-Gonzalez National Affordable Housing Act (
`(iv) section 106 of the Housing and Urban Development Act of 1968 (
`(v) section 422(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (
`(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (
`(vii) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (
`(viii) the rental assistance program under section 8 of the United States Housing Act of 1937 (
`(2) STANDARDS FOR MATERIALS- The Secretary, in conjunction with the advisory committee established under subsection (g)(4), shall establish standards for materials and forms to be used, as appropriate, by organizations providing homeownership counseling services, including any recipients of assistance pursuant to subsection (a)(4).CommentsClose CommentsPermalink
`(3) MORTGAGE SOFTWARE SYSTEMS-CommentsClose CommentsPermalink
`(A) CERTIFICATION- The Secretary shall provide for the certification of various computer software programs for consumers to use in evaluating different residential mortgage loan proposals. The Secretary shall require, for such certification, that the mortgage software systems take into account--CommentsClose CommentsPermalink
`(i) the consumer's financial situation and the cost of maintaining a home, including insurance, taxes, and utilities;CommentsClose CommentsPermalink
`(ii) the amount of time the consumer expects to remain in the home or expected time to maturity of the loan;CommentsClose CommentsPermalink
`(iii) such other factors as the Secretary considers appropriate to assist the consumer in evaluating whether to pay points, to lock in an interest rate, to select an adjustable or fixed rate loan, to select a conventional or government-insured or guaranteed loan and to make other choices during the loan application process.CommentsClose CommentsPermalink
If the Secretary determines that available existing software is inadequate to assist consumers during the residential mortgage loan application process, the Secretary shall arrange for the development by private sector software companies of new mortgage software systems that meet the Secretary's specifications.CommentsClose CommentsPermalink
`(B) USE AND INITIAL AVAILABILITY- Such certified computer software programs shall be used to supplement, not replace, housing counseling. The Secretary shall provide that such programs are initially used only in connection with the assistance of housing counselors certified pursuant to subsection (e).CommentsClose CommentsPermalink
`(C) AVAILABILITY- After a period of initial availability under subparagraph (B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make mortgage software systems certified pursuant to this paragraph widely available through the Internet and at public locations, including public libraries, senior-citizen centers, public housing sites, offices of public housing agencies that administer rental housing assistance vouchers, and housing counseling centers.CommentsClose CommentsPermalink
`(4) NATIONAL PUBLIC SERVICE MULTIMEDIA CAMPAIGNS TO PROMOTE HOUSING COUNSELING-CommentsClose CommentsPermalink
`(A) IN GENERAL- The Director of Housing Counseling shall develop, implement, and conduct national public service multimedia campaigns designed to make persons facing mortgage foreclosure, persons considering a subprime mortgage loan to purchase a home, elderly persons, persons who face language barriers, low-income persons, and other potentially vulnerable consumers aware that it is advisable, before seeking or maintaining a residential mortgage loan, to obtain homeownership counseling from an unbiased and reliable sources and that such homeownership counseling is available, including through programs sponsored by the Secretary of Housing and Urban Development.CommentsClose CommentsPermalink
`(B) CONTACT INFORMATION- Each segment of the multimedia campaign under subparagraph (A) shall publicize the toll-free telephone number and web site of the Department of Housing and Urban Development through which persons seeking housing counseling can locate a housing counseling agency in their State that is certified by the Secretary of Housing and Urban Development and can provide advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages.CommentsClose CommentsPermalink
`(C) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to the Secretary, not to exceed $3,000,000 for fiscal years 2008, 2009, and 2010, for the develop, implement, and conduct of national public service multimedia campaigns under this paragraph.CommentsClose CommentsPermalink
`(5) EDUCATION PROGRAMS- The Secretary shall provide advice and technical assistance to States, units of general local government, and nonprofit organizations regarding the establishment and operation of, including assistance with the development of content and materials for, educational programs to inform and educate consumers, particularly those most vulnerable with respect to residential mortgage loans (such as elderly persons, persons facing language barriers, low-income persons, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing, home equity loans, and home repair loans.'.CommentsClose CommentsPermalink
(b) Conforming Amendments to Grant Program for Homeownership Counseling Organizations- Section 106(c)(5)(A)(ii) of the Housing and Urban Development Act of 1968 (
(1) in subclause (II), by striking `and' at the end;CommentsClose CommentsPermalink
(2) in subclause (III) by striking the period at the end and inserting `; and'; andCommentsClose CommentsPermalink
(3) by inserting after subclause (III) the following new subclause:CommentsClose CommentsPermalink
`(IV) notify the housing or mortgage applicant of the availability of mortgage software systems provided pursuant to subsection (h)(4).'.CommentsClose CommentsPermalink
SEC. 314. GRANTS FOR HOUSING COUNSELING ASSISTANCE.
