[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4471 Introduced in House (IH)]


109th CONGRESS
  1st Session
                                H. R. 4471

To amend the Home Ownership and Equity Protection Act of 1994 and other 
  sections of the Truth in Lending Act, so as to enact the ``Fair and 
 Responsible Lending Act;'' to provide for definitions; to provide for 
prohibited practices and limitations relating to high-cost home loans; 
 to provide for prohibited practices and limitations relating to home 
   loans; to provide for penalties and remedies and enforcement; to 
provide for corrections of certain unintentional violations; to provide 
 for coordination with state laws; to provide for related matters; to 
    provide for consumer counseling requirements; to expand housing 
           counseling opportunities; and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 8, 2005

   Mr. Clay introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To amend the Home Ownership and Equity Protection Act of 1994 and other 
  sections of the Truth in Lending Act, so as to enact the ``Fair and 
 Responsible Lending Act;'' to provide for definitions; to provide for 
prohibited practices and limitations relating to high-cost home loans; 
 to provide for prohibited practices and limitations relating to home 
   loans; to provide for penalties and remedies and enforcement; to 
provide for corrections of certain unintentional violations; to provide 
 for coordination with state laws; to provide for related matters; to 
    provide for consumer counseling requirements; to expand housing 
           counseling opportunities; 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 ``Fair and Responsible Lending Act.''.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.
Sec. 2. Table of contents.
                     TITLE I--HIGH-COST HOME LOANS

Sec. 101. Short title.
Sec. 102. Definitions relating to high-cost home loans.
Sec. 103. Amendments to requirements for high-cost home loans.
Sec. 104. Amendments relating to dispute and error resolution.
Sec. 105. Amendments to damages, rescission, liability, and rescission 
                            provisions.
Sec. 106. Coordination with State law.
Sec. 107. Clarification of State enforcement authority.
Sec. 108. Requirements for Home Loans.
Sec. 109. Amendments to Disclosure Guidelines.
Sec. 110. Regulations.
Sec. 111. 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 I--HIGH-COST LOANS

SEC. 101. SHORT TITLE.

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

SEC. 102. DEFINITIONS RELATING TO HIGH-COST HOME LOANS.

