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Introduced in House	27,424	n/a	n/a
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Engrossed in House	38,925	230	19%
Referred in Senate	38,719	5 Show Changes Hide Changes	0%

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HR 1728 EHRFSCommentsClose CommentsPermalink

111th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 1728CommentsClose CommentsPermalink

AN ACTCommentsClose CommentsPermalink

To amend the Truth in Lending Act to reform consumer mortgage practices and provide accountability for such practices, to provide certain minimum standards for consumer mortgage loans, 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 ‘Mortgage Reform and Anti-Predatory Lending Act’.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

TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Sec. 101. Definitions.CommentsClose CommentsPermalink





Sec. 102. Residential mortgage loan origination.CommentsClose CommentsPermalink





Sec. 103. Prohibition on steering incentives.CommentsClose CommentsPermalink





Sec. 104. Liability.CommentsClose CommentsPermalink





Sec. 105. Regulations.CommentsClose CommentsPermalink





Sec. 106. RESPA and TILA disclosure improvement.CommentsClose CommentsPermalink





Sec. 107. Study of shared appreciation mortgages.CommentsClose CommentsPermalink

TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Sec. 201. Ability to repay.CommentsClose CommentsPermalink





Sec. 202. Net tangible benefit for refinancing of residential mortgage loans.CommentsClose CommentsPermalink





Sec. 203. Safe harbor and rebuttable presumption.CommentsClose CommentsPermalink





Sec. 204. Liability.CommentsClose CommentsPermalink





Sec. 205. Defense to foreclosure.CommentsClose CommentsPermalink





Sec. 206. Additional standards and requirements.CommentsClose CommentsPermalink





Sec. 207. Rule of construction.CommentsClose CommentsPermalink





Sec. 208. Effect on State laws.CommentsClose CommentsPermalink





Sec. 209. Regulations.CommentsClose CommentsPermalink





Sec. 210. Amendments to civil liability provisions.CommentsClose CommentsPermalink





Sec. 211. Lender rights in the context of borrower deception.CommentsClose CommentsPermalink





Sec. 212. Six-month notice required before reset of hybrid adjustable rate mortgages.CommentsClose CommentsPermalink





Sec. 213. Credit risk retention.CommentsClose CommentsPermalink





Sec. 214. Required disclosures.CommentsClose CommentsPermalink





Sec. 215. Disclosures required in monthly statements for residential mortgage loans.CommentsClose CommentsPermalink





Sec. 216. Legal assistance for foreclosure-related issues.CommentsClose CommentsPermalink





Sec. 217. Effective date.CommentsClose CommentsPermalink





Sec. 218. Report by the GAO.CommentsClose CommentsPermalink





Sec. 219. State Attorney General enforcement authority.CommentsClose CommentsPermalink





Sec. 220. Tenant protection.CommentsClose CommentsPermalink

TITLE III--HIGH-COST MORTGAGES

Sec. 301. Definitions relating to high-cost mortgages.CommentsClose CommentsPermalink





Sec. 302. Amendments to existing requirements for certain mortgages.CommentsClose CommentsPermalink





Sec. 303. Additional requirements for certain mortgages.CommentsClose CommentsPermalink





Sec. 304. Regulations.CommentsClose CommentsPermalink





Sec. 305. Effective date.CommentsClose CommentsPermalink

TITLE IV--OFFICE OF HOUSING COUNSELING

Sec. 401. Short title.CommentsClose CommentsPermalink





Sec. 402. Establishment of Office of Housing Counseling.CommentsClose CommentsPermalink





Sec. 403. Counseling procedures.CommentsClose CommentsPermalink





Sec. 404. Grants for housing counseling assistance.CommentsClose CommentsPermalink





Sec. 405. Requirements to use HUD-certified counselors under HUD programs.CommentsClose CommentsPermalink





Sec. 406. Study of defaults and foreclosures.CommentsClose CommentsPermalink





Sec. 407. Default and foreclosure database.CommentsClose CommentsPermalink





Sec. 408. Definitions for counseling-related programs.CommentsClose CommentsPermalink





Sec. 409. Accountability and transparency for grant recipients.CommentsClose CommentsPermalink





Sec. 410. Updating and simplification of mortgage information booklet.CommentsClose CommentsPermalink





Sec. 411. Home inspection counseling.CommentsClose CommentsPermalink





Sec. 412. Warnings to homeowners of foreclosure rescue scams.CommentsClose CommentsPermalink

TITLE V--MORTGAGE SERVICING

Sec. 501. Escrow and impound accounts relating to certain consumer credit transactions.CommentsClose CommentsPermalink





Sec. 502. Disclosure notice required for consumers who waive escrow services.CommentsClose CommentsPermalink





Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments.CommentsClose CommentsPermalink





Sec. 504. Truth in Lending Act amendments.CommentsClose CommentsPermalink





Sec. 505. Escrows included in repayment analysis.CommentsClose CommentsPermalink

TITLE VI--APPRAISAL ACTIVITIES

Sec. 601. Property appraisal requirements.CommentsClose CommentsPermalink





Sec. 602. Unfair and deceptive practices and acts relating to certain consumer credit transactions.CommentsClose CommentsPermalink





Sec. 603. Amendments relating to Appraisal Subcommittee of FIEC, Appraiser Independence Monitoring, Approved Appraiser Education, Appraisal Management Companies, Appraiser Complaint Hotline, Automated Valuation Models, and Broker Price Opinions.CommentsClose CommentsPermalink





Sec. 604. Study required on improvements in appraisal process and compliance programs.CommentsClose CommentsPermalink





Sec. 605. Equal Credit Opportunity Act amendment.CommentsClose CommentsPermalink





Sec. 606. Real Estate Settlement Procedures Act of 1974 amendment relating to certain appraisal fees.CommentsClose CommentsPermalink

TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT SPONSORED ENTERPRISES REFORM

Sec. 701. Sense of Congress regarding the importance of Government-sponsored enterprises reform to enhance the protection, limitation, and regulation of the terms of residential mortgage credit.CommentsClose CommentsPermalink

TITLE VIII--REPORTS

Sec. 801. GAO study report on government efforts to combat mortgage foreclosure rescue scams and loan modification fraud.CommentsClose CommentsPermalink

TITLE IX--MULTIFAMILY MORTGAGE RESOLUTION

Sec. 901. Multifamily mortgage resolution program.CommentsClose CommentsPermalink

TITLE X--STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES

Sec. 1001. Study of effect of drywall presence on foreclosures.CommentsClose CommentsPermalink

TITLE XI--FANNIE MAE GUIDELINES FOR PURCHASE OF CONDOMINIUM AND COOPERATIVE HOUSING MORTGAGES

Sec. 1101. Guidelines for purchase of condominium and cooperative housing mortgages.CommentsClose CommentsPermalink

TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDSCommentsClose CommentsPermalink

SEC. 101. DEFINITIONS.

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(cc) Definitions Relating to Mortgage Origination and Residential Mortgage Loans-CommentsClose CommentsPermalink





‘(1) COMMISSION- Unless otherwise specified, the term ‘Commission’ means the Federal Trade Commission.CommentsClose CommentsPermalink





‘(2) 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 Federal Deposit Insurance Corporation, and the National Credit Union Administration Board. All rule writing by the ‘Federal banking agencies’ as designated by the Mortgage Reform and Anti-Predatory Lending Act will be coordinated through the Financial Institutions Examination Council in consultation with the Chairman of the State Liaison Committee.CommentsClose CommentsPermalink





‘(3) MORTGAGE ORIGINATOR- The term ‘mortgage originator’--CommentsClose CommentsPermalink





‘(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain--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 residential mortgage loan;CommentsClose CommentsPermalink





‘(B) includes any person 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 person can or will provide any of the services or perform any of the activities described in subparagraph (A);CommentsClose CommentsPermalink





‘(C) does not include any person who is (i) not otherwise described in subparagraph (A) or (B) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph, or (ii) an employee of a retailer of manufactured homes who is not described in clause (i) or (iii) of subparagraph (A) and who does not advise a consumer on loan terms (including rates, fees, and other costs);CommentsClose CommentsPermalink





‘(D) does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless such person or entity is compensated for performing such brokerage activities by a lender, a mortgage broker, or other mortgage originator or by any agent of such lender, mortgage broker, or other mortgage originator;CommentsClose CommentsPermalink





‘(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month period, provided that such loan--CommentsClose CommentsPermalink





‘(i) is fully amortizing;CommentsClose CommentsPermalink





‘(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;CommentsClose CommentsPermalink





‘(iii) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; andCommentsClose CommentsPermalink





‘(iv) meets any other criteria the Federal banking agencies may prescribe; andCommentsClose CommentsPermalink





‘(F) does not include a servicer or servicer employees, agents and contractors, including but not limited to those who offer or negotiate terms of a residential mortgage loan for purposes of renegotiating, modifying, replacing and subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a reasonable likelihood of being in default or falling behind.CommentsClose CommentsPermalink





‘(4) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY- The term ‘Nationwide Mortgage Licensing System and Registry’ has the same meaning as in the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.CommentsClose CommentsPermalink





‘(5) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR- For purposes of this subsection, a person ‘assists a consumer in obtaining or applying to obtain a residential mortgage loan’ by, among other things, advising on residential mortgage loan terms (including rates, fees, and other costs), preparing residential mortgage loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan.CommentsClose CommentsPermalink





‘(6) RESIDENTIAL MORTGAGE LOAN- The term ‘residential mortgage loan’ means any consumer credit transaction that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real property that includes a dwelling, other than a consumer credit transaction under an open end credit plan or a reverse mortgage or, for purposes of sections 129B and 129C and section 128(a) (16), (17), and (18), and 128(f) and any regulations promulgated thereunder, an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.CommentsClose CommentsPermalink





‘(7) SECRETARY- The term ‘Secretary’, when used in connection with any transaction or person involved with a residential mortgage loan, means the Secretary of Housing and Urban Development.CommentsClose CommentsPermalink





‘(8) SECURITIZATION VEHICLE- The term ‘securitization vehicle’ means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that--CommentsClose CommentsPermalink





‘(A) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; andCommentsClose CommentsPermalink





‘(B) holds such loans.CommentsClose CommentsPermalink





‘(9) SECURITIZER- The term ‘securitizer’ means the person that transfers, conveys, or assigns, or causes the transfer, conveyance, or assignment of, residential mortgage loans, including through a special purpose vehicle, to any securitization vehicle, excluding any trustee that holds such loans solely for the benefit of the securitization vehicle.CommentsClose CommentsPermalink





‘(10) SERVICER- The term ‘servicer’ has the same meaning as in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974.’.CommentsClose CommentsPermalink

SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

(a) In General- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 129A the following new section:CommentsClose CommentsPermalink

‘Sec. 129B. Residential mortgage loan origination

‘(a) Finding and Purpose-CommentsClose CommentsPermalink





‘(1) FINDING- The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible, affordable mortgage credit remains available to consumers.CommentsClose CommentsPermalink





‘(2) PURPOSE- It is the purpose of this section and section 129C to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive or abusive.CommentsClose CommentsPermalink





‘(b) Duty of Care-CommentsClose CommentsPermalink





‘(1) STANDARD- Subject to regulations prescribed under this subsection, each mortgage originator shall, in addition to the duties imposed by otherwise applicable provisions of State or Federal law--CommentsClose CommentsPermalink





‘(A) be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008;CommentsClose CommentsPermalink





‘(B) with respect to each consumer seeking or inquiring about a residential mortgage loan, diligently work to present the consumer with a range of residential mortgage loan products for which the consumer likely qualifies and which are appropriate to the consumer’s existing circumstances, based on information known by, or obtained in good faith by, the originator;CommentsClose CommentsPermalink





‘(C) make full, complete, and timely disclosure to each such consumer in writing, the receipt and understanding of which shall be acknowledged by the signature of the mortgage originator and the consumer, of--CommentsClose CommentsPermalink





‘(i) the comparative costs and benefits of each residential mortgage loan product offered, discussed, or referred to by the originator (and such comparative costs and benefits for each such product shall be presented side by side and the disclosures for each such product shall have equal prominence);CommentsClose CommentsPermalink





‘(ii) the nature of the originator’s relationship to the consumer (including the cost of the services to be provided by the originator and a statement that the mortgage originator is or is not acting as an agent for the consumer, as the case may be); andCommentsClose CommentsPermalink





‘(iii) any relevant conflicts of interest between the originator and the consumer;CommentsClose CommentsPermalink





‘(D) certify to the creditor, with respect to any transaction involving a residential mortgage loan, that the mortgage originator has fulfilled all requirements applicable to the originator under this section with respect to the transaction; andCommentsClose CommentsPermalink





‘(E) include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry.CommentsClose CommentsPermalink





‘(2) CLARIFICATION OF EXTENT OF DUTY TO PRESENT RANGE OF PRODUCTS AND APPROPRIATE PRODUCTS-CommentsClose CommentsPermalink





‘(A) NO DUTY TO OFFER PRODUCTS FOR WHICH ORIGINATOR IS NOT AUTHORIZED TO TAKE AN APPLICATION- Paragraph (1)(B) shall not be construed as requiring--CommentsClose CommentsPermalink





‘(i) a mortgage originator to present to any consumer any specific residential mortgage loan product that is offered by a creditor which does not accept consumer referrals from, or consumer applications submitted by or through, such originator; orCommentsClose CommentsPermalink





‘(ii) a creditor to offer products that the creditor does not offer to the general public.CommentsClose CommentsPermalink





‘(B) APPROPRIATE LOAN PRODUCT- For purposes of paragraph (1)(B), a residential mortgage loan shall be presumed to be appropriate for a consumer if--CommentsClose CommentsPermalink





‘(i) the mortgage originator determines in good faith, based on then existing information and without undergoing a full underwriting process, that the consumer has a reasonable ability to repay and, in the case of a refinancing of an existing residential mortgage loan, receives a net tangible benefit, as determined in accordance with regulations prescribed under subsections (a) and (b) of section 129C; andCommentsClose CommentsPermalink





‘(ii) the loan does not have predatory characteristics or effects (such as equity stripping and excessive fees and abusive terms) as determined in accordance with regulations prescribed under paragraph (4).CommentsClose CommentsPermalink





‘(3) RULES OF CONSTRUCTION- No provision of this subsection shall be construed as--CommentsClose CommentsPermalink





‘(A) creating an agency or fiduciary relationship between a mortgage originator and a consumer if the originator does not hold himself or herself out as such an agent or fiduciary; orCommentsClose CommentsPermalink





‘(B) restricting a mortgage originator from holding himself or herself out as an agent or fiduciary of a consumer subject to any additional duty, requirement, or limitation applicable to agents or fiduciaries under any Federal or State law.CommentsClose CommentsPermalink





‘(4) REGULATIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Federal banking agencies, in consultation with the Secretary, and the Commission, shall jointly prescribe regulations to--CommentsClose CommentsPermalink





‘(i) further define the duty established under paragraph (1);CommentsClose CommentsPermalink





‘(ii) implement the requirements of this subsection;CommentsClose CommentsPermalink





‘(iii) establish the time period within which any disclosure required under paragraph (1) shall be made to the consumer; andCommentsClose CommentsPermalink





‘(iv) establish such other requirements for any mortgage originator as such regulatory agencies may determine to be appropriate to meet the purposes of this subsection.CommentsClose CommentsPermalink





‘(B) COMPLEMENTARY AND NONDUPLICATIVE DISCLOSURES- The agencies referred to in subparagraph (A) shall endeavor to make the required disclosures to consumers under this subsection complementary and nonduplicative with other disclosures for mortgage consumers to the extent such efforts--CommentsClose CommentsPermalink





‘(i) are practicable; andCommentsClose CommentsPermalink





‘(ii) do not reduce the value of any such disclosure to recipients of such disclosures.CommentsClose CommentsPermalink





‘(5) COMPLIANCE PROCEDURES REQUIRED- The Federal banking agencies shall prescribe regulations requiring depository institutions to establish and maintain procedures reasonably designed to assure and monitor the compliance of such depository institutions, the subsidiaries of such institutions, and the employees of such institutions or subsidiaries with the requirements of this section and the registration procedures established under section 1507 of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.’.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 items:CommentsClose CommentsPermalink





‘129A. Fiduciary duty of servicers of pooled residential mortgages.CommentsClose CommentsPermalink





‘129B. Residential mortgage loan origination.’.CommentsClose CommentsPermalink

SEC. 103. PROHIBITION ON STEERING INCENTIVES.

