S 2296 ISCommentsClose CommentsPermalink

To provide for improved disclosures by all mortgage lenders at the loan approval and settlement stages of all mortgage loans.CommentsClose CommentsPermalink

November 1, 2007

Mr. SCHUMER introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To provide for improved disclosures by all mortgage lenders at the loan approval and settlement stages of all mortgage loans.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.

This Act may be cited as the `Mortgage Disclosure Enhancement Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. AMENDMENTS TO THE TRUTH IN LENDING ACT.

The Truth In Lending Act (15 U.S.C. 1601 et seq.) is amended by inserting after section 129 the following new section:CommentsClose CommentsPermalink

`SEC. 129A. ENHANCED MORTGAGE DISCLOSURES.

`(a) Definitions- As used in this section, the term `mortgage loan' means any consumer credit transaction in which a security interest is or will be retained or acquired in any real property located in the United States which is or, upon completion of the transaction, will be used as the dwelling of the consumer.CommentsClose CommentsPermalink





`(b) Disclosures for Mortgage Loans- Subject to the rules of the Board, with respect to a mortgage loan, the creditor shall disclose to the consumer, in addition to any other disclosures required under this title--CommentsClose CommentsPermalink





`(1) the amount of the loan;CommentsClose CommentsPermalink





`(2) the percentage of the loan, as compared to the appraised value of the property;CommentsClose CommentsPermalink





`(3) the term of the loan;CommentsClose CommentsPermalink





`(4) the monthly income of the borrower, as relied upon in making the loan;CommentsClose CommentsPermalink





`(5) if the annual percentage rate of interest is fixed--CommentsClose CommentsPermalink





`(A) the applicable annual percentage rate of interest for the loan;CommentsClose CommentsPermalink





`(B) the amount of the monthly payment on the loan;CommentsClose CommentsPermalink





`(C) an estimate of the monthly payment, plus taxes and insurance; andCommentsClose CommentsPermalink





`(D) the percentage of the stated monthly income of the borrower represented by the monthly payment, plus taxes and insurance;CommentsClose CommentsPermalink





`(6) if the annual percentage rate of interest is variable--CommentsClose CommentsPermalink





`(A) the initial interest rate;CommentsClose CommentsPermalink





`(B) the duration of the initial interest rate;CommentsClose CommentsPermalink





`(C) an estimate of the monthly payment amount associated with the initial interest rate;CommentsClose CommentsPermalink





`(D) an estimate of the monthly payment associated with the initial interest rate, plus taxes and insurance;CommentsClose CommentsPermalink





`(E) the percentage of the stated monthly income of the borrower represented by the estimated monthly payment associated with the initial interest rate, plus taxes and insurance;CommentsClose CommentsPermalink





`(F) the date on which the interest rate will be adjusted or reset;CommentsClose CommentsPermalink





`(G) the fully indexed rate (expressed as an estimate of the interest rate after it is adjusted or reset);CommentsClose CommentsPermalink





`(H) an estimate of the monthly payment amount associated with the fully indexed interest rate;CommentsClose CommentsPermalink





`(I) the percentage of the stated monthly income of the borrower represented by the estimated monthly payment associated with the fully indexed interest rate;CommentsClose CommentsPermalink





`(J) an estimate of the monthly payment associated with the fully indexed rate, plus taxes and insurance; andCommentsClose CommentsPermalink





`(K) an estimate of the maximum possible applicable annual percentage rate of interest, including language expressing that if there is no maximum rate, the applicable State usury rate shall be disclosed;CommentsClose CommentsPermalink





`(7) if the loan represents a subordinate lien (also referred to as a `piggyback loan') on the real property securing the loan, a brief statement that the loan is subordinate to an existing primary lien, and that the amount of the loan and estimated monthly payments described in the disclosure are in addition to any amounts arising from existing loan obligations;CommentsClose CommentsPermalink





`(8) in any case in which a prepayment fee or penalty may be imposed with respect to the loan--CommentsClose CommentsPermalink





`(A) the amount of such fee or penalty; andCommentsClose CommentsPermalink





`(B) a brief description, in plain English, of the circumstances or events which would trigger the imposition of the prepayment fee or penalty;CommentsClose CommentsPermalink





`(9) in any case in which a balloon payment may be required with respect to the loan--CommentsClose CommentsPermalink





`(A) the date on which the balloon payment is due, and the estimated amount of the balloon payment; andCommentsClose CommentsPermalink





`(B) a brief statement, in plain English, that a balloon payment mortgage does not fully pay off the loan, that a large balloon payment of the remaining principal will be required at the end of the loan term, and that many borrowers must secure another loan to make the balloon payment;CommentsClose CommentsPermalink





`(10) if the borrower has a `payment option' loan--CommentsClose CommentsPermalink





`(A) a disclosure that the loan is a payment option loan; andCommentsClose CommentsPermalink





`(B) a brief statement, in plain English, that a payment option loan has negative amortization, which can result in the loan balance becoming higher than the original amount of the loan, even if the borrower makes all payments on time;CommentsClose CommentsPermalink





`(11) total points to be paid at closing, with an explanation that points are a fee that the borrower pays to the lender, expressed as a percentage of the total loan; andCommentsClose CommentsPermalink





`(12) the total actual closing costs, including points, if known, and if not known, the total estimated closing costs, including points.CommentsClose CommentsPermalink





`(c) Timing of Disclosures- The disclosures required by this section shall be provided to the consumer at the time of approval of the mortgage loan, but in no case later than 7 days before the date on which the mortgage loan is consummated.CommentsClose CommentsPermalink





`(d) Format- Disclosures required by this section shall be presented to the consumer in the form and manner which the Board shall prescribe by regulation--CommentsClose CommentsPermalink





`(1) in a simple, clearly legible, and uniform tabular format, in accordance with subsection (e);CommentsClose CommentsPermalink





`(2) to the extent possible, as a one-page, single document;CommentsClose CommentsPermalink





`(3) when provided in conjunction with or at the same time as other required written disclosures, as the first of such documents; andCommentsClose CommentsPermalink





`(4) in an easily readable font size.CommentsClose CommentsPermalink





`(e) Tabular Format-CommentsClose CommentsPermalink





`(1) IN GENERAL- In the regulations prescribed under subsection (d)(1), the Board shall require that the disclosure of such information shall be in the form of a table, which--CommentsClose CommentsPermalink





`(A) contains clear and concise headings for each item of such information; andCommentsClose CommentsPermalink





`(B) provides a clear and concise form for stating each item of information required to be disclosed under each such heading.CommentsClose CommentsPermalink





`(2) BOARD DISCRETION IN PRESCRIBING ORDER AND WORDING OF TABLE- In prescribing the form of the table under paragraph (1), the Board may--CommentsClose CommentsPermalink





`(A) list the items required to be included in the table in a different order than the order in which such items are set forth in subsection (b); andCommentsClose CommentsPermalink





`(B) employ terminology which is different from the terminology employed in subsection (b), if such terminology conveys substantially the same meaning.CommentsClose CommentsPermalink





`(f) Rules for Reduction of Time Limit of Disclosure Requirements to 24 Hours- The Board shall, by rule, provide for procedures to reduce the time limit described in subsection (c) to 24 hours prior to the consummation of the mortgage, to the extent that the Board determines necessary and appropriate, except that such rules shall provide for a time limit reduction only at the request of the borrower, and only in those limited circumstances in which the borrower needs to consummate the mortgage transaction in a more expedited manner than would otherwise be permitted under this section.CommentsClose CommentsPermalink





`(g) Tolerances for Accuracy- The provisions of section 106(f), relating to tolerances for accuracy, and any rules of the Board issued under that subsection, shall apply to disclosures required under this section.'.CommentsClose CommentsPermalink

SEC. 3. AMENDMENT TO REAL ESTATE SETTLEMENT PROCEDURES.

Section 4 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(c) Truth in Lending Act Disclosures- The form required under section 129A of the Truth in Lending Act shall be provided to the borrower at the time of settlement by the person conducting the settlement, in addition to any other disclosures required by this Act. In no case may a federally related mortgage loan be consummated if such form has not been provided to the borrower, both at the time of the approval of the loan, in accordance with that section 129A, and at settlement.'.CommentsClose CommentsPermalink