    (a) High-Cost Home Loans 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) High-Cost Home Loan Defined.--
            ``(1) In general.--The term `high-cost home loan' means 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 $50,000 and 
                total points and fees payable on the transaction will 
                exceed 5 percent of the total loan amount.
                    ``(D) The total loan amount is $50,000 or less and 
                total points and fees payable on the transaction will 
                exceed 7 percent of the total loan amount.
                    ``(E) For purposes of computing the annual 
                percentage rate for this subsection, introductory rate 
                shall be not taken into account.''; and
            (2) in paragraph (2)(B)(i), by striking ``that'' and 
        inserting ``than''.
    (b) Points and Fees Defined.--
            (1) In general.--Section 103(aa) of the Truth in Lending 
        Act (15 U.S.C. 1602(aa)) is amended--
                    (A) by striking paragraph (3);
                    (B) 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;
                            ``(iii) all compensation paid indirectly by 
                        a creditor to mortgage brokers, provided, 
                        however, indirect compensation not in excess of 
                        2 percent of the total loan amount may be 
                        excluded if the new loan does not refinance a 
                        previous loan that was consummated within the 
                        prior 12 months and that was originated by the 
                        same creditor;
                            ``(iv) 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, and 
                                reasonable;
                                    ``(II) the creditor receives no 
                                direct compensation; and
                                    ``(III) the charge is paid to a 
                                third party that is not under the 
                                control of or controlled by the 
                                creditor; and
                            ``(v) all prepayment fees or penalties that 
                        are incurred by the consumer on the previous 
                        loan if the new loan refinances a previous loan 
                        currently held by the same creditor or an 
                        affiliate of the creditor, unless the loan is 
                        held in a fiduciary or servicing capacity 
                        only.''.
            (2) Calculation of points and fees for open-end loans.--
        Section 103(aa) of the Truth in Lending Act (15 U.S.C. 
        1602(aa)) is amended--
                    (A) by redesignating paragraph (5) as paragraph 
                (6); and
                    (B) by inserting after paragraph (3), as amended by 
                paragraph (1) above, the following new paragraph:
            ``(4) Calculation of points and fees for open-end loans.--
        In the case of open-end loans, points and fees shall be 
        calculated, for purposes of this section and section 129, by 
        adding the total points and fees known at or before closing, 
        plus the minimum additional fees the consumer would be required 
        to pay to draw down an amount equal to the total credit 
        line.''.
            (3) Exclusion of bona fide discount points.--Section 
        103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) is 
        amended by inserting after paragraph (4), as amended by 
        paragraph (2) above, the following new paragraph:
            ``(5) Exclusion of bona fide discount points.--
                    ``(A) In general.--Not more than 2 bona fide loan 
                discount points shall be excluded from determining the 
                amounts of points and fees with respect to a high-cost 
                home loan for purposes of subsection (aa), but only if 
                the interest rate from which the loan's interest rate 
                will be discounted does not exceed by more than 3 
                percentage points the required net yield for a 90-day 
                standard mandatory delivery commitment for a reasonably 
                comparable loan from either the Federal National 
                Mortgage Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater.
                    ``(B) Definition.--For purposes of paragraph (1), 
                the term `bona fide discount points' means loan 
                discount points which are knowingly paid by the 
                consumer to a creditor for the purpose of reducing, and 
                which in fact result in a bona fide reduction of, the 
                interest rate or time-price differential applicable to 
                the loan.
                    ``(C) Exception for interest rate reductions 
                inconsistent with industry norms.--Paragraph (1) shall 
                not apply to discount points used to purchase an 
                interest rate reduction unless the amount of the 
                interest rate reduction purchased is reasonably 
                consistent with established industry norms and 
                practices for secondary mortgage market 
                transactions.''.
    (c) Home Loan Defined.--Section 103 of the Truth in Lending Act (15 
U.S.C. 1602) is amended by adding at the end the following subsection:
    ``(cc) the term `home loan' means any consumer credit transaction 
that is secured by a dwelling that is, or upon the consummation of the 
transaction is intended to be, occupied by the consumer as his 
principal dwelling.''.
    (d) Technical and Conforming Amendment.--
            (1) 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)''.
            (2) Subchapter I of chapter 41 of title 15 of the United 
        States Code is amended by striking ``a mortgage referred to in 
        this subsection'' and ``a mortgage referred to in section 
129(aa)'' each place such term appears and inserting ``a high-cost home 
loan'' in lieu thereof.
            (3) The title of section 129 of the Truth in Lending Act 
        (15 U.S.C. 1639) is amended by striking ``Requirements for 
        Certain Mortgages'' and inserting ``Requirements for High-Cost 
        Home Loans''.

SEC. 103. AMENDMENTS TO REQUIREMENTS FOR HIGH-COST HOME LOANS.