Section 106(a) of the Housing and Urban Development Act of 1968 (
`(4) Homeownership and Rental Counseling Assistance-CommentsClose CommentsPermalink
`(A) IN GENERAL- The Secretary shall make financial assistance available under this paragraph to States, units of general local governments, and nonprofit organizations providing homeownership or rental counseling (as such terms are defined in subsection (h)(1)).CommentsClose CommentsPermalink
`(B) QUALIFIED ENTITIES- The Secretary shall establish standards and guidelines for eligibility of organizations (including governmental and nonprofit organizations) to receive assistance under this paragraph.CommentsClose CommentsPermalink
`(C) DISTRIBUTION- Assistance made available under this paragraph shall be distributed in a manner that encourages efficient and successful counseling programs.CommentsClose CommentsPermalink
`(D) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $100,000,000 for each of fiscal years 2008 through 2011 for--CommentsClose CommentsPermalink
`(i) the operations of the Office of Housing Counseling of the Department of Housing and Urban Development;CommentsClose CommentsPermalink
`(ii) the responsibilities of the Secretary under paragraphs (2) through (6) of subsection (h); andCommentsClose CommentsPermalink
`(iii) assistance pursuant to this paragraph for entities providing homeownership and rental counseling.'.CommentsClose CommentsPermalink
SEC. 315. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD PROGRAMS.
Section 106(e) of the Housing and Urban Development Act of 1968 (
(1) by striking paragraph (1) and inserting the following new paragraph:CommentsClose CommentsPermalink
`(1) REQUIREMENT FOR ASSISTANCE- An organization may not receive assistance for counseling activities under subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under section 101(e), unless the organization, or the individuals through which the organization provides such counseling, has been certified by the Secretary under this subsection as competent to provide such counseling.';CommentsClose CommentsPermalink
(2) in paragraph (2)--CommentsClose CommentsPermalink
(A) by inserting `and for certifying organizations' before the period at the end of the first sentence; andCommentsClose CommentsPermalink
(B) in the second sentence by striking `for certification' and inserting `, for certification of an organization, that each individual through which the organization provides counseling shall demonstrate, and, for certification of an individual,';CommentsClose CommentsPermalink
(3) in paragraph (3), by inserting `organizations and' before `individuals';CommentsClose CommentsPermalink
(4) by redesignating paragraph (3) as paragraph (5); andCommentsClose CommentsPermalink
(5) by inserting after paragraph (2) the following new paragraphs:CommentsClose CommentsPermalink
`(3) REQUIREMENT UNDER HUD PROGRAMS- Any homeownership counseling or rental housing counseling (as such terms are defined in subsection (h)(1)) 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 under this subsection as competent to provide such counseling.CommentsClose CommentsPermalink
`(4) OUTREACH- The Secretary shall take such actions as the Secretary considers appropriate to ensure that individuals and organizations providing homeownership or rental housing counseling are aware of the certification requirements and standards of this subsection and of the training and certification programs under subsection (f).'.CommentsClose CommentsPermalink
SEC. 316. STUDY OF DEFAULTS AND FORECLOSURES.
The Secretary of Housing and Urban Development shall conduct an extensive study of the root causes of default and foreclosure of home loans, using as much empirical data as are available. The study shall also examine the role of escrow accounts in helping prime and nonprime borrowers to avoid defaults and foreclosures. Not later than 12 months after the date of the enactment of this Act, the Secretary shall submit to the Congress a preliminary report regarding the study. Not later than 24 months after such date of enactment, the Secretary shall submit a final report regarding the results of the study, which shall include any recommended legislation relating to the study, and recommendations for best practices and for a process to identify populations that need counseling the most.CommentsClose CommentsPermalink
SEC. 317. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.
