[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1053 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1053
To amend the Equal Credit Opportunity Act and the Home Mortgage
Disclosure Act of 1975 to reduce the disparate impact of predatory
lending on minorities, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 15, 2001
Mr. LaFalce (for himself, Mr. Gutierrez, Ms. Lee, Mrs. Jones of Ohio,
Mr. Capuano, Mr. Clay, Mr. Hinchey, and Ms. Schakowsky) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To amend the Equal Credit Opportunity Act and the Home Mortgage
Disclosure Act of 1975 to reduce the disparate impact of predatory
lending on minorities, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Equal Credit Enhancement and
Neighborhood Protection Act of 2001''.
SEC. 2. COMBATING DISCRIMINATORY STEERING AND REVERSE REDLINING.
(a) Discriminatory Steering and Reverse Redlining Prohibited.--
Section 701 of the Equal Credit Opportunity Act (15 U.S.C. 1691) is
amended--
(1) by striking ``(a) It shall be unlawful'' and inserting
``(a) In General.--It shall be unlawful'';
(2) by redesignating subsections (b), (c), (d), and (e) as
subsections (d), (e), (f), and (g), respectively; and
(3) by inserting after subsection (a) the following new
subsections:
``(b) Most Favorable Credit Terms.--
``(1) In general.--It shall be unlawful for a creditor to
fail to extend credit to an applicant under the most favorable
terms available from the creditor, or an affiliate of the
creditor, for which the applicant qualifies.
``(2) Affiliate defined.--For purposes of this subsection,
the term `affiliate' has the same meaning given such term in
section 2(k) of the Bank Holding Company Act of 1956.
``(c) Targeting High-Cost Mortgages Prohibited.--
``(1) In general.--It shall be unlawful for any creditor to
adversely target an applicant or group of applicants on the
basis of race, color, religion, national origin, sex, marital
status or age, with respect to a high cost mortgage.
``(2) High cost mortgage defined.--
``(A) In general.--For purposes of this title, the
term `high cost mortgage' means a consumer credit
transaction--
``(i) that is secured by the consumer's
principal dwelling, other than a reverse
mortgage transaction; and
``(ii) the terms of which are described in
at least 1 of the following subclauses:
``(I) The transaction is secured by
a first mortgage on the consumer's
principal dwelling and the annual
percentage rate on the credit, at the
consummation of the transaction, will
exceed by more than 6 percentage points
the yield on Treasury securities having
comparable periods of maturity on the
15th day of the month immediately
preceding the month in which the
application for the extension of credit
is received by the creditor;
``(II) The transaction is secured
by a junior or subordinate mortgage on
the consumer's principal dwelling and
the annual percentage rate on the
credit, at the consummation of the
transaction, will exceed by more than 8
percentage points the yield on Treasury
securities having comparable periods of
maturity on the 15th day of the month
immediately preceding the month in
which the application for the extension
of credit is received by the creditor.
``(III) The total points and fees
payable on the transaction will exceed
the greater of 5 percent of the total
loan amount or $1,000.
``(B) Introductory rates not taken into account.--
If the terms of any consumer credit transaction that is
secured by the consumer's principal dwelling offer, for
any initial or introductory period, an annual
percentage rate of interest which--
``(i) is less than the annual percentage
rate of interest which will apply after the end
of such initial or introductory period; or
``(ii) in the case of an annual percentage
rate which varies in accordance with an index,
which is less than the current annual
percentage rate under the index which will
apply after the end of such period,
the annual percentage rate of interest that shall be
taken into account for purposes of subclauses (I) and
(II) of subparagraph (A)(ii) shall be the rate
described in clause (i) or (ii) of this subparagraph
rather than any rate in effect during the initial or
introductory period.
``(3) No negative implication.--No provision of this
subsection shall be construed as prohibiting a nonprofit entity
or government agency from promoting a program that enhances the
availability of mortgage credit on fair terms, as defined in
regulations that the Secretary shall prescribe, to underserved
persons and communities.''.