Section 129B of the Truth in Lending Act (as added by section 102(a)) is amended by inserting after subsection (b) the following new subsection:CommentsClose CommentsPermalink





‘(c) Prohibition on Steering Incentives-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For any mortgage loan, the total amount of direct and indirect compensation from all sources permitted to a mortgage originator may not vary based on the terms of the loan (other than the amount of the principal).CommentsClose CommentsPermalink





‘(2) RESTRUCTURING OF FINANCING ORIGINATION FEE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- For any mortgage loan, a mortgage originator may not arrange for a consumer to finance through rate any origination fee or cost except bona fide third party settlement charges not retained by the creditor or mortgage originator.CommentsClose CommentsPermalink





‘(B) EXCEPTION- Notwithstanding paragraph subparagraph (A), a mortgage originator may arrange for a consumer to finance through rate an origination fee or cost if--CommentsClose CommentsPermalink





‘(i) the mortgage originator does not receive any other compensation from the consumer except the compensation that is financed through rate; andCommentsClose CommentsPermalink





‘(ii) the mortgage is a qualified mortgage.CommentsClose CommentsPermalink





‘(3) REGULATIONS- The Federal banking agencies, in consultation with the Secretary and the Commission, shall jointly prescribe regulations to prohibit--CommentsClose CommentsPermalink





‘(A) mortgage originators from steering any consumer to a residential mortgage loan that--CommentsClose CommentsPermalink





‘(i) the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 129C(a));CommentsClose CommentsPermalink





‘(ii) in the case of a refinancing of a residential mortgage loan, does not provide the consumer with a net tangible benefit (in accordance with regulations prescribed under section 129C(b)); orCommentsClose CommentsPermalink





‘(iii) has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);CommentsClose CommentsPermalink





‘(B) mortgage originators from steering any consumer from a residential mortgage loan for which the consumer is qualified that is a qualified mortgage (as defined in section 129C(c)(3)) to a residential mortgage loan that is not a qualified mortgage;CommentsClose CommentsPermalink





‘(C) abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age;CommentsClose CommentsPermalink





‘(D) mortgage originators from assessing excessive points and fees (as such term is described under section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4))) to a consumer for the origination of a residential mortgage loan based on such consumer’s decision to finance all or part of the payment through the rate for such points and fees; andCommentsClose CommentsPermalink





‘(E) mortgage originators from--CommentsClose CommentsPermalink





‘(i) mischaracterizing the credit history of a consumer or the residential mortgage loans available to a consumer;CommentsClose CommentsPermalink





‘(ii) mischaracterizing or suborning the mischaracterization of the appraised value of the property securing the extension of credit; orCommentsClose CommentsPermalink





‘(iii) if unable to suggest, offer, or recommend to a consumer a loan that is not more expensive than a loan for which the consumer qualifies, discouraging a consumer from seeking a home mortgage loan secured by a consumer’s principal dwelling from another mortgage originator.CommentsClose CommentsPermalink





‘(4) RULES OF CONSTRUCTION- No provision of this subsection shall be construed as--CommentsClose CommentsPermalink





‘(A) permitting yield spread premiums or other similar incentive compensation;CommentsClose CommentsPermalink





‘(B) affecting the mechanism for providing the total amount of direct and indirect compensation permitted to a mortgage originator;CommentsClose CommentsPermalink





‘(C) limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;CommentsClose CommentsPermalink





‘(D) restricting a consumer’s ability to finance, including through principal, any origination fees or costs permitted under this subsection, or the mortgage originator’s ability to receive such fees or costs (including compensation) from any person, so long as such fees or costs were fully and clearly disclosed to the consumer earlier in the application process as required by 129B(b)(1)(C)(i) and do not vary based on the terms of the loan (other than the amount of the principal) or the consumer’s decision about whether to finance such fees or costs; orCommentsClose CommentsPermalink





‘(E) prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.’.CommentsClose CommentsPermalink

SEC. 104. LIABILITY.

Section 129B of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 103) the following new subsection:CommentsClose CommentsPermalink





‘(d) Liability for Violations-CommentsClose CommentsPermalink





‘(1) IN GENERAL- For purposes of providing a cause of action for any failure by a mortgage originator to comply with any requirement imposed under this section and any regulation prescribed under this section, subsections (a) and (b) of section 130 shall be applied with respect to any such failure by substituting ‘mortgage originator’ for ‘creditor’ each place such term appears in each such subsection.CommentsClose CommentsPermalink





‘(2) MAXIMUM- The maximum amount of any liability of a mortgage originator under paragraph (1) to a consumer for any violation of this section shall not exceed the greater of actual damages or an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortgage originator in connection with the residential mortgage loan involved in the violation, plus the costs to the consumer of the action, including a reasonable attorney’s fee.’.CommentsClose CommentsPermalink

SEC. 105. REGULATIONS.

(a) Discretionary Regulatory Authority- Section 129B of the Truth in Lending Act is amended by inserting after subsection (d) (as added by section 104) the following new subsection:CommentsClose CommentsPermalink





‘(e) Discretionary Regulatory Authority-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Federal banking agencies shall, by regulations issued jointly, prohibit or condition terms, acts or practices relating to residential mortgage loans that the agencies find to be abusive, unfair, deceptive, predatory, inconsistent with reasonable underwriting standards, necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section and section 129B, necessary or proper to effectuate the purposes of this section and section 129C, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections, or are not in the interest of the borrower.CommentsClose CommentsPermalink





‘(2) APPLICATION- The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans and shall be applied in the same manner as regulations prescribed under section 105.CommentsClose CommentsPermalink





‘(f) Section 129B and any regulations promulgated thereunder do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.’.CommentsClose CommentsPermalink





(b) Effective Date- The regulations required or authorized to be prescribed under this title or the amendments made by this title--CommentsClose CommentsPermalink





(1) shall be prescribed in final form before the end of the 12-month period beginning on the date of the enactment of this Act; andCommentsClose CommentsPermalink





(2) shall take effect not later than 18 months after the date of the enactment of this Act.CommentsClose CommentsPermalink





(c) Truth in Lending Final Rule- Notwithstanding any other provision of this Act, the regulations adopted by the Board concerning Truth in Lending, 73 Fed. Reg. 44522 (July 30, 2008), shall take effect as decided by the Board with such exceptions or revisions as the Board determines necessary.CommentsClose CommentsPermalink





(d) Technical and Conforming Amendments- Section 129(l)(2) of the Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by inserting ‘referred to in section 103(aa)’ after ‘loans’ each place such term appears.CommentsClose CommentsPermalink

SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT.

(a) Compatible Disclosures- The Secretary of Housing and Urban Development and the Board of Governors of the Federal Reserve shall, not later than the expiration of the 6-month period beginning upon the date of the enactment of this Act, jointly issue for public comment proposed regulations providing for compatible disclosures for borrowers to receive at the time of mortgage application and at the time of closing.CommentsClose CommentsPermalink





(b) Requirements- Such disclosures shall--CommentsClose CommentsPermalink





(1) provide clear and concise information to borrowers on the terms and costs of residential mortgage transactions and mortgage transactions covered by the Truth in Lending Act (12 U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.);CommentsClose CommentsPermalink





(2) satisfy the requirements of section 128 of the Truth in Lending Act (12 U.S.C. 1638) and section 4 and 5 of the Real Estate Settlement Procedures Act of 1974; andCommentsClose CommentsPermalink





(3) comprise early disclosures under the Truth in Lending Act and the good faith estimate disclosures under the Real Estate Settlement Procedures Act of 1974 and final Truth in Lending Act disclosures and the uniform settlement statement disclosures under Real Estate Settlement Procedures Act of 1974 and provide for standardization to the greatest extent possible among such disclosures from mortgage origination through the mortgage settlement.CommentsClose CommentsPermalink





(4) shall include, with respect to a residential home mortgage loan, a written statement of--CommentsClose CommentsPermalink





(A) the principal amount of the loan;CommentsClose CommentsPermalink





(B) the term of the loan;CommentsClose CommentsPermalink





(C) whether the loan has a fixed rate of interest or an adjustable rate of interest;CommentsClose CommentsPermalink





(D) the annual percentage rate of interest under the loan as of the time of the disclosure;CommentsClose CommentsPermalink





(E) if the rate of interest under the loan can adjust after the disclosure, for each such possible adjustment--CommentsClose CommentsPermalink





(i) when such adjustment will or may occur; andCommentsClose CommentsPermalink





(ii) the maximum annual percentage rate of interest to which it can be adjusted;CommentsClose CommentsPermalink





(F) the total monthly payment under the loan (including loan principal and interest, property taxes, and insurance) at the time of the disclosure;CommentsClose CommentsPermalink





(G) the maximum total estimated monthly maximum payment pursuant to each such possible adjustment;CommentsClose CommentsPermalink





(H) the total settlement charges in connection with the loan and the amount of any downpayment and cash required at settlement; andCommentsClose CommentsPermalink





(I) whether or not the loan has a prepayment penalty or balloon payment and the terms, timing, and amount of any such penalty or payment.CommentsClose CommentsPermalink





(c) Suspension of 2008 RESPA Rule-CommentsClose CommentsPermalink





(1) REQUIREMENT- The Secretary of Housing and Urban Development shall, during the period beginning on the date of the enactment of this Act and ending upon issuance of proposed regulations pursuant to subsection (a), suspend implementation of any provisions of the final rule referred to in paragraph (2) that would establish and implement a new standardized good faith estimate and a new standardized uniform settlement statement. Any such provisions shall be replaced by the regulations issued pursuant to subsections (a) and (b).CommentsClose CommentsPermalink





(2) 2008 RULE- The final rule referred to in this paragraph is the rule of the Department of Housing and Urban Development published on November 17, 2008, on pages 68204-68288 of Volume 73 of the Federal Register (Docket No. FR-5180-F-03; relating to ‘Real Estate Settlement Procedures Act (RESPA): Rule to Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs’).CommentsClose CommentsPermalink





(d) Implementation- The regulations required under subsection (a) shall take effect, and shall provide an implementation date for the new disclosures required under such regulations, not later than the expiration of the 12-month period beginning upon the date of the enactment of this Act.CommentsClose CommentsPermalink





(e) Failure To Issue Compatible Disclosures- If the Secretary of Housing and Urban Development and the Board of Governors of the Federal Reserve System cannot agree on compatible disclosures pursuant to subsections (a) and (b), the Secretary and the Board shall submit a report to the Congress, after the 6-month period referred to in subsection (a), explaining the reasons for such disagreement. After the 15-day period beginning upon submission of such report, the Secretary and the Board may separately issue for public comment regulations providing for disclosures under the Real Estate Settlement Procedures Act of 1974 and the Truth in Lending Act, respectively. Any final disclosures as a result of such regulations issued by the Secretary and the Board shall take effect on the same date, and not later than the expiration of the 12-month period beginning on the date of the enactment of this Act. If either the Secretary or the Board fails to act during such 12-month period, either such agency may act independently and implement final regulations.CommentsClose CommentsPermalink





(f) Standardized Disclosure Forms-CommentsClose CommentsPermalink





(1) IN GENERAL- Any regulations proposed or issued pursuant to the requirements of this section shall include model disclosure forms.CommentsClose CommentsPermalink





(2) OPTION FOR MANDATORY USE- In issuing proposed regulations under subsection (a), the Secretary of Housing and Urban Development and the Board of Governors of the Federal Reserve System shall include regulations for the mandatory use of standardized disclosure forms if they jointly determine that it would substantially benefit the consumer.CommentsClose CommentsPermalink

SEC. 107. STUDY OF SHARED APPRECIATION MORTGAGES.

(a) Study- The Secretary of Housing and Urban Development, in consultation with the Secretary of the Treasury and other relevant agencies, shall conduct a comprehensive study to determine prudent statutory and regulatory requirements sufficient to provide for the widespread use of shared appreciation mortgages to strengthen local housing markets, provide new opportunities for affordable homeownership, and enable homeowners at-risk of foreclosure to refinance or modify their mortgages.CommentsClose CommentsPermalink





(b) Report- Not later than the expiration of the 6-month period beginning on the date of the enactment of this Act, the Secretary of Housing and Urban Development shall submit a report to the Congress on the results of the study, which shall include recommendations for the regulatory and legislative requirements referred to in subsection (a).CommentsClose CommentsPermalink

TITLE II--MINIMUM STANDARDS FOR MORTGAGESCommentsClose CommentsPermalink

SEC. 201. ABILITY TO REPAY.

(a) In General- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 129B (as added by section 102(a)) the following new section:CommentsClose CommentsPermalink

‘Sec. 129C. Minimum standards for residential mortgage loans

‘(a) Ability To Repay-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In accordance with regulations prescribed jointly by the Federal banking agencies, in consultation with the Commission, no creditor may make a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance, and assessments.CommentsClose CommentsPermalink





‘(2) MULTIPLE LOANS- If the creditor knows, or has reason to know, that 1 or more residential mortgage loans secured by the same dwelling will be made to the same consumer, the creditor shall make a reasonable and good faith determination, based on verified and documented information, that the consumer has a reasonable ability to repay the combined payments of all loans on the same dwelling according to the terms of those loans and all applicable taxes, insurance, and assessments.CommentsClose CommentsPermalink





‘(3) BASIS FOR DETERMINATION- A determination under this subsection of a consumer’s ability to repay a residential mortgage loan shall include consideration of the consumer’s credit history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio, employment status, and other financial resources other than the consumer’s equity in the dwelling or real property that secures repayment of the loan.CommentsClose CommentsPermalink





‘(4) INCOME VERIFICATION- In order to safeguard against fraudulent reporting, any consideration of a consumer’s income history in making a determination under this subsection shall include the verification of such income by the use of--CommentsClose CommentsPermalink





‘(A) Internal Revenue Service transcripts of tax returns provided by a third party; orCommentsClose CommentsPermalink





‘(B) such other similar method that quickly and effectively verifies income documentation by a third party as the Federal banking agencies may jointly prescribe.CommentsClose CommentsPermalink





‘(5) NONSTANDARD LOANS-CommentsClose CommentsPermalink





‘(A) VARIABLE RATE LOANS THAT DEFER REPAYMENT OF ANY PRINCIPAL OR INTEREST- For purposes of determining, under this subsection, a consumer’s ability to repay a variable rate residential mortgage loan that allows or requires the consumer to defer the repayment of any principal or interest, the creditor shall use a fully amortizing repayment schedule.CommentsClose CommentsPermalink





‘(B) INTEREST-ONLY LOANS- For purposes of determining, under this subsection, a consumer’s ability to repay a residential mortgage loan that permits or requires the payment of interest only, the creditor shall use the payment amount required to amortize the loan by its final maturity.CommentsClose CommentsPermalink





‘(C) CALCULATION FOR NEGATIVE AMORTIZATION- In making any determination under this subsection, a creditor shall also take into consideration any balance increase that may accrue from any negative amortization provision.CommentsClose CommentsPermalink





‘(D) CALCULATION PROCESS- For purposes of making any determination under this subsection, a creditor shall calculate the monthly payment amount for principal and interest on any residential mortgage loan by assuming--CommentsClose CommentsPermalink





‘(i) the loan proceeds are fully disbursed on the date of the consummation of the loan;CommentsClose CommentsPermalink





‘(ii) the loan is to be repaid in substantially equal monthly amortizing payments for principal and interest over the entire term of the loan with no balloon payment, unless the loan contract requires more rapid repayment (including balloon payment), in which case the calculation shall be made (I) in accordance with regulations prescribed by the Federal banking agencies, with respect to any loan which has an annual percentage rate that does not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is set, by 1.5 or more percentage points for a first lien residential mortgage loan; and by 3.5 or more percentage points for a subordinate lien residential mortgage loan; or (II) using the contract’s repayment schedule, with respect to a loan which has an annual percentage rate, as of the date the interest rate is set, that is at least 1.5 percentage points above the average prime offer rate for a first lien residential mortgage loan; and 3.5 percentage points above the average prime offer rate for a subordinate lien residential mortgage loan; andCommentsClose CommentsPermalink





‘(iii) the interest rate over the entire term of the loan is a fixed rate equal to the fully indexed rate at the time of the loan closing, without considering the introductory rate.CommentsClose CommentsPermalink





‘(E) REFINANCE OF HYBRID LOANS WITH CURRENT LENDER- In considering any application for refinancing an existing hybrid loan by the creditor into a standard loan to be made by the same creditor in any case in which the sole net-tangible benefit to the mortgagor would be a reduction in monthly payment and the mortgagor has not been delinquent on any payment on the existing hybrid loan, the creditor may--CommentsClose CommentsPermalink





‘(i) consider the mortgagor’s good standing on the existing mortgage;CommentsClose CommentsPermalink





‘(ii) consider if the extension of new credit would prevent a likely default should the original mortgage reset and give such concerns a higher priority as an acceptable underwriting practice; andCommentsClose CommentsPermalink





‘(iii) offer rate discounts and other favorable terms to such mortgagor that would be available to new customers with high credit ratings based on such underwriting practice.CommentsClose CommentsPermalink





‘(6) FULLY-INDEXED RATE DEFINED- For purposes of this subsection, the term ‘fully indexed rate’ means the index rate prevailing on a residential mortgage loan at the time the loan is made plus the margin that will apply after the expiration of any introductory interest rates.’.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 129B (as added by section 102(b)) the following new item:CommentsClose CommentsPermalink





‘129C. Minimum standards for residential mortgage loans.’.CommentsClose CommentsPermalink

SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE LOANS.