Section 106 of the Housing and Urban Development Act of 1968 (
`(i) Definitions- For purposes of this section:CommentsClose CommentsPermalink
`(1) NONPROFIT ORGANIZATION- The term `nonprofit organization' has the meaning given such term in section 104(5) of the Cranston-Gonzalez National Affordable Housing Act (
`(2) STATE- The term `State' means each of the several States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession of the United States.CommentsClose CommentsPermalink
`(3) UNIT OF GENERAL LOCAL GOVERNMENT- The term `unit of general local government' means any city, county, parish, town, township, borough, village, or other general purpose political subdivision of a State.'.CommentsClose CommentsPermalink
SEC. 318. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.
Section 5 of the Real Estate Settlement Procedures Act of 1974 (
(1) in the section heading, by striking `SPECIAL' and inserting `HOME BUYING';CommentsClose CommentsPermalink
(2) by striking subsections (a) and (b) and inserting the following new subsections:CommentsClose CommentsPermalink
`(a) Preparation and Distribution- The Secretary shall prepare, at least once every 5 years, a booklet to help consumers applying for federally related mortgage loans to understand the nature and costs of real estate settlement services. The Secretary shall prepare the booklet in various languages and cultural styles, as the Secretary determines to be appropriate, so that the booklet is understandable and accessible to homebuyers of different ethnic and cultural backgrounds. The Secretary shall distribute such booklets to all lenders that make federally related mortgage loans. The Secretary shall also distribute to such lenders lists, organized by location, of homeownership counselors certified under section 106(e) of the Housing and Urban Development Act of 1968 (
`(b) Contents- Each booklet shall be in such form and detail as the Secretary shall prescribe and, in addition to such other information as the Secretary may provide, shall include in plain and understandable language the following information:CommentsClose CommentsPermalink
`(1) A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a federally related mortgage loan. The description and explanation shall provide general information about the mortgage process as well as specific information concerning, at a minimum--CommentsClose CommentsPermalink
`(A) balloon payments;CommentsClose CommentsPermalink
`(B) prepayment penalties; andCommentsClose CommentsPermalink
`(C) the trade-off between closing costs and the interest rate over the life of the loan.CommentsClose CommentsPermalink
`(2) An explanation and sample of the uniform settlement statement required by section 4.CommentsClose CommentsPermalink
`(3) A list and explanation of lending practices, including those prohibited by the Truth in Lending Act or other applicable Federal law, and of other unfair practices and unreasonable or unnecessary charges to be avoided by the prospective buyer with respect to a real estate settlement.CommentsClose CommentsPermalink
`(4) A list and explanation of questions a consumer obtaining a federally related mortgage loan should ask regarding the loan, including whether the consumer will have the ability to repay the loan, whether the consumer sufficiently shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan will benefit the borrower.CommentsClose CommentsPermalink
`(5) An explanation of the right of rescission as to certain transactions provided by sections 125 and 129 of the Truth in Lending Act.CommentsClose CommentsPermalink
`(6) A brief explanation of the nature of a variable rate mortgage and a reference to the booklet entitled `Consumer Handbook on Adjustable Rate Mortgages', published by the Board of Governors of the Federal Reserve System pursuant to section 226.19(b)(1) of title 12, Code of Federal Regulations, or to any suitable substitute of such booklet that such Board of Governors may subsequently adopt pursuant to such section.CommentsClose CommentsPermalink
`(7) A brief explanation of the nature of a home equity line of credit and a reference to the pamphlet required to be provided under section 127A of the Truth in Lending Act.CommentsClose CommentsPermalink
`(8) Information about homeownership counseling services made available pursuant to section 106(a)(4) of the Housing and Urban Development Act of 1968 (
`(9) An explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate and the requirements under section 10 of this Act regarding such accounts.CommentsClose CommentsPermalink
`(10) An explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary services incidental to a real estate settlement.CommentsClose CommentsPermalink
`(11) An explanation of a consumer's responsibilities, liabilities, and obligations in a mortgage transaction.CommentsClose CommentsPermalink
`(12) An explanation of the nature and purpose of real estate appraisals, including the difference between an appraisal and a home inspection.CommentsClose CommentsPermalink
`(13) Notice that the Office of Housing of the Department of Housing and Urban Development has made publicly available a brochure regarding loan fraud and a World Wide Web address and toll-free telephone number for obtaining the brochure.CommentsClose CommentsPermalink
The booklet prepared pursuant to this section shall take into consideration differences in real estate settlement procedures that may exist among the several States and territories of the United States and among separate political subdivisions within the same State and territory.';CommentsClose CommentsPermalink
(3) in subsection (c), by striking the last sentence and inserting the following new sentence: `Each lender shall also include with the booklet a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 106(e) of the Housing and Urban Development Act of 1968 (
(4) in subsection (d), by inserting after the period at the end of the first sentence the following: `The lender shall provide the HUD-issued booklet in the version that is most appropriate for the person receiving it.'.CommentsClose CommentsPermalink
TITLE IV--PROHIBITION ON ABUSIVE PRACTICES
Subtitle A--Mortgage Servicing
SEC. 401. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER CREDIT TRANSACTIONS.
(a) In General- Chapter 2 of the Truth in Lending Act (
`SEC. 129B. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER CREDIT TRANSACTIONS.
`(a) In General- A creditor, in connection with the formation or consummation of a subprime mortgage, shall establish, at the time of the consummation of such mortgage, an escrow or impound account for the payment of taxes and hazard insurance as provided in, and in accordance with, this section, unless such an account already exists.CommentsClose CommentsPermalink
`(b) Duration of Escrow or Impound Account- An escrow or impound account established pursuant to this section, shall remain in existence for a minimum period of 5 years, unless the underlying mortgage is terminated.CommentsClose CommentsPermalink
`(c) Administration of Escrow or Impound Accounts- Except as may otherwise be provided for in this title or in regulations prescribed by the Board, escrow or impound accounts established pursuant to this section shall be established in an insured depository institution.CommentsClose CommentsPermalink
`(d) Disclosures Relating to Escrow or Impound Account-CommentsClose CommentsPermalink
`(1) IN GENERAL- In the case of any impound, trust, or escrow account that is subject to this section, the creditor shall disclose by written notice to the consumer within 3 business days before the consummation of the consumer credit transaction giving rise to such account the following information:CommentsClose CommentsPermalink
`(A) The fact that an escrow or impound account will be established at consummation of the transaction.CommentsClose CommentsPermalink
`(B) The amount required at closing to initially fund the escrow or impound account.CommentsClose CommentsPermalink
`(C) The amount in the initial year of the estimated taxes and hazard insurance premiums.CommentsClose CommentsPermalink
`(D) The estimated monthly amount payable for taxes and hazard insurance.CommentsClose CommentsPermalink
`(E) The fact that if the consumer chooses to terminate the account after 5 years, the consumer will become responsible for the payment of all taxes and hazard insurance on the property unless a new escrow or impound account is established.CommentsClose CommentsPermalink
`(2) REGULATIONS- The Board shall prescribe by regulation the contents of the notice required in paragraph (1) no later than 90 days after the date of the enactment of the Fair Mortgage Practices Act of 2007.CommentsClose CommentsPermalink
`(e) Hazard Insurance Defined- For purposes of this section, the term `hazard insurance' shall have the same meaning as provided under the law of the State where the real property securing the consumer credit transaction is located.'.CommentsClose CommentsPermalink
(b) 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 129A (as added by section 301(a) of this Act) the following new item:CommentsClose CommentsPermalink
`129B. Escrow or impound accounts relating to certain consumer credit transactions.'.CommentsClose CommentsPermalink
SEC. 402. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO OPT OUT OF ESCROW SERVICES.
Section 129B of the Truth in Lending Act (as added by section 401(a) of this title) is amended by adding at the end the following new subsections:CommentsClose CommentsPermalink
`(g) Disclosure Notice Required for Consumers Who Opt Out of Escrow Services-CommentsClose CommentsPermalink
`(1) IN GENERAL- If an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to property securing a consumer credit transaction is not established in connection with any consumer credit transaction secured by the principal dwelling of the consumer, or if a consumer chooses, at any time after such an account is established in connection with any such transaction, to close such account, the creditor shall provide a timely and clearly written disclosure to the consumer that advises the consumer of the responsibilities of the consumer and implications for the consumer in the absence of any such account, including--CommentsClose CommentsPermalink
`(A) information concerning any applicable fees associated with either the nonestablishment of any such account at the time of the transaction, or any subsequent closure of any such account;CommentsClose CommentsPermalink
`(B) clear and prominent notice that the consumer is responsible for personally and directly paying the non-escrowed items, in addition to paying the mortgage loan payment, in the absence of any such account; andCommentsClose CommentsPermalink
`(C) a clear explanation of the consequences of any failure to pay non-escrowed items, including the possible requirement for direct placement of insurance by the creditor and the potentially higher cost (including any potential commission payments to the servicer) or reduced coverage for the consumer in the event of any such creditor-placed insurance.CommentsClose CommentsPermalink
`(2) REGULATIONS- The Board shall prescribe such regulations as are necessary to implement the requirements of this subsection in final form before the end of the 12-month period beginning on the date of the enactment of the Fair Mortgage Practices Act of 2007.CommentsClose CommentsPermalink
`(h) Preemption- The provisions of this section requiring disclosures relating to impound, trust, or escrow accounts, including disclosures under subsection (g) to a consumer shall supersede the provisions of the law of any State relating to such disclosures.'.CommentsClose CommentsPermalink
Subtitle B--Nontraditional Mortgage Provisions
SEC. 411. PREPAYMENT PENALTIES.
Section 129A of the Truth in Lending Act (as added by section 301(a)) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink
`(b) Limitation on Prepayment Penalties for Hybrid ARMs-CommentsClose CommentsPermalink
`(1) IN GENERAL- In the case of a consumer credit transaction secured by the consumer's principal residence with a fixed interest rate for an introductory period that resets to a variable interest rate after such period, the transaction may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due at any time after the beginning of the 120-day period ending on the date of the reset to a variable interest rate.CommentsClose CommentsPermalink
`(2) PREEMPTION- The provisions of this section relating to prepayment penalties with respect to any consumer credit transaction secured by the consumer's principal residence with a fixed interest rate for an introductory period that resets to a variable interest rate after such period shall supersede the provisions of the law of any State relating to prepayment penalties with respect to any such transaction.'.CommentsClose CommentsPermalink
SEC. 412. ABILITY TO REPAY.
Section 129A of the Truth in Lending Act is amended by inserting after subsection (b) (as added by section 411 of this subtitle) the following new subsection:CommentsClose CommentsPermalink
`(c) Ability To Repay- The Board, in consultation with other Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act), shall prescribe regulations in accordance with section 105, or issue guidance, that encourages any creditor with respect to a consumer credit transaction secured by the consumer's principal residence to evaluate the consumer's ability to repay the transaction under the terms of the transaction.'.CommentsClose CommentsPermalink
TITLE V--MORTGAGE FRAUD
SEC. 501. AUTHORIZATION OF APPROPRIATIONS FOR MORTGAGE FRAUD PREVENTION, INVESTIGATION, AND PROSECUTION.
For fiscal years 2008, 2009, 2010, 2011, and 2012, there are authorized to be appropriated to the Attorney General a total of $20,000,000, in addition to other amounts authorized to be appropriated to the Attorney General for any such fiscal year, for the purpose of enhancing the efforts of the Department of Justice and the Federal Bureau of Investigation to prevent, investigate, and prosecute mortgage fraud.CommentsClose CommentsPermalink
TITLE VI--APPRAISAL ACTIVITIES
SEC. 601. PROPERTY APPRAISAL REQUIREMENTS.
Section 129A of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 412 of this Act) the following new subsection:CommentsClose CommentsPermalink
`(d) Property Appraisal Requirements-CommentsClose CommentsPermalink
`(1) IN GENERAL- A creditor may not extend credit in the form of a subprime mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged prepared in accordance with the requirements of this subsection.CommentsClose CommentsPermalink
`(2) APPRAISAL REQUIREMENTS-CommentsClose CommentsPermalink
`(A) PHYSICAL INSPECTION- An appraisal of property to be secured by a subprime mortgage does not meet the requirement of this subsection unless it is performed by a qualified appraiser who conducts a physical inspection of the mortgaged property.CommentsClose CommentsPermalink
`(B) SECOND APPRAISAL UNDER CERTAIN CIRCUMSTANCES-CommentsClose CommentsPermalink
`(i) IN GENERAL- If the purpose of the subprime mortgage is to finance the purchase or acquisition of the mortgaged property from a person within 180 days of the 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 second qualified appraiser that supports the current sale price of the property.CommentsClose CommentsPermalink
`(ii) NO COST TO CONSUMER- The cost of any second appraisal required under clause (i) may not be charged to the consumer.CommentsClose CommentsPermalink
`(C) QUALIFIED APPRAISER DEFINED- For purposes of this subsection, the term `qualified appraiser' means a person who--CommentsClose CommentsPermalink
`(i) is certified or licensed by the State in which property to be appraised is located; andCommentsClose CommentsPermalink
`(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.CommentsClose CommentsPermalink
`(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.CommentsClose CommentsPermalink
`(4) 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.'.CommentsClose CommentsPermalink
SEC. 602. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC, APPRAISER INDEPENDENCE, AND APPROVED APPRAISER EDUCATION.
(a) Annual Report of Appraisal Subcommittee- Section 1103(a)(4) of Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(b) Open Meetings- Section 1104(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(c) Regulations- Section 1106 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(d) Criteria- Section 1116 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(1) in subsection (c), by inserting `whose criteria for the licensing of a real estate appraiser currently meet or exceed the minimum criteria issued by the Appraiser Qualifications Board of The Appraiser Foundation for the licensing of real estate appraisers' before the period at the end; andCommentsClose CommentsPermalink
(2) by striking subsection (e).CommentsClose CommentsPermalink
(e) Temporary Practice- Section 1122(a)(1) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(1) by striking subparagraph (A);CommentsClose CommentsPermalink
(2) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; andCommentsClose CommentsPermalink
(3) by moving the left margin of such subparagraphs 2 ems to the right.CommentsClose CommentsPermalink
(f) Reciprocity- Subsection (b) of section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
`(b) Reciprocity- A State appraiser certifying or licensing agency shall issue a reciprocal certification or license for an individual from another State when--CommentsClose CommentsPermalink
`(1) the appraiser licensing and certification program of such other State is in compliance with the provisions of this title; andCommentsClose CommentsPermalink
`(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 Qualifications Board of The Appraisal Foundation.'.CommentsClose CommentsPermalink
(g) Consideration of Professional Appraisal Designations- Section 1122(d) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
(h) Appraiser Independence- Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
`(g) Appraiser Independence-CommentsClose CommentsPermalink
`(1) IN GENERAL- No mortgage lender, mortgage broker or mortgage banker, real estate broker, nor any other person with an interest in a real estate transaction involving an appraisal shall improperly influence or attempt to improperly influence, through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan.CommentsClose CommentsPermalink
`(2) EXCEPTIONS- The requirements of paragraph (1) shall 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 provide 1 or more of the following services:CommentsClose CommentsPermalink
`(A) Consider additional, appropriate property information.CommentsClose CommentsPermalink
`(B) Provide further detail, substantiation, or explanation for the appraiser's value conclusion.CommentsClose CommentsPermalink
`(C) Correct errors in the appraisal report.'.CommentsClose CommentsPermalink
(i) Appraiser Education- Section 1122 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (
`(h) Approved Education- A State certifying or licensing agency shall accept courses and seminars approved by the Appraiser Qualification Board's Course Approval Program.'.CommentsClose CommentsPermalink
SEC. 603. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND COMPLIANCE PROGRAMS.
(a) Study- The Comptroller General shall conduct a comprehensive study on possible improvements in the appraisal process generally, and specifically on the consistency in and the effectiveness of, and possible improvements in, State compliance efforts and programs in accordance with title XI of Financial Institutions Reform, Recovery, and Enforcement Act of 1989.CommentsClose CommentsPermalink
(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 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, at the Federal or State level, as the Comptroller General may determine to be appropriate.CommentsClose CommentsPermalink
TITLE VII--INCENTIVES FOR BEST PRACTICES
SEC. 701. CRA CREDIT FOR CERTAIN LENDER PRACTICES.
Section 804 of the Community Reinvestment Act of 1977 (
`(d) Efforts on Behalf of Subprime Borrowers- In assessing and taking into account, under subsection (a), the record of a regulated financial institution, the appropriate Federal financial supervisory agency may consider as a factor, in accordance with such guidelines as the agency may issue, any of the following programs undertaken by the institution:CommentsClose CommentsPermalink
`(1) A program to provide or support the provision of home ownership or credit counseling to low- and moderate-income consumer borrowers through programs reasonably available to the consumer that have been certified or approved by the Secretary of Housing and Urban Development for such purpose.CommentsClose CommentsPermalink
`(2) A program to provide or support the provision of foreclosure-prevention counseling and other prevention efforts to low- and moderate-income consumer borrowers through programs reasonably available to the consumer that have been certified or approved by the Secretary of Housing and Urban Development for such purpose.CommentsClose CommentsPermalink
`(3) A program to transition low- and moderate-income consumer borrowers from higher-cost mortgage loans to lower-cost mortgage loans.'.CommentsClose CommentsPermalink
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