(b) Enhanced General Damages for Reverse Redlining.--Section 706 of
the Equal Credit Opportunity Act (15 U.S.C. 1691e) is amended--
(1) by striking ``(a) Any creditor'' and inserting ``(a)
Actual Damages.--Any creditor'';
(2) by striking ``(b) Any creditor'' and inserting ``(b)
General Damages.--
``(1) In general.--Any creditor''; and
(3) by adding at the end of subsection (b) the following
new paragraph:
``(2) Punitive damages for reverse redlining.--Any
creditor, other than a government or governmental subdivision
or agency, who fails to comply with any requirement imposed
under subsection (b) or (c) of section 701 shall be liable--
``(A) to the aggrieved applicant for punitive
damages in an amount not greater than $20,000, in
addition to any actual damages provided in subsection
(a) of this section; and
``(B) except in the case of a class action the
total recovery under this paragraph shall not exceed
the greater of--
``(i) the amount determined by multiplying
the maximum amount of liability under
subparagraph (A) for such failure to comply in
an individual action by the number of members
of the certified class; or
``(ii) the amount equal to 2 percent of the
net worth of the creditor.''.
SEC. 3. APPLICABILITY OF EQUAL CREDIT OPPORTUNITY ACT TO REQUESTS FOR
PREAPPROVALS.
Section 702(b) of the Equal Credit Opportunity Act (15 U.S.C.
1691a(b)) is amended by inserting the following before the period at
the end: ``and includes any person who requests a written commitment
from a creditor for a home purchase loan, even if the person requests a
commitment to be issued subject to the identification of a suitable
property or other condition''.
SEC. 4. PROHIBITION ON CERTAIN REGULATORY EXEMPTIONS UNDER THE HOME
MORTGAGE DISCLOSURE ACT OF 1977.
Section 304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2803) is amended by adding at the end the following new subsection:
``(n) Prohibition on Regulatory Exemptions From Reporting
Requirements.--Subject to subsection (i)--
``(1) no provision of this title may be construed as
authorizing the Board, the Secretary, or any other Federal
agency to exempt any depository institution from the
requirements of this title; and
``(2) any exemption from the requirements of this title
provided in any regulation, such as the exemption provided in
Appendix A to part 203 of the Code of Federal Regulations for
lending institutions described in section 303(2)(B) whose total
dollar amount of purchase loans originated in any year did not
exceed 10 percent of the total dollar amount of all loan
originations by such institution in such year, shall cease to
be effective as of the date of the enactment of the Equal
Credit Enhancement and Neighborhood Protection Act.''.
SEC. 5. ADDITIONAL DISCLOSURES UNDER THE HOME MORTGAGE DISCLOSURE ACT
OF 1977.
(a) Reason for Denial.--Paragraph (4) of section 304(b) of the Home
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)(4)) is amended by
inserting ``(and the reasons for denial of a loan in the case of
completed application, as appropriate)'' after ``completed
applications''.
(b) APR and Fees.--Section 304(b) of the Home Mortgage Disclosure
Act of 1975 (12 U.S.C. 2803(b)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon; and
(3) by adding at the end the following new paragraph:
``(5) annual percentage rate (as determined under section
107 of the Truth in Lending Act) of mortgage loans, along with
all costs of credit, which shall include all finance charges
(as determined under section 106 of the Truth in Lending Act),
costs of all insurance premiums paid within 90 days of a loan's
origination, fees and amounts imposed by third party closing
agents and all fees collected by mortgage brokers, and an
indication of whether a loan is subject to the Homeownership
Equity Protection Act of 1994, grouped according to census
tract, income level, racial characteristics and gender;''.
(c) Debt-to-Income Ratio for Certain Loans.--Section 304(b) of the
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by
inserting after paragraph (5) (as added by subsection (b)(3) of this
section) the following new paragraph:
``(6) for each mortgage loan, the ratio of the mortgagor's
debt to the mortgagor's income;''.
(d) Manufactured Housing.--Section 304(b) of the Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by inserting
after paragraph (6) (as added by subsection (c) of this section) the
following new paragraph:
``(7) for each mortgage loan, indication of whether
repayment of the loan is secured by a lien on a manufactured
home;''.
(e) Loan-to-Value Ratio.--Section 304(b) of the Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by inserting
after paragraph (7) (as added by subsection (d) of this section) the
following new paragraph:
``(8) for each mortgage loan, the ratio of the value of the
real estate (including a manufactured home, as appropriate)
that secures repayment of the loan to the principal amount of
the loan at the time of origination; and''
(f) Race, Age, and Gender of All Applicants.--Section 304(b) of the
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by
inserting after paragraph (8) (as added by subsection (e) of this
section) the following new paragraph:
``(9) for each completed application, including
applications taken by telephone or electronically, the racial
characteristics, age, and gender of each applicant.''
(g) Involvement of Mortgage Brokers.--Section 304(b) of the Home
Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by
inserting after paragraph (9) (as added by subsection (f) of this
section) the following new paragraph:
``(9) the number and dollar amounts of mortgage loans and
loan applications (whether completed or not) with respect to
which a mortgage broker (as defined in regulations prescribed
under the Real Estate Settlement Procedures Act of 1974) was
involved at any stage of the loan process.''.
(h) Technical and Conforming Amendments.--Section 304(h) of the
Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended by
striking ``subsection (b)(4)'' each place such term appears and
inserting ``paragraph (4), (5), (6), (7), (8), (9), or (10) of
subsection (b)''.
SEC. 6. DISCLOSURE OF PARENT COMPANY.
Section 304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2803) is amended by inserting after subsection (n) (as added by section
4 of this Act) the following new subsection:
``(o) Obligation to Identify Parent.--
``(1) In general.--In each disclosure and submission
required by this title, each depository institution shall
clearly identify the company that controls the depository
institution and any affiliate of the depository institution
that makes mortgage loans or provides financing for such loans.
``(2) Control defined.--For purposes of this subsection,
the term `control' shall have the same meaning given such term
in section 2 of the Bank Holding Company Act of 1956.''.
SEC. 7. APPLICATION INCLUDES REQUESTS FOR PREAPPROVAL.
Section 303(3) of the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2802(3)) is amended by inserting ``and includes any request for
a written commitment from a depository institution for a home purchase
loan, even if the applicant requests a commitment to be issued subject
to the identification of a suitable property or other condition''
before the semicolon at the end.
SEC. 8. SANCTIONS AGAINST MORTGAGE LENDERS NOT AFFILIATED WITH
DEPOSITORY INSTITUTIONS.
Section 305 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2804) is amended--
(1) in subsection (b)--
(A) by inserting ``and'' after the semicolon at the
end of paragraph (2);
(B) by striking ``; and'' at the end of paragraph
(3) and inserting a period; and
(C) by striking paragraph (4);
(2) by redesignating subsection (c) as subsection (e); and
(3) by inserting after subsection (b), the following new
subsection:
``(c) Powers of the Secretary of Housing and Urban Development.--
``(1) In general.--The Secretary of Housing and Urban
Development (hereafter in this subsection referred to as `the
Secretary') shall enforce compliance with the requirements
imposed under this title with regard to other lending
institutions not described in subsection (b).
``(2) Civil money penalties.--Pursuant to paragraph (1) of
this subsection, the Secretary may impose a civil money penalty
for failure to comply with the requirements of this Act.
``(3) Amount of penalty.--The amount of the penalty, as
determined by the Secretary, may not exceed $5,000 for each
violation, except that the maximum penalty for all violations
by any particular lending institution during any 1-year period
shall not exceed $1,000,000.
``(4) Violations for which penalty may be imposed.--A civil
money penalty may be imposed for the late submission of a
report, failure to submit a report, submission of an illegible
report, submission of an erroneous report, and failure to
submit corrections to a report that was illegible or erroneous.
``(5) Agency procedures.--
``(A) Establishment.--The Secretary shall establish
standards and procedures governing the imposition of
civil money penalties under this section. These
standards and procedures shall provide for the
Secretary to make the determination to impose the
penalty or to use in administrative entity (such as the
Mortgagee Review Board, established pursuant to section
202(c) of the National Housing Act) to make the
determination, shall provide for the imposition of a
penalty only after the lending institution has been
given an opportunity for a hearing on a record, and may
provide for review by the Secretary of a determination
on order, or interlocutory ruling, arising from a
hearing.
