[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3012 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3012

 To amend the Truth in Lending Act to provide for the establishment of 
   fair mortgage practices, generally, and for subprime mortgages in 
     particular, to provide for a national system for licensing or 
   registering residential mortgage loan originators, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 12, 2007

 Mr. Bachus (for himself, Mr. Gillmor, Ms. Pryce of Ohio, Mr. Gary G. 
  Miller of California, and Mr. LaTourette) introduced the following 
bill; which was referred to the Committee on Financial Services, and in 
    addition to the Committee on the Judiciary, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Truth in Lending Act to provide for the establishment of 
   fair mortgage practices, generally, and for subprime mortgages in 
     particular, to provide for a national system for licensing or 
   registering residential mortgage loan originators, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Fair Mortgage 
Practices Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition.
   TITLE I--LICENSING SYSTEM OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS

Sec. 101. Purposes and methods for establishing a mortgage licensing 
                            system.
Sec. 102. Definitions.
Sec. 103. License or registration required.
Sec. 104. License and registration application and issuance.
Sec. 105. Standards for license renewal.
Sec. 106. System of registration administration by Federal banking 
                            agencies.
Sec. 107. Secretary of housing and urban development backup authority 
                            to establish a loan originator licensing 
                            system.
Sec. 108. System for State-licensed loan originators.
Sec. 109. Fees.
Sec. 110. Mortgage professional background checks.
Sec. 111. Confidentiality of information.
Sec. 112. Liability provisions.
                    TITLE II--SIMPLIFIED DISCLOSURES

Sec. 201. Basic mortgage facts.
                     TITLE III--HOUSING COUNSELING

                    Subtitle A--Consumer Counseling

Sec. 301. Consumer counseling requirements.
         Subtitle B--Expanded Housing Counseling Opportunities

Sec. 311. Short title.
Sec. 312. Establishment of Office of Housing Counseling.
Sec. 313. Counseling procedures.
Sec. 314. Grants for housing counseling assistance.
Sec. 315. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 316. Study of defaults and foreclosures.
Sec. 317. Definitions for counseling-related programs.
Sec. 318. Updating and simplification of mortgage information booklet.
               TITLE IV--PROHIBITION ON ABUSIVE PRACTICES

                     Subtitle A--Mortgage Servicing

Sec. 401. Escrow and impound accounts relating to certain consumer 
                            credit transactions.
Sec. 402. Disclosure notice required for consumers who opt out of 
                            escrow services.
             Subtitle B--Nontraditional Mortgage Provisions

Sec. 411. Prepayment penalties.
Sec. 412. Ability to repay.
                        TITLE V--MORTGAGE FRAUD

Sec. 501. Authorization of appropriations for mortgage fraud 
                            prevention, investigation, and prosecution.
                     TITLE VI--APPRAISAL ACTIVITIES

Sec. 601. Property appraisal requirements.
Sec. 602. Amendments relating to appraisal subcommittee of FIEC, 
                            appraiser independence, and approved 
                            appraiser education.
Sec. 603. Study required on improvements in appraisal process and 
                            compliance programs.
                TITLE VII--INCENTIVES FOR BEST PRACTICES

Sec. 701. CRA credit for certain lender practices.

SEC. 2. DEFINITION.

    (a) Definition of Subprime Mortgage.--Section 103 of the Truth in 
Lending Act (15 U.S.C. 1602) is amended by adding at the end the 
following new subsection:
    ``(cc) Subprime Mortgage.--The term `subprime mortgage' means any 
consumer credit transaction secured by the principal dwelling of the 
consumer that bears or otherwise meets the terms and characteristics 
for such a transaction that the Board has defined as a subprime 
mortgage.''.
    (b) Regulations.--The Board shall prescribe regulations defining a 
subprime mortgage for purposes of the amendment made by subsection (a) 
before the end of the 90-day period beginning on the date of the 
enactment of this Act.

   TITLE I--LICENSING SYSTEM OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS

SEC. 101. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE LICENSING 
              SYSTEM.

    In order to increase uniformity, reduce regulatory burden, enhance 
consumer protection, and reduce fraud, the States, through the 
Conference of State Bank Supervisors and the American Association of 
Residential Mortgage Regulators, are hereby encouraged to establish a 
Nationwide Mortgage Licensing System and registry for the residential 
mortgage industry that accomplishes all of the following objectives:
            (1) Provides uniform mortgage applications and reporting 
        requirements for State-licensed loan originators.
            (2) Provides a comprehensive licensing and supervisory 
        database.
            (3) Aggregates and improves the flow of information to and 
        between regulators.
            (4) Provides increased licensee accountability and 
        tracking.
            (5) Streamlines the licensing process and reduces the 
        regulatory burden.
            (6) Enhances consumer protections and supports anti-fraud 
        measures.

SEC. 102. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:
            (1) Federal banking agencies.--The term ``Federal banking 
        agencies'' means the Board of Governors of the Federal Reserve 
        System, the Comptroller of the Currency, the Director of the 
        Office of Thrift Supervision, the National Credit Union 
        Administration, and the Federal Deposit Insurance Corporation.
            (2) Loan originator.--
                    (A) In general.--The term ``loan originator''--
                            (i) means an individual who--
                                    (I) takes a residential mortgage 
                                loan application;
                                    (II) assists a consumer in 
                                obtaining or applying to obtain a 
                                residential mortgage loan; or
                                    (III) offers or negotiates terms of 
                                a mortgage loan, for direct or indirect 
                                compensation or gain, or in the 
                                expectation of direct or indirect 
                                compensation or gain;
                            (ii) includes any individual who represents 
                        to the public, through advertising or other 
                        means of communicating or providing information 
                        (including the use of business cards, 
                        stationery, brochures, signs, rate lists, or 
                        other promotional items), that such individual 
                        can or will provide or perform any of the 
                        activities described in clause (i); and
                            (iii) does not include any individual who 
                        performs purely administrative or clerical 
                        tasks and is not otherwise described in this 
                        subparagraph.
                    (B) Other definitions relating to loan 
                originator.--For purposes of this paragraph, a person 
                ``assists a consumer in obtaining or applying to obtain 
                a residential mortgage loan'' by, among other things, 
                counseling on loan terms (rates, fees, other costs), 
                preparing loan packages, or collecting enough 
                information on behalf of the consumer to anticipate a 
                credit decision.
            (3) Administrative or clerical tasks.--The term 
        ``administrative or clerical tasks'' means the receipt, 
        collection, and distribution of information common for the 
        processing or underwriting of a loan in the mortgage industry 
        and communication with a consumer to obtain information 
        necessary for the processing or underwriting of a loan.
            (4) Loan processor or underwriter.--
                    (A) In general.--The term ``loan processor or 
                underwriter'' means an individual who performs clