[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1295 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 1295

    To protect consumers against unfair and deceptive practices in 
 connection with higher cost mortgage transactions, to strengthen the 
 civil remedies available to consumers under existing law, to provide 
 for certain uniform lending standards, to improve housing counseling, 
   to better mortgage servicing, to enhance appraisal standards and 
 oversight, to establish licensing and minimum standards for mortgage 
                    brokers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 15, 2005

Mr. Ney (for himself, Mr. Kanjorski, Mr. Gary G. Miller of California, 
Mr. Meeks of New York, Mr. Gillmor, Mr. Crowley, Mr. Feeney, Mr. Clay, 
    Mr. Sherman, Mr. Scott of Georgia, Ms. Hooley, and Mr. Tiberi) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
    To protect consumers against unfair and deceptive practices in 
 connection with higher cost mortgage transactions, to strengthen the 
 civil remedies available to consumers under existing law, to provide 
 for certain uniform lending standards, to improve housing counseling, 
   to better mortgage servicing, to enhance appraisal standards and 
 oversight, to establish licensing and minimum standards for mortgage 
                    brokers, 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 ``Responsible Lending Act''.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.
                     TITLE I--HIGHER-COST MORTGAGES

Sec. 101. Short title.
Sec. 102. Definitions relating to higher-cost mortgages.
Sec. 103. Amendments to requirements for higher-cost mortgages.
Sec. 104. Amendments relating to dispute and error resolution.
Sec. 105. Amendments to damages, rescission and liability provisions.
Sec. 106. Coordination with State law.
Sec. 107. Clarification of State enforcement authority.
Sec. 108. Prepayment penalties and late charges.
Sec. 109. Regulations.
Sec. 110. Effective dates.
                      TITLE II--HOUSING COUNSELING

                    Subtitle A--Consumer counseling

Sec. 201. Consumer counseling requirements.
         Subtitle B--Expanded housing counseling opportunities

Sec. 211. Short title.
Sec. 212. Establishment of Office of Housing Counseling.
Sec. 213. Counseling procedures.
Sec. 214. Grants for housing counseling assistance.
Sec. 215. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 216. Study of defaults and foreclosures.
Sec. 217. Definitions for counseling-related programs.
Sec. 218. Updating and simplification of mortgage information booklet.
Sec. 219. Option for notice of foreclosure prevention counseling 
                            availability.
                     TITLE III--MORTGAGE SERVICING

Sec. 301. Escrow and impound accounts relating to certain consumer 
                            credit transactions.
Sec. 302. Disclosure notice required for consumers who opt out of 
                            escrow services.
Sec. 303. Mortgage servicing clarification.
Sec. 304. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 305. Mortgage servicing studies required.
                     TITLE IV--APPRAISAL ACTIVITIES

Sec. 401. Property appraisal requirements.
Sec. 402. Amendments relating to appraisal subcommittee of FIEC, 
                            appraiser independence, and approved 
                            appraiser education.
Sec. 403.  Study required on improvements in appraisal process and 
                            compliance programs.
               TITLE V--REQUIREMENTS FOR MORTGAGE BROKERS

              Subtitle A--Licensing and minimum standards

Sec. 501. State regulation of mortgage brokers.
Sec. 502. Federal mortgage broker requirements.
Sec. 503. Definitions.
           Subtitle B--Database of licensed mortgage brokers

Sec. 511. Establishment.
Sec. 512. Database.
Sec. 513. Fees.
Sec. 514. Confidentiality of information.
Sec. 515. Liability provisions.

                     TITLE I--HIGHER-COST MORTGAGES

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Mortgage Lending Improvements and 
Uniform National Standards Act''.

SEC. 102. DEFINITIONS RELATING TO HIGHER-COST MORTGAGES.

    (a) Higher-Cost Mortgage Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)(1)) is amended--
            (1) by striking all that precedes paragraph (2) and 
        inserting the following:
    ``(aa) Higher-Cost Mortgage Defined.--
            ``(1) In general.--The terms `higher-cost mortgage' and 
        `mortgage referred to in this subsection' mean a consumer 
        credit transaction that is secured by the consumer's principal 
        dwelling, other than a reverse mortgage transaction, if any of 
        the following apply with respect to such consumer credit 
        transaction:
                    ``(A) The transaction is secured by a first 
                mortgage on the consumer's principal dwelling and the 
                annual percentage rate on the credit, at 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.
                    ``(B) 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 consummation of the transaction, will exceed by more 
                than 10 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.
                    ``(C) The total loan amount exceeds $40,000 and 
                total points and fees payable on the transaction will 
                exceed 5 percent of the total loan amount.
                    ``(D) The total loan amount is $40,000 or less and 
                total points and fees payable on the transaction will 
                exceed 6 percent of the total loan amount.''; and
            (2) in paragraph (2)(B)(i), by striking ``that'' and 
        inserting ``than''.
    (b) Points and Fees Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended--
            (1) by striking paragraph (3);
            (2) by striking paragraph (4) and inserting the following 
        new paragraph:
            ``(3) Points and fees defined.--
                    ``(A) In general.--For purposes of subparagraphs 
                (C) and (D) of paragraph (1), the term `points and 
                fees' includes--
                            ``(i) all items included in the finance 
                        charge, except interest or the time-price 
                        differential;
                            ``(ii) all compensation paid directly to 
                        mortgage brokers by or on behalf of the 
                        consumer (other than borrower credits);
                            ``(iii) each of the charges listed in 
                        section 106(e), except an escrow for future 
                        payment of taxes or insurance, unless--
                                    ``(I) the charge is bona fide, 
                                competitive, and reasonable;
                                    ``(II) the creditor receives no 
                                direct compensation; and
                                    ``(III) the charge is paid to a 
                                third party; and
                            ``(iv) all prepayment fees or penalties on 
                        the new loan that will be incurred by the 
                        borrower if the loan refinances a previous loan 
                        currently held by the same creditor or an 
                        affiliate of the creditor.
                    ``(B) Excludable bona fide discount points.--Not 
                more than 2 bona fide loan discount points in 
                connection with the loan transaction may be excluded 
                from the amount of points and fees taken into account 
                for purposes of paragraph (1).''; and
            (3) by redesignating paragraph (5) as paragraph (4).
    (c) Bona Fide Discount Points and Benchmark Rate Defined.--Section 
103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding 
at the end the following new subsection:
    ``(cc) Other Interest Rate Related Terms.--
            ``(1) Bona fide discount points.--The term `bona fide 
        discount points' means loan discount points that--
                    ``(A) are knowingly paid by the borrower;
                    ``(B) are paid for the express purpose of lowering 
                the interest rate;
                    ``(C) reduce the interest rate applicable to the 
                loan from an interest rate that does not exceed the 
                benchmark rate; and
                    ``(D) reduce the interest rate by a minimum of 25 
                basis points per discount point so long as all other 
                terms of the loan remain the same.
            ``(2) Benchmark rate.--The term `benchmark rate' means the 
        interest rate that the consumer can reduce by paying bona fide 
        discount points, not to exceed the sum of--
                    ``(A) 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; and
                    ``(B) 4 percentage points.''.
    (d) Technical and Conforming Amendment.--Paragraph (2) of section 
103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended 
by striking ``specified in paragraph (1)(A)'' and inserting ``specified 
in subparagraph (A) or (B) of paragraph (1)''.

SEC. 103. AMENDMENTS TO REQUIREMENTS FOR HIGHER-COST MORTGAGES.

    (a) Prepayment Penalties.--Subsection (c) of section 129 of the 
Truth in Lending Act (15 U.S.C. 1639(c)) is amended to read as follows:
    ``(c) [Repealed]''.
    (b) Balloon Payments.--Section 129(e) of the Truth in Lending Act 
(15 U.S.C. 1639(e)) is amended--
            (1) by striking ``Payments.--A mortgage'' and inserting 
        ``Payments.--
            ``(1) In general.--A mortgage'';
            (2) by striking ``having a term of less than 5 years''; and
            (3) by adding at the end the following new paragraphs:
            ``(2) Exception.--
                    ``(A) In general.--Paragraph (1) shall not apply 
                when the payment schedule is adjusted to account for 
                the seasonal or irregular income of the consumer or if 
                the purpose of the loan is a bridge loan.
                    ``(B) Bridge loan defined.--For purposes of this 
                subsection, the term `bridge loan' means a loan that--
                            ``(i) has a period to maturity of 18 months 
                        or less; and
                            ``(ii) is made in connection with the 
                        acquisition or construction of a dwelling.
            ``(3) Notice required.--A creditor that offers a higher-
        cost mortgage having a balloon payment term that, in accordance 
        with paragraph (2), is not subject to paragraph (1) shall 
        clearly disclose to the consumer that--
                    ``(A) the loan contains such a term;
                    ``(B) the balloon payment amount that will be owed 
                by the consumer on the loan maturity date will be equal 
                to the initial principal loan amount, plus interest and 
                costs that may be due, minus any principal payments 
                that may have been made over the term of the loan; and
                    ``(C) balloon payments are permissible under the 
                circumstances described in paragraph (2).''.
    (c) Negative Amortization.--Subsection (f) of section 129 of the 
Truth in Lending Act (15 U.S.C. 1639(f)) is amended--
            (1) by striking ``Amortization.--A mortgage referred to in 
        section 103(aa)'' and inserting ``Amortization.--
            ``(1) In general.--A higher-cost mortgage''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception for period of forbearance.--Paragraph (1) 
        shall not apply with respect to negative amortization resulting 
        from periods of temporary forbearance allowed by the 
        creditor.''.
    (d) Financing of Points or Fees.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by adding at the end the 
following new subsection:
    ``(m) Restrictions on Financing of Points or Fees; Disclosures 
Required.--
            ``(1) In general.--No creditor may, in connection with the 
        formation or consummation of a higher-cost mortgage 
        transaction, finance, directly or indirectly, any portion of 
        the points and fees applicable to such mortgage that exceeds an 
        amount equal to 5 percent of the total loan amount (or, if the 
        total loan amount is $40,000 or less, an amount equal to 6 
        percent of the total loan amount).
            ``(2) Disclosure.--If, in connection with the consummation 
        of a higher-cost mortgage, any portion of the points, fees, or 
        other charges payable to the creditor or any third party are 
        included, directly or indirectly, in the principal amount of 
        the loan or otherwise financed by the creditor, the creditor 
        shall disclose that fact to the consumer together with a 
        statement that the creditor cannot require that such point, fee 
        or charge be financed.''.
    (e) Prohibition on Evasions Through Structuring Transaction or 
Reciprocal Arrangements.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (n) (as added by 
section 104(a) of this Act) the following new subsection:
    ``(o) Prohibition on Evasions Through Structuring Transaction or 
Reciprocal Arrangements.--
            ``(1) In general.--No creditor, or any affiliate of a 
        creditor, may take any action for the purpose of, or with the 
        intent to, circumvent or evade any requirement of this title 
        with respect to higher-cost mortgages, including--
                    ``(A) entering into any reciprocal arrangement;
                    ``(B) dividing any loan transaction into separate 
                parts for the purpose of evading, and with the intent 
                to evade, the provisions of this section; and
                    ``(C) in the case of a credit transaction that 
                would be a higher-cost mortgage if structured as a 
                consumer loan, structuring or restructuring such 
                transaction as a business loan or other form of credit 
                for the purpose of evading, and with the intent to 
                evade, the provisions of this section.
            ``(2) Rule on nonattribution.--If, in the case of 2 credit 
        transactions that are consummated at the same time and are 
        secured by the same real property, the loan-to-value ratio of 1 
        of such transactions is 80 percent or more, the points and fees 
        payable by the consumer at or before closing on such 
        transaction may not be imputed or attributed to the other 
        transaction for purposes of determining whether a creditor has 
        attempted to evade any requirement of this title.
            ``(3) Reciprocal arrangement defined.--For purposes of this 
        subsection, the term `reciprocal arrangement' means any 
        agreement, understanding, or other arrangement under which--
                    ``(A) a creditor or affiliate of a creditor agrees 
                to engage in a transaction with, or on behalf of, 
                another creditor, or an affiliate of such other 
                creditor, in exchange for
                    ``(B) the agreement of the second creditor referred 
                to in subparagraph (A), or any affiliate of such 
                creditor, to engage in a transaction with, or on behalf 
                of, the first creditor referred to in such 
                subparagraph, or any affiliate of such creditor,
        for the purpose of evading any requirement or prohibition under 
        this title, or any other provision of any Federal law or 
        regulation relating to higher-cost mortgages.''.
    (f) No Encouragement of Default or Nonpayment on Prior Existing 
Loan.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is 
amended by inserting after subsection (o) (as added by subsection (e) 
of this section) the following new subsection:
    ``(p) No Encouragement of Default or Skipped Payment.--No creditor 
may recommend or encourage default or nonpayment, including nonpayment 
of any periodic payment, on an existing loan or other debt prior to and 
in connection with the consummation or planned consummation of a 
higher-cost mortgage that refinances all or any portion of such 
existing loan or debt.''.
    (g) Ability to Repay.--Subsection (h) of section 129 of the Truth 
in Lending Act (15 U.S.C. 1639(h)) is amended to read as follows:
    ``(h) Prohibition on Extending Credit Without Regard to Payment 
Ability of Consumer.--
            ``(1) In general.--A creditor shall not extend credit to a 
        consumer under a higher-cost mortgage based on the foreclosure 
        value of the consumer's principal dwelling securing the loan 
        without regard to the consumer's repayment ability, including 
        the consumer's current and expected income, current 
        obligations, and employment.
            ``(2) Presumption of ability.--
                    ``(A) In general.--Unless a creditor knows or has 
                reason to know otherwise and except as provided in 
                paragraphs (3) and (4), a creditor may presume that a 
                consumer is able to make the scheduled payments to 
                repay the higher-cost mortgage, if, at the time the 
                extension of credit is approved--
                            ``(i) the consumer's total monthly payments 
                        due on outstanding obligations, including 
                        amounts owed under the higher-cost mortgage, do 
                        not exceed 50 percent of the consumer's monthly 
                        gross income, as verified by the credit 
                        application, the consumer's financial 
                        statement, a credit report, or any other 
                        reasonable means, subject to subparagraph (B); 
                        and
                            ``(ii) the consumer has sufficient residual 
                        income, as determined in accordance with 
                        regulations issued by the Board, to pay 
                        essential monthly expenses after paying the 
                        scheduled monthly payments and any additional 
                        debt.
                    ``(B) Verification of retirement and other 
                benefits.--If a consumer's repayment ability is based 
                substantially on fixed income (from any source, public 
                or private, including retirement or disability benefits 
                paid by the Social Security Administration or other 
                governmental agency), the income verification required 
                under subparagraph (A)(i) shall include reasonable 
                documentation of such fixed income, in addition to any 
                statement by the consumer.
                    ``(C) Rule of construction.--The absence of any 
                means of verification described in clause (i) or (ii) 
                of subparagraph (A) shall not be construed as creating 
                a presumption of a violation of this subsection.
            ``(3) Presumption not applicable in case of balloon 
        payments.--A balloon payment or final payment on a bridge loan 
        otherwise permissible under subsection (e) shall not be 
        construed as a payment for purposes of paragraph (2)(A).
            ``(4) Verification of income required in case of consumer 
        without earned or fixed income.--A creditor may rely on a 
        consumer's statement of income for purposes of paragraph (2)(A) 
        if--
                    ``(A) the consumer verifies his or her monthly 
                income on a signed financial statement or other 
                documentation that shows the consumer's income and 
                obligations before the extension of credit; and
                    ``(B) the creditor has a reasonable basis for 
                believing that the income exists and will support 
                repayment of the transaction.''.
    (h) Prohibition on Single Premium Credit Insurance.--Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after 
subsection (p) (as added by subsection (f) of this section) the 
following new subsection:
    ``(q) Prohibition on Single Premium Credit Insurance.--
            ``(1) In general.--No consumer credit transaction involving 
        a higher-cost mortgage may include the offer or sale of any 
        credit insurance policy, or any analogous product whether 
        deemed to be insurance, including any debt cancellation or 
        suspension agreement or contract, on a single premium basis.
            ``(2) Collection of monthly premiums not affected.--The 
        prohibition in paragraph (1) shall not be construed as 
        affecting the right of a creditor to collect premium payments 
        on credit insurance or any analogous products that are 
        calculated and paid on a regular monthly basis.
            ``(3) Credit insurance defined.--For purposes of this 
        subsection, the term `credit insurance' means a policy of 
        insurance that insures, guarantees or indemnifies the creditor, 
        as the primary beneficiary, for the repayment of the 
        outstanding balance of the loan against death, illness, 
        accident, disability, loss of property, or unemployment of the 
        consumer.''.
    (i) Limitations on Refinancing.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(q) (as added by subsection (h) of this section) the following new 
subsection:
    ``(r) Limitations on Refinancing.--
            ``(1) In general.--No creditor shall knowingly or 
        intentionally engage in the unfair act or practice of loan 
        flipping.
            ``(2) Safe harbor.--A higher-cost mortgage shall be 
        presumed to provide a reasonable tangible benefit to the 
        consumer if any 1 of the following factors applies to the new 
        loan:
                    ``(A) The purpose of the higher-cost mortgage is to 
                finance a personal investment or a purchase or 
                acquisition of real property that is not the principal 
                dwelling of the consumer.
                    ``(B) The interest rate on the new fixed-rate 
                higher-cost mortgage is lower than the interest rate on 
                the fixed-rate refinanced loan and it will take 4 years 
                or less for the consumer to recoup the costs of the 
                points and fees, and other closing costs that are 
                required to be paid by the consumer on the new higher-
                cost mortgage through savings resulting from the lower 
                interest rate.
                    ``(C) The creditor makes a good-faith determination 
                that the consumer's monthly payment to pay the higher-
                cost mortgage is a minimum of 15 percent less than the 
                total of all minimum monthly payments on the 
                obligations being financed, based on a consumer credit 
                report or other reasonable documentation utilized by 
                the creditor.
                    ``(D) Any cash proceeds paid either to the 
                consumer, or on behalf of the consumer, above the 
                payoff of the refinanced loan are in excess of twice 
                the amount of total points and fees and closing costs 
                that are required to be paid by the consumer.
                    ``(E) The refinanced loan is changed from a loan 
                that is not a fixed-rate fully-amortizing loan to a 
                fixed-rate fully-amortizing loan.
                    ``(F) The terms of repayment of the refinanced loan 
                are changed from a longer full amortization term to a 
                shorter full amortization term by at least 5 years.
                    ``(G) The consumer presents a certificate, dated 
                not more than 90 days prior to the date of the 
                application for the new higher-cost mortgage, from an 
                independent housing or credit counselor approved by the 
                United States Department of Housing and Urban 
                Development, or by any State regulatory agency, which 
                states that the consumer has received counseling with 
                regard to refinancing the existing loan.
                    ``(H) The consumer provides the creditor with a 
                written, signed statement not prepared by the creditor, 
                at or before the consummation of the new higher-cost 
                mortgage, that the new loan is needed to meet a bona 
                fide personal or family financial, health or medical 
                emergency, or to avoid a filed foreclosure action.
                    ``(I) The refinancing is necessary under, or in 
                response to, any order or judgment of a court of 
                competent jurisdiction.
            ``(3) Special mortgages.--
                    ``(A) In general.--A higher-cost mortgage may not 
                be used to refinance an existing loan if--
                            ``(i) it is apparent on the face of the 
                        security instrument for the existing loan that 
                        it is a special mortgage; and
                            ``(ii) as a result of the refinancing, the 
                        consumer would lose 1 or more of the benefits 
                        of the special mortgage.
                    ``(B) Exception under certain circumstances.--The 
                restriction in subparagraph (A) shall not apply if--
                            ``(i) the holder of the special mortgage 
                        being refinanced consents in writing to the new 
                        higher-cost mortgage; and
                            ``(ii) a credit counselor referred to in 
                        paragraph (2)(G) certifies in writing that the 
                        consumer has obtained counseling on the 
                        advantages and disadvantages of the new loan.
            ``(4) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Loan flipping.--
                            ``(i) In general.--The term `loan flipping' 
                        means an extension of credit by a creditor to a 
                        consumer for a higher-cost mortgage that--
                                    ``(I) refinances an existing home 
                                loan that was consummated within the 
                                prior 24 months; and
                                    ``(II) does not have a reasonable 
                                tangible benefit to the consumer 
                                considering all material circumstances 
                                known to the creditor.
                            ``(ii) Determination of reasonable tangible 
                        benefit.--In instances where one of the safe 
                        harbor provisions contained in subsection (r) 
                        is inapplicable, the factors to be considered 
                        may include the terms and conditions of both 
                        the new and refinanced loan, the consumer's 
                        known economic and non-economic circumstances, 
                        the purpose of the loan, and the cost of the 
                        new loan.
                    ``(B) Special mortgage.--The term `special 
                mortgage' means a consumer credit transaction that is 
                originated, subsidized, or guaranteed by or through a 
                Federal, State, tribal, or local government, 
                government-sponsored enterprise (as defined in section 
                1404(e) of Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989), or nonprofit organization 
                (other than a mutual bank, mutual savings association, 
                or credit union) that either--
                            ``(i) bears, by at least 2 percentage 
                        points, a below-market interest rate as of the 
                        date of its consummation; or
                            ``(ii) has non-standard payment terms 
                        beneficial to the consumer, such as payments 
                        that vary with income or are limited to a 
                        percentage of income, or terms that permit the 
                        consumer to make no payments under specified 
                        conditions.
            ``(5) Rule of construction.--No negative inference may be 
        drawn from the absence of any factor or circumstance described 
        in any subparagraph of paragraph (2) with regard to any higher-
        cost mortgage so as to create a presumption of a violation of 
        this subsection with regard to such mortgage by reason of such 
        absence.
            ``(6) Limitation on legal fees.--Notwithstanding section 
        130 or any other provision of law, in any successful action 
        instituted by a person for a violation of paragraph (1), the 
        person shall not be entitled to recover the costs of the action 
        and attorney's fees if the court determines, in the court's 
        discretion, that a reasonable offer to remedy the violation and 
        compensate the person for the violation was made to such person 
        and the offer was rejected.''.
    (j) Requirements Relating to Home Improvement Contracts.--Section 
129(i) of the Truth in Lending Act (15 U.S.C. 1639(i)) is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively, and moving the left 
        margin of each such subparagraph (as so redesignated) 2 ems to 
        the right;
            (2) by striking ``Improvement Contracts.--A creditor shall 
        not'' and inserting ``Improvement Contracts.--
            ``(1) In general.--A creditor shall not''; and
            (3) by adding at the end the following new paragraph:
            ``(2) No payment in full without proof of completion of the 
        work.--
                    ``(A) In general.--No creditor may use the proceeds 
                of a higher-cost mortgage to make a final payment or 
                payment in full to a home improvement contractor under 
                a home improvement contract without proof of completion 
                in accordance with subparagraph (B).
                    ``(B) Proof of completion.--
                            ``(i) Completion certificate under state 
                        law.--A completion certificate, completed in 
                        compliance with applicable State law, stating 
                        that the contractor has fully performed the 
                        contract obligations, shall be deemed proof of 
                        completion of such obligations for purposes of 
                        this subsection.
                            ``(ii) Lack of availability of certificate 
                        under state law.--If applicable State law does 
                        not provide for or recognize completion 
                        certificates for home improvement contractors, 
                        a signed statement by both the consumer who 
                        entered into the higher-cost mortgage and the 
                        home improvement contractor referred to in 
                        subparagraph (A) that the contractor has fully 
                        performed the contract shall constitute proof 
                        of completion of such obligation for purposes 
                        of this subsection.
                    ``(C) Inspection.--No creditor may use the proceeds 
                of a higher-cost mortgage to make a final payment or 
                payment in full to a home improvement contractor under 
                a home improvement contract without first arranging and 
                paying for an independent inspection of any home 
                improvements exceeding $10,000 to verify that the work 
                has been completed.
                    ``(D) Disclosure.--Before making a final payment to 
                a home improvement contractor, the creditor shall 
                provide the following written disclosure to the 
                consumer: `You will be asked, when the job is 
                completed, to sign a statement confirming the work has 
                been completed because the lender may not make a final 
                payment or payment in full to the home improvement 
                contractor without such a statement signed by both the 
                contractor and you. If the work has not been completed 
                according to the terms of your work agreement, do not 
                sign the statement and notify the lender immediately. 
                If the improvements you are financing exceed $10,000, 
                the lender is required by law to arrange for an 
                inspection of the job. The purpose of the inspection is 
                to ensure that the job has been completed according to 
                the terms of the contract, and it is not a warranty or 
                guarantee of the overall quality of the work. If you 
                would like a more detailed inspection of the 
                contractor's work, you may want to arrange for an 
                additional inspection on your own.'.''.
    (k) Additional Specific Disclosures.--Section 129(a)(1) of the 
Truth in Lending Act (15 U.S.C. 1639(a)(1)) is amended by adding at the 
end the following new subparagraphs:
                    ``(C) `The interest rate and the amount of fees you 
                pay on this loan are higher than you would pay for a 
                conventional or ``prime'' rate loan. As a result, your 
                monthly interest payments are higher than those on a 
                comparable loan with a lower interest rate.'.
                    ``(D) `The rate of interest and the amount of fees 
                you pay on a loan may vary depending on which lender or 
                broker you select. You may be able to get a loan with a 
                lower interest rate. Your credit score can provide an 
                indication of whether you may qualify for a lower-cost 
                prime loan. If you have a relatively good credit score, 
                such as a FICO score in excess of 660, you may qualify 
                for a ``prime'' loan. In that event, you should 
                consider shopping more for a lower-cost loan instead of 
                simply accepting the higher-cost loan that has been 
                offered to you.'.
                    ``(E) `If you are taking out this loan to repay 
                other loans, look to see how many months it will take 
                to pay for this loan and what the total amount is that 
                you will have to pay before this loan is repaid. Even 
                though the total amount you will have to pay each month 
                for this loan may be less than the total amount you are 
                paying each month for those other loans, you may have 
                to pay on this loan for a longer period than those 
                other loans, and that may cost you more overall.'.
                    ``(F) `You may get into serious financial 
                difficulties if you use this loan to pay off old debts 
                and then replace them with other new debts.'.''.
    (l) No Call Provision.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (r) (as added by 
subsection (i) of this section) the following new subsection:
    ``(s) No Call Provision.--
            ``(1) In general.--A higher-cost mortgage may not include 
        terms under which the indebtedness may be accelerated by the 
        creditor, in the creditor's sole discretion.
            ``(2) Exceptions.--Paragraph (1) shall not apply if the 
        repayment of the higher-cost mortgage has been accelerated--
                    ``(A) by default or pursuant to a due-on-sale 
                provision or some other provision of the loan documents 
                unrelated to the payment schedule; or
                    ``(B) due to any action or omission by the consumer 
                that adversely affects the creditor's security interest 
                in the dwelling or any rights of the creditor in such 
                security.''.
    (m) Modification and Deferral Fees Prohibited.--Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after 
subsection (s) (as added by subsection (l) of this section) the 
following new subsection:
    ``(t) Modification and Deferral Fees Prohibited.--
            ``(1) In general.--A creditor may not charge a consumer any 
        fee in excess of the lesser of the amount of 1 monthly loan 
        payment on the existing higher-cost mortgage or $300.00 to 
        modify, renew, extend, or amend a higher-cost mortgage, or to 
        defer any payment due under the terms of such mortgage.
            ``(2) Exception for certain workouts.--The restrictions in 
        paragraph (1) shall not apply in the case of an existing 
        higher-cost mortgage that is in default or more than 60 days 
        delinquent, if the modification, renewal, extension, or 
        amendment is part of the resolution or workout of the default 
        or delinquency.''.
    (n) Increased Interest Rate Upon Default 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 (m) of this section) the 
following new subsection:
    ``(u) Increased Interest Rate Upon Default Permitted for Variable-
Rate Higher-Cost Mortgage.--In the case of a higher-cost mortgage that 
is subject to a variable rate of interest, subsection (d) shall not 
apply to changes in the rate of interest due to any change in the index 
rate, to the extent the change of interest is not due in any part to a 
default by the consumer or a permissible acceleration by the 
creditor.''.
    (o) Prepayment of Periodic Payments From Proceeds Prohibited.--
Subsection (g) of section 129 of the Truth in Lending Act (15 U.S.C. 
1639) is amended to read as follows:
    ``(g) Prepayment of Periodic Payments From Proceeds Prohibited.--No 
higher-cost mortgage may include terms under which more than 2 
scheduled payments of interest or principal due under such mortgage may 
be paid in advance or otherwise deducted from the proceeds of the 
loan.''.
    (p) Payoff Statements.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (u) (as added by 
subsection (n) of this section) the following new subsection:
    ``(v) Payoff Statements.--
            ``(1) Fees.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), 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 higher-cost mortgage.
                    ``(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 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 that are not higher-cost 
                mortgages.
                    ``(C) Multiple requests.--A creditor or servicer 
                shall not charge any fee for the first 2 payoff 
                requests in any continuous 6-month period. A creditor 
                or servicer may charge a reasonable fee for each 
                additional request during any such period.
            ``(2) Prompt delivery.--A creditor or servicer shall send a 
        payoff balance within 7 business days of receipt of a written 
        request for such balance.''.
    (q) Credit Reporting Requirements.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(v) (as added by subsection (p) of this section) the following new 
subsection:
    ``(w) Duty to Report.--
            ``(1) In general.--Each creditor who enters into a higher-
        cost mortgage, and each successor, assignee or servicer to such 
        creditor with respect to such mortgage shall report monthly the 
        complete payment history, favorable and unfavorable, of the 
        obligor with respect to such transaction to a consumer 
        reporting agency that compiles and maintains files on consumers 
        on a nationwide basis, while such transaction is in effect.
            ``(2) Exception for short-term holders.--Paragraph (1) 
        shall not apply to any person who holds a higher-cost mortgage 
        for less than 90 days.
            ``(3) Exception for certain circumstances.--Paragraph (1) 
        shall not apply in connection with a loan forbearance or 
        workout of a loan in default or the settlement of a dispute or 
        consumer complaint.''.
    (r) Steering Prohibited.--Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended by inserting after (w) (as added by 
subsection (q) of this section) the following new subsection:
    ``(x) Steering Prohibited.--
            ``(1) Creditors.--
                    ``(A) In general.--A creditor who originates a 
                higher-cost mortgage shall not knowingly or 
                intentionally steer or direct a consumer into a loan 
                product offered by the creditor that is not based upon 
                the creditor's best credit grade that the consumer 
                would qualify for under the creditor's then-current 
                underwriting guidelines.
                    ``(B) Notice of credit score.--A creditor who 
                originates a higher-cost mortgage shall, within 3 
                business days of the later of--
                            ``(i) the receipt of an application for 
                        such higher-cost mortgage loan; or
                            ``(ii) the making of a determination that 
                        the consumer only qualifies for a higher-cost 
                        mortgage,
                notify the consumer in writing of the consumer's credit 
                score.
                    ``(C) Rescission or reformation.--
                            ``(i) In general.--A creditor found by a 
                        preponderance of the evidence to have violated 
                        subparagraph (A) shall, if the creditor is the 
                        holder of the obligation, at the consumer's 
                        option--
                                    ``(I) rescind the loan as provided 
                                for in section 125; or
                                    ``(II) rewrite the loan into a loan 
                                product at the credit grade that the 
                                consumer would have originally 
                                qualified for but for the violation.
                            ``(ii) Restitution.--In addition to the 
                        action required under clause (i) with respect 
                        to a creditor, or in the case of a creditor who 
                        is not the holder of the obligation and has 
                        been found by a preponderance of the evidence 
                        to have violated subparagraph (A), such 
                        creditor shall make appropriate restitution to 
                        the consumer of all fees, interest, or other 
                        charges paid by the consumer above those that 
                        would have been paid had the loan not been 
                        originated at the less favorable credit grade.
                    ``(D) Safe harbor.--A creditor shall not be 
                presumed to have violated subparagraph (A) if--
                            ``(i) the creditor had a reasonable basis 
                        to believe that the credit grade determined by 
                        the creditor's then-current underwriting 
                        guidelines applied to a consumer was 
                        appropriate, based on the information available 
                        to that creditor, including the information 
                        provided by the consumer; or
                            ``(ii) the consumer voluntarily, on an 
                        informed basis, agreed to a loan with a higher 
                        rate than that for which the consumer would 
                        otherwise qualify.
            ``(2) Brokers.--
                    ``(A) In general.--A broker who is not a creditor 
                shall not knowingly or intentionally steer or direct 
                any prospective consumer to accept a loan product 
                offered by a creditor that is less favorable than the 
                loan products offered by the creditors with whom the 
                broker regularly does business and for which the 
                consumer would qualify for under such creditors' best 
                credit grade based on such creditors' then-current 
                underwriting guidelines.
                    ``(B) Safe harbor.--A broker shall not be presumed 
                to have violated subparagraph (A) if--
                            ``(i) the broker had a reasonable basis to 
                        believe that the credit grade applied to a 
                        consumer was appropriate, based on the 
                        information available to that broker, including 
                        the information provided by the consumer; or
                            ``(ii) the consumer voluntarily, on an 
                        informed basis, agreed to a loan with a higher 
                        rate than that for which the consumer would 
                        otherwise qualify.
                    ``(C) Penalty.--A broker who knowingly or 
                intentionally violates this section shall be liable to 
                the consumer for an amount equal to the sum of $4,000 
                and the consumer's actual financial damages and 
                reasonable attorney's fees and court costs.''.
    (s) Regulations for Disclosures.--Section 129(l) of the Truth in 
Lending Act (15 U.S.C. 1639(l)) is amended by adding at the end the 
following new paragraph:
            ``(3) Redefinition.--The Board may amend the definition and 
        determination of what constitutes a prime loan for purposes of 
        the disclosure requirements contained in subsection (a)(1).''.

SEC. 104. AMENDMENTS RELATING TO DISPUTE AND ERROR RESOLUTION.

    (a) Prohibition on Arbitration Requirements.--Section 129 of the 
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after 
subsection (m) (as added by subsection (d) of section 103) the 
following new subsection:
    ``(n) Arbitration.--
            ``(1) In general.--A higher-cost mortgage may not include 
        terms that require arbitration or any other nonjudicial 
        procedure as the method for resolving any controversy or 
        settling any claim arising out of the transaction.
            ``(2) Post-controversy voluntary agreements.--
                    ``(A) In general.--Subject to paragraph (3), 
                paragraph (1) shall not be construed as limiting the 
                right of the consumer and the creditor to agree 
                voluntarily 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.
                    ``(B) Requirements for post-controversy 
                agreements.--Post-controversy voluntary agreements 
                shall--
                            ``(i) establish the venue for the 
                        arbitration in the Federal judicial district or 
                        division in which the real property that is the 
                        security for the higher-cost mortgage is 
                        located;
                            ``(ii) comply with the standards set forth 
                        by a nationally recognized arbitration 
                        organization, such as the Statement of 
                        Principles of the National Consumer Dispute 
                        Advisory Committee of the American Arbitration 
                        Association or any comparable standards of such 
                        other organization as may be approved by the 
                        Board; and
                            ``(iii) require the creditor to bear the 
                        reasonable costs of all parties to the 
                        arbitration, including the production of fact 
                        witnesses and documents, during at least the 
                        first 2 days of such arbitration.
            ``(3) No waiver of statutory cause of action.--No provision 
        of any higher-cost mortgage or any voluntary agreement between 
        the consumer and the creditor 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.''.
    (b) Correction of Errors.--Subsection (b) of section 130 of the 
Truth in Lending Act (15 U.S.C. 1640(b)) is amended to read as follows:
    ``(b) Correction of Errors.--
            ``(1) In general.--A creditor or assignee shall have no 
        liability under this section or section 108 or section 112 for 
        any failure to comply with any requirement imposed under this 
        chapter or chapter 5, if--
                    ``(A) before the end of the 45-day period beginning 
                on the date of consummation of a loan, the creditor or 
                assignee notifies the consumer of the error and makes 
                appropriate restitution to the consumer of any amounts 
                collected in error, and takes the necessary action to 
                make all appropriate adjustments to the credit 
                transaction to correct the error, including, if 
                applicable, that the consumer will not be required to 
                pay an amount in excess of the charge actually 
                disclosed, or the dollar equivalent of the annual 
                percentage rate actually disclosed, whichever is less; 
                or
                    ``(B) before the end of the 60-day period beginning 
                on the date an error is discovered, whether pursuant to 
                a final examination report or notice issued under 
                section 108(e) of this title, or through the creditor's 
                or assignee's own procedures, or receipt of written 
                notice from the consumer or service upon the creditor 
                or assignee of the institution of an action, the 
                creditor or assignee notifies the consumer of the 
                error, makes appropriate restitution to the consumer of 
                any amounts collected in error, takes the necessary 
                action to make all appropriate adjustments to the 
                credit transaction to correct the error, including, if 
                applicable, that the consumer will not be required to 
                pay an amount in excess of the charge actually 
                disclosed, or the dollar equivalent of the annual 
                percentage rate actually disclosed, whichever is less, 
                pays the consumer an error penalty of $2,000 and the 
                consumer's reasonable attorney's fees, if any, except 
                that no error penalty or attorney's fees shall be 
                assessed if the creditor or assignee discovers the 
                error through the creditor's or assignee's own 
                procedures.
            ``(2) Modification of terms.--In the case of a higher-cost 
        mortgage, appropriate restitution for purposes of paragraph (1) 
        above may also include a creditor modifying the terms of the 
        credit transaction in such a way that the transaction is no 
        longer a higher-cost mortgage within the meaning of this title.
            ``(3) Consumer remedy.--If a creditor or assignee fails to 
        correct the error as provided for above in paragraph (1), the 
        consumer may file an action or proceed with an action already 
        filed.
            ``(4) Effective date of document revisions.--Any document 
        revisions necessitated by and made consistent with the 
        procedures set forth above in subparagraph (A) or (B) of 
        paragraph (1) shall be deemed legally effective for all 
        purposes as of the original date of the document that was 
        revised.''.
    (c) Clarification Relating to State-Regulated Transactions.--
Section 123 of the Truth in Lending Act (15 U.S.C. 1633) is amended by 
striking ``The Board''and inserting ``Except with respect to higher-
cost mortgages, the Board''.

SEC. 105. AMENDMENTS TO DAMAGES, RESCISSION AND LIABILITY PROVISIONS.

    (a) Increase in Amount of Civil Money Penalties for Certain 
Violations.--Section 130(a) of the Truth in Lending Act (15 U.S.C. 
1640(a)) is amended--
            (1) in paragraph (2)(A)(iii), by striking ``$2,000'' and 
        inserting ``$4,000''; and
            (2) in paragraph (2)(B), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
    (b) Coordination of Class-Action Damages With Actual Damages.--
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended by 
adding at the end the following new subsection:
    ``(j) Class Actions Relating to Higher-Cost Mortgages.--
            ``(1) Coordination of class-action damages with actual 
        damages.--The maximum amount of general damages that may 
        otherwise be imposed on any person under subsection (a)(2)(B) 
        for violations of section 129 in a class action shall be 
        reduced by the aggregate amount of actual damages for which 
        such person is liable to members of the class under subsection 
        (a)(1).
            ``(2) Pattern and practice.--In determining the amount of 
        any liability of any person under subsection (a)(2)(B) for 
        violations of section 129 in a class action, the court shall 
        consider the pattern and practices of the person giving rise to 
        the violations, and whether or not such pattern and practices 
        were willful.''.
    (c) Amendments Relating to Timing of Waiver by Consumer of Right of 
Rescission.--Section 125(a) of the Truth in Lending Act (15 U.S.C. 
1635(a)) is amended--
            (1) by striking ``(a) Except as otherwise provided'' and 
        inserting ``(a) Right Established.--
            ``(1) In general.--Except as otherwise provided''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Timing of election of waiver by consumer.--No 
        election by a consumer to waive the right established under 
        paragraph (1) to rescind a transaction shall be effective if--
                    ``(A) the waiver was required by the creditor as a 
                condition for the transaction; or
                    ``(B) the creditor advised or encouraged the 
                consumer to waive such right of the consumer.''.
    (d) 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--
            (1) in the 1st sentence, by striking ``Any action'' and 
        inserting ``Except as provided in the subsequent sentence, any 
        action'';
            (2) by inserting after the first sentence the following new 
        sentence: ``Any action under this section with respect to any 
        violation of section 129 (other than subsection (x) of such 
        section) may be brought in any United States district court, or 
        in any other court of competent jurisdiction, before the end of 
        the 2-year period beginning on the date of the occurrence of 
        the violation, unless a shorter time period is herein 
        provided.''; and
            (3) by inserting ``and except that this sentence shall not 
        apply to a violation of section 129(x)'' before the period at 
        the end of the 3rd sentence (as determined taking into account 
        the amendment made by paragraph (2) of this subsection).
    (e) Amendments Relating to Liability of Assignees.--
            (1) In general.--Paragraph (4) of section 131(d) of the 
        Truth in Lending Act (15 U.S.C. 1641(d)) is amended by striking 
        ``mortgage referred to in section 103(aa)'' and inserting 
        ``higher-cost mortgage''.
            (2) Rights upon assignment of higher-cost mortgages.--
        Section 131(d) of the Truth in Lending Act (15 U.S.C. 1641(d)) 
        is amended--
                    (A) by redesignating paragraphs (3) and (4) as 
                paragraphs (4) and (5), respectively; and
                    (B) by striking paragraphs (1) and (2) and 
                inserting the following new paragraphs:
            ``(1) Claims and defenses.--
                    ``(A) In general.--Any person who purchases or is 
                otherwise assigned a higher-cost mortgage shall be 
                subject to all claims and defenses with respect to that 
                mortgage that the consumer could assert against the 
                creditor of the mortgage either--
                            ``(i) as a defense to the enforcement of 
                        such mortgage by the purchaser or assignee 
                        based on a default by the consumer if such 
                        default is reasonably related to a violation of 
                        this section by the creditor, unless the 
                        consumer demonstrates that the purchaser or 
                        assignee had actual knowledge of or exhibited 
                        reckless indifference to a violation in which 
                        case the consumer may raise any defensive claim 
                        without regard to whether such violation is 
                        related to the consumer's default; or
                            ``(ii) as an affirmative claim, unless the 
                        purchaser or assignee demonstrates, by a 
                        preponderance of the evidence, that a 
                        reasonable person exercising ordinary due 
                        diligence could not determine with reasonable 
                        certainty based on information contained in the 
                        documentation required by this title, the 
                        itemization of the amount financed, and other 
                        disclosure of disbursements that a violation 
                        had occurred.
                    ``(B) Clarification of rights of consumer.--
                Subparagraph (A) may not be construed as affecting any 
                rights of a consumer under subsection (a), (b), or (c) 
                of this section or any other provision of this title.
                    ``(C) Exclusion.--This section shall not apply if a 
                purchaser or assignee has exercised such due diligence 
                by demonstrating that such purchaser or assignee--
                            ``(i) has in place at the time of the 
                        purchase or assignment of the loans, policies 
                        that expressly prohibit the purchase or 
                        acceptance of assignment, by such purchaser or 
                        assignee, of either any higher-cost mortgage at 
                        all or any higher-cost mortgage containing such 
                        violations;
                            ``(ii) requires, by the applicable purchase 
                        contract, that a seller or assignor of such 
                        loans to the purchaser or assignee represents 
                        and warrants to the purchaser or assignee as of 
                        the applicable sale date that either--
                                    ``(I) the seller or assignor will 
                                not sell or assign to the purchaser or 
                                assignee either any higher-cost 
                                mortgage at all or any higher-cost 
                                mortgage containing such violations; or
                                    ``(II) the seller or assignor is a 
                                beneficiary of a representation and 
                                warranty from a previous seller or 
                                assignor to that effect, and, as a 
                                result of its purchase of the loans, 
                                the purchaser or assignee is a 
                                beneficiary of such representation and 
                                warranty; and
                            ``(iii) exercises reasonable due diligence 
                        at or before the time of the purchase or 
                        assignment of home loans, or within a 
                        reasonable period of time after the purchase or 
                        assignment of such home loans, that is intended 
                        by the purchaser or assignee to prevent the 
                        purchaser or assignee from purchasing or taking 
                        assignment of either any higher-cost mortgages 
                        at all or any higher-cost mortgages containing 
                        such violations.
                    ``(D) Reasonable due diligence.--The reasonable due 
                diligence requirement referred to in subparagraph 
                (C)(iii) may be met by employing a statistically 
                significant sampling methodology and shall not require 
                loan-by-loan review, for purposes of this subsection.
            ``(2) Limitation on relief.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, relief provided as a result of any 
                action made permissible by paragraph (1) may not exceed 
                the greater of--
                            ``(i) with respect to actions based upon a 
                        violation of this title, the amount specified 
                        in section 130; or
                            ``(ii) with respect to other actions, as 
                        specified in paragraph (1)(A)(i), the sum of--
                                    ``(I) the amount of all remaining 
                                indebtedness; and
                                    ``(II) the total amount paid by the 
                                consumer in connection with the 
                                transaction.
                    ``(B) Factors for the court to consider.--In 
                determining the amount of the award in any action 
                referred to in clause (i) or (ii) of subparagraph (A), 
                the court shall consider, among other relevant 
                factors--
                            ``(i) the amount of any actual economic 
                        damages awarded and the extent to which the 
                        noneconomic harm suffered from the violation 
                        should be compensable by general damages;
                            ``(ii) the lack of such purchaser's or 
                        assignee's knowledge of or participation in the 
                        facts or circumstances giving rise to the 
                        violations and claim and defenses;
                            ``(iii) the materiality of the violation; 
                        and
                            ``(iv) the relative harm to the consumer.
                    ``(C) Limitation on damages for wrongs not creating 
                financial losses.--Unless the consumer demonstrates 
                that the purchaser or assignee had actual knowledge of 
                or exhibited reckless indifference to a violation of 
                this title or other applicable law, the damages for 
                which a purchaser or assignee shall be liable shall be 
                limited to the amounts specified in paragraphs (1) and 
                (2) of section 130(a), which consist of damages for 
                actual financial losses and attorney's fees.
            ``(3)  clarification of terms.--For purposes of determining 
        the liability of assignees under this section, the terms 
        `purchaser' and `assignee' shall not include--
                    ``(A) persons whose interest in higher-cost 
                mortgages is limited to a security interest or who 
                acquire title as a result of the foreclosure of such 
                security interest;
                    ``(B) broker-dealers and their affiliates that 
                trade in mortgage loans and related mortgage securities 
                and otherwise are not involved in any material respect 
                in the terms and conditions under which such mortgage 
                loans were made or such securities were issued;
                    ``(C) passive investors in securities, or interests 
                in securities, including investors who guarantee the 
                payment of principal and interest of securities to 
                other investors, based on and backed by a pool of 
                residential mortgage loans; or
                    ``(D) purchasers of mortgage loans that do not take 
                record title to such loans where, within 1 year 
                following the initial sale, the seller is obligated by 
                written agreement to repurchase the loans or the 
                purchaser is obligated by written agreement to deliver 
                the loans to a third party at the direction of a 
                seller.''.

SEC. 106. COORDINATION WITH STATE LAW.

    Section 111 of the Truth in Lending Act (15 U.S.C. 1610) is 
amended--
            (1) by adding at the end the following new subsection:
    ``(f) Higher-Cost Mortgages.--
            ``(1) In general.--The provisions of this title shall 
        supersede any provision of the law of any State to the extent 
        that such provision of law attempts, directly or indirectly, to 
        regulate, or has the effect of regulating, mortgage lending 
        activities by or through--
                    ``(A) the imposition of a high-cost limitation, 
                including--
                            ``(i) through limitations or prohibitions 
                        in connection with contracts for other business 
                        with any such State or any political 
                        subdivision of any such State;
                            ``(ii) by making any conduct in connection 
                        with any such activities subject to civil or 
                        criminal penalties; or
                            ``(iii) by making activities regulated 
                        under real estate, foreclosure, or other laws 
                        of such State or political subdivision 
                        contingent upon the manner in which mortgage 
                        lending activities are conducted; or
                    ``(B) any requirement, limitation, or prohibition 
                without regard to whether the provisions of the 
                requirement, limitation, or prohibition are consistent 
                or inconsistent with section 129 or 129A or whether the 
                consumer credit transaction subject to such requirement 
                is a higher-cost mortgage,
        without respect to whether or the extent to which such 
        provision of law may afford greater protection, substantive or 
        otherwise, to consumers.
            ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Mortgage lending activities.--The term 
                `mortgage lending activities' includes any 
                advertisement, solicitation, offer, negotiation, 
                placement, application, processing, underwriting, 
                originating, closing, funding, recording, assignment, 
                purchase, pledge, securitization, holding, servicing, 
                collection, modification, satisfaction, or foreclosure 
                in connection with or arising out of a consumer credit 
                transaction secured by a lien against a consumer's 
                dwelling, by or on behalf of a broker, creditor, 
                secured creditor, purchaser, servicer, trustee, 
                certificate or securities holder, or any other person 
                or entity that may engage in any of the above 
                enumerated activities and their respective agents, 
                contractors, employees, officers, and directors.
                    ``(B) Law of any state.--The term `law of any 
                State' includes any constitutional provision, statute, 
                rule, regulation, or ordinance of any State or any 
                political subdivision of any State, including any State 
                law as to which the Board has made a determination 
                under section 123, and any judicial decision or 
                determination rendered in connection therewith.
                    ``(C) High-cost limitation.--The term `high-cost 
                limitation' means any requirement, limitation, or 
                prohibition on any mortgage lending activities in 
                connection with a consumer credit transaction secured 
                by a lien against a consumer's dwelling when the 
                applicability of such requirement, limitation or 
                prohibition is based in whole or in part on whether the 
                actual or contingent, direct or indirect, interest 
                rate, costs, fees, price or finance charges to the 
                consumer associated with such consumer credit 
                transaction exceed any particular threshold, however 
                such threshold may be defined, without regard to 
                whether the consumer credit transaction subject to such 
                requirement, limitation, or prohibition is a higher-
                cost mortgage.
            ``(3) Clarification of preemption.--Any law of any State 
        preempted under paragraph (1) of this subsection shall, without 
        in any way limiting the effect of paragraph (1) of this 
        subsection, include any law of any State that directly or 
        indirectly--
                    ``(A) limits a creditor's ability to extend new 
                credit to a consumer;
                    ``(B) limits the rights, claims, defenses, or other 
                remedies at law or equity available to a creditor, 
                secured creditor, servicer, assignee or other direct or 
                indirect holder, and their respective agents or 
                contractors, including without limitation, the right to 
                foreclose on the lien against the consumer's dwelling 
                in respect of a consumer's default under the related 
                loan documents; or
                    ``(C) imposes legal liability on any party for the 
                violations of law by another party by virtue of such 
                first party's acquisition of any direct or indirect 
                right, title or interest in and to, or contractual 
                responsibility for the servicing or administration of, 
                a higher-cost mortgage.
            ``(4) Exclusions.--Notwithstanding paragraphs (1), (2), and 
        (3), the following laws are expressly excluded from the 
        preemption established under paragraph (1):
                    ``(A) Any law of any State, not otherwise preempted 
                under Federal law, limiting the rate of interest 
                reflected in the note or other instrument evidencing an 
                extension of consumer credit secured by a lien against 
                a consumer's dwelling, to the extent that such law does 
                not require compliance with any law that is otherwise 
                preempted under paragraphs (1), (2), and (3) as a 
                condition of contracting for, charging, or collecting 
                any rate of interest otherwise permitted by such law.
                    ``(B) Any law of any State requiring the licensing, 
                registration, or authorization of any person engaged in 
                mortgage-lending activities, except that the law of any 
                State will be preempted to the extent that such law 
                conditions the issuance or maintenance of such a 
                license, registration or other authorization, or the 
                authority granted thereby, on compliance with any law 
                that is otherwise preempted under paragraphs (1), (2) 
                and (3).
            ``(5) Prompt determination by board of governors.--
                    ``(A) In general.--In response to a request from 
                any person, the Board, or any official or employee of 
                the Board duly authorized by the Board, shall--
                            ``(i) promptly determine whether and to the 
                        extent to which the specific law of any State 
                        identified in such request is preempted by 
                        operation of this subsection; and
                            ``(ii) cause such determination to be 
                        published in the Federal Register.
                    ``(B) Effect of publication.--The preemption 
                provided under this section shall be self-executing, 
                and the publication of a finding or preemption by the 
                Board shall not be required in order for preemption to 
                occur in accordance with the terms of this section.'';
            (2) in subsection (a)(1), by striking the 1st sentence and 
        inserting the following new sentence: ``Except as provided in 
        subsections (e) and (f), no provision of chapter 1, 2, or 3 
        shall be construed as annulling, altering, or affecting the 
        laws of any State relating to the disclosure of information in 
        connection with credit transactions, except to the extent that 
        those laws are inconsistent with the provisions of this title, 
        and then only to the extent of the inconsistency.'';
            (3) in subsection (b)--
                    (A) by striking ``section 129'' the 1st place such 
                term appears and inserting ``subsection (f) and 
                sections 129, 129A, and 129B''; and
                    (B) by inserting ``, 129A, or 129B'' after 
                ``section 129'' each place such term appears after the 
                1st place; and
            (4) in subsection (d), by striking ``sections 125, 130, and 
        166'' and inserting ``subsection (f) and sections 125, 130, and 
        166''.

SEC. 107. CLARIFICATION OF STATE ENFORCEMENT AUTHORITY.

    Subsection (e) of section 130 of Truth in Lending Act (15 U.S.C. 
1640(e)) (as amended by section 105(d) of this Act) is amended--
            (1) by striking ``(e) Except as provided in the subsequent 
        sentence, any action'' and inserting ``(e) Jurisdiction; 
        Statute of Limitations.--
            ``(1) In general.--Except as provided in the subsequent 
        sentence, any action''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Clarification of primary enforcement authority with 
        respect to state-chartered or licensed entities.--In addition 
        to the authority provided under subsection (1), no provision of 
        this title shall be construed as limiting the authority of any 
        State to enforce the provisions of this title, as the primary 
        enforcement authority, with regard to any person licensed or 
        chartered by such State.''.

SEC. 108. PREPAYMENT PENALTIES AND LATE CHARGES.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129 the following 
new section:
``Sec. 129A. Prepayment penalties and late charges
    ``Except as otherwise provided by this title, any consumer credit 
transaction that is secured by a dwelling that is, or upon the 
consummation of the transaction will be, occupied by the consumer as 
his principal dwelling, may contain--
            ``(1) a provision for the imposition of a prepayment 
        penalty for the prepayment of the credit transaction, only if--
                    ``(A) the penalty cannot be imposed if the debt is 
                accelerated as a result of default or any other breach 
                of the loan documents;
                    ``(B) the penalty does not apply after the end of 
                the 36-month period beginning on the date the 
                transaction is consummated;
                    ``(C) the consumer is offered a choice of another 
                similar loan without a prepayment penalty and is given 
                a description of the benefit the consumer will receive, 
                and the consequences the consumer might encounter, for 
                accepting a loan with the prepayment penalty; and
                    ``(D) the penalty does not exceed an amount equal 
                to the payment of 6 months advance interest on the 
                amount prepaid in any 12-month period in excess of 20 
                percent of the original principal amount; and
            ``(2) a provision for the imposition of unanticipated late 
        payment, only if the late-payment fee--
                    ``(A) is not in excess of 5 percent of the amount 
                of the scheduled payment past due;
                    ``(B) may only be assessed on a payment past due 
                for 15 days or more; and
                    ``(C) may not be charged more than once with 
                respect to a single late payment.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129 the following new item:

``129A. Prepayment penalties and late charges.''.

SEC. 109. REGULATIONS.

    Notwithstanding any provision of the Truth in Lending Act, the 
Board of Governors of the Federal Reserve System shall--
            (1) prescribe such regulations implementing this title and 
        the amendments made by this title as the Board may determine to 
        be appropriate; and
            (2) publish such regulations in final form in the Federal 
        Register before the end of the 12-month period beginning on the 
        date of the enactment of this Act.

SEC. 110. EFFECTIVE DATES.

    (a) In General.--This title, and the amendments made by this title, 
shall take effect at the end of the 3-month period beginning on the 
date of the enactment of this Act.
    (b) Scope of Application.--This title, and the amendments made by 
this title, shall apply with respect to applications for consumer 
credit transactions received on or after the effective date of this 
Act.

                      TITLE II--HOUSING COUNSELING

                    Subtitle A--Consumer Counseling

SEC. 201. CONSUMER COUNSELING REQUIREMENTS.

    Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (x) (as added by section 103(r) of this 
Act) the following:
    ``(y) Consumer Counseling Requirements.--
            ``(1) In general.--A creditor may not extend any credit in 
        the form of a higher-cost mortgage to any consumer unless the 
        creditor has provided to the consumer, at such time before the 
        consummation of the mortgage and in such manner as the Board 
        shall provide by regulation--
                    ``(A) a separate written statement recommending 
                that the consumer take advantage of available home 
                ownership or credit counseling services before agreeing 
                to the terms of any higher-cost mortgage; and
                    ``(B) a written statement containing the names, 
                addresses and telephone numbers of counseling agencies 
                or programs reasonably available to the consumer that 
                have been certified or approved and made publicly 
                available by the Secretary of Housing and Urban 
                Development, a State housing finance authority (as 
                defined in section 1301 of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989), or the 
                agency referred to in subsection (a) or (c) of section 
                108 with jurisdiction over the creditor as qualified to 
                provide counseling on--
                            ``(i) the advisability of a higher-cost 
                        mortgage transaction; and
                            ``(ii) the appropriateness of a higher-cost 
                        mortgage for the consumer.
            ``(2) Complete and updated lists required.--A creditor 
        shall be deemed to be in compliance with the requirements of 
        this subsection if the creditor provides the consumer with a 
        reasonably complete or updated list of counseling agencies 
        required by section 5(a) of the Real Estate Settlement 
        Procedures Act of 1974.''.

         Subtitle B--Expanded Housing Counseling Opportunities

SEC. 211. SHORT TITLE.

    This subtitle may be cited as the ``Expanding Housing Opportunities 
Through Education and Counseling Act''.

SEC. 212. 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:
    ``(g) Office of Housing Counseling.--
            ``(1) Establishment.--There is established, in the Office 
        of the Secretary, the Office of Housing Counseling.
            ``(2) Director.--There is established the position of 
        Director of Housing Counseling. The Director shall be the head 
        of the Office of Housing Counseling and shall be appointed by 
        the Secretary. Such position shall be a career-reserved 
        position in the Senior Executive Service.
            ``(3) Functions.--
                    ``(A) In general.--The Director shall have ultimate 
                responsibility within the Department, except for the 
                Secretary, for all activities and matters relating to 
                homeownership counseling and rental housing counseling, 
                including--
                            ``(i) research, grant administration, 
                        public outreach, and policy development 
                        relating to such counseling; and
                            ``(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.
                    ``(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--
                            ``(i) the counseling procedures under 
                        section 106(h)(1) of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 
                        1701x(h)(1));
                            ``(ii) carrying out all other functions of 
                        the Secretary under section 106(h) of the 
                        Housing and Urban Development Act of 1968, 
                        including the establishment, operation, and 
                        publication of the availability of the toll-
                        free telephone number under paragraph (2) of 
                        such section;
                            ``(iii) carrying out section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604) for home buying information 
                        booklets prepared pursuant to such section;
                            ``(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));
                            ``(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;
                            ``(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 216 of the Expanding Housing 
                        Opportunities Through Education and Counseling 
                        Act;
                            ``(vii) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection; and
                            ``(viii) collaborating with community-based 
                        organizations with expertise in the field of 
                        housing counseling.
            ``(4) Advisory committee.--
                    ``(A) In general.--The Secretary shall appoint an 
                advisory committee to provide advice and oversight 
                regarding the carrying out of the functions of the 
                Director.
                    ``(B) Members.--Such advisory committee shall 
                consist of not more than 12 individuals, and the 
                membership of the committee shall equally represent all 
                aspects of the mortgage and real estate industry, 
                including consumers.
                    ``(C) Terms.--Except as provided in subparagraph 
                (D), each member of the advisory committee shall be 
                appointed for a term of three years. Members may be 
                reappointed at the discretion of the Secretary.
                    ``(D) Terms of initial appointees.--As designated 
                by the Secretary at the time of appointment, of the 
                members first appointed to the advisory committee, four 
                shall be appointed for a term of one year and four 
                shall be appointed for a term of two years.
                    ``(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.
                    ``(F) Advisory role only.--The advisory committee 
                shall have no role in reviewing or awarding housing 
                counseling grants.
            ``(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.''.

SEC. 213. COUNSELING PROCEDURES.

    (a) In General.--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:
    ``(h) Procedures and Activities.--
            ``(1) Counseling procedures.--
                    ``(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.
                    ``(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--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 8(y)(1)(D) (42 
                                U.S.C. 1437f(y)(1)(D));
                                    ``(III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(IV) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(V) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(VI) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B));
                                    ``(VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                    ``(VIII) section 304(c)(4) (42 
                                U.S.C. 1437aaa-3(c)(4));
                            ``(iii) section 302(a)(4) of the American 
                        Homeownership and Economic Opportunity Act of 
                        2000 (42 U.S.C. 1437f note);
                            ``(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));
                            ``(v) this section and section 101(e) of 
                        the Housing and Urban Development Act of 1968 
                        (12 U.S.C. 1701x, 1701w(e));
                            ``(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));
                            ``(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));
                            ``(viii) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(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));
                            ``(x) in the National Housing Act--
                                    ``(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);
                                    ``(II) subsections (a) and (c)(3) 
                                of section 237 (12 U.S.C. 1715z-2); and
                                    ``(III) subsections (d)(2)(B) and 
                                (m)(1) of section 255 (12 U.S.C. 1715z-
                                20);
                            ``(xi) section 502(h)(4)(B) of the Housing 
                        Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7).
                    ``(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--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(III) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(IV) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(V) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B)); and
                                    ``(VI) section 302(b)(6) (42 U.S.C. 
                                1437aaa-1(b)(6));
                            ``(iii) section 233(b)(2) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12773(b)(2));
                            ``(iv) section 106 of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x);
                            ``(v) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(b)(6));
                            ``(vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(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)); and
                            ``(viii) the rental assistance program 
                        under section 8 of the United States Housing 
                        Act of 1937 (42 U.S.C. 1437f).
            ``(2) Toll-free telephone number and web site.--The 
        Secretary shall provide for the establishment, operation, and 
        publication of a toll-free telephone number and a World Wide 
        Web site through which persons interested in homeownership or 
        rental housing counseling services may locate and obtain names 
        and contact information of persons and organizations certified 
        under section 106(e) of the Housing and Urban Development Act 
        of 1968 to provide such services.
            ``(3) Standards for materials.--The Secretary, in 
        conjunction with the advisory committee established under 
        subsection (g)(4), shall establish standards for materials and 
        forms to be used, as appropriate, by organizations providing 
        homeownership counseling services, including any recipients of 
        assistance pursuant to subsection (a)(4).
            ``(4) Mortgage software systems.--
                    ``(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--
                            ``(i) the consumer's financial situation 
                        and the cost of maintaining a home, including 
                        insurance, taxes, and utilities;
                            ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan;
                            ``(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.
                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.
                    ``(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).
                    ``(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.
            ``(5) Outreach to vulnerable populations.--The Secretary 
        shall develop a multimedia outreach program designed to make 
        elderly persons, persons who face language barriers, low-income 
        persons, and other potentially vulnerable consumers aware that 
        it is advisable, before seeking a residential mortgage loan, to 
        obtain homeownership counseling from an unbiased and reliable 
        source and that such homeownership counseling is available, 
        including through programs of the Department of Housing and 
        Urban Development.
            ``(6) Education programs.--The Secretary shall provide 
        advice and technical assistance to States, units of general 
        local government, and nonprofit organizations regarding the 
        establishment and operation of, including assistance with the 
        development of content and materials for, educational programs 
        to inform and educate consumers, particularly those most 
        vulnerable with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-income 
        persons, and other potentially vulnerable consumers), regarding 
        home mortgages, mortgage refinancing, home equity loans, and 
        home repair loans.''.
    (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--
            (1) in subclause (II), by striking ``and'' at the end;
            (2) in subclause (III) by striking the period at the end 
        and inserting ``; and''; and
            (3) by inserting after subclause (III) the following new 
        subclause:
                                    ``(IV) notify the housing or 
                                mortgage applicant of the availability 
                                of mortgage software systems provided 
                                pursuant to subsection (h)(4).''.

SEC. 214. 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:
    ``(4) Homeownership and Rental Counseling Assistance.--
            ``(A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to States, units of 
        general local governments, and nonprofit organizations 
        providing homeownership or rental counseling (as such terms are 
        defined in subsection (h)(1)).
            ``(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.
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
            ``(D) Authorization of appropriations.--There are 
        authorized to be appropriated $75,000,000 for each of fiscal 
        years 2006 through 2009 for--
                    ``(i) the operations of the Office of Housing 
                Counseling of the Department of Housing and Urban 
                Development;
                    ``(ii) the responsibilities of the Secretary under 
                paragraphs (2) through (6) of subsection (h); and
                    ``(iii) assistance pursuant to this paragraph for 
                entities providing homeownership and rental 
                counseling.''.

SEC. 215. 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--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(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.'';
            (2) in paragraph (2)--
                    (A) by inserting ``and for certifying 
                organizations'' before the period at the end of the 
                first sentence; and
                    (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,'';
            (3) in paragraph (3), by inserting ``organizations and'' 
        before ``individuals'';
            (4) by redesignating paragraph (3) as paragraph (5); and
            (5) by inserting after paragraph (2) the following new 
        paragraphs:
            ``(3) Requirement under hud programs.--Any homeownership 
        counseling or rental housing counseling (as such terms are 
        defined in subsection (h)(1)) required under, or provided in 
        connection with, any program administered by the Department of 
        Housing and Urban Development shall be provided only by 
        organizations or counselors certified by the Secretary under 
        this subsection as competent to provide such counseling.
            ``(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).''.

SEC. 216. STUDY OF DEFAULTS AND FORECLOSURES.

    The Secretary of Housing and Urban Development shall conduct an 
extensive study of the root causes of default and foreclosure of home 
loans, using as much empirical data as are available. The study shall 
also examine the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures. Not later than 12 months 
after the date of the enactment of this Act, the Secretary shall submit 
to the Congress a preliminary report regarding the study. Not later 
than 24 months after such date of enactment, the Secretary shall submit 
a final report regarding the results of the study, which shall include 
any recommended legislation relating to the study, and recommendations 
for best practices and for a process to identify populations that need 
counseling the most.

SEC. 217. 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:
    ``(i) Definitions.--For purposes of this section:
            ``(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.
            ``(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.
            ``(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.''.

SEC. 218. 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--
            (1) in the section heading, by striking ``special'' and 
        inserting ``home buying'';
            (2) by striking subsections (a) and (b) and inserting the 
        following new subsections:
    ``(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.
    ``(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:
            ``(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--
                    ``(A) balloon payments;
                    ``(B) prepayment penalties; and
                    ``(C) the trade-off between closing costs and the 
                interest rate over the life of the loan.
            ``(2) An explanation and sample of the uniform settlement 
        statement required by section 4.
            ``(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.
            ``(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.
            ``(5) An explanation of the right of rescission as to 
        certain transactions provided by sections 125 and 129 of the 
        Truth in Lending Act.
            ``(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.
            ``(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.
            ``(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.
            ``(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.
            ``(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.
            ``(11) An explanation of a consumer's responsibilities, 
        liabilities, and obligations in a mortgage transaction.
            ``(12) An explanation of the nature and purpose of real 
        estate appraisals, including the difference between an 
        appraisal and a home inspection.
            ``(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.
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.'';
            (3) in subsection (c), by striking the last sentence and 
        inserting the following new sentence: ``Each lender shall also 
        include with the booklet a reasonably complete or updated list 
        of homeownership counselors who are certified pursuant to 
        section 106(e) of the Housing and Urban Development Act of 1968 
        (12 U.S.C. 1701x(e)) and located in the area of the lender.''; 
        and
            (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.''.

SEC. 219. OPTION FOR NOTICE OF FORECLOSURE PREVENTION COUNSELING 
              AVAILABILITY.

    Section 4 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2603) is amended by adding at the end the following new 
subsection:
    ``(c) Option for Notice of Foreclosure Prevention Counseling 
Availability.--
            ``(1) Option.--In connection with any federally related 
        mortgage loan, the mortgagee shall provide the borrower, at the 
        time of the execution of the mortgage, an optional written 
        agreement that, if signed by the borrower, allows, but does not 
        require, the mortgagee to provide the notice described in 
        paragraph (2) to a homeownership counseling entity that has 
        agreed to provide the notice and counseling required under 
        paragraph (3) and is approved by the Secretary.
            ``(2) Notice to counseling agency.--The notice described in 
        this paragraph, with respect to any federally related mortgage 
        loan, is notice, provided at the earliest time practicable 
        after the borrower becomes 60 days delinquent with respect to 
        any payment due under the mortgage, that the borrower is so 
        delinquent and of how to contact the borrower. Such notice may 
        only be provided once with respect to each delinquency period 
        for a mortgage.
            ``(3) Notice to mortgagor.--Upon notice from a mortgagee 
        that a borrower is 60 days delinquent with respect to payments 
        due under the mortgage, the homeownership counseling entity 
        shall at the earliest time practicable notify the borrower of 
        such delinquency, that the entity makes available foreclosure-
        prevention counseling that may assist the mortgagor in 
        resolving the delinquency, and of how to contact the entity to 
        arrange for such counseling.
            ``(4) Ability to cure.--Failure to provide the optional 
        written agreement required under paragraph (1) may be corrected 
        by sending such agreement to the borrower not later than the 
        earliest time practicable after the mortgagor first becomes 60 
        days delinquent with respect to payments due under the 
        mortgage. Mortgage insurance, if any, provided in connection 
        with such federally related mortgage loan may not be terminated 
        and penalties for such failure may not be prospectively or 
        retroactively imposed if such failure is corrected in 
        accordance with this paragraph.
            ``(5) Penalties for failure to provide agreement.--The 
        Secretary may establish and impose appropriate penalties for 
        failure of a mortgagee to provide the optional written 
        agreement required under paragraph (1).
            ``(6) Limitation on liability of mortgagee.--A mortgagee 
        shall not incur any liability or penalties for any failure of a 
        homeownership counseling entity to provide notice under 
        paragraph (3).
            ``(7) No private right of action.--This subsection shall 
        not create any private right of action on behalf of the 
        borrower.
            ``(8) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Delinquency period.--The term `delinquency 
                period' means, with respect to a mortgage, a period 
                that begins upon the borrower becoming delinquent with 
                respect to payments due under the mortgage and ends 
                upon the first subsequent occurrence of such payments 
                under the mortgage becoming current or the property 
                subject to the mortgage being foreclosed or otherwise 
                disposed of.
                    ``(B) Homeownership counseling entity.--The term 
                `homeownership counseling entity' means any State, unit 
                of general local government, or nonprofit organization 
                that provides homeownership counseling (as defined in 
                section 106(h)(1)(B) of the Housing and Urban 
                Development Act of 1968).''.

                     TITLE III--MORTGAGE SERVICING

SEC. 301. 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 129A (as added by 
section 108 of this Act) the following new section:

``SEC. 129B. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
              CREDIT TRANSACTIONS.

    ``(a) In General.--Except as provided in subsection (b) or (c), a 
creditor, in connection with the formation or consummation of a 
consumer credit transaction secured by the principal dwelling of the 
consumer, shall establish, at the time of the consummation of such 
transaction, an escrow or impound account for the payment of taxes and 
hazard insurance as provided in, and in accordance with, this section.
    ``(b) When Required.--No impound, trust, or other type of account 
for payment of taxes on the property, 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 deed of trust or 
mortgage on real property containing only a single-family, owner-
occupied dwelling, except when--
            ``(1) any such impound, trust, or other type of escrow or 
        impound account for such purposes is required by Federal or 
        State law;
            ``(2) a loan is made, guaranteed, or insured by a State or 
        Federal governmental lending or insuring agency;
            ``(3) the consumer's debt-to-income ratio taking into 
        account income from all sources including the consumer's 
        employment exceeds 45 percent;
            ``(4) a consumer obtains a higher-cost mortgage;
            ``(5) the original principal amount of such loan is--
                    ``(A) 90 percent or more of the sale price, if the 
                property involved is sold; or
                    ``(B) 90 percent or more of the appraised value of 
                the property securing the loan;
            ``(6) the combined principal amount of all loans secured by 
        the real property exceeds 95 percent of the appraised value of 
        the property securing the loans; or
            ``(7) so required by the Board pursuant to regulation.
    ``(c) Duration of Escrow or Impound Account.--An escrow or impound 
account established pursuant to this section, shall remain in existence 
for a minimum period of 5 years, unless the underlying mortgage is 
terminated.
    ``(d) Administration of Escrow or Impound Accounts.--
            ``(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 this section may be 
        established in an insured depository institution in the State 
        where the creditor, or servicer, if not the creditor, is 
        located.
            ``(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--
                    ``(A) the Real Estate Settlement Procedures Act of 
                1974 and regulations prescribed under such Act; and
                    ``(B) the law of the State where the real property 
                securing the consumer credit transaction is located.
            ``(3) Payment of interest.--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 applicable Federal or State law.
    ``(e) Disclosures Relating to Escrow or Impound Account.--
            ``(1) In general.--In the case of any impound, trust, or 
        escrow account that is subject to this section, the creditor 
        shall disclose by written notice to the consumer within 3 
        business days before the consummation of the consumer credit 
        transaction giving rise to such account the following 
        information:
                    ``(A) The fact that an escrow or impound account 
                will be established at consummation of the transaction.
                    ``(B) The amount required at closing to initially 
                fund the escrow or impound account.
                    ``(C) The amount in the initial year of the 
                estimated taxes and hazard insurance premiums.
                    ``(D) The estimated monthly amount payable for 
                taxes and hazard insurance.
                    ``(E) The fact that if the consumer chooses to 
                terminate the account after 5 years, the consumer will 
                become responsible for the payment of all taxes and 
                hazard insurance on the property unless a new escrow or 
                impound account is established.
            ``(2) Regulations.--The Board shall prescribe by regulation 
        the contents of the notice required in paragraph (1) no later 
        than 90 days after the date of the enactment of the Responsible 
        Lending Act.
    ``(f) Hazard Insurance Defined.--For purposes of this section, the 
term `hazard insurance' shall have the same meaning as provided under 
the law of the State where the real property securing the consumer 
credit transaction is located.
    ``(g) Exclusions.--
            ``(1) Not included in points and fees.--Amounts paid for 
        escrow, trust, or impound accounts in accordance with this 
        section shall not be treated as points or fees under section 
        103(aa).
            ``(2) Exclusions by board.--The Board may exclude, by 
        regulation, any category or type of loan from the requirements 
        of this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129 the following new item:

``129B. Escrow or impound accounts relating to certain consumer credit 
                            transactions.''.

SEC. 302. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO OPT OUT OF 
              ESCROW SERVICES.