    (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.--Subsection (e) of section 129 of the Truth 
in Lending Act (15 U.S.C. 1639(e)) is amended--
            (1) by striking ``Payments.--A mortgage referred to in 
        section 103(aa) of this title'' and inserting ``Payments.--
            ``(1) In general.--A high-cost home loan'';
            (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--
                            ``(i) when the payment schedule is adjusted 
                        to account for the seasonal or irregular income 
                        of the consumer;
                            ``(ii) if the purpose of the loan is a 
                        bridge loan; or
                            ``(iii) if the unamortized amount is the 
                        result of the creditor's deferral of the 
                        consumer's delinquent payments and fees 
                        relating to delinquent payments.
                    ``(B) Bridge loan defined.--For purposes of this 
                subsection, the term `bridge loan' means a loan that--
                            ``(i) has a period to maturity of 12 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 high-cost 
        home loan 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) of this title'' and inserting ``Amortization.--
            ``(1) In general.--A high-cost home loan''; 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.--No creditor may 
directly or indirectly finance, in connection with any high-cost home 
loan, any of the following:
            ``(1) Any prepayment fee or penalty payable by the consumer 
        in a refinancing transaction if the creditor or an affiliate of 
        the creditor is the holder of the note being refinanced in 
        other than a fiduciary or servicing capacity.
            ``(2) Any points or fees in excess of 3 percent of the 
        total loan amount.''.
    (e) Prohibition on Evasions.--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.--A creditor may not take any action 
in connection with a high-cost home loan with the intent of evading 
provisions of this title.''.
    (f) No Encouragement of Default 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.--No creditor shall recommend or 
encourage default on an existing loan or other debt prior to and in 
connection with the closing or planned closing of a high-cost home loan 
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:
            ``(1) In general.--A creditor may not extend credit to a 
        consumer under a high-cost home loan unless a reasonable 
        creditor would believe at the time the loan is closed that the 
        consumer or consumers that are residing or will reside in the 
        dwelling subject to the loan will be able to make the scheduled 
        payments associated with the loan, based upon a consideration 
        of the consumers' current and expected income, current 
        obligations, employment status, and other financial resources, 
        other than equity in the dwelling.
            ``(2) Presumption of ability.--For purposes of this 
        subsection, there shall be a rebuttable presumption that a 
        consumer is able to make the scheduled payments to repay the 
        obligation if, at the time the extension of credit is approved, 
        the consumer's total monthly debts due on outstanding 
        obligations, including amounts under the high-cost home loan, 
        do not exceed 50 percent of his or her monthly gross income as 
        verified by: (a) the consumer's credit application and a credit 
        report; and (b) tax returns, payroll receipts, or other third-
        party income verification.''.
    (h) Limitations on Refinancing.--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) Limitations on Refinancing.--
            ``(1) In general.--No creditor shall knowingly or 
        intentionally engage in the unfair act or practice of loan 
        flipping.
            ``(2) Flipping defined.--For purposes of this subsection, 
        the term `loan flipping' means the making of a high-cost home 
        loan to a consumer which refinances an existing home loan that 
        was consummated within the prior 36 months when the new high-
        cost home loan does not have a reasonable tangible net benefit 
        to the consumer, considering all of the material circumstances 
        known to the creditor, including but not limited to, the terms 
        of both the new and the refinanced loans or credit, the cost of 
        the new loan or credit, and the consumer's known economic and 
        non-economic circumstances, the consumer's stated purpose of 
        and desire for the loan, and the benefits the consumer states 
        that he or she will receive from the refinancing.
            ``(3) Safe harbors.--A high-cost home loan shall be 
        presumed to provide a reasonable tangible net benefit to the 
        consumer if any of the following factors applies to the new 
        loan:
                    ``(A) The interest rate on the new fixed-rate high-
                cost home loan 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 high-cost home loan 
                through savings resulting from the lower interest rate.
                    ``(B) The creditor makes a good-faith determination 
                that the consumer's monthly payment of principal and 
                interest required to be paid on the new high-cost home 
                loan is a minimum of 15 percent less than the 
                consolidated total of all minimum monthly payments on 
                the obligations being financed, 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 high-
                cost home loan through savings resulting from the total 
                reduction in payments.
                    ``(C) The consumer provides written confirmation to 
                the creditor from an independent housing or credit 
                counselor approved by the United States Department of 
                Housing and Urban Development, or by any State housing 
                authority, which states that the consumer has received 
                counseling regarding the advisability of refinancing 
                the existing loan with the high-cost home loan being 
                offered to the consumer by the creditor.
                    ``(D) The refinancing is necessary under, or in 
                response to, any order or judgment of a court of 
                competent jurisdiction, or to avoid a filed foreclosure 
                action.
            ``(4) 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 high-
        cost home loan so as to create a presumption of a violation of 
        this subsection with regard to such high-cost home loan by 
        reason of such absence.
            ``(5) Limitation.--Notwithstanding section 130 or any other 
        provision of law, any suit instituted by a consumer who alleges 
        that a creditor violated this section shall be brought only in 
        an individual action, and the presiding judge may, in the 
        judge's discretion, allow reasonable attorneys' fees to be 
        taxed as a part of the court costs and payable by the losing 
        party, upon a finding by the court that:
                    ``(A) The party charged with the violation has 
                willfully engaged in the act or practice, and there was 
                an unwarranted refusal by such party to fully resolve 
                the matter which constitutes the basis of such suit; or
                    ``(B) The party instituting the action knew, or 
                should have known, that the action was frivolous and 
                malicious.
            ``(6) Regulations.--The Board may, by regulation or order, 
        add to, delete, or modify the factors listed in paragraph (3) 
        of this subsection.''.
    (i) No Call Provision.--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) No Call Provision.--No high-cost home loan may contain a 
provision which permits the creditor, in its sole discretion, to 
accelerate the indebtedness. This provision shall not apply when 
repayment of the loan has been accelerated by default, pursuant to a 
due-on-sale provision, pursuant to a material violation of some other 
provision of the loan documents unrelated to the payment schedule, or 
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.''.
    (j) Modification and Deferral Fees Prohibited.--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) Modification and Deferral Fees Prohibited.--
            ``(1) In general.--A creditor may not charge a consumer any 
        fee to modify, renew, extend, or amend a high-cost home loan, 
        or to defer any payment due under the terms of such loan, 
        unless the modification, renewal, extension or amendment 
        results in a lower annual percentage rate on the loan for the 
        consumer and then only if the amount of the fee is comparable 
        to fees imposed for similar transactions in connection with 
        consumer credit transactions that are secured by a consumer's 
        principal dwelling and are not high-cost home loans.
            ``(2) Exception for certain workouts.--The restrictions in 
        paragraph (1) shall not apply in the case of an existing high-
        cost home loan 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.''.
    (k) 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 (s) (as added by subsection (j) of this section) the 
following new subsection:
    ``(t) Increased Interest Rate Upon Default Permitted for Variable-
Rate High-Cost Home Loan.--In the case of a high-cost home loan 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.''.
    (l) 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 
high-cost home loan may include terms under which more than 2 scheduled 
payments of interest or principal due under such loan may be paid in 
advance or otherwise deducted from the proceeds of the loan.''.
    (m) Payoff Statements.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (t) (as added by 
subsection (k) of this section) the following new subsection:
    ``(u) Payoff Statements.--
            ``(1) Fees.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), no creditor or servicer may charge a 
                fee for informing or transmitting to any person the 
                balance due to pay off the outstanding balance on a 
                high-cost home loan.
                    ``(B) Transaction fee.--When payoff information 
                referred to in subparagraph (A) is provided by 
                facsimile or electronic transmission, courier service 
                or other expedited means, a creditor or servicer may 
                charge a processing fee to cover the cost of such 
                transmission or service in an amount not to exceed an 
                amount that is comparable to fees imposed for similar 
                services provided in connection with consumer credit 
                transactions that are secured by the consumer's 
                principal dwelling and are not high-cost home loans.
                    ``(C) Fee disclosure.--Prior to charging a 
                transaction fee as provided in subparagraph (B), a 
                creditor or servicer shall disclose that payoff 
                balances are available for free pursuant to 
                subparagraph (A).
                    ``(D) Multiple requests.--If a creditor or servicer 
                has provided payoff information referred to in 
                subparagraph (A) without charge, other than the 
                transaction fee allowed by subparagraph (B), on 4 
                occasions during a calendar year, the creditor or 
                servicer may thereafter charge a reasonable fee for 
                providing such information during the remainder of the 
                calendar year.
            ``(2) Prompt delivery.--Payoff balances shall be provided 
        within a reasonable time but in any event no more than 10 
        business days after receiving a written request by a consumer 
        or a person authorized by the consumer to obtain such 
        information.''.
    (n) Discretionary Regulatory Authority of the Board.--Subsection 
(l) of section 129 of the Truth in Lending Act (15 U.S.C. 1639(l)) is 
amended--
            (1) by striking paragraph (2) and inserting the following 
        new paragraphs:
            ``(2) The Board, by regulation or order, shall prohibit 
        acts or practices in connection with--
                    ``(A) mortgage loans that the Board finds to be 
                unfair, deceptive, abusive, or designed to evade the 
                provisions of this section; and
                    ``(B) mortgage loans that the Board finds to be 
                associated with abusive lending practices, or that are 
                otherwise not in the interest of the borrower.
            ``(3) Notwithstanding paragraph (2), the Board shall not 
        have authority to adjust or modify the definitions contained in 
        section 103(aa) (15 U.S.C. 1602(aa)) of this title.
            ``(4) On a biannual basis, the Board shall hold a hearing 
        to solicit and consider input and recommendations from State 
        Attorneys General and other interested parties on whether new 
        regulations should be prescribed, or new legislation passed to 
        prevent further acts and practices in connection with mortgage 
        loans that are abusive or otherwise not in the interest of the 
        borrower.''.