Section 129C of the Truth in Lending Act (as added by section 201(a)) is amended by inserting after subsection (a) the following new subsection:CommentsClose CommentsPermalink





‘(b) Net Tangible Benefit for Refinancing of Residential Mortgage Loans-CommentsClose CommentsPermalink





‘(1) IN GENERAL- In accordance with regulations prescribed under paragraph (3), no creditor may extend credit in connection with any residential mortgage loan that involves a refinancing of a prior existing residential mortgage loan unless the creditor reasonably and in good faith determines, at the time the loan is consummated and on the basis of information known by or obtained in good faith by the creditor, that the refinanced loan will provide a net tangible benefit to the consumer.CommentsClose CommentsPermalink





‘(2) CERTAIN LOANS PROVIDING NO NET TANGIBLE BENEFIT- A residential mortgage loan that involves a refinancing of a prior existing residential mortgage loan shall not be considered to provide a net tangible benefit to the consumer if the costs of the refinanced loan, including points, fees and other charges, exceed the amount of any newly advanced principal without any corresponding changes in the terms of the refinanced loan that are advantageous to the consumer.CommentsClose CommentsPermalink





‘(3) NET TANGIBLE BENEFIT- The Federal banking agencies shall jointly prescribe regulations defining the term ‘net tangible benefit’ for purposes of this subsection.’.CommentsClose CommentsPermalink

SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

Section 129C of the Truth in Lending Act is amended by inserting after subsection (b) (as added by section 202) the following new subsection:CommentsClose CommentsPermalink





‘(c) Presumption of Ability To Repay and Net Tangible Benefit-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Any creditor with respect to any residential mortgage loan, and any assignee or securitizer of such loan, may presume that the loan has met the requirements of subsections (a) and (b), if the loan is a qualified mortgage.CommentsClose CommentsPermalink





‘(2) DEFINITIONS- For purposes of this subsection, the following definitions shall apply:CommentsClose CommentsPermalink





‘(A) QUALIFIED MORTGAGE- The term ‘qualified mortgage’ means any residential mortgage loan--CommentsClose CommentsPermalink





‘(i) that does not allow a consumer to defer repayment of principal or interest, or is not otherwise deemed a ‘non-traditional mortgage’ under guidance, advisories, or regulations prescribed by the Federal Banking Agencies;CommentsClose CommentsPermalink





‘(ii) that does not provide for a repayment schedule that results in negative amortization at any time;CommentsClose CommentsPermalink





‘(iii) for which the terms are fully amortizing and which does not result in a balloon payment, where a ‘balloon payment’ is a scheduled payment that is more than twice as large as the average of earlier scheduled payments;CommentsClose CommentsPermalink





‘(iv) which has an annual percentage rate that does not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is set--CommentsClose CommentsPermalink





‘(I) by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is equal to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2));CommentsClose CommentsPermalink





‘(II) by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is more than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date of such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); andCommentsClose CommentsPermalink





‘(III) by 3.5 or more percentage points, in the case of a subordinate lien residential mortgage loan;CommentsClose CommentsPermalink





‘(v) for which the income and financial resources relied upon to qualify the obligors on the loan are verified and documented;CommentsClose CommentsPermalink





‘(vi) in the case of a fixed rate loan, for which the underwriting process is based on a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;CommentsClose CommentsPermalink





‘(vii) in the case of an adjustable rate loan, for which the underwriting is based on the maximum rate permitted under the loan during the first seven years, and a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments;CommentsClose CommentsPermalink





‘(viii) that does not cause the consumer’s total monthly debts, including amounts under the loan, to exceed a percentage established by regulation of the consumer’s monthly gross income or such other maximum percentage of such income as may be prescribed by regulation under paragraph (4), and such rules shall also take into consideration the consumer’s income available to pay regular expenses after payment of all installment and revolving debt;CommentsClose CommentsPermalink





‘(ix) for which the total points and fees payable in connection with the loan do not exceed 2 percent of the total loan amount, where ‘points and fees’ means points and fees as defined by Section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)); andCommentsClose CommentsPermalink





‘(x) for which the term of the loan does not exceed 30 years, except as such term may be extended under paragraph (4).CommentsClose CommentsPermalink





‘(B) AVERAGE PRIME OFFER RATE- The term ‘average prime offer rate’ means an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage transactions that have low risk pricing characteristics.CommentsClose CommentsPermalink





‘(3) PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR THRESHOLDS- The Board--CommentsClose CommentsPermalink





‘(A) shall publish, and update at least weekly, average prime offer rates;CommentsClose CommentsPermalink





‘(B) may publish multiple rates based on varying types of mortgage transactions; andCommentsClose CommentsPermalink





‘(C) shall adjust the thresholds of 1.50 percentage points in paragraph (2)(A)(iv)(I), 2.50 percentage points in paragraph (2)(A)(iv)(II), and 3.50 percentage points in paragraph (2)(A)(v)(III), as necessary to reflect significant changes in market conditions and to effectuate the purposes of the Mortgage Reform and Anti-Predatory Lending Act.CommentsClose CommentsPermalink





‘(4) REGULATIONS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Federal banking agencies shall jointly prescribe regulations to carry out the purposes of this subsection.CommentsClose CommentsPermalink





‘(B) REVISION OF SAFE HARBOR CRITERIA-CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Federal banking agencies may jointly prescribe regulations that revise, add to, or subtract from the criteria that define a qualified mortgage upon a finding that such regulations are necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section, necessary and appropriate to effectuate the purposes of this section and section 129B, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections.CommentsClose CommentsPermalink





‘(ii) LOAN DEFINITION- The following agencies shall, in consultation with the Federal banking agencies, prescribe rules defining the types of loans they insure, guarantee or administer, as the case may be, that are Qualified Mortgages for purposes of subsection (c)(1)(A) upon a finding that such rules are consistent with the purposes of this section and section 129B, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections--CommentsClose CommentsPermalink





‘(I) The Department of Housing and Urban Development, with regard to mortgages insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.);CommentsClose CommentsPermalink





‘(II) The Secretary of Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of Veterans Affairs;CommentsClose CommentsPermalink





‘(III) The Secretary of Agriculture, with regard loans guaranteed by the Secretary of Agriculture pursuant to 42 U.S.C. 1472(h);CommentsClose CommentsPermalink





‘(IV) The Federal Housing Finance Agency, with regard to loans meeting the conforming loan standards of the Federal National Mortgage Corporation or the Federal Home Loan Mortgage Corporation; andCommentsClose CommentsPermalink





‘(V) The Rural Housing Service, with regard to loans insured by the Rural Housing Service.’.CommentsClose CommentsPermalink

SEC. 204. LIABILITY.

Section 129C of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 203) the following new subsection:CommentsClose CommentsPermalink





‘(d) Liability for Violations-CommentsClose CommentsPermalink





‘(1) IN GENERAL-CommentsClose CommentsPermalink





‘(A) RESCISSION- In addition to any other liability under this title for a violation by a creditor of subsection (a) or (b) (for example under section 130) and subject to the statute of limitations in paragraph (9), a civil action may be maintained against a creditor for a violation of subsection (a) or (b) with respect to a residential mortgage loan for the rescission of the loan, and such additional costs as the obligor may have incurred as a result of the violation and in connection with obtaining a rescission of the loan, including a reasonable attorney’s fee.CommentsClose CommentsPermalink





‘(B) CURE- A creditor shall not be liable for rescission under subparagraph (A) with respect to a residential mortgage loan if, no later than 90 days after the receipt of notification from the consumer that the loan violates subsection (a) or (b), the creditor, acting in good faith, a cure.CommentsClose CommentsPermalink





‘(2) LIMITED ASSIGNEE AND SECURITIZER LIABILITY- Notwithstanding sections 125(e) and 131 and except as provided in paragraph (3), a civil action which may be maintained against a creditor with respect to a residential mortgage loan for a violation of subsection (a) or (b) may be maintained against any assignee or securitizer of such residential mortgage loan, who has acted in good faith, for the following liabilities only:CommentsClose CommentsPermalink





‘(A) Rescission of the loan.CommentsClose CommentsPermalink





‘(B) Such additional costs as the obligor may have incurred as a result of the violation and in connection with obtaining a rescission of the loan, including a reasonable attorney’s fee.CommentsClose CommentsPermalink





‘(3) ASSIGNEE AND SECURITIZER EXEMPTION- No assignee or securitizer of a residential mortgage loan that has exercised reasonable due diligence in complying with the requirements of subsections (a) and (b), consistent with reasonable due diligence practices prescribed by the Federal banking agencies, shall be liable under paragraph (2) with respect to such loan if, no later than 90 days after the receipt of notification from the consumer that the loan violates subsection (a) or (b), the assignee or securitizer provides a cure so that the loan satisfies the requirements of subsections (a) and (b).CommentsClose CommentsPermalink





‘(4) ABSENT PARTIES-CommentsClose CommentsPermalink





‘(A) ABSENT CREDITOR- Notwithstanding the exemption provided in paragraph (3), if the creditor with respect to a residential mortgage loan made in violation of subsection (a) or (b) has ceased to exist as a matter of law or has filed for bankruptcy protection under title 11, United States Code, or has had a receiver, conservator, or liquidating agent appointed, a consumer may maintain a civil action against an assignee to cure the residential mortgage loan, plus the costs and reasonable attorney’s fees incurred in obtaining such remedy.CommentsClose CommentsPermalink





‘(B) ABSENT CREDITOR AND ASSIGNEE- Notwithstanding the exemption provided in paragraph (3), if the creditor with respect to a residential mortgage loan made in violation of subsection (a) or (b) and each assignee of such loan have ceased to exist as a matter of law or have filed for bankruptcy protection under title 11, United States Code, or have had receivers, conservators, or liquidating agents appointed, the consumer may maintain the civil action referred to in subparagraph (A) against the securitizer.CommentsClose CommentsPermalink





‘(5) CURE DEFINED- For purposes of this subsection, the term ‘cure’ means, with respect to a residential mortgage loan that violates subsection (a) or (b), the modification or refinancing, at no cost to the consumer, of the loan to provide terms that satisfy the requirements of subsections (a) and (b) and the payment of such additional costs as the obligor may have incurred in connection with obtaining a cure of the loan, including a reasonable attorney’s fee.CommentsClose CommentsPermalink





‘(6) DISAGREEMENT OVER CURE- If any creditor, assignee, or securitizer and a consumer fail to reach agreement on a cure with respect to a residential mortgage loan that violates subsection (a) or (b), or the consumer fails to accept a cure proffered by a creditor, assignee, or securitizer--CommentsClose CommentsPermalink





‘(A) the creditor, assignee, or securitizer may provide the cure; andCommentsClose CommentsPermalink





‘(B) the consumer may challenge the adequacy of the cure during the 6-month period beginning when the cure is provided.CommentsClose CommentsPermalink





If the consumer’s challenge, under this paragraph, of a cure is successful, the creditor, assignee, or securitizer shall be liable to the consumer for rescission of the loan and such additional costs under paragraph (2).CommentsClose CommentsPermalink





‘(7) INABILITY TO PROVIDE OR OBTAIN RESCISSION- If a creditor, assignee, or securitizer cannot provide, or a consumer cannot obtain, rescission under paragraph (1) or (2), the liability of such creditor, assignee, or securitizer shall be met by providing the financial equivalent of a rescission, together with such additional costs as the obligor may have incurred as a result of the violation and in connection with obtaining a rescission of the loan, including a reasonable attorney’s fee.CommentsClose CommentsPermalink





‘(8) NO CLASS ACTIONS AGAINST ASSIGNEE OR SECURITIZER UNDER PARAGRAPH (2)- Only individual actions may be brought against an assignee or securitizer of a residential mortgage loan for a violation of subsection (a) or (b).CommentsClose CommentsPermalink





‘(9) STATUTE OF LIMITATIONS- The liability of a creditor, assignee, or securitizer under this subsection shall apply in any original action against a creditor under paragraph (1) or an assignee or securitizer under paragraph (2) which is brought before--CommentsClose CommentsPermalink





‘(A) in the case of any residential mortgage loan other than a loan to which subparagraph (B) applies, the end of the 3-year period beginning on the date the loan is consummated; orCommentsClose CommentsPermalink





‘(B) in the case of a residential mortgage loan that provides for a fixed interest rate for an introductory period and then resets or adjusts to a variable rate or that provides for a nonamortizing payment schedule and then converts to an amortizing payment schedule, the earlier of--CommentsClose CommentsPermalink





‘(i) the end of the 1-year period beginning on the date of such reset, adjustment, or conversion; orCommentsClose CommentsPermalink





‘(ii) the end of the 6-year period beginning on the date the loan is consummated.CommentsClose CommentsPermalink





‘(10) TRUSTEES, POOLS, AND INVESTORS IN POOLS EXCLUDED- In the case of residential mortgage loans acquired or aggregated for the purpose of including such loans in a pool of assets held for the purpose of issuing or selling instruments representing interests in such pools including through a securitization vehicle, the terms ‘assignee’ and ‘securitizer’, as used in this section, do not include the securitization vehicle, any trustee that holds such loans solely for the benefit of the securitization vehicle, the pools of such loans or any original or subsequent purchaser of any interest in the securitization vehicle or any instrument representing a direct or indirect interest in such pool.CommentsClose CommentsPermalink





‘(e) Obligation of Securitizers, and Preservation of Borrower Remedies-CommentsClose CommentsPermalink





‘(1) OBLIGATION TO RETAIN ACCESS- Any securitizer of a residential mortgage loan sold or to be sold as part of a securitization vehicle shall, in any document or contract providing for the transfer, conveyance, or the establishment of such securitization vehicle, reserve the right and preserve the ability--CommentsClose CommentsPermalink





‘(A) to identify and obtain access to any such loan;CommentsClose CommentsPermalink





‘(B) to acquire any such loan in the event of a violation of subsection (a) or (b) of this section; andCommentsClose CommentsPermalink





‘(C) to provide to the consumer any and all remedies provided for under this title for any violation of this title.CommentsClose CommentsPermalink





‘(2) ADDITIONAL DAMAGES- Any creditor, assignee, or securitizer of a residential mortgage loan that is subject to a remedy under subsection (d) and has failed to comply with paragraph (1) shall be subject to additional exemplary or punitive damages not to exceed the original principal balance of such loan.CommentsClose CommentsPermalink





‘(3) CONTACT INFORMATION NOTICE- The servicer with respect to a residential mortgage loan shall provide a written notice to a consumer identifying the name and contact information of the creditor or any assignee or securitizer who should be contacted by the consumer for any reason concerning the consumer’s rights with respect to the loan. Such notice shall be provided--CommentsClose CommentsPermalink





‘(A) upon request of the consumer;CommentsClose CommentsPermalink





‘(B) whenever there is a change in ownership of a residential mortgage loan; orCommentsClose CommentsPermalink





‘(C) on a regular basis, not less than annually.CommentsClose CommentsPermalink





‘(f) Rules To Establish Process- The Board shall promulgate rules to govern the rescission process established for violations of subsections (a) and (b) of this section. Such rules shall provide that notice given to a servicer or holder is sufficient notice regardless of the identity of the party or the parties liable under this title.’.CommentsClose CommentsPermalink

SEC. 205. DEFENSE TO FORECLOSURE.