    Section 129B of the Truth in Lending Act (as added by section 301 
of this title) is amended by adding at the end the following new 
subsection:
    ``(h) Disclosure Notice Required for Consumers Who Opt Out of 
Escrow Services.--
            ``(1) In general.--If an impound, trust, or other type of 
        account for the payment of property taxes, insurance premiums, 
        or other purposes relating to property securing a consumer 
        credit transaction is not established in connection with the 
        transaction, or if a consumer chooses, at any time after such 
        an account is established in connection with any such 
        transaction, to close such account, the creditor shall provide 
        a timely and clearly written disclosure to the consumer that 
        advises the consumer of the responsibilities of the consumer 
        and implications for the consumer in the absence of any such 
        account, including--
                    ``(A) information concerning any applicable fees 
                associated with either the nonestablishment of any such 
                account at the time of the transaction, or any 
                subsequent closure of any such account;
                    ``(B) clear and prominent notice that the consumer 
                is responsible for personally and directly paying the 
                non-escrowed items, in addition to paying the mortgage 
                loan payment, in the absence of any such account; and
                    ``(C) a clear explanation of the consequences of 
                any failure to pay non-escrowed items, including the 
                possible requirement for direct placement of insurance 
                by the creditor and the potentially higher cost 
                (including any potential commission payments to the 
                servicer) or reduced coverage for the consumer in the 
                event of any such creditor-placed insurance.
            ``(2) Regulations.--The Board shall prescribe such 
        regulations as are necessary to implement the requirements of 
        this subsection in final form before the end of the 12-month 
        period beginning on the date of the enactment of the 
        Responsible Lending Act.''.

SEC. 303. MORTGAGE SERVICING CLARIFICATION.

    (a) In General.--The Fair Debt Collection Practices Act (15 U.S.C. 
1692 et seq.) is amended--
            (1) by redesignating section 818 as section 819; and
            (2) by inserting after section 817 the following new 
        section:
``Sec. 818. Mortgage servicer exemption
    ``(a) Exemption.--A covered mortgage servicer who, whether by 
assignment, sale or transfer, becomes the person responsible for 
servicing federally related mortgage loans secured by first liens that 
include loans that were in default at the time such person became 
responsible for the servicing of such federally related mortgage loans 
shall be exempt from the requirements of section 807(11) in connection 
with the collection of any debt arising from such defaulted federally 
related mortgage loans.
    ``(b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Covered mortgage servicer.--The term `covered 
        mortgage servicer' means any servicer of federally related 
        mortgage loans secured by first liens--
                    ``(A) who is also a debt collector; and
                    ``(B) for whom the collection of delinquent debts 
                is incidental to the servicer's primary function of 
                servicing current federally related mortgage loans.
            ``(2) Federally related mortgage loan.--The term `federally 
        related mortgage loan' has the meaning given to such term in 
        section 3(1) of the Real Estate Settlement Procedures Act of 
        1974, except that, for purposes of this section, such term 
        includes only loans secured by first liens.
            ``(3) Person.--The term `person' has the meaning given to 
        such term in section 3(5) of the Real Estate Settlement 
        Procedures Act of 1974.
            ``(4) Servicer; servicing.--The terms `servicer' and 
        `servicing' have the meanings given to such terms in section 
        6(i) of the Real Estate Settlement Procedures Act of 1974.''.
    (b) Clerical Amendment.--The table of sections for the Fair Debt 
Collection Practices Act (15 U.S.C. 1692 et seq.) is amended--
            (1) by redesignating the item relating to section 818 as 
        section 819; and
            (2) by inserting after the item relating to section 817 the 
        following new item:

``818. Mortgage servicer exemption.''.

SEC. 304. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.

    (a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end 
the following new subsection:
    ``(k) Servicer Prohibitions.--A servicer of a federally related 
mortgage shall not--
            ``(1) force place insurance unless there is a reasonable 
        basis to believe the borrower has failed to comply with the 
        loan contract's requirements to maintain property insurance;
            ``(2) charge fees for responding to valid qualified written 
        requests under this section;
            ``(3) fail to take timely action to respond to a borrower's 
        requests to correct errors relating to allocation of payments, 
        final balances for purposes of paying off the loan, or avoiding 
        foreclosure, or other standard servicer's duties;
            ``(4) fail to respond within 10 business days to a request 
        from a borrower to provide the identity, address and other 
        relevant information about the owner assignee of the loan; or
            ``(5) fail to comply with any other obligation found by the 
        Secretary to be appropriate to carry out the consumer 
        protection purposes of this Act.''.
    (b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
            (1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000'' 
        each place such term appears and inserting ``$2,000''; and
            (2) in paragraph (2)(B)(i), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
    (c) Decrease in Response Times.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
            (1) in paragraph (1)(A), by striking ``20 days'' and 
        inserting ``15 days'';
            (2) in paragraph (2), by striking ``60 days'' and inserting 
        ``30 days''; and
            (3) by adding at the end the following new paragraph:
            ``(4) Limited extension of response time.--The 30-day 
        period described in paragraph (2) may be extended for not more 
        than 30 days if, before the end of such 30-day period, the 
        servicer notifies the borrower of the extension and the reasons 
        for the delay in responding.''.
    (d) Requests for Pay-Off Amounts.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended by 
inserting after paragraph (4) (as added by subsection (c) of this 
section) the following new paragraph:
            ``(5) Requests for pay-off amounts.--A creditor or servicer 
        shall send a payoff balance within 7 business days of receipt 
        of a written request for such balance from or on behalf of the 
        borrower by first-class mail.''.
    (e) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g)) 
is amended by adding at the end the following new sentence: ``Any 
balance in any such account at the time the loan is paid off shall be 
promptly returned to the borrower.''.

SEC. 305. MORTGAGE SERVICING STUDIES REQUIRED.

    (a) Mortgage Servicing Fraud.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Board of Governors of the Federal 
        Reserve System and the Federal Trade Commission, shall conduct 
        a comprehensive study on mortgage servicing fraud.
            (2) Issues to be included.--In addition to other issues the 
        Secretary, Board, and Commission may determine to be 
        appropriate and possibly pertinent to the study conducted under 
        paragraph (1), the study shall include the following issues:
                    (A) A survey of the industry in order to examine 
                the issue of the timely posting of payments by 
                servicers.
                    (B) The use of force placed insurance.
                    (C) The employment of daily interest when payments 
                are made after a due date.
                    (D) The charging of late fees on the entire 
                outstanding principal.
                    (E) The charging of interest on servicing fees.
                    (F) The utilization of abusive collection 
                practices.
                    (G) The charging of prepayment penalties when not 
                authorized by either the note or law.
                    (H) The employment of unconscionable forbearance 
                agreements.
                    (I) Foreclosure abuses.
            (3) Report.--Before the end of the 18-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate.
    (b) Mortgage Servicing Improvements.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Board of Governors of the Federal 
        Reserve System and the Federal Trade Commission, shall conduct 
        a comprehensive study on means to improve the best practices of 
        the mortgage servicing industry, and Federal and State laws 
        governing such industry.
            (2) Report.--Before the end of the 24-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate, together with such recommendations for administrative 
        or legislative action as the Secretary, in consultation with 
        the Board and the Commission, may determine to be appropriate.

                     TITLE IV--APPRAISAL ACTIVITIES

SEC. 401. PROPERTY APPRAISAL REQUIREMENTS.

    Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (y) (as added by section 201 of this Act) 
the following new subsection:
    ``(z) Property Appraisal Requirements.--
            ``(1) In general.--A creditor may not extend credit in the 
        form of a higher-cost mortgage to any consumer without first 
        obtaining a written appraisal of the property to be mortgaged 
        prepared in accordance with the requirements of this 
        subsection.
            ``(2) Appraisal requirements.--
                    ``(A) Physical inspection.--An appraisal of 
                property to be secured by a higher-cost mortgage does 
                not meet the requirement of this subsection unless it 
                is performed by a qualified appraiser who conducts a 
                physical inspection of the mortgaged property.
                    ``(B) Second appraisal under certain 
                circumstances.--
                            ``(i) In general.--If the purpose of the 
                        higher-cost mortgage is to finance the purchase 
                        or acquisition of the mortgaged property from a 
                        person within 180 days of the purchase or 
                        acquisition of such property by that person at 
                        a price that was lower than the current sale 
                        price of the property, the creditor shall 
                        obtain a second appraisal from a second 
                        qualified appraiser that supports the current 
                        sale price of the property.
                            ``(ii) No cost to consumer.--The cost of 
                        any second appraisal required under clause (i) 
                        may not be charged to the consumer.
                    ``(C) Qualified appraiser defined.--For purposes of 
                this subsection, the term `qualified appraiser' means a 
                person who--
                            ``(i) is certified or licensed by the State 
                        in which property to be appraised is located; 
                        and
                            ``(ii) performs each appraisal in 
                        conformity with the Uniform Standards of 
                        Professional Appraisal Practice and Title XI of 
                        the Financial Institutions Reform, Recovery, 
                        and Enforcement Act of 1989, and the 
                        regulations prescribed under such title, as in 
                        effect on the date of the appraisal.
            ``(3) Free copy of appraisal.--A creditor shall provide 1 
        copy of each appraisal conducted in accordance with this 
        subsection in connection with a higher-cost mortgage to the 
        consumer without charge.
            ``(4) Violations.--In addition to any other liability to 
        any person under this title, a creditor found to have willfully 
        failed to obtain an appraisal as required in this subsection 
        shall be liable to the consumer for the sum of $2,000.''.

SEC. 402. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC, 
              APPRAISER INDEPENDENCE, AND APPROVED APPRAISER EDUCATION.

    (a) Annual Report of Appraisal Subcommittee.--Section 1103(a)(4) of 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3332(a)(4)) is amended by inserting ``in detail the 
activities of the Appraisal Subcommittee and'' after ``which 
describes''.
    (b) Open Meetings.--Section 1104(b) of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is 
amended by inserting ``in public session after notice to the general 
public'' after ``shall meet''.
    (c) Regulations.--Section 1106 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is 
amended by inserting ``prescribe regulations after notice and 
opportunity for comment,'' after ``hold hearings''.
    (d) Criteria.--Section 1116 of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
            (1) in subsection (c), by inserting ``whose criteria for 
        the licensing of a real estate appraiser currently meet or 
        exceed the minimum criteria issued by the Appraiser 
        Qualifications Board of The Appraiser Foundation for the 
        licensing of real estate appraisers'' before the period at the 
        end; and
            (2) by striking subsection (e).
    (e) Temporary Practice.--Section 1122(a)(1) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351(a)(1)) is amended--
            (1) by striking subparagraph (A);
            (2) by redesignating subparagraphs (B) and (C) as 
        subparagraphs (A) and (B), respectively; and
            (3) by moving the left margin of such subparagraphs 2 ems 
        to the right.
    (f) Reciprocity.--Subsection (b) of section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351(b)) is amended to read as follows:
    ``(b) Reciprocity.--A State appraiser certifying or licensing 
agency shall issue a reciprocal certification or license for an 
individual from another State when--
            ``(1) the appraiser licensing and certification program of 
        such other State is in compliance with the provisions of this 
        title; and
            ``(2) the appraiser holds a valid certification from a 
        State whose requirements for certification or licensing meet 
        the requirements for certification and licensing as established 
        by the Appraiser Qualifications Board of The Appraisal 
        Foundation.''.
    (g) Consideration of Professional Appraisal Designations.--Section 
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3351(d)) is amended by adding at the end the 
following new sentence: ``Consideration may be given for professional 
appraisal designations conferred by sponsoring organizations of The 
Appraisal Foundation as an indication of proficiency in addition to the 
criteria established by certification or licensing.''.
    (h) Appraiser Independence.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351) is amended by adding at the end the following new subsection:
    ``(g) Appraiser Independence.--
            ``(1) In general.--No mortgage lender, mortgage broker or 
        mortgage banker, real estate broker, nor any other person with 
        an interest in a real estate transaction involving an appraisal 
        shall improperly influence or attempt to improperly influence, 
        through coercion, extortion, or bribery, the development, 
        reporting, result, or review of a real estate appraisal sought 
        in connection with a mortgage loan.
            ``(2) Exceptions.--The requirements of paragraph (1) shall 
        not be construed as prohibiting a mortgage lender, mortgage 
        broker, mortgage banker, real estate broker, or any other 
        person with an interest in a real estate transaction from 
        asking an appraiser to provide 1 or more of the following 
        services:
                    ``(A) Consider additional, appropriate property 
                information.
                    ``(B) Provide further detail, substantiation, or 
                explanation for the appraiser's value conclusion.
                    ``(C) Correct errors in the appraisal report.''.
    (i) Appraiser Education.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351) is amended by inserting after subsection (g) (as added by 
subsection (h) of this section) the following new subsection:
    ``(h) Approved Education.--A State certifying or licensing agency 
shall accept courses and seminars approved by the Appraiser 
Qualification Board's Course Approval Program.''.

SEC. 403. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND 
              COMPLIANCE PROGRAMS.