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 high-cost home loan may not include 
        terms which require arbitration or any other nonjudicial 
        procedure as the method for resolving any controversy or 
        settling any claims arising out of the transaction.
            ``(2) Post-controversy agreements.--Subject to paragraph 
        (3), paragraph (1) shall not be construed as limiting the right 
        of the consumer and the creditor to agree to arbitration or any 
        other nonjudicial procedure as the method for resolving any 
        controversy at any time after a dispute or claim under the 
        transaction arises.
            ``(3) No waiver of statutory cause of action.--No provision 
        of any high-cost home loan and no other pre-controversy 
        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, provided that this section does not prohibit a 
        creditor from requiring a consumer to waive or release such 
        rights in connection with the settlement of a dispute.''.
    (b) Correction of Errors.--Section 130 of the Truth in Lending Act 
(15 U.S.C. 1640) is amended--
            (1) by redesignating subsections (d) through (i) as 
        subsections (e) through (j);
            (2) by adding the following sentence at the end of 
        subsection (b): ``This section does not apply to violations of 
        section 129 or section 129A.'';
            (3) by adding the following sentence at the end of 
        subsection (c): ``This section does not apply to violations of 
        section 129 or section 129A.''; and
            (4) by inserting the following new subsection (d):
    ``(d) Correction of Violations of Requirements for High-Cost Home 
Loans and Home Loans.--
            ``(1) In general.--A creditor or assignee shall have no 
        liability under this section or section 108, 112, or 125 for 
        any failure to comply with any requirement imposed under 
        section 129 or 129A, except for knowing or intentional 
        violations, 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 high-cost 
        home loan, 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 high-cost home loan 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) Consumer rescission right unaffected.--This section 
        does not affect a consumer's right to rescind the transaction 
        in accordance with section 125.
            ``(5) 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.''.
    (b) 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 section 
129 and 129A, the Board''.

SEC. 105. AMENDMENTS TO DAMAGES, LIABILITY, AND RESCISSION 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) by redesignating paragraph (2)(A)(iii) as paragraph 
        (2)(A)(iii)(I);
            (2) by inserting ``or'' at the end of paragraph 
        (2)(A)(iii)(I);
            (3) by inserting at the end the following:
                                    ``(II) in the case of an individual 
                                action relating to violations of 
                                sections 129 or 129A, not less than 
                                $500 or greater than $5,000'';
            (4) by redesignating paragraph (2)(B) as paragraph 
        (2)(B)(i);
            (5) by inserting ``or'' at the end of paragraph (2)(B)(i); 
        and
            (6) by inserting at the end the following:
                            ``(ii) in the case of a class action 
                        relating to violations of sections 129 or 129A, 
                        such amount as the court may allow, except that 
                        as to each member of the class no minimum 
                        recovery shall be applicable, and the total 
                        recovery under this subparagraph in any class 
                        action or series of class actions arising out 
                        of the same failure to comply by the same 
                        creditor shall not be more than the lesser of 
                        $1,500,000 or 1 per centum of the net worth of 
                        the creditor.''.
    (b) Class-Actions Relating to High-Cost Home Loans.--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 High-Cost Home Loans; Knowing or 
Intentional Violations.--In determining the amount of any liability of 
any person under subsection (a)(2)(B)(ii) for violations of section 129 
in a class action, the court shall consider whether the person 
knowingly or intentionally violated this part.''.
    (c) 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 first 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 or 129A 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.''.
    (d) 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 
        ``high-cost home loan''.
            (2) Rights upon assignment of high-cost home loans.--
        Section 131(d) of the Truth in Lending Act (15 U.S.C. 1641(d)) 
        is amended by striking paragraph (1) and inserting the 
        following new paragraph:
            ``(1) In general.--A borrower acting only in an individual 
        capacity may assert affirmative claims and any defenses with 
        respect to a high-cost home loan against any subsequent holder 
        or assignee of the high-cost home loan that the borrower could 
        assert against the original lender or broker of the loan, 
        provided that this paragraph shall not apply if the purchaser 
        or assignee demonstrates by a preponderance of the evidence 
        that it:
                    ``(A) has in place at the time of the purchase or 
                assignment of the subject loan policies that expressly 
                prohibit its purchase or acceptance of assignment of 
                any high-cost home loans;
                    ``(B) requires by contract that a seller or 
                assignor of home loans represents and warrants to the 
                purchaser or assignee that either--
                            ``(i) the seller or assignor will not sell 
                        or assign any high-cost home loans to the 
                        purchaser or assignee; or
                            ``(ii) that the seller or assignor is a 
                        beneficiary of a representation and warranty 
                        from a previous seller or assignor to that 
                        effect; and
                    ``(C) exercises reasonable due diligence at the 
                time of purchase or assignment of home loans or within 
                a reasonable period of time after the purchase or 
                assignment of the home loans, intended by the purchaser 
                or assignee to prevent the purchaser or assignee from 
                purchasing or taking assignment of any high-cost home 
                loans: Provided, however, That reasonable due diligence 
                may provide for sampling and shall not require loan by 
                loan review.''.
    (e) Conforming Amendment Concerning Consumer's Right To Rescind in 
Steering Cases.--Section 125(b) of the Truth in Lending Act (15 U.S.C. 
1635(b)) is amended in the first sentence by inserting ``or subsection 
(d) of section 129A'' after ``subsection (a) of this section''.

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) Home Loans and High-Cost Home Loans.--
            ``(1) In general.--The provisions of this title shall 
        supersede any provision of the law of any State, whether 
        enacted before, on, or after the effective date of this Act, 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 rate limitation, 
                including--
                            ``(i) 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, including data collection, 
                or any limitation, or prohibition pertaining to--
                            ``(i) unfair, deceptive or abusive mortgage 
                        lending practices, or
                            ``(ii) the subject matters contained in 
                        sections 129 and 129A,
                regardless of whether the consumer credit transaction 
                subject to such requirement, limitation, or prohibition 
                is a home loan or high-cost home loan.
            ``(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 
                principal 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) Rate limitation.--The term `rate 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 principal 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 high cost home loan.
            ``(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, but not be limited to, any law of any 
        State that directly or indirectly--
                    ``(A) limits a creditor's ability to extend to a 
                consumer new consumer credit secured by a consumer's 
                principal dwelling;
                    ``(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 principal 
dwelling in respect of a consumer's default under the related mortgage 
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 home loan or high cost home loan.
          ``(4) Exclusions.--The following laws are expressly excluded 
        from the preemption established under paragraph (1):
                    ``(A) Any law of any State prohibiting a creditor 
                or broker from discriminating against any person in 
                making available a consumer credit transaction that is 
                secured by the consumer's principal dwelling because of 
                race, creed, color, religion, age, sex, handicap, 
                marital status, familial status, or national origin. 
                For the purpose of this section, the term 
                `discriminating' means engaging in any of the following 
                acts in a manner that is arbitrary or unsupported by a 
                reasonable analysis of the lending risks associated 
                with a particular consumer credit transaction:
                            ``(i) failing to provide information or 
                        services or providing different information or 
                        services regarding any aspect of the mortgage 
                        lending process, including credit availability, 
                        application procedures, or mortgage lending 
                        standards;
                            ``(ii) discouraging or selectively 
                        encouraging consumer credit transaction 
                        applicant with respect to inquiries about or 
                        applications for consumer credit;
                            ``(iii) refusing to extend consumer credit 
                        card or using different standards in 
                        determining whether to extend consumer credit;
                            ``(iv) varying the terms of consumer credit 
                        offered, including the amount, interest rate, 
                        duration, type, or other terms term or 
                        condition of loan;
                            ``(v) using different standards to evaluate 
                        collateral; and
                            ``(vi) treating a consumer differently in 
                        servicing a loan or in invoking default 
                        remedies.
                    ``(B) 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 principal 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;
                    ``(C) 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);
                    ``(D) General contract and commercial law to the 
                extent that such law is not otherwise preempted under 
                paragraphs (1), (2), and (3);
                    ``(E) Torts to the extent that such law is not 
                otherwise preempted under paragraphs (1), (2), and (3);
                    ``(F) Real property law to the extent that such law 
                is not otherwise preempted under paragraphs (1), (2), 
                and (3);
                    ``(G) Tax law to the extent that such law is not 
                otherwise preempted under paragraphs (1), (2), and (3); 
                and
                    ``(H) Criminal law to the extent that such law is 
                not otherwise preempted under paragraphs (1), (2), and 
                (3).
            ``(5) Prompt determination by board of governors.--
                    ``(A) In general.--In response to a bona fide 
                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.
            ``(6) Effect on preemption by other federal laws.--Nothing 
        in this subsection shall narrow or limit the extent to which 
        another provision of Federal law preempts or validates any 
        State law to the extent such State law would be preempted or 
        validated in the absence of this subsection.
            ``(7) Prohibition on evasion.--No State or any political 
        subdivision of a State shall regulate mortgage lending 
        activities with the intent to circumvent or evade the 
        provisions of this title, or in a manner which has the effect 
        of circumventing or evading the provisions of this title.''.
            (2) in subsection (a)(1), by striking the first sentence 
        and inserting the following new sentence: ``Except as provided 
        in subsections (3) 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 first place 
                such terms appears and inserting ``subsection (f) and 
                sections 129 and 129A''; and
                    (B) by inserting ``, or 129A'' after ``section 
                129'' each place such term appears after the first 
                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. REQUIREMENTS FOR HOME LOANS.