``(B) Final orders.--If no hearing is requested
within 15 days of receipt of the notice of opportunity
for hearing, the imposition of the penalty shall
constitute a final and unappealable determination. If
the Secretary reviews the determination or order, the
Secretary may affirm, modify, or reverse that
determination or order. If the Secretary does not
review the determination or order within 90 days of the
issuance of the determination or order, the
determination or order shall be final.
``(C) Factors in determining amount of penalty.--In
determining the amount of a penalty under this
subsection, consideration shall be given to such
factors as the gravity of the offense, any history of
prior offenses, ability to pay the penalty, deterrence
of future violations, and such other factors as the
Secretary may determine to be appropriate.
``(D) Reviewability of imposition of penalty.--The
Secretary's determination or order imposing a penalty
under this subsection shall not be subject to review,
except as provided in this subsection.
``(6) Judicial review of agency determination.--
``(A) In general.--After exhausting all
administrative remedies established by the Secretary
under this subsection, a lending institution against
whom the Secretary has imposed a civil money penalty
under this subsection may obtain a review of the
penalty as may be addressed in the notice of
determination to impose a penalty in the appropriate
court of appeals of the United States, by filing in
such court, within 20 days after the entry of such
order or determination, a written petition praying that
the Secretary's determination or order be modified or
set aside in whole or in part.
``(B) Objections not raised in hearing.--
``(i) In general.--The court shall not
consider any objection that was not raised in
the hearing conducted pursuant to this
subsection unless a demonstration is made of
extraordinary circumstances causing the failure
to raise the objection.
``(ii) Remand of new evidence.--If any
party demonstrates to the satisfaction of the
court that additional evidence not presented at
the hearing is material and that there were
reasonable grounds for the failure to present
such evidence at the hearing, the court shall
remand the matter to the Secretary for
consideration of the additional evidence.
``(C) Scope of review.--The decisions, findings,
and determinations of the Secretary shall be reviewed
pursuant to section 706 of title 5, United States Code.
``(D) Order to pay penalty.--Notwithstanding any
other provision of law, in any such review, the court
shall have the power to order payment of the penalty
imposed by the Secretary.
``(7) Action to collect penalty.--
``(A) Action by attorney general.--If a lending
institution fails to comply with the Secretary's
determination or order imposing a civil money penalty
under this subsection, after the determination or order
is no longer subject to review as provided by this
subsection, the Secretary may request the Attorney
General to bring an action in an appropriate United
States district court to obtain a monetary judgment
against the lending institution.
``(B) Scope of review.--In such an action, the
validity and appropriateness of the Secretary's
determination or order imposing the penalty shall not
be subject to review.
``(C) Recovery of costs of federal action.--The
money judgment may, in the court's discretion, include
the attorneys fees and other expenses incurred by the
United States in connection with the action.
``(8) Settlement by secretary.--The Secretary may
compromise, modify, or remit any civil money penalty which may
be imposed under this subsection.
``(9) Regulations.--The Secretary shall issue such
regulations as the Secretary deems appropriate to implement
this subsection.
``(10) Retention and use of penalties.--Notwithstanding any
other provisions of law, all civil money penalties collected
under this subsection shall be deposited in a revolving fund
established by the Secretary, to be available without fiscal
year limitation for enforcement of the requirements of this
title and for data improvement activities of the Secretary in
connection with the reporting requirements of this title.''.
SEC. 9. ALTERNATIVE ENFORCEMENT BY STATES.
Section 305 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2804) is amended by inserting after subsection (c) (as added by section
8 of this Act) the following new subsection:
``(d) Alternative Enforcement by States.--
``(1) State request for enforcement action.--A State may
request in writing that the Secretary take an action permitted
under subsection (c) to enforce compliance with the Act by a
depository institution doing business within such State.
``(2) State enforcement action.--If the Secretary fails to
initiate any action requested by a State in accordance with
paragraph (1) within 30 days of receipt of such a request, the
State shall have the authority to bring an action against such
depository institution to impose any penalty permitted under
subsection (c).
``(3) Venue.--An enforcement action under paragraph (2) may
be brought in any United States district court in which such
depository institution does business within the State.''.
<all>