    (a) Study.--The Comptroller General shall conduct a comprehensive 
study on possible improvements in the appraisal process generally, and 
specifically on the consistency in and the effectiveness of, and 
possible improvements in, State compliance efforts and programs in 
accordance with title XI of Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989.
    (b) Report.--Before the end of the 18-month period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report on the study under subsection (a) to the Committee on 
Financial Services of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate, together with such 
recommendations for administrative or legislative action, at the 
Federal or State level, as the Comptroller General may determine to be 
appropriate.

               TITLE V--REQUIREMENTS FOR MORTGAGE BROKERS

              Subtitle A--Licensing and Minimum Standards

SEC. 501. STATE REGULATION OF MORTGAGE BROKERS.

    (a) In General.--The Federal mortgage broker requirements 
established pursuant to this title shall apply only with respect to 
States that, upon the expiration of the 3-year period beginning on the 
date of the enactment of this Act, have not enacted and do not have in 
effect uniform State laws and regulations described in subsection (b).
    (b) Uniform State Laws.--
            (1) In general.--Laws and regulations described in this 
        subsection are laws and regulations that--
                    (A) require licensing for mortgage brokers;
                    (B) require, as a condition of the issuance of a 
                license, that an applicant submit a written application 
                for a license;
                    (C) require, as a condition of the issuance of a 
                license, that an applicant complete at least 24 hours 
                of education on primary and subordinate mortgage 
                financing and pass a written examination upon the 
                completion of such training;
                    (D) require a criminal background check to be 
                performed on the applicant;
                    (E) establish minimum testing standards for 
                mortgage brokers;
                    (F) require continuing education of mortgage 
                brokers, including at least 12 hours of education on a 
                biennial basis, a minimum of 2 hours of which shall 
                address ethics education;
                    (G) require the public agency or official in the 
                State that is responsible for the licensing of mortgage 
                brokers to provide, directly or otherwise to the 
                national mortgage database established under subtitle 
                B, such information as may be necessary to ensure that 
                such database is effective for the purposes for which 
                it is established; and
                    (H) comply with such standards regarding uniformity 
                of information submitted to the national database of 
                mortgage brokers established under subtitle B as the 
                Secretary of Housing and Urban Development considers 
                necessary to facilitate the operation of the database.
            (2) Exemptions.--For purposes of this subsection, the term 
        ``mortgage broker'' has the meaning provided in section 503(3), 
        except that the laws and regulations of a State shall exempt 
        from treatment as mortgage brokers the following persons:
                    (A) Any bank, savings bank, savings and loan 
                association, or credit union organized under the laws 
                of a State or the United States, or a subsidiary or 
                affiliate of a bank, savings bank, savings and loan 
                association, or credit union.
                    (B) Any budget or debt counseling service, as 
                defined by the Secretary, that is a nonprofit 
                organization exempt from taxation under section 
                501(c)(3) of the Internal Revenue Code of 1986 (26 
                U.S.C. 501(c)(3)).
                    (C) Any consumer reporting agency that is in 
                substantial compliance with the Fair Credit Reporting 
                Act (15 U.S.C. 1681 et seq.).
                    (D) Any political subdivision, or any governmental 
                or other public entity, corporation, or agency, in or 
                of the United States or any State.
                    (E) Any college or university, or entity that is 
                controlled by a college or university, as determined by 
                the Secretary.
                    (F) Any person who--
                            (i) makes, services, buys, or sells 
                        mortgage loans;
                            (ii) underwrites the loans; and
                            (iii)(I) has been approved by the Secretary 
                        of Housing and Urban Development as a 
                        nonsupervised mortgagee with participation in 
                        the direct endorsement program, but not 
                        including a mortgagee approved as a loan 
                        correspondent;
                            (II) has been approved by the Federal 
                        National Mortgage Association as a seller or 
                        servicer;
                            (III) has been approved by the Federal Home 
                        Loan Mortgage Corporation as a seller or 
                        servicer;
                            (IV) has been approved by the Secretary of 
                        Veterans Affairs as a nonsupervised automatic 
                        lender, but not including a person approved by 
                        the Secretary as a nonsupervised lender, an 
                        agent of a nonsupervised automatic lender, or 
                        an agent of a nonsupervised lender; or
                            (V) is a creditor (as defined in section 
                        103(f) of the Truth in Lending Act) who makes 
                        or invests in residential real estate loans 
                        aggregating more than $1,000,000 per year, and 
                        irrespective of whether such creditor is 
                        licensed or supervised by an agency of a State.
                    (G) Any person created solely for the purpose of 
                packaging and selling, as a unit of sale as investment 
                securities, mortgage loans that are secured by an 
                interest in real estate, if the person does not service 
                the loans.
                    (H) Any officer or employee of any of the persons 
                described in a preceding subparagraph of this paragraph 
                while such officer or employee is acting within the the 
                scope of the office or employment.
    (c) Determination.--
            (1) HUD determination.--At the end of the 3-year period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall determine, in 
        consultation with the Federal banking agencies (as defined in 
        section 3 of the Federal Deposit Insurance Act) and the 
        National Credit Union Administration, whether the uniformity 
        necessary to comply with subsection (a) has been achieved.
            (2) Judicial review.--The appropriate United States 
        district court shall have exclusive jurisdiction over any 
        challenge to the determination pursuant to paragraph (1) and 
        such court shall apply the standards set forth in section 706 
        of title 5, United States Code, when reviewing any such 
        challenge.
    (d) Continued Application.--If, at any time, the Secretary 
determines that a State no longer has in effect laws and regulations 
described in subsection (a) or the uniformity necessary to comply with 
subsection (a) no longer exists with respect to a State, the Federal 
mortgage broker requirements shall take effect with respect to such 
State 2 years after the date on which such determination was made, 
unless the State has in effect such laws or regulations, or the 
uniformity necessary to comply with subsection (a) is satisfied, before 
the expiration of such 2-year period.
    (e) Monitoring.--The Secretary shall monitor the laws and 
regulations of the States governing the matters referred to in 
subsection (a) for purposes of making determinations under subsection 
(d).

SEC. 502. FEDERAL MORTGAGE BROKER REQUIREMENTS.

    (a) In General.--Not later than 3 years after the date of the 
enactment of this Act, the Secretary of Housing and Urban Development 
shall, by regulation and in consultation with the Federal banking 
agencies (as defined in section 3 of the Federal Deposit Insurance Act) 
and the National Credit Union Administration, establish Federal 
mortgage broker requirements under this section that meet the 
requirements established in section 501(b)(1).
    (b) Rulemaking.--The regulations required under subsection (a) 
shall be issued after notice and opportunity for public comment 
pursuant to the provisions of section 553 of title 5, United States 
Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of such 
section).

SEC. 503. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Buyer.--The term ``buyer'' means an individual who is 
        solicited to purchase, or who purchases, the services of a 
        mortgage broker for purposes other than obtaining a business 
        loan.
            (2) Mortgage.--The term ``mortgage'' means any indebtedness 
        secured by a deed of trust, security deed, or other lien on 
        real property.
            (3) Mortgage broker.--The term ``mortgage broker'' means a 
        person who engages for compensation, either directly or 
        indirectly, in the acceptance of applications for mortgage 
        loans for others, solicitation of mortgage loans on behalf of 
        borrowers, or negotiation of terms or conditions of loans on 
        behalf of borrowers or lenders.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.

           Subtitle B--Database of Licensed Mortgage Brokers

SEC. 511. ESTABLISHMENT.

    (a) In General.--The Secretary of Housing and Urban Development 
(hereafter in this subtitle referred to as the ``Secretary'') shall 
provide for the establishment and maintenance of a national database of 
mortgage brokers.
    (b) Administration.--The Secretary shall either maintain and 
administrate the database established under this subtitle or enter into 
a contract with a private regulatory organization to maintain and 
administrate the database. The Secretary shall consult with the 
American Association of Residential Mortgage Regulators, the Conference 
of State Bank Supervisors, and other appropriate organizations in 
determining the information to be maintained in the database and, if 
the Secretary provides for any other organization to maintain and 
administrate the database, in selecting such organization.
    (c) Competitively Procured Contract.--If the Secretary decides to 
select a private regulatory organization to maintain and administrate 
the database, the Secretary shall enter into any contract for 
administration of the database using competitive procedures (as such 
term is defined in section 4 of the Office of Federal Procurement 
Policy Act).
    (d) Performance Review.--The Secretary--
            (1) shall periodically review the performance of any 
        organization serving as administrator of the database; and
            (2) may replace any such other organization with another 
        qualified organization, pursuant to competitive procedures if 
        the Secretary determines in writing that the organization 
        serving as administrator is not fulfilling the terms of the 
        contract or upon the expiration of the contract.

SEC. 512. DATABASE.

    The national database of mortgage brokers maintained pursuant to 
this title shall--
            (1) include a listing of each person licensed under State 
        law or regulation or under Federal mortgage broker requirements 
        under section 502 to act as a mortgage broker;
            (2) make available to the public information regarding 
        complaints made, and final disciplinary and enforcement actions 
        taken, against each licensed mortgage broker;
            (3) make available to the Secretary of Housing and Urban 
        Development and to each public agency or official in a State 
        responsible for licensing or testing under the laws or 
        regulations referred to in section 501(b) such information 
        regarding mortgage brokers as the Secretary, by regulation, 
        considers appropriate for the Secretary and such agencies and 
        officials to carry out their functions regarding regulation, 
        licensing, or testing of mortgage brokers, including 
        information regarding employment histories and criminal 
        backgrounds of mortgage brokers;
            (4) make available to persons employing or using the 
        services of mortgage brokers such information regarding 
        mortgage brokers as the Secretary, by regulation, considers 
        appropriate; and
            (5) provide for the maintenance of such other information 
        as the Secretary considers appropriate.

SEC. 513. FEES.

    The Secretary may provide for the national database of mortgage 
brokers to charge reasonable fees to cover costs of maintaining and 
providing access to information from the database to the extent such 
fees are not charged to the general public.

SEC. 514. CONFIDENTIALITY OF INFORMATION.

    (a) In General.--
            (1) Database.--Except as otherwise provided in this 
        section, any requirement under Federal or State law regarding 
        the privacy or confidentiality of any information or material 
        in the possession of the Secretary or any other organization 
        serving as the administrator of the database, and any privilege 
        arising under Federal or State law (including the rules of any 
        Federal or State court) with respect to such information or 
        material, shall continue to apply to such information or 
        material after the information or material has been disclosed 
        to the database.
            (2) Nonapplicability of certain requirements.--Information 
        or material that is subject to a privilege or confidentiality 
        under any other paragraph of this subsection shall not be 
        subject to--
                    (A) disclosure under any Federal or State law 
                governing the disclosure to the public of information 
                held by an officer or an agency of the Federal 
                Government or the respective State; or
                    (B) subpoena or discovery, or admission into 
                evidence, in any private civil action or administrative 
                process,
        unless with respect to any privilege held by the Secretary with 
        respect to such information or material, the participant 
        waives, in whole or in part, in the discretion of the 
        participant, such privilege.
    (b) Preemption of State Law.--Any State law, including any State 
open record law, relating to the disclosure of confidential supervisory 
information or any information or material described in subsection (a) 
that is inconsistent with subsection (a) shall be superseded by the 
requirements of such provision to the extent State law provides less 
confidentiality or a weaker privilege.

SEC. 515. LIABILITY PROVISIONS.

    (a) No Liability for Good-Faith Disclosures.--Any State official or 
agency, or employee thereof, shall not be subject to any civil action 
or proceeding for monetary damages by reason of the good-faith action 
or omission of any officer or employee, while acting within the scope 
of office or employment, relating to collecting, furnishing, or 
disseminating of information concerning persons who are mortgage 
brokers or are applying for licensing as mortgage brokers, whether 
directly or through the national database established under this 
subtitle.
    (b) Criminal Liability for Intentional Unlawful Disclosures.--
            (1) In general.--It shall be unlawful to willfully disclose 
        to any person any information concerning any person who is a 
        mortgage broker or is applying for licensing as a mortgage 
        broker knowing the disclosure to be in violation of any 
        provision of this title--
                    (A) requiring the confidentiality of such 
                information; or
                    (B) establishing a privilege from disclosure for 
                such information that has not been waived by the 
                Secretary and the person who is a mortgage broker or is 
                applying for licensing as a mortgage broker.
            (2) Penalty.--Notwithstanding section 3571 of title 18, 
        United States Code, any person who violates paragraph (1) shall 
        be fined an amount not to exceed the greater of $100,000 or the 
        amount of the actual damages sustained by any person as a 
        result of such violation, or imprisoned not more than 5 years, 
        or both.
    (c) Full, Continued Protection Under the So-Called ``Federal Tort 
Claims Act''.--No provision of this Act shall be construed as reducing 
or limiting any protection provided for any Federal agency, or any 
officer or employee of any Federal agency, under section 2679 of title 
28, United States Code.
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