    (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. Requirements for home loans
    ``(a) Restrictions on Prepayment Penalties.--Except as otherwise 
provided by this title, any home loan 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 solely 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, or in the case of an 
                adjustable rate mortgage (ARM) where the first rate 
                adjustment date is earlier than the end of such 36-
                month period, after the adjustment date;
                    ``(C) the consumer is offered a choice of another 
                similar loan without a prepayment penalty and is 
                advised of the lower rate or other financial 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 2\1/2\ percent of the original principal amount 
                of the loan.
    ``(b) Single Premium Credit Insurance Prohibited.--
            ``(1) In general.--No creditor may finance, directly or 
        indirectly, in connection with any home loan, any credit life, 
        credit disability, credit unemployment or credit property 
        insurance, or any other credit insurance, or any payments 
        directly or indirectly for any debt cancellation or suspension 
        agreement or contract, except that insurance premiums or debt 
        cancellation or suspension fees calculated and paid in full on 
        a monthly basis shall not be considered financed by the 
        creditor.
            ``(2) 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.
    ``(c) Late Fees Prohibited.--
            ``(1) In general.--Except as otherwise provided by this 
        title, any home loan may contain 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.''.
            ``(2) Limitations.--If a payment is otherwise a full 
        payment for the applicable period and is paid on its due date 
        or within an applicable grace period, and the only delinquency 
        or insufficiency of payment is attributable to any late fee or 
        delinquency charge assessed on any earlier payment, no late fee 
        or delinquency charge may be imposed on such payment.
    ``(d) Steering Prohibited.--
            ``(1) Creditors.--
                    ``(A) In general.--A creditor who originates a home 
                loan shall not knowingly or intentionally steer or 
                direct a consumer to accept a home loan with a risk 
                grade less favorable than the risk grade that the 
                consumer would qualify for based on the then-current 
                underwriting guidelines of the creditor or its 
                affiliates, considering the information known to that 
                creditor, including, but not limited to, the consumer's 
                stated objectives and other information provided by the 
                consumer.
                    ``(B) Exception.--A creditor does not violate this 
                section by offering the consumer a home loan for which 
                the price (including the rate) or the risk grade is 
                based on the particular origination channel used by the 
                consumer (e.g., internet, retail, broker, or 
                correspondent), even if the consumer might get a lower 
                price or a lower risk grade had the consumer used a 
                different origination channel of that creditor.
                    ``(C) Definition.--For purposes of this section, 
                the term `risk grade' means the creditor's 
                determination of the risk involved in making the home 
                loan, considering both the credit risk related to the 
                consumer and the risk related to the specific loan 
                product.
                    ``(D) 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 in 
                                accordance with the procedures 
                                contained in section 125(b) and 125(f); 
                                or
                                    ``(II) rewrite the loan into a loan 
                                at the risk grade and pricing that the 
                                consumer would have originally received 
                                but for the violation.
                            ``(ii) Restitution.--In addition to the 
                        action required under clause (i)(II) 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 risk grade.
            ``(2) Brokers.--
                    ``(A) In general.--A broker who is not a creditor 
                shall not knowingly or intentionally steer or direct a 
                consumer to accept a home loan offered by a creditor 
                with a risk grade that is less favorable than the risk 
                grade that the consumer would qualify for on a home 
                loan offered by the creditors or their affiliates with 
                whom the broker regularly does business and for which 
                the consumer would qualify for based on the then-
                current underwriting guidelines of such creditors or 
                their affiliates.
                    ``(B) Creditor liability.--A creditor shall have no 
                liability under subparagraph (2) unless the creditor 
                had actual knowledge of the broker's violation.
                    ``(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 $5,000 
                and the consumer's actual financial damages and 
                reasonable attorney's fees and court costs.
    ``(e) Credit Reporting Requirements.--
            ``(1) In general.--Each creditor who enters into a home 
        loan, and each successor, assignee or servicer to such creditor 
        with respect to such loan 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 home loan 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 settlement of a dispute or 
        consumer complaint.
            ``(4) Regulations.--The Board may, by regulation or order, 
        exempt from or defer reporting by other entities not listed in 
        paragraph (2), and exempt or defer reporting under other 
        circumstances not listed in paragraph (3).''.
    (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. Requirements for Home Loans.''.