Section 129C of the Truth in Lending Act is amended by inserting after subsection (f) (as added by section 204) the following new subsections:CommentsClose CommentsPermalink





‘(g) Defense to Foreclosure- Notwithstanding any other provision of law--CommentsClose CommentsPermalink





‘(1) when the holder of a residential mortgage loan or anyone acting for such holder initiates a judicial or nonjudicial foreclosure--CommentsClose CommentsPermalink





‘(A) a consumer who has the right to rescind under this section with respect to such loan against the creditor or any assignee or securitizer may assert such right as a defense to foreclosure or counterclaim to such foreclosure against the holder, orCommentsClose CommentsPermalink





‘(B) if the foreclosure proceeding begins after the end of the period during which a consumer may bring an action for rescission under subsection (d) and the consumer would have had a valid basis for such an action if it had been brought before the end of such period, the consumer may seek actual damages incurred by reason of the violation which gave rise to the right of rescission, together with costs of the action, including a reasonable attorney’s fee against the creditor or any assignee or securitizer; andCommentsClose CommentsPermalink





‘(2) such holder or anyone acting for such holder or any other applicable third party may sell, transfer, convey, or assign a residential mortgage loan to a creditor, any assignee, or any securitizer, or their designees, subject to the rights of the consumer described in this subsection, to effect a rescission or cure.’.CommentsClose CommentsPermalink

SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS.

(a) In General- Section 129C of the Truth in Lending Act is amended by inserting after subsection (g) (as added by section 205) the following new subsections:CommentsClose CommentsPermalink





‘(h) Prohibition on Certain Prepayment Penalties-CommentsClose CommentsPermalink





‘(1) PROHIBITED ON CERTAIN LOANS- A residential mortgage loan that is not a ‘qualified mortgage’ may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated. For purposes of this subsection, a ‘qualified mortgage’ may not include a residential mortgage loan that has an adjustable rate.CommentsClose CommentsPermalink





‘(2) PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES- A qualified mortgage (as defined in subsection (c)) may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated in excess of the following limitations:CommentsClose CommentsPermalink





‘(A) During the 1-year period beginning on the date the loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan.CommentsClose CommentsPermalink





‘(B) During the 1-year period beginning after the period described in subparagraph (A), the prepayment penalty shall not exceed an amount equal to 2 percent of the outstanding balance on the loan.CommentsClose CommentsPermalink





‘(C) During the 1-year period beginning after the 1-year period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the outstanding balance on the loan.CommentsClose CommentsPermalink





‘(D) After the end of the 3-year period beginning on the date the loan is consummated, no prepayment penalty may be imposed on a qualified mortgage.CommentsClose CommentsPermalink





‘(3) OPTION FOR NO PREPAYMENT PENALTY REQUIRED- A creditor may not offer a consumer a residential mortgage loan product that has a prepayment penalty for paying all or part of the principal after the loan is consummated as a term of the loan without offering the consumer a residential mortgage loan product that does not have a prepayment penalty as a term of the loan.CommentsClose CommentsPermalink





‘(i) Single Premium Credit Insurance Prohibited- No creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer (other than a reverse mortgage), any credit life, credit disability, credit unemployment or credit property insurance, or any other accident, loss-of-income, life or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that--CommentsClose CommentsPermalink





‘(1) insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor; andCommentsClose CommentsPermalink





‘(2) this subsection shall not apply to credit unemployment insurance for which the unemployment insurance premiums are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid pursuant to another insurance contract and not paid to an affiliate of the creditor.CommentsClose CommentsPermalink





‘(j) Arbitration-CommentsClose CommentsPermalink





‘(1) IN GENERAL- No residential mortgage loan and no extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer, other than a reverse mortgage, may include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of the transaction.CommentsClose CommentsPermalink





‘(2) POST-CONTROVERSY AGREEMENTS- Subject to paragraph (3), paragraph (1) shall not be construed as limiting the right of the consumer and the creditor, any assignee, or any securitizer to agree to arbitration or any other nonjudicial procedure as the method for resolving any controversy at any time after a dispute or claim under the transaction arises.CommentsClose CommentsPermalink





‘(3) NO WAIVER OF STATUTORY CAUSE OF ACTION- No provision of any residential mortgage loan or of any extension of credit under an open end consumer credit plan secured by the principal dwelling of the consumer (other than a reverse mortgage), and no other agreement between the consumer and the creditor relating to the residential mortgage loan or extension of credit referred to in paragraph (1), shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court of the United States, or any other court of competent jurisdiction, pursuant to section 130 or any other provision of law, for damages or other relief in connection with any alleged violation of this section, any other provision of this title, or any other Federal law.CommentsClose CommentsPermalink





‘(k) Mortgages With Negative Amortization- No creditor may extend credit to a borrower in connection with a consumer credit transaction under an open or closed end consumer credit plan secured by a dwelling or residential real property that includes a dwelling, other than a reverse mortgage, that provides or permits a payment plan that may, at any time over the term of the extension of credit, result in negative amortization unless, before such transaction is consummated--CommentsClose CommentsPermalink





‘(1) the creditor provides the consumer with a statement that--CommentsClose CommentsPermalink





‘(A) the pending transaction will or may, as the case may be, result in negative amortization;CommentsClose CommentsPermalink





‘(B) describes negative amortization in such manner as the Federal banking agencies shall prescribe;CommentsClose CommentsPermalink





‘(C) negative amortization increases the outstanding principal balance of the account; andCommentsClose CommentsPermalink





‘(D) negative amortization reduces the consumer’s equity in the dwelling or real property; andCommentsClose CommentsPermalink





‘(2) in the case of a first-time borrower with respect to a residential mortgage loan that is not a qualified mortgage, the first-time borrower provides the creditor with sufficient documentation to demonstrate that the consumer received homeownership counseling from organizations or counselors certified by the Secretary of Housing and Urban Development as competent to provide such counseling.’.CommentsClose CommentsPermalink





(b) Conforming Amendment Relating to Enforcement- Section 108(a) of the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting after paragraph (6) the following new paragraph:CommentsClose CommentsPermalink





‘(7) sections 21B and 21C of the Securities Exchange Act of 1934, in the case of a broker or dealer, other than a depository institution, by the Securities and Exchange Commission.’.CommentsClose CommentsPermalink





(c) Protection Against Loss of Anti-Deficiency Protection- Section 129C of the Truth in Lending Act is amended by inserting after subsection (k) (as added by subsection (a) of this section) the following new subsection (and designated succeeding subsections accordingly):CommentsClose CommentsPermalink





‘(l) Protection Against Loss of Anti-Deficiency Protection-CommentsClose CommentsPermalink





‘(1) DEFINITION- For purposes of this subsection, the term ‘anti-deficiency law’ means the law of any State which provides that, in the event of foreclosure on the residential property of a consumer securing a mortgage, the consumer is not liable, in accordance with the terms and limitations of such State law, for any deficiency between the sale price obtained on such property through foreclosure and the outstanding balance of the mortgage.CommentsClose CommentsPermalink





‘(2) NOTICE AT TIME OF CONSUMMATION- In the case of any residential mortgage loan that is, or upon consummation will be, subject to protection under an anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the consumer describing the protection provided by the anti-deficiency law and the significance for the consumer of the loss of such protection before such loan is consummated.CommentsClose CommentsPermalink





‘(3) NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS OF PROTECTION- In the case of any residential mortgage loan that is subject to protection under an anti-deficiency law, if a creditor or mortgage originator provides an application to a consumer, or receives an application from a consumer, for any type of refinancing for such loan that would cause the loan to lose the protection of such anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the consumer describing the protection provided by the anti-deficiency law and the significance for the consumer of the loss of such protection before any agreement for any such refinancing is consummated.’.CommentsClose CommentsPermalink





(d) Policy Regarding Acceptance of Partial Payment- Section 129C of the Truth in Lending Act is amended by inserting after subsection (l) the following new subsection (and redesignating subsequent subsections of such section accordingly):CommentsClose CommentsPermalink





‘(m) Policy Regarding Acceptance of Partial Payment- In the case of any residential mortgage loan, a creditor shall disclose prior to settlement or, in the case of a person becoming a creditor with respect to an existing residential mortgage loan, at the time such person becomes a creditor--CommentsClose CommentsPermalink





‘(1) the creditor’s policy regarding the acceptance of partial payments; andCommentsClose CommentsPermalink





‘(2) if partial payments are accepted, how such payments will be applied to such mortgage and if such payments will be placed in escrow.’.CommentsClose CommentsPermalink

SEC. 207. RULE OF CONSTRUCTION.

Except as otherwise expressly provided in section 129B or 129C of the Truth in Lending Act (as added by this Act), no provision of such section 129B or 129C shall be construed as superseding, repealing, or affecting any duty, right, obligation, privilege, or remedy of any person under any other provision of the Truth in Lending Act or any other provision of Federal or State law.CommentsClose CommentsPermalink

SEC. 208. EFFECT ON STATE LAWS.

(a) In General- Except as provided in subsection (b), section 129C(d) of the Truth in Lending Act (as added by section 204) shall supersede any State law to the extent that it provides additional remedies against any assignee, securitizer, or securitization vehicle for a violation of subsection (a) or (b) of section 129C of such Act or any other State law the terms of which address the specific subject matter of subsection (a) (determination of ability to repay) or (b) (requirement of a net tangible benefit) of section 129C of such Act, and the remedies described in section 129C(d) shall constitute the sole remedies against any assignee, securitizer, or securitization vehicle for such violations.CommentsClose CommentsPermalink





(b) Rules of Construction- No provision of this section shall be construed as limiting--CommentsClose CommentsPermalink





(1) the application of any State law, or the availability of remedies under such law, against a creditor for a particular residential mortgage loan regardless of whether such creditor also acts as an assignee, securitizer, or securitization vehicle for such loan;CommentsClose CommentsPermalink





(2) the application of any State law, or the availability of remedies under such law, against an assignee, securitizer, or securitization vehicle under State law, other than a provision of such law the terms of which address the specific subject matter of subsection (a) (determination of ability to repay) or (b) (requirement of a net tangible benefit) of section 129C of such Act;CommentsClose CommentsPermalink





(3)(A) the application of any State law, or the availability of remedies under such law, against an assignee, securitizer or securitization vehicle for its participation in or direction of the credit or underwriting decisions of a creditor relating to the making of a residential mortgage loan; orCommentsClose CommentsPermalink





(B) the ability of a consumer to assert any rights against or obtain any remedies from an assignee, securitizer or securitization vehicle with respect to a residential mortgage loan as a defense to foreclosure under section 129C(g);CommentsClose CommentsPermalink





(4) the availability of any equitable remedies, including injunctive relief, under State law; orCommentsClose CommentsPermalink





(5) notwithstanding paragraph (2), the availability of any remedies under State law against any assignee, securitizer or securitization vehicle that--CommentsClose CommentsPermalink





(A) are in addition to those remedies provided for in section 129C; andCommentsClose CommentsPermalink





(B) were in effect on the date of enactment of this Act.CommentsClose CommentsPermalink

SEC. 209. REGULATIONS.

Regulations required or authorized to be prescribed under this title or the amendments made by this title--CommentsClose CommentsPermalink





(1) shall be prescribed in final form before the end of the 12-month period beginning on the date of the enactment of this Act; andCommentsClose CommentsPermalink





(2) shall take effect not later than 18 months after the date of the enactment of this Act.CommentsClose CommentsPermalink

SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

(a) Increase in Amount of Civil Money Penalties for Certain Violations- Section 130(a)(2) of the Truth in Lending Act (15 U.S.C. 1640(a)(2)) is amended--CommentsClose CommentsPermalink





(1) by striking ‘$100’ and inserting ‘$200’;CommentsClose CommentsPermalink





(2) by striking ‘$1,000’ and inserting ‘$2,000’; andCommentsClose CommentsPermalink





(3) by striking ‘$500,000’ and inserting ‘$1,000,000’.CommentsClose CommentsPermalink





(b) Statute of Limitations Extended for Section 129 Violations- Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended--CommentsClose CommentsPermalink





(1) in the first sentence, by striking ‘Any action’ and inserting ‘Except as provided in the subsequent sentence, any action’; andCommentsClose CommentsPermalink





(2) by inserting after the first sentence the following new sentence: ‘Any action under this section with respect to any violation of section 129 may be brought in any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning on the date of the occurrence of the violation.’.CommentsClose CommentsPermalink

SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

Section 130 of the Truth in Lending Act is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(k) Exemption From Liability and Rescission in Case of Borrower Fraud or Deception- In addition to any other remedy available by law or contract, no creditor, assignee, or securitizer shall be liable to an obligor under this section, nor shall it be subject to the right of rescission of any obligor under 129B, if such obligor, or co-obligor, knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining such residential mortgage loan.’.CommentsClose CommentsPermalink

SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE RATE MORTGAGES.

(a) In General- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 128 the following new section:CommentsClose CommentsPermalink

‘Sec. 128A. Reset of hybrid adjustable rate mortgages

‘(a) Hybrid Adjustable Rate Mortgages Defined- For purposes of this section, the term ‘hybrid adjustable rate mortgage’ means a consumer credit transaction secured by the consumer’s principal residence with a fixed interest rate for an introductory period that adjusts or resets to a variable interest rate after such period.CommentsClose CommentsPermalink





‘(b) Notice of Reset and Alternatives- During the 1-month period that ends 6 months before the date on which the interest rate in effect during the introductory period of a hybrid adjustable rate mortgage adjusts or resets to a variable interest rate or, in the case of such an adjustment or resetting that occurs within the first 6 months after consummation of such loan, at consummation, the creditor or servicer of such loan shall provide a written notice, separate and distinct from all other correspondence to the consumer, that includes the following:CommentsClose CommentsPermalink





‘(1) Any index or formula used in making adjustments to or resetting the interest rate and a source of information about the index or formula.CommentsClose CommentsPermalink





‘(2) An explanation of how the new interest rate and payment would be determined, including an explanation of how the index was adjusted, such as by the addition of a margin.CommentsClose CommentsPermalink





‘(3) A good faith estimate, based on accepted industry standards, of the creditor or servicer of the amount of the monthly payment that will apply after the date of the adjustment or reset, and the assumptions on which this estimate is based.CommentsClose CommentsPermalink





‘(4) A list of alternatives consumers may pursue before the date of adjustment or reset, and descriptions of the actions consumers must take to pursue these alternatives, including--CommentsClose CommentsPermalink





‘(A) refinancing;CommentsClose CommentsPermalink





‘(B) renegotiation of loan terms;CommentsClose CommentsPermalink





‘(C) payment forbearances; andCommentsClose CommentsPermalink





‘(D) pre-foreclosure sales.CommentsClose CommentsPermalink





‘(5) The names, addresses, telephone numbers, and Internet addresses 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 or a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989).CommentsClose CommentsPermalink





‘(6) The address, telephone number, and Internet address for the State housing finance authority (as so defined) for the State in which the consumer resides.’.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 128 the following new item:CommentsClose CommentsPermalink





‘128A. Reset of hybrid adjustable rate mortgages.’.CommentsClose CommentsPermalink

SEC. 213. CREDIT RISK RETENTION.

Section 129C of the Truth in Lending Act is amended by inserting after subsection (k) (as added by section 206) the following new subsection:CommentsClose CommentsPermalink





‘(l) Credit Risk Retention-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The Federal banking agencies shall prescribe regulations jointly to require any creditor that makes a residential mortgage loan that is not a qualified mortgage (as defined under section 129C(c)(2)(A)), to retain an economic interest in a material portion of the credit risk for any such loan that the creditor transfers, sells or conveys to a third party.CommentsClose CommentsPermalink





‘(2) STANDARDS FOR REGULATIONS- Regulations prescribed under paragraph (1) shall--CommentsClose CommentsPermalink





‘(A) apply only to residential mortgage loans that are not qualified mortgages (as so defined);CommentsClose CommentsPermalink





‘(B) prohibit a creditor from directly or indirectly hedging or otherwise transferring the credit risk such creditor is required to retain under the regulations with respect to any residential mortgage loan;CommentsClose CommentsPermalink





‘(C) require a creditor to retain at least 5 percent of the credit risk on any non-qualified mortgage that is transferred, sold or conveyed by such creditor; andCommentsClose CommentsPermalink





‘(D) specify the permissible forms of the required risk retention (for example, first loss position or pro rata vertical slice) and the minimum duration of the required risk retention.CommentsClose CommentsPermalink





‘(3) EXCEPTIONS AND ADJUSTMENTS-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Federal banking agencies shall have authority to jointly provide exceptions or adjustments to the requirements of this subsection, including exceptions or adjustments relating to the 5 percent risk retention threshold and the hedging prohibition.CommentsClose CommentsPermalink





‘(B) APPLICABLE STANDARDS- Any exceptions or adjustments granted by the Federal banking agencies shall--CommentsClose CommentsPermalink





‘(i) be consistent with the purpose of this subsection to help ensure high quality underwriting standards for creditors that make residential mortgage loans that are not qualified mortgages; andCommentsClose CommentsPermalink





‘(ii) facilitate appropriate risk management practices by such creditors, improve access of consumers to mortgage credit on reasonable terms, or otherwise serve the public interest.CommentsClose CommentsPermalink





‘(4) ALTERNATIVE RISK RETENTION FOR SECURITIZERS- The Federal banking agencies may jointly, in their discretion, apply the risk retention requirements of this subsection to securitizers of residential mortgages (or particular types of residential mortgages) that are not qualified mortgages in addition to or in substitution for any or all of the requirements that apply to creditors that make such mortgages if the agencies jointly determine that applying the requirements to such securitizers would--CommentsClose CommentsPermalink





‘(A) be consistent with the purpose of this subsection to help ensure high quality underwriting standards for creditors of residential mortgage loans that are not qualified mortgages; andCommentsClose CommentsPermalink





‘(B) facilitate appropriate risk management practices by such creditors, improve access of consumers to mortgage credit on reasonable terms, or otherwise serve the public interest.CommentsClose CommentsPermalink





‘(m) Section 129C and any regulations promulgated thereunder do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.’.CommentsClose CommentsPermalink

SEC. 214. REQUIRED DISCLOSURES.

Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is amended by adding at the end the following new paragraphs:CommentsClose CommentsPermalink





‘(16) In the case of a variable rate residential mortgage loan for which an escrow or impound account will be established for the payment of all applicable taxes, insurance, and assessments--CommentsClose CommentsPermalink





‘(A) the amount of initial monthly payment due under the loan for the payment of principal and interest, and the amount of such initial monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments; andCommentsClose CommentsPermalink





‘(B) the amount of the fully indexed monthly payment due under the loan for the payment of principal and interest, and the amount of such fully indexed monthly payment including the monthly payment deposited in the account for the payment of all applicable taxes, insurance, and assessments.CommentsClose CommentsPermalink





‘(17) In the case of a residential mortgage loan, the aggregate amount of settlement charges for all settlement services provided in connection with the loan, the amount of charges that are included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds in connection with the loan, and the aggregate amount of other fees or required payments in connection with the loan.CommentsClose CommentsPermalink





‘(18) In the case of a residential mortgage loan, the aggregate amount of fees paid to the mortgage originator in connection with the loan, the amount of such fees paid directly by the consumer, and any additional amount received by the originator from the creditor.CommentsClose CommentsPermalink





‘(19) In the case of a residential mortgage loan, the total amount of interest that the consumer will pay over the life of the loan as a percentage of the principal of the loan. Such amount shall be computed assuming the consumer makes each monthly payment in full and on-time, and does not make any over-payments.’.CommentsClose CommentsPermalink

SEC. 215. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL MORTGAGE LOANS.

Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(f) Periodic Statements for Residential Mortgage Loans-CommentsClose CommentsPermalink





‘(1) IN GENERAL- The creditor, assignee, or servicer with respect to any residential mortgage loan shall transmit to the obligor, for each billing cycle, a statement setting forth each of the following items, to the extent applicable, in a conspicuous and prominent manner:CommentsClose CommentsPermalink





‘(A) The amount of the principal obligation under the mortgage.CommentsClose CommentsPermalink





‘(B) The current interest rate in effect for the loan.CommentsClose CommentsPermalink





‘(C) The date on which the interest rate may next reset or adjust.CommentsClose CommentsPermalink





‘(D) The amount of any prepayment fee to be charged, if any.CommentsClose CommentsPermalink





‘(E) A description of any late payment fees.CommentsClose CommentsPermalink





‘(F) A telephone number and electronic mail address that may be used by the obligor to obtain information regarding the mortgage.CommentsClose CommentsPermalink





‘(G) The names, addresses, telephone numbers, and Internet addresses 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 or a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989).CommentsClose CommentsPermalink





‘(H) Such other information as the Board may prescribe in regulations.CommentsClose CommentsPermalink





‘(2) DEVELOPMENT AND USE OF STANDARD FORM- The Federal banking agencies shall jointly develop and prescribe a standard form for the disclosure required under this subsection, taking into account that the statements required may be transmitted in writing or electronically.’.CommentsClose CommentsPermalink

SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

(a) Establishment- The Secretary of Housing and Urban Development (hereafter in this section referred to as the ‘Secretary’ shall establish a program for making grants for providing a full range of foreclosure legal assistance to low- and moderate-income homeowners and tenants related to home ownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.CommentsClose CommentsPermalink





(b) Competitive Allocation- The Secretary shall allocate amounts made available for grants under this section to State and local legal organizations on the basis of a competitive process. For purposes of this subsection ‘State and local legal organizations’ are those State and local organizations whose primary business or mission is to provide legal assistance.CommentsClose CommentsPermalink





(c) Priority to Certain Areas- In allocating amounts in accordance with subsection (b), the Secretary shall give priority consideration to State and local legal organizations that are operating in the 100 metropolitan statistical areas (as that term is defined by the Director of the Office of Management and Budget) with the highest home foreclosure rates.CommentsClose CommentsPermalink





(d) Legal Assistance-CommentsClose CommentsPermalink





(1) IN GENERAL- Any State or local legal organization that receives financial assistance pursuant to this section may use such amounts only to assist--CommentsClose CommentsPermalink





(A) homeowners of owner-occupied homes with mortgages in default, in danger of default, or subject to or at risk of foreclosure; andCommentsClose CommentsPermalink





(B) tenants at risk of or subject to eviction as a result of foreclosure of the property in which such tenant resides.CommentsClose CommentsPermalink





(2) COMMENCE USE WITHIN 90 DAYS- Any State or local legal organization that receives financial assistance pursuant to this section shall begin using any financial assistance received under this section within 90 days after receipt of the assistance.CommentsClose CommentsPermalink





(3) PROHIBITION ON CLASS ACTIONS- No funds provided to a State or local legal organization under this section may be used to support any class action litigation.CommentsClose CommentsPermalink





(4) LIMITATION ON LEGAL ASSISTANCE- Legal assistance funded with amounts provided under this section shall be limited to mortgage-related default, eviction, or foreclosure proceedings, without regard to whether such foreclosure is judicial or nonjudicial.CommentsClose CommentsPermalink





(5) EFFECTIVE DATE- Notwithstanding section 217, this subsection shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink





(e) Limitation on Distribution of Assistance-CommentsClose CommentsPermalink





(1) IN GENERAL- None of the amounts made available under this section shall be distributed to--CommentsClose CommentsPermalink





(A) any organization which has been convicted for a violation under Federal law relating to an election for Federal office; orCommentsClose CommentsPermalink





(B) any organization which employs applicable individuals.CommentsClose CommentsPermalink





(2) DEFINITION OF APPLICABLE INDIVIDUALS- In this subsection, the term ‘applicable individual’ means an individual who--CommentsClose CommentsPermalink





(A) is--CommentsClose CommentsPermalink





(i) employed by the organization in a permanent or temporary capacity;CommentsClose CommentsPermalink





(ii) contracted or retained by the organization; orCommentsClose CommentsPermalink





(iii) acting on behalf of, or with the express or apparent authority of, the organization; andCommentsClose CommentsPermalink





(B) has been convicted for a violation under Federal law relating to an election for Federal office.CommentsClose CommentsPermalink





(f) Authorization of Appropriations- There are authorized to be appropriated to the Secretary $35,000,000 for each of fiscal years 2009 through 2012 for grants under this section.CommentsClose CommentsPermalink

SEC. 217. EFFECTIVE DATE.

The amendments made by this title shall apply to transactions consummated on or after the effective date of the regulations specified in section 209.CommentsClose CommentsPermalink

SEC. 218. REPORT BY THE GAO.

(a) Report Required- The Comptroller General shall conduct a study to determine the effects the enactment of this Act will have on the availability and affordability of credit for consumers, small businesses, homebuyers, and mortgage lending, including the effect--CommentsClose CommentsPermalink





(1) on the mortgage market for mortgages that are not within the safe harbor provided in the amendments made by this title;CommentsClose CommentsPermalink





(2) on the ability of prospective homebuyers to obtain financing;CommentsClose CommentsPermalink





(3) on the ability of homeowners facing resets or adjustments to refinance--for example, do they have fewer refinancing options due to the unavailability of certain loan products that were available before the enactment of this Act;CommentsClose CommentsPermalink





(4) on minorities’ ability to access affordable credit compared with other prospective borrowers;CommentsClose CommentsPermalink





(5) on home sales and construction;CommentsClose CommentsPermalink





(6) of extending the rescission right, if any, on adjustable rate loans and its impact on litigation;CommentsClose CommentsPermalink





(7) of State foreclosure laws and, if any, an investor’s ability to transfer a property after foreclosure;CommentsClose CommentsPermalink





(8) of expanding the existing provisions of the Home Ownership and Equity Protection Act of 1994;CommentsClose CommentsPermalink





(9) of prohibiting prepayment penalties on high-cost mortgages; andCommentsClose CommentsPermalink





(10) of establishing counseling services under the Department of Housing and Urban Development and offered through the Office of Housing Counseling.CommentsClose CommentsPermalink





(b) Report- Before the end of the 1-year period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Congress containing the findings and conclusions of the Comptroller General with respect to the study conducted pursuant to subsection (a).CommentsClose CommentsPermalink





(c) Examination Related to Certain Credit Risk Retention Provisions- The report required by subsection (b) shall also include an analysis by the Comptroller General of the effect on the capital reserves and funding of lenders of credit risk retention provisions for non-qualified mortgages, including an analysis of the exceptions and adjustments authorized in section 129C(l)(3)(A) of the Truth in Lending Act and a recommendation on whether a uniform standard is needed.CommentsClose CommentsPermalink





(d) Analysis of Credit Risk Retention Provisions- The report required by subsection (b) shall also include--CommentsClose CommentsPermalink





(1) an analysis by the Comptroller General of whether the credit risk retention provisions have significantly reduced risks to the larger credit market of the repackaging and selling of securitized loans on a secondary market; andCommentsClose CommentsPermalink





(2) recommendations to the Congress on adjustments that should be made, or additional measures that should be undertaken.CommentsClose CommentsPermalink

SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by striking ‘section 129 may also’ and inserting ‘section 129, 129B, or 129C of this Act, section 220 of the Mortgage Reform and Anti-Predatory Lending Act, or any amendment made by section 220 of the Mortgage Reform and Anti-Predatory Lending Act may also’.CommentsClose CommentsPermalink

SEC. 220. TENANT PROTECTION.

(a) Tenant Protection Generally-CommentsClose CommentsPermalink





(1) IN GENERAL- In the case of any foreclosure on any dwelling or residential real property, after the date of the enactment of the Mortgage Reform and Anti-Predatory Lending Act, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to--CommentsClose CommentsPermalink





(A) except as provided in paragraph (2), the rights of any bona fide tenant, as of the date of foreclosure under any bona fide lease entered into before the date of foreclosure, to occupy the premises until the end of the remaining term of the lease; andCommentsClose CommentsPermalink





(B) the rights of any bona fide tenant, as of the date of foreclosure, without a lease or with a lease terminable at will under State law, subject to the provision by the immediate successor in interest and the receipt by the tenant in the unit, of a notice to vacate at least 90 days before the effective date of such notice.CommentsClose CommentsPermalink





(2) EXCEPTION FOR SUBSEQUENT OWNER-OCCUPANT- Notwithstanding paragraph (1), if the immediate successor in interest of any dwelling or residential real property that is otherwise subject to paragraph (1) is a purchaser who will occupy a unit of the dwelling or residential real property as a primary residence, or such successor in interest sells the dwelling or residential real property to a purchaser who will occupy a unit of the dwelling or residential real property, as a primary residence--CommentsClose CommentsPermalink





(A) such purchaser may terminate a lease relating to such unit on the effective date of a notice to vacate; andCommentsClose CommentsPermalink





(B)(i) such notice to vacate shall be provided by the purchaser to the tenant in such unit at least 90 days before the effective date of such notice; and (ii) with respect to a single-family residence for which the borrower rented the unit in violation of the mortgage contract, such notice to vacate shall be provided by the purchaser to the tenant in such unit at least 30 days before the effective date of such notice, and shall include a copy of the mortgage contract prohibiting the rental of the unit.CommentsClose CommentsPermalink





(3) BONA FIDE LEASE OR TENANCY- For purposes of this subsection, a lease or tenancy shall be considered bona fide only if--CommentsClose CommentsPermalink





(A) the mortgagor under the contract is not the tenant;CommentsClose CommentsPermalink





(B) the lease or tenancy was the result of an arms-length transaction; andCommentsClose CommentsPermalink





(C) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.CommentsClose CommentsPermalink





(4) RULE OF CONSTRUCTION- Except for the specific provisions of this subsection, no provision of this subsection shall be construed as affecting the requirements for termination of any Federal- or State-subsidized tenancy. The provisions of this subsection shall not be construed to limit any State or local law that provides longer time periods or other additional protections for tenants.CommentsClose CommentsPermalink





(b) Corresponding Provision Relating to Effect of Foreclosures on Section 8 Tenancies- Paragraph (7) of section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended--CommentsClose CommentsPermalink





(1) in subparagraph (C), by inserting before the semicolon at the end the following: ‘, and in the case of an owner who is an immediate successor in interest pursuant to foreclosure--CommentsClose CommentsPermalink





‘(i) during the initial term of the tenant’s lease, having the property vacant prior to sale shall not constitute good cause; andCommentsClose CommentsPermalink





‘(ii) in subsequent lease terms of the tenant’s lease, who will occupy the unit as a primary residence, who sells the property to a purchaser who will occupy a unit of the property as a primary residence, or if the unit is unmarketable while occupied, such owner may terminate a lease relating to such unit for good cause on the effective date of the notice to vacate, where such notice is provided by the owner to the tenant in such unit at least 90 days before the effective date of such notice;’.CommentsClose CommentsPermalink





(2) in subparagraph (E), by striking ‘and’ at the end;CommentsClose CommentsPermalink





(3) by redesignating subparagraph (F) as subparagraph (G); andCommentsClose CommentsPermalink





(4) by inserting after subparagraph (E) the following:CommentsClose CommentsPermalink





‘(F) shall provide that in the case of any foreclosure on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit; if a public housing agency is unable to make payments under the contract to the immediate successor in interest after foreclosure, due to action or inaction by the successor in interest, including the rejection of payments or the failure of the successor to maintain the unit in compliance with paragraph (8) or an inability to identify the successor, the agency may use funds that would have been used to pay the rental amount on behalf of the family--CommentsClose CommentsPermalink





‘(i) to pay for utilities that are the responsibility of the owner under the lease or applicable law, after taking reasonable steps to notify the owner that it intends to make payments to a utility provider in lieu of payments to the owner, except prior notification shall not be required in any case in which the unit will be or has been rendered uninhabitable due to the termination or threat of termination of service, in which case the public housing agency shall notify the owner within a reasonable time after making such payment; orCommentsClose CommentsPermalink





‘(ii) for the family’s reasonable moving costs, including security deposit costs;CommentsClose CommentsPermalink





except that this subparagraph and the provisions related to foreclosure in subparagraph (C) shall not affect any State or local law that provides longer time periods or other additional protections for tenants.’.CommentsClose CommentsPermalink





(c) Landlord Notice to Tenants- Notwithstanding the law of any State or the terms of any consumer residential lease, each person who owns a dwelling or residential real property--CommentsClose CommentsPermalink





(1) which is leased to a bona fide tenant (including a tenancy terminable at will), or which the landlord offers to lease to a prospective tenant; andCommentsClose CommentsPermalink





(2) which, pursuant to the terms of a valid loan to such person which is secured by such dwelling or property, is or becomes subject to foreclosure or with respect to which the person is in default,CommentsClose CommentsPermalink





shall promptly notify any such tenant or prospective tenant of the circumstances prevailing with respect to such property and the effect of any such default or foreclosure. The requirements of this subsection shall have no effect on any State or local law that provides additional notice or other additional protections for tenants.CommentsClose CommentsPermalink





(d) Effective Date- Notwithstanding section 217, this section and the amendments made by this section shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink

TITLE III--HIGH-COST MORTGAGESCommentsClose CommentsPermalink

SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

(a) High-Cost Mortgage Defined- Section 103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that precedes paragraph (2) and inserting the following:CommentsClose CommentsPermalink





‘(aa) High-Cost Mortgage-CommentsClose CommentsPermalink





‘(1) DEFINITION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The term ‘high-cost mortgage’, and a mortgage referred to in this subsection, means a consumer credit transaction that is secured by the consumer’s principal dwelling, other than a reverse mortgage transaction, if--CommentsClose CommentsPermalink





‘(i) in the case of a credit transaction secured--CommentsClose CommentsPermalink





‘(I) by a first mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more than 6.5 percentage points (8.5 percentage points, if the dwelling is personal property and the transaction is for less than $50,000) the average prime offer rate, as defined in section 129C(c)(2)(B), for a comparable transaction; orCommentsClose CommentsPermalink





‘(II) by a subordinate or junior mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more than 8.5 percentage points the average prime offer rate, as defined in section 129C(c)(2)(B), for a comparable transaction;CommentsClose CommentsPermalink





‘(ii) the total points and fees payable in connection with the transaction exceed--CommentsClose CommentsPermalink





‘(I) in the case of a transaction for $20,000 or more, 5 percent of the total transaction amount; orCommentsClose CommentsPermalink





‘(II) in the case of a transaction for less than $20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar amount as the Board shall prescribe by regulation); orCommentsClose CommentsPermalink





‘(iii) the credit transaction documents permit the creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction closing or such fees or penalties exceed, in the aggregate, more than 2 percent of the amount prepaid.CommentsClose CommentsPermalink





‘(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT- For purposes of subparagraph (A)(i), the annual percentage rate of interest shall be determined based on the following interest rate:CommentsClose CommentsPermalink





‘(i) In the case of a fixed-rate transaction in which the annual percentage rate will not vary during the term of the loan, the interest rate in effect on the date of consummation of the transaction.CommentsClose CommentsPermalink





‘(ii) In the case of a transaction in which the rate of interest varies solely in accordance with an index, the interest rate determined by adding the index rate in effect on the date of consummation of the transaction to the maximum margin permitted at any time during the transaction agreement.CommentsClose CommentsPermalink





‘(iii) In the case of any other transaction in which the rate may vary at any time during the term of the loan for any reason, the interest charged on the transaction at the maximum rate that may be charged during the term of the transaction.’.CommentsClose CommentsPermalink





(b) Adjustment of Percentage Points- Section 103(aa)(2) of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking subparagraph (B) and inserting the following new subparagraph:CommentsClose CommentsPermalink





‘(B) An increase or decrease under subparagraph (A)--CommentsClose CommentsPermalink





‘(i) may not result in the number of percentage points referred to in paragraph (1)(A)(i)(I) being less than 6 percentage points or greater than 10 percentage points; andCommentsClose CommentsPermalink





‘(ii) may not result in the number of percentage points referred to in paragraph (1)(A)(i)(II) being less than 8 percentage points or greater than 12 percentage points.’.CommentsClose CommentsPermalink





(c) Points and Fees Defined-CommentsClose CommentsPermalink





(1) IN GENERAL- Section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is amended--CommentsClose CommentsPermalink





(A) by striking subparagraph (B) and inserting the following:CommentsClose CommentsPermalink





‘(B) all compensation paid directly or indirectly by a consumer or creditor to a mortgage originator from any source, including a mortgage originator that originates a loan in the name of the creditor in a table-funded transaction;’;CommentsClose CommentsPermalink





(B) in subparagraph (C)(ii), by inserting ‘except where applied to the charges set forth in section 106(e)(1) where a creditor may receive indirect compensation solely as a result of obtaining distributions of profits from an affiliated entity based on its ownership interest in compliance with section 8(c)(4) of the Real Estate Settlement Procedures Act of 1974’ before the semicolon at the end;CommentsClose CommentsPermalink





(C) in subparagraph (C)(iii), by striking ‘; and’ and inserting ‘, except as provided for in clause (ii);’;CommentsClose CommentsPermalink





(D) by redesignating subparagraph (D) as subparagraph (G); andCommentsClose CommentsPermalink





(E) by inserting after subparagraph (C) the following new subparagraphs:CommentsClose CommentsPermalink





‘(D) premiums or other charges payable at or before closing for any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-of-income, life or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid in full on a monthly basis shall not be considered financed by the creditor;CommentsClose CommentsPermalink





‘(E) except as provided in subsection (cc), the maximum prepayment fees and penalties which may be charged or collected under the terms of the credit transaction;CommentsClose CommentsPermalink





‘(F) all prepayment fees or penalties that are incurred by the consumer if the loan refinances a previous loan made or currently held by the same creditor or an affiliate of the creditor; and’.CommentsClose CommentsPermalink





(2) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS- Section 103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) is amended--CommentsClose CommentsPermalink





(A) by redesignating paragraph (5) as paragraph (6); andCommentsClose CommentsPermalink





(B) by inserting after paragraph (4) the following new paragraph:CommentsClose CommentsPermalink





‘(5) CALCULATION OF POINTS AND FEES FOR OPEN-END CONSUMER CREDIT PLANS- In the case of open-end consumer credit plans, points and fees shall be calculated, for purposes of this section and section 129, by adding the total points and fees known at or before closing, including the maximum prepayment penalties which may be charged or collected under the terms of the credit transaction, plus the minimum additional fees the consumer would be required to pay to draw down an amount equal to the total credit line.’.CommentsClose CommentsPermalink





(d) Bona Fide Discount Loan Discount Points- Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after subsection (cc) (as added by section 101) the following new subsection:CommentsClose CommentsPermalink





‘(dd) Bona Fide Discount Points and Prepayment Penalties- For the purposes of determining the amount of points and fees for purposes of subsection (aa), either the amounts described in paragraph (1) or (2) of the following paragraphs, but not both, shall be excluded:CommentsClose CommentsPermalink





‘(1) Up to and including 2 bona fide discount points payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than 1 percentage point--CommentsClose CommentsPermalink





‘(A) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; orCommentsClose CommentsPermalink





‘(B) if secured by a personal property loan, the average rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 1702 et seq.).CommentsClose CommentsPermalink





‘(2) Unless 2 bona fide discount points have been excluded under paragraph (1), up to and including 1 bona fide discount point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than 2 percentage points--CommentsClose CommentsPermalink





‘(A) the required net yield for a 90-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; orCommentsClose CommentsPermalink





‘(B) if secured by a personal property loan, the average rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 1702 et seq.).CommentsClose CommentsPermalink





‘(3) For purposes of paragraph (1), the term ‘bona fide discount points’ means loan discount points which are knowingly paid by the consumer for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate or time-price differential applicable to the mortgage.CommentsClose CommentsPermalink





‘(4) Paragraphs (1) and (2) shall not apply to discount points used to purchase an interest rate reduction unless the amount of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.’.CommentsClose CommentsPermalink

SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) Prepayment Penalty Provisions- Section 129(c)(2) of the Truth in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.CommentsClose CommentsPermalink





(b) No Balloon Payments- Section 129(e) of the Truth in Lending Act (15 U.S.C. 1639(e)) is amended to read as follows:CommentsClose CommentsPermalink





‘(e) No Balloon Payments- No high-cost mortgage may contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This subsection shall not apply when the payment schedule is adjusted to the seasonal or irregular income of the consumer.’.CommentsClose CommentsPermalink

SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) Additional Requirements for Certain Mortgages- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended--CommentsClose CommentsPermalink





(1) by redesignating subsections (j), (k) and (l) as subsections (n), (o) and (p) respectively; andCommentsClose CommentsPermalink





(2) by inserting after subsection (i) the following new subsections:CommentsClose CommentsPermalink





‘(j) Recommended Default- No creditor shall recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a high-cost mortgage that refinances all or any portion of such existing loan or debt.CommentsClose CommentsPermalink





‘(k) Late Fees-CommentsClose CommentsPermalink





‘(1) IN GENERAL- No creditor may impose a late payment charge or fee in connection with a high-cost mortgage--CommentsClose CommentsPermalink





‘(A) in an amount in excess of 4 percent of the amount of the payment past due;CommentsClose CommentsPermalink





‘(B) unless the loan documents specifically authorize the charge or fee;CommentsClose CommentsPermalink





‘(C) before the end of the 15-day period beginning on the date the payment is due, or in the case of a loan on which interest on each installment is paid in advance, before the end of the 30-day period beginning on the date the payment is due; orCommentsClose CommentsPermalink





‘(D) more than once with respect to a single late payment.CommentsClose CommentsPermalink





‘(2) COORDINATION WITH SUBSEQUENT LATE FEES- If a payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period, and the only delinquency or insufficiency of payment is attributable to any late fee or delinquency charge assessed on any earlier payment, no late fee or delinquency charge may be imposed on such payment.CommentsClose CommentsPermalink





‘(3) FAILURE TO MAKE INSTALLMENT PAYMENT- If, in the case of a loan agreement the terms of which provide that any payment shall first be applied to any past due principal balance, the consumer fails to make an installment payment and the consumer subsequently resumes making installment payments but has not paid all past due installments, the creditor may impose a separate late payment charge or fee for any principal due (without deduction due to late fees or related fees) until the default is cured.CommentsClose CommentsPermalink





‘(l) Acceleration of Debt- No high-cost mortgage may contain a provision which permits the creditor to accelerate the indebtedness, except when repayment of the loan has been accelerated by default in payment, or pursuant to a due-on-sale provision, or pursuant to a material violation of some other provision of the loan document unrelated to payment schedule.CommentsClose CommentsPermalink





‘(m) Restriction on Financing Points and Fees- No creditor may directly or indirectly finance, in connection with any high-cost mortgage, any of the following:CommentsClose CommentsPermalink





‘(1) Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate of the creditor is the noteholder of the note being refinanced.CommentsClose CommentsPermalink





‘(2) Any points or fees.’.CommentsClose CommentsPermalink





(b) Prohibitions on Evasions- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as so redesignated by subsection (a)(1)) the following new subsection:CommentsClose CommentsPermalink





‘(q) Prohibitions on Evasions, Structuring of Transactions, and Reciprocal Arrangements- A creditor may not take any action in connection with a high-cost mortgage--CommentsClose CommentsPermalink





‘(1) to structure a loan transaction as an open-end credit plan or another form of loan for the purpose and with the intent of evading the provisions of this title; orCommentsClose CommentsPermalink





‘(2) to divide any loan transaction into separate parts for the purpose and with the intent of evading provisions of this title.’.CommentsClose CommentsPermalink





(c) Modification or Deferral Fees- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as added by subsection (b) of this section) the following new subsection:CommentsClose CommentsPermalink





‘(r) Modification and Deferral Fees Prohibited-CommentsClose CommentsPermalink





‘(1) CREDITORS- A creditor may not charge a consumer any fee to modify, renew, extend, or amend a high-cost mortgage, or to defer any payment due under the terms of such mortgage, unless the modification, renewal, extension or amendment results in a lower annual percentage rate on the mortgage for the consumer and then only if the amount of the fee is comparable to fees imposed for similar transactions in connection with consumer credit transactions that are secured by a consumer’s principal dwelling and are not high-cost mortgages.CommentsClose CommentsPermalink





‘(2) THIRD PARTIES- A third-party may not charge a consumer any fee to--CommentsClose CommentsPermalink





‘(A) modify, renew, extend, or amend a high-cost mortgage, or defer any payment due under the terms of such mortgage;CommentsClose CommentsPermalink





‘(B) negotiate with a creditor on behalf of a consumer, the modification, renewal, extension, or amendment of a high-cost mortgage; orCommentsClose CommentsPermalink





‘(C) negotiate with a creditor on behalf of a consumer, the deferral of any payment due under the terms of such mortgage,CommentsClose CommentsPermalink





unless the modification renewal, extension or amendment results in a significantly lower annual percentage rate on the mortgage, or a significant reduction in the amount of the outstanding principal on the mortgage, for the consumer and then only if the amount of the fee is comparable to fees imposed for similar transactions in connection with consumer credit transactions that are secured by a consumer’s principal dwelling and are not high-cost mortgages.CommentsClose CommentsPermalink





‘(3) ENFORCEMENT- Section 130 shall be applied for purposes of paragraph (2) by--CommentsClose CommentsPermalink





‘(A) substituting ‘third party’ for ‘creditor’each place such term appears; andCommentsClose CommentsPermalink





‘(B) substituting ‘any fee charged by a third party’ for ‘finance charge’ each place such term appears.’.CommentsClose CommentsPermalink





(d) Payoff Statement- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (r) (as added by subsection (c) of this section) the following new subsection:CommentsClose CommentsPermalink





‘(s) Payoff Statement-CommentsClose CommentsPermalink





‘(1) FEES-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Except as provided in subparagraph (B), no creditor or servicer may charge a fee for informing or transmitting to any person the balance due to pay off the outstanding balance on a high-cost mortgage.CommentsClose CommentsPermalink





‘(B) TRANSACTION FEE- When payoff information referred to in subparagraph (A) is provided by facsimile transmission or by a courier service, a creditor or servicer may charge a processing fee to cover the cost of such transmission or service in an amount not to exceed an amount that is comparable to fees imposed for similar services provided in connection with consumer credit transactions that are secured by the consumer’s principal dwelling and are not high-cost mortgages.CommentsClose CommentsPermalink





‘(C) FEE DISCLOSURE- Prior to charging a transaction fee as provided in subparagraph (B), a creditor or servicer shall disclose that payoff balances are available for free pursuant to subparagraph (A).CommentsClose CommentsPermalink





‘(D) MULTIPLE REQUESTS- If a creditor or servicer has provided payoff information referred to in subparagraph (A) without charge, other than the transaction fee allowed by subparagraph (B), on 4 occasions during a calendar year, the creditor or servicer may thereafter charge a reasonable fee for providing such information during the remainder of the calendar year.CommentsClose CommentsPermalink





‘(2) PROMPT DELIVERY- Payoff balances shall be provided within 5 business days after receiving a request by a consumer or a person authorized by the consumer to obtain such information.CommentsClose CommentsPermalink





‘(3) SERVICES CONSIDERED ASSIGNEE- For the purposes of this subsection, a servicer shall be considered an assignee under the Truth in Lending Act.’.CommentsClose CommentsPermalink





(e) Pre-Loan Counseling Required- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (s) (as added by subsection (d) of this section) the following new subsection:CommentsClose CommentsPermalink





‘(t) Pre-Loan Counseling-CommentsClose CommentsPermalink





‘(1) IN GENERAL- A creditor may not extend credit to a consumer under a high-cost mortgage without first receiving certification from a counselor that is approved by the Secretary of Housing and Urban Development, or at the discretion of the Secretary, a State housing finance authority, that the consumer has received counseling on the advisability of the mortgage. Such counselor shall not be employed by the creditor or an affiliate of the creditor or be affiliated with the creditor.CommentsClose CommentsPermalink





‘(2) DISCLOSURES REQUIRED PRIOR TO COUNSELING- No counselor may certify that a consumer has received counseling on the advisability of the high-cost mortgage unless the counselor can verify that the consumer has received each statement required (in connection with such loan) by this section or the Real Estate Settlement Procedures Act of 1974 with respect to the transaction.CommentsClose CommentsPermalink





‘(3) REGULATIONS- The Board may prescribe such regulations as the Board determines to be appropriate to carry out the requirements of paragraph (1).’.CommentsClose CommentsPermalink





(f) Flipping Prohibited- Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (t) (as added by subsection (e)) the following new subsection:CommentsClose CommentsPermalink





‘(u) Flipping-CommentsClose CommentsPermalink





‘(1) IN GENERAL- No creditor may knowingly or intentionally engage in the unfair act or practice of flipping in connection with a high-cost mortgage.CommentsClose CommentsPermalink





‘(2) FLIPPING DEFINED- For purposes of this subsection, the term ‘flipping’ means the making of a loan or extension of credit in the form a high-cost mortgage to a consumer which refinances an existing mortgage when the new loan or extension of credit does not have reasonable, net tangible benefit (as determined in accordance with regulations prescribed under section 129C(b)) to the consumer considering all of the circumstances, including the terms of both the new and the refinanced loans or credit, the cost of the new loan or credit, and the consumer’s circumstances.CommentsClose CommentsPermalink





‘(v) Corrections and Unintentional Violations- A creditor or assignee in a high cost loan who, when acting in good faith, fails to comply with any requirement under this section will not be deemed to have violated such requirement if the creditor or assignee establishes that either--CommentsClose CommentsPermalink





‘(1) within 30 days of the loan closing and prior to the institution of any action, the consumer is notified of or discovers the violation, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer--CommentsClose CommentsPermalink





‘(A) make the loan satisfy the requirements of this chapter; orCommentsClose CommentsPermalink





‘(B) in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial to the consumer so that the loan will no longer be a high-cost mortgage; orCommentsClose CommentsPermalink





‘(2) within 60 days of the creditor’s discovery or receipt of notification of an unintentional violation or bona fide error as described in subsection (c) and prior to the institution of any action, the consumer is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer--CommentsClose CommentsPermalink





‘(A) make the loan satisfy the requirements of this chapter; orCommentsClose CommentsPermalink





‘(B) in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial so that the loan will no longer be a high-cost mortgage.’.CommentsClose CommentsPermalink

SEC. 304. REGULATIONS.

(a) In General- The Board of Governors of the Federal Reserve System shall publish regulations implementing this title and the amendments made by this title in final form before the end of the 6-month period beginning on the date of the enactment of this Act.CommentsClose CommentsPermalink





(b) Consumer Mortgage Education-CommentsClose CommentsPermalink





(1) REGULATIONS- The Board of Governors of the Federal Reserve System may prescribe regulations requiring or encouraging creditors to provide consumer mortgage education to prospective customers or direct such customers to qualified consumer mortgage education or counseling programs in the vicinity of the residence of the consumer.CommentsClose CommentsPermalink





(2) COORDINATION WITH STATE LAW- No requirement established by the Board of Governors of the Federal Reserve System pursuant to paragraph (1) shall be construed as affecting or superseding any requirement under the law of any State with respect to consumer mortgage counseling or education.CommentsClose CommentsPermalink

SEC. 305. EFFECTIVE DATE.

The amendments made by this title shall take effect at the end of the 6-month period beginning on the date of the enactment of this Act and shall apply to mortgages referred to in section 103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) for which an application is received by the creditor after the end of such period.CommentsClose CommentsPermalink

TITLE IV--OFFICE OF HOUSING COUNSELINGCommentsClose CommentsPermalink

SEC. 401. SHORT TITLE.

This title may be cited as the ‘Expand and Preserve Home Ownership Through Counseling Act’.CommentsClose CommentsPermalink

SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

Section 4 of the Department of Housing and Urban Development Act (42 U.S.C. 3533) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(g) Office of Housing Counseling-CommentsClose CommentsPermalink





‘(1) ESTABLISHMENT- There is established, in the Department, 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, and shall report to, 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 primary responsibility within the Department 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(g)(1) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(h)(1));CommentsClose CommentsPermalink





‘(ii) carrying out all other functions of the Secretary under section 106(g) 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) contributing to the preparation and distribution of home buying information booklets pursuant to section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604);CommentsClose CommentsPermalink





‘(iv) carrying out the certification program under section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e));CommentsClose CommentsPermalink





‘(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) carrying out any functions regarding abusive, deceptive, or unscrupulous lending practices relating to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the study under section 6 of the Expand and Preserve Home Ownership Through Counseling Act;CommentsClose CommentsPermalink





‘(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection;CommentsClose CommentsPermalink





‘(viii) collaborating with community-based organizations with expertise in the field of housing counseling; andCommentsClose CommentsPermalink





‘(ix) providing for the building of capacity to provide housing counseling services in areas that lack sufficient services, including underdeveloped areas that lack basic water and sewer systems, electricity services, and safe, sanitary housing.CommentsClose CommentsPermalink





‘(4) ADVISORY COMMITTEE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Secretary shall appoint an advisory committee to provide advice 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 the mortgage and real estate industry, including consumers and housing counseling agencies certified by the Secretary.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. 403. COUNSELING PROCEDURES.

(a) In General- Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(g) 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 (42 U.S.C. 5305(a)(20));CommentsClose CommentsPermalink





‘(ii) in the United States Housing Act of 1937--CommentsClose CommentsPermalink





‘(I) section 9(e) (42 U.S.C. 1437g(e));CommentsClose CommentsPermalink





‘(II) section 8(y)(1)(D) (42 U.S.C. 1437f(y)(1)(D));CommentsClose CommentsPermalink





‘(III) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));CommentsClose CommentsPermalink





‘(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4));CommentsClose CommentsPermalink





‘(V) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));CommentsClose CommentsPermalink





‘(VI) section 33(d)(2)(B) (42 U.S.C. 1437z-5(d)(2)(B));CommentsClose CommentsPermalink





‘(VII) sections 302(b)(6) and 303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 1437aaa-2(b)(7)); andCommentsClose CommentsPermalink





‘(VIII) section 304(c)(4) (42 U.S.C. 1437aaa-3(c)(4));CommentsClose CommentsPermalink





‘(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (42 U.S.C. 1437f note);CommentsClose CommentsPermalink





‘(iv) sections 233(b)(2) and 258(b) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12773(b)(2), 12808(b));CommentsClose CommentsPermalink





‘(v) this section and section 101(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x, 1701w(e));CommentsClose CommentsPermalink





‘(vi) section 220(d)(2)(G) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4110(d)(2)(G));CommentsClose CommentsPermalink





‘(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 (42 U.S.C. 12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6), and 12893(b)(6));CommentsClose CommentsPermalink





‘(viii) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));CommentsClose CommentsPermalink





‘(ix) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A));CommentsClose CommentsPermalink





‘(x) in the National Housing Act--CommentsClose CommentsPermalink





‘(I) in section 203 (12 U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2) of subsection (b), subsection (c)(2)(A), and subsection (r)(4);CommentsClose CommentsPermalink





‘(II) subsections (a) and (c)(3) of section 237 (12 U.S.C. 1715z-2); andCommentsClose CommentsPermalink





‘(III) subsections (d)(2)(B) and (m)(1) of section 255 (12 U.S.C. 1715z-20);CommentsClose CommentsPermalink





‘(xi) section 502(h)(4)(B) of the Housing Act of 1949 (42 U.S.C. 1472(h)(4)(B));CommentsClose CommentsPermalink





‘(xii) section 508 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z-7); andCommentsClose CommentsPermalink





‘(xiii) section 106 of the Energy Policy Act of 1992 (42 U.S.C. 12712 note).CommentsClose CommentsPermalink





‘(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 (42 U.S.C. 5305(a)(20));CommentsClose CommentsPermalink





‘(ii) in the United States Housing Act of 1937--CommentsClose CommentsPermalink





‘(I) section 9(e) (42 U.S.C. 1437g(e));CommentsClose CommentsPermalink





‘(II) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));CommentsClose CommentsPermalink





‘(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4));CommentsClose CommentsPermalink





‘(IV) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));CommentsClose CommentsPermalink





‘(V) section 33(d)(2)(B) (42 U.S.C. 1437z-5(d)(2)(B)); andCommentsClose CommentsPermalink





‘(VI) section 302(b)(6) (42 U.S.C. 1437aaa-1(b)(6));CommentsClose CommentsPermalink





‘(iii) section 233(b)(2) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12773(b)(2));CommentsClose CommentsPermalink





‘(iv) section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x);CommentsClose CommentsPermalink





‘(v) section 422(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12872(b)(6));CommentsClose CommentsPermalink





‘(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));CommentsClose CommentsPermalink





‘(vii) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); andCommentsClose CommentsPermalink





‘(viii) the rental assistance program under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).CommentsClose CommentsPermalink





‘(2) STANDARDS FOR MATERIALS- The Secretary, in consultation with the advisory committee established under subsection (g)(4) of the Department of Housing and Urban Development Act, 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; andCommentsClose 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





‘(D) BUDGET COMPLIANCE- This paragraph shall be effective only to the extent that amounts to carry out this paragraph are made available in advance in appropriations Acts.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, minorities, 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 website 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 2009, 2010, and 2011, for the development, implementation, and conduct of national public service multimedia campaigns under this paragraph.CommentsClose CommentsPermalink





‘(D) FORECLOSURE RESCUE EDUCATION PROGRAMS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Ten percent of any funds appropriated pursuant to the authorization under subparagraph (C) shall be used by the Director of Housing Counseling to conduct an education program in areas that have a high density of foreclosure. Such program shall involve direct mailings to persons living in such areas describing--CommentsClose CommentsPermalink





‘(I) tips on avoiding foreclosure rescue scams;CommentsClose CommentsPermalink





‘(II) tips on avoiding predatory lending mortgage agreements;CommentsClose CommentsPermalink





‘(III) tips on avoiding for-profit foreclosure counseling services; andCommentsClose CommentsPermalink





‘(IV) local counseling resources that are approved by the Department of Housing and Urban Development.CommentsClose CommentsPermalink





‘(ii) PROGRAM EMPHASIS- In conducting the education program described under clause (i), the Director of Housing Counseling shall also place an emphasis on serving communities that have a high percentage of retirement communities or a high percentage of low-income minority communities.CommentsClose CommentsPermalink





‘(iii) TERMS DEFINED- For purposes of this subparagraph:CommentsClose CommentsPermalink





‘(I) HIGH DENSITY OF FORECLOSURES- An area has a ‘high density of foreclosures’ if such area is one of the metropolitan statistical areas (as that term is defined by the Director of the Office of Management and Budget) with the highest home foreclosure rates.CommentsClose CommentsPermalink





‘(II) HIGH PERCENTAGE OF RETIREMENT COMMUNITIES- An area has a ‘high percentage of retirement communities’ if such area is one of the metropolitan statistical areas (as that term is defined by the Director of the Office of Management and Budget) with the highest percentage of residents aged 65 or older.CommentsClose CommentsPermalink





‘(III) HIGH PERCENTAGE OF LOW-INCOME MINORITY COMMUNITIES- An area has a ‘high percentage of low-income minority communities’ if such area contains a higher-than-normal percentage of residents who are both minorities and low-income, as defined by the Director of Housing Counseling.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, minorities, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing, home equity loans, home repair loans, and where appropriate by region, any requirements and costs associated with obtaining flood or other disaster-specific insurance coverage.’.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 (12 U.S.C. 1701x(c)(5)(A)(ii)) is amended--CommentsClose CommentsPermalink





(1) in subclause (III), by striking ‘and’ at the end;CommentsClose CommentsPermalink





(2) in subclause (IV) by striking the period at the end and inserting ‘; and’; andCommentsClose CommentsPermalink





(3) by inserting after subclause (IV) the following new subclause:CommentsClose CommentsPermalink





‘(V) notify the housing or mortgage applicant of the availability of mortgage software systems provided pursuant to subsection (g)(3).’.CommentsClose CommentsPermalink

SEC. 404. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

Section 106(a) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(4) Homeownership and Rental Counseling Assistance-CommentsClose CommentsPermalink





‘(A) IN GENERAL- The Secretary shall make financial assistance available under this paragraph to HUD-approved housing counseling agencies and State housing finance agencies.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, in accordance with subparagraph (D).CommentsClose CommentsPermalink





‘(C) DISTRIBUTION- Assistance made available under this paragraph shall be distributed in a manner that encourages efficient and successful counseling programs and that ensures adequate distribution of amounts for rural areas having traditionally low levels of access to such counseling services, including areas with insufficient access to the Internet. In distributing such assistance, the Secretary may give priority consideration to entities serving areas with the highest home foreclosure rates.CommentsClose CommentsPermalink





‘(D) LIMITATION ON DISTRIBUTION OF ASSISTANCE-CommentsClose CommentsPermalink





‘(i) IN GENERAL- None of the amounts made available under this paragraph shall be distributed to--CommentsClose CommentsPermalink





‘(I) any organization which has been convicted for a violation under Federal law relating to an election for Federal office; orCommentsClose CommentsPermalink





‘(II) any organization which employs applicable individuals.CommentsClose CommentsPermalink





‘(ii) DEFINITION OF APPLICABLE INDIVIDUALS- In this subparagraph, the term ‘applicable individual’ means an individual who--CommentsClose CommentsPermalink





‘(I) is--CommentsClose CommentsPermalink





‘(aa) employed by the organization in a permanent or temporary capacity;CommentsClose CommentsPermalink





‘(bb) contracted or retained by the organization; orCommentsClose CommentsPermalink





‘(cc) acting on behalf of, or with the express or apparent authority of, the organization; andCommentsClose CommentsPermalink





‘(II) has been convicted for a violation under Federal law relating to an election for Federal office.CommentsClose CommentsPermalink





‘(E) GRANTMAKING PROCESS- In making assistance available under this paragraph, the Secretary shall consider appropriate ways of streamlining and improving the processes for grant application, review, approval, and award.CommentsClose CommentsPermalink





‘(F) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $45,000,000 for each of fiscal years 2009 through 2012 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 Director of Housing Counseling under paragraphs (2) through (5) of subsection (g); andCommentsClose CommentsPermalink





‘(iii) assistance pursuant to this paragraph for entities providing homeownership and rental counseling.’.CommentsClose CommentsPermalink

SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD PROGRAMS.

Section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) is amended--CommentsClose CommentsPermalink





(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 (g)(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. 406. 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, and the role of computer registries of mortgages, including those used for trading mortgage loans. 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. 407. DEFAULT AND FORECLOSURE DATABASE.

(a) Establishment- The Secretary of Housing and Urban Development, in consultation with the Federal agencies responsible for regulation of banking and financial institutions involved in residential mortgage lending and servicing, shall establish and maintain a database of information on foreclosures and defaults on mortgage loans for one- to four-unit residential properties and shall make such information publicly available.CommentsClose CommentsPermalink





(b) Census Tract Data- Information in the database shall be collected, aggregated, and made available on a census tract basis.CommentsClose CommentsPermalink





(c) Requirements- Information collected and made available through the database shall include--CommentsClose CommentsPermalink





(1) the number and percentage of such mortgage loans that are delinquent by more than 30 days;CommentsClose CommentsPermalink





(2) the number and percentage of such mortgage loans that are delinquent by more than 90 days;CommentsClose CommentsPermalink





(3) the number and percentage of such properties that are real estate-owned;CommentsClose CommentsPermalink





(4) number and percentage of such mortgage loans that are in the foreclosure process;CommentsClose CommentsPermalink





(5) the number and percentage of such mortgage loans that have an outstanding principal obligation amount that is greater than the value of the property for which the loan was made; andCommentsClose CommentsPermalink





(6) such other information as the Secretary considers appropriate.CommentsClose CommentsPermalink

SEC. 408. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(h) 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 (42 U.S.C. 12704(5)), except that subparagraph (D) of such section shall not apply for purposes of this section.CommentsClose CommentsPermalink





‘(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





‘(4) HUD-APPROVED COUNSELING AGENCY- The term ‘HUD-approved counseling agency’ means a private or public nonprofit organization that is--CommentsClose CommentsPermalink





‘(A) exempt from taxation under section 501(c) of the Internal Revenue Code of 1986; andCommentsClose CommentsPermalink





‘(B) certified by the Secretary to provide housing counseling services.CommentsClose CommentsPermalink





‘(5) STATE HOUSING FINANCE AGENCY- The term ‘State housing finance agency’ means any public body, agency, or instrumentality specifically created under State statute that is authorised to finance activities designed to provide housing and related facilities throughout an entire State through land acquisition, construction, or rehabilitation.’.CommentsClose CommentsPermalink

SEC. 409. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.

Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x), as amended by the preceding provisions of this title, is further amended by adding at the end the following:CommentsClose CommentsPermalink





‘(i) Accountability for Recipients of Covered Assistance-CommentsClose CommentsPermalink





‘(1) TRACKING OF FUNDS- The Secretary shall--CommentsClose CommentsPermalink





‘(A) develop and maintain a system to ensure that any organization or entity that receives any covered assistance uses all amounts of covered assistance in accordance with this section or section 216 of the Mortgage Reform and Anti-Predatory Lending Act, as applicable, the regulations issued under this section or such section 216, as applicable, and any requirements or conditions under which such amounts were provided; andCommentsClose CommentsPermalink





‘(B) require any organization or entity, as a condition of receipt of any covered assistance, to agree to comply with such requirements regarding covered assistance as the Secretary shall establish, which shall include--CommentsClose CommentsPermalink





‘(i) appropriate periodic financial and grant activity reporting, record retention, and audit requirements for the duration of the covered assistance to the organization or entity to ensure compliance with the limitations and requirements of this section or section 216 of the Mortgage Reform and Anti-Predatory Lending Act, as applicable, the regulations under this section or such section 216, as applicable, and any requirements or conditions under which such amounts were provided; andCommentsClose CommentsPermalink





‘(ii) any other requirements that the Secretary determines are necessary to ensure appropriate administration and compliance.CommentsClose CommentsPermalink





‘(2) MISUSE OF FUNDS- If any organization or entity that receives any covered assistance is determined by the Secretary to have used any covered assistance in a manner that is materially in violation of this section or section 216 of the Mortgage Reform and Anti-Predatory Lending Act, as applicable, the regulations issued under this section or such section 216, as applicable, or any requirements or conditions under which such assistance was provided--CommentsClose CommentsPermalink





‘(A) the Secretary shall require that, within 12 months after the determination of such misuse, the organization or entity shall reimburse the Secretary for such misused amounts and return to the Secretary any such amounts that remain unused or uncommitted for use; andCommentsClose CommentsPermalink





‘(B) such organization or entity shall be ineligible, at any time after such determination, to apply for or receive any further covered assistance.CommentsClose CommentsPermalink





The remedies under this paragraph are in addition to any other remedies that may be available under law.CommentsClose CommentsPermalink





‘(3) COVERED ASSISTANCE- For purposes of this subsection, the term ‘covered assistance’ means any grant or other financial assistance provided under--CommentsClose CommentsPermalink





‘(A) this section; orCommentsClose CommentsPermalink





‘(B) section 216 of the Mortgage Reform and Anti-Predatory Lending Act.’.CommentsClose CommentsPermalink

SEC. 410. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) is amended--CommentsClose CommentsPermalink





(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 (12 U.S.C. 1701x(e)) for use in complying with the requirement under subsection (c) of this section.CommentsClose CommentsPermalink





‘(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;CommentsClose CommentsPermalink





‘(C) the advantages of prepayment; andCommentsClose CommentsPermalink





‘(D) 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 (12 U.S.C. 1701x(a)(4)), a recommendation that the consumer use such services, and notification that a list of certified providers of homeownership counseling in the area, and their contact information, is available.CommentsClose CommentsPermalink





‘(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 inserting at the end 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 (12 U.S.C. 1701x(e)) and located in the area of the lender.’; andCommentsClose CommentsPermalink





(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

SEC. 411. HOME INSPECTION COUNSELING.

(a) Public Outreach-CommentsClose CommentsPermalink





(1) IN GENERAL- The Secretary of Housing and Urban Development (in this section referred to as the ‘Secretary’) shall take such actions as may be necessary to inform potential homebuyers of the availability and importance of obtaining an independent home inspection. Such actions shall include--CommentsClose CommentsPermalink





(A) publication of the HUD/FHA form HUD 92564-CN entitled ‘For Your Protection: Get a Home Inspection’, in both English and Spanish languages;CommentsClose CommentsPermalink





(B) publication of the HUD/FHA booklet entitled ‘For Your Protection: Get a Home Inspection’, in both English and Spanish languages;CommentsClose CommentsPermalink





(C) development and publication of a HUD booklet entitled ‘For Your Protection--Get a Home Inspection’ that does not reference FHA-insured homes, in both English and Spanish languages; andCommentsClose CommentsPermalink





(D) publication of the HUD document entitled ‘Ten Important Questions To Ask Your Home Inspector’, in both English and Spanish languages.CommentsClose CommentsPermalink





(2) AVAILABILITY- The Secretary shall make the materials specified in paragraph (1) available for electronic access and, where appropriate, inform potential homebuyers of such availability through home purchase counseling public service announcements and toll-free telephone hotlines of the Department of Housing and Urban Development. The Secretary shall give special emphasis to reaching first-time and low-income homebuyers with these materials and efforts.CommentsClose CommentsPermalink





(3) UPDATING- The Secretary may periodically update and revise such materials, as the Secretary determines to be appropriate.CommentsClose CommentsPermalink





(b) Requirement for FHA-Approved Lenders- Each mortgagee approved for participation in the mortgage insurance programs under title II of the National Housing Act shall provide prospective homebuyers, at first contact, whether upon pre-qualification, pre-approval, or initial application, the materials specified in subparagraphs (A), (B), and (D) of subsection (a)(1).CommentsClose CommentsPermalink





(c) Requirements for HUD-Approved Counseling Agencies- Each counseling agency certified pursuant by the Secretary to provide housing counseling services shall provide each of their clients, as part of the home purchase counseling process, the materials specified in subparagraphs (C) and (D) of subsection (a)(1).CommentsClose CommentsPermalink





(d) Training- Training provided the Department of Housing and Urban Development for housing counseling agencies, whether such training is provided directly by the Department or otherwise, shall include--CommentsClose CommentsPermalink





(1) providing information on counseling potential homebuyers of the availability and importance of getting an independent home inspection;CommentsClose CommentsPermalink





(2) providing information about the home inspection process, including the reasons for specific inspections such as radon and lead-based paint testing;CommentsClose CommentsPermalink





(3) providing information about advising potential homebuyers on how to locate and select a qualified home inspector; andCommentsClose CommentsPermalink





(4) review of home inspection public outreach materials of the Department.CommentsClose CommentsPermalink

SEC. 412. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.

(a) Assistance to NRC- Notwithstanding any other provision of law, of any amounts made available for any fiscal year pursuant to section 106(a)(4)(F) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)(F)) (as added by section 404 of this Act), 10 percent shall be used only for assistance to the Neighborhood Reinvestment Corporation for activities, in consultation with servicers of residential mortgage loans, to provide notice to borrowers under such loans who are delinquent with respect to payments due under such loans that makes such borrowers aware of the dangers of fraudulent activities associated with foreclosure.CommentsClose CommentsPermalink





(b) Notice- The Neighborhood Reinvestment Corporation, in consultation with servicers of residential mortgage loans, shall use the amounts provided pursuant to subsection (a) to carry out activities to inform borrowers under residential mortgage loans--CommentsClose CommentsPermalink





(1) that the foreclosure process is complex and can be confusing;CommentsClose CommentsPermalink





(2) that the borrower may be approached during the foreclosure process by persons regarding saving their home and they should use caution in any such dealings;CommentsClose CommentsPermalink





(3) that there are Federal Government and nonprofit agencies that may provide information about the foreclosure process, including the Department of Housing and Urban Development;CommentsClose CommentsPermalink





(4) that they should contact their lender immediately, contact the Department of Housing and Urban Development to find a housing counseling agency certified by the Department to assist in avoiding foreclosure, or visit the Department’s website regarding tips for avoiding foreclosure; andCommentsClose CommentsPermalink





(5) of the telephone number of the loan servicer or successor, the telephone number of the Department of Housing and Urban Development housing counseling line, and the Uniform Resource Locators (URLs) for the Department of Housing and Urban Development websites for housing counseling and for tips for avoiding foreclosure.CommentsClose CommentsPermalink

TITLE V--MORTGAGE SERVICINGCommentsClose CommentsPermalink

SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

(a) In General- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 129C (as added by section 201) the following new section:CommentsClose CommentsPermalink

‘SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER CREDIT TRANSACTIONS.

‘(a) In General- Except as provided in subsection (b), (c), or (d) , a creditor, in connection with the formation or consummation of a consumer credit transaction secured by a first lien on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, shall establish, before the consummation of such transaction, an escrow or impound account for the payment of taxes and hazard insurance, and, if applicable, flood insurance, mortgage insurance, ground rents, and any other required periodic payments or premiums with respect to the property or the loan terms, as provided in, and in accordance with, this section.CommentsClose CommentsPermalink





‘(b) When Required- No impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property may be required as a condition of a real property sale contract or a loan secured by a first deed of trust or mortgage on the principal dwelling of the consumer, other than a consumer credit transaction under an open end credit plan or a reverse mortgage, except when--CommentsClose CommentsPermalink





‘(1) any such impound, trust, or other type of escrow or impound account for such purposes is required by Federal or State law;CommentsClose CommentsPermalink





‘(2) a loan is made, guaranteed, or insured by a State or Federal governmental lending or insuring agency;CommentsClose CommentsPermalink





‘(3) the transaction is secured by a first mortgage or lien on the consumer’s principal dwelling having an original principal obligation amount that--CommentsClose CommentsPermalink





‘(A) does not exceed the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate for a comparable transaction by 1.5 or more percentage points; orCommentsClose CommentsPermalink





‘(B) exceeds the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, as of the date such interest rate set, pursuant to the sixth sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and the annual percentage rate will exceed the average prime offer rate for a comparable transaction by 2.5 or more percentage points; orCommentsClose CommentsPermalink





‘(4) so required pursuant to regulation.CommentsClose CommentsPermalink





‘(c) Duration of Mandatory Escrow or Impound Account- An escrow or impound account established pursuant to subsection (b), shall remain in existence for a minimum period of 5 years, beginning with the date of the consummation of the loan, and until such borrower has sufficient equity in the dwelling securing the consumer credit transaction so as to no longer be required to maintain private mortgage insurance, or such other period as may be provided in regulations to address situations such as borrower delinquency, unless the underlying mortgage establishing the account is terminated.CommentsClose CommentsPermalink





‘(d) Limited Exemptions for Loans Secured by Shares in a Cooperative and for Certain Condominium Units- Escrow accounts need not be established for loans secured by shares in a cooperative. Insurance premiums need not be included in escrow accounts for loans secured by condominium units, where the condominium association has an obligation to the condominium unit owners to maintain a master policy insuring condominium units.CommentsClose CommentsPermalink





‘(e) Clarification on Escrow Accounts for Loans Not Meeting Statutory Test- For mortgages not covered by the requirements of subsection (b), no provision of this section shall be construed as precluding the establishment of an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to the property--CommentsClose CommentsPermalink





‘(1) on terms mutually agreeable to the parties to the loan;CommentsClose CommentsPermalink





‘(2) at the discretion of the lender or servicer, as provided by the contract between the lender or servicer and the borrower; orCommentsClose CommentsPermalink





‘(3) pursuant to the requirements for the escrowing of flood insurance payments for regulated lending institutions in section 102(d) of the Flood Disaster Protection Act of 1973.CommentsClose CommentsPermalink





‘(f) Administration of Mandatory Escrow or Impound Accounts-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Except as may otherwise be provided for in this title or in regulations prescribed by the Board, escrow or impound accounts established pursuant to subsection (b) shall be established in a federally insured depository institution.CommentsClose CommentsPermalink





‘(2) ADMINISTRATION- Except as provided in this section or regulations prescribed under this section, an escrow or impound account subject to this section shall be administered in accordance with--CommentsClose CommentsPermalink





‘(A) the Real Estate Settlement Procedures Act of 1974 and regulations prescribed under such Act;CommentsClose CommentsPermalink





‘(B) the Flood Disaster Protection Act of 1973 and regulations prescribed under such Act; andCommentsClose CommentsPermalink





‘(C) the law of the State, if applicable, where the real property securing the consumer credit transaction is located.CommentsClose CommentsPermalink





‘(3) APPLICABILITY OF PAYMENT OF INTEREST- If prescribed by applicable State or Federal law, each creditor shall pay interest to the consumer on the amount held in any impound, trust, or escrow account that is subject to this section in the manner as prescribed by that applicable State or Federal law.CommentsClose CommentsPermalink





‘(4) PENALTY COORDINATION WITH RESPA- Any action or omission on the part of any person which constitutes a violation of the Real Estate Settlement Procedures Act of 1974 or any regulation prescribed under such Act for which the person has paid any fine, civil money penalty, or other damages shall not give rise to any additional fine, civil money penalty, or other damages under this section, unless the action or omission also constitutes a direct violation of this section.CommentsClose CommentsPermalink





‘(g) Disclosures Relating to Mandatory Escrow or Impound Account- 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 at least 3 business days before the consummation of the consumer credit transaction giving rise to such account or in accordance with timeframes established in prescribed regulations the following information:CommentsClose CommentsPermalink





‘(1) The fact that an escrow or impound account will be established at consummation of the transaction.CommentsClose CommentsPermalink





‘(2) The amount required at closing to initially fund the escrow or impound account.CommentsClose CommentsPermalink





‘(3) The amount, in the initial year after the consummation of the transaction, of the estimated taxes and hazard insurance, including flood insurance, if applicable, and any other required periodic payments or premiums that reflects, as appropriate, either the taxable assessed value of the real property securing the transaction, including the value of any improvements on the property or to be constructed on the property (whether or not such construction will be financed from the proceeds of the transaction) or the replacement costs of the property.CommentsClose CommentsPermalink





‘(4) The estimated monthly amount payable to be escrowed for taxes, hazard insurance (including flood insurance, if applicable) and any other required periodic payments or premiums.CommentsClose CommentsPermalink





‘(5) The fact that, if the consumer chooses to terminate the account at the appropriate time in the future, the consumer will become responsible for the payment of all taxes, hazard insurance, and flood insurance, if applicable, as well as any other required periodic payments or premiums on the property unless a new escrow or impound account is established.CommentsClose CommentsPermalink





‘(6) Such other information as the Federal banking agencies jointly determine necessary for the protection of the consumer.CommentsClose CommentsPermalink





‘(h) Definitions- For purposes of this section, the following definitions shall apply:CommentsClose CommentsPermalink





‘(1) FLOOD INSURANCE- The term ‘flood insurance’ means flood insurance coverage provided under the national flood insurance program pursuant to the National Flood Insurance Act of 1968.CommentsClose CommentsPermalink





‘(2) HAZARD INSURANCE- The term ‘hazard insurance’ shall have the same meaning as provided for ‘hazard insurance’, ‘casualty insurance’, ‘homeowner’s insurance’, or other similar term under the law of the State where the real property securing the consumer credit transaction is located.’.CommentsClose CommentsPermalink





(b) Implementation-CommentsClose CommentsPermalink





(1) REGULATIONS- The Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, (hereafter in this Act referred to as the ‘Federal banking agencies’) and the Federal Trade Commission shall prescribe, in final form, such regulations as determined to be necessary to implement the amendments made by subsection (a) before the end of the 180-day period beginning on the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) EFFECTIVE DATE- The amendments made by subsection (a) shall only apply to covered mortgage loans consummated after the end of the 1-year period beginning on the date of the publication of final regulations in the Federal Register.CommentsClose CommentsPermalink





(c) 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 129C (as added by section 201) the following new item:CommentsClose CommentsPermalink





‘129D. Escrow or impound accounts relating to certain consumer credit transactions.’.CommentsClose CommentsPermalink

SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW SERVICES.

(a) In General- Section 129D of the Truth in Lending Act (as added by section 501) is amended by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(i) Disclosure Notice Required for Consumers Who Waive Escrow Services-CommentsClose CommentsPermalink





‘(1) IN GENERAL- If--CommentsClose CommentsPermalink





‘(A) an impound, trust, or other type of account for the payment of property taxes, insurance premiums, or other purposes relating to real property securing a consumer credit transaction is not established in connection with the transaction; orCommentsClose CommentsPermalink





‘(B) a consumer chooses, and provides written notice to the creditor or servicer of such choice, at any time after such an account is established in connection with any such transaction and in accordance with any statute, regulation, or contractual agreement, to close such account,CommentsClose CommentsPermalink





the creditor or servicer 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.CommentsClose CommentsPermalink





‘(2) DISCLOSURE REQUIREMENTS- Any disclosure provided to a consumer under paragraph (1) shall include the following:CommentsClose CommentsPermalink





‘(A) Information concerning any applicable fees or costs associated with either the non-establishment of any such account at the time of the transaction, or any subsequent closure of any such account.CommentsClose CommentsPermalink





‘(B) A 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, and the fact that the costs for taxes, insurance, and related fees can be substantial.CommentsClose CommentsPermalink





‘(C) A clear explanation of the consequences of any failure to pay non-escrowed items, including the possible requirement for the forced placement of insurance by the creditor or servicer 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





‘(D) Such other information as the Federal banking agencies jointly determine necessary for the protection of the consumer.’.CommentsClose CommentsPermalink





(b) Implementation-CommentsClose CommentsPermalink





(1) REGULATIONS- The Federal banking agencies and the Federal Trade Commission shall prescribe, in final form, such regulations as such agencies determine to be necessary to implement the amendments made by subsection (a) before the end of the 180-day period beginning on the date of the enactment of this Act.Comments