SEC. 109. AMENDMENTS TO DISCLOSURE GUIDELINES.

    Section 105 of the Truth in Lending Act (15 U.S.C. 1604) is amended 
by striking paragraph (a) and inserting the following new paragraph:
    ``(a) The Board shall prescribe regulations to carry out the 
purposes of this title. These regulations may contain such 
classifications, differentiations, or other provisions, and may provide 
for such adjustments and exceptions for any class of transactions, as 
in the judgment of the Board are necessary or proper to effectuate the 
purposes of this title, to prevent circumvention or evasion thereof, or 
to facilitate compliance therewith.''.

SEC. 110. 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 6-month period beginning on the 
        date of the enactment of this Act.

SEC. 111. EFFECTIVE DATES.

    (a) In General.--This title, and the amendments made by this title, 
shall take effect at the end of the 6-month period beginning on the 
date of the enactment of this Act.
    (b) Pending Applications.--This title, and the amendments made by 
this title, shall not apply with respect to applications for consumer 
credit transactions received prior to 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 
byinserting 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 high-cost home loan 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 high-cost home loan; 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 high-cost home 
                        loan transaction; and
                            ``(ii) the appropriateness of a high-cost 
                        home loan 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, 1701 w(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 met 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 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 primary 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 collected 
        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) 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).
            ``(6) No private right of action.--This subsection shall 
        not create any private right of action on behalf of the 
        borrower.
            ``(7) 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).''.
                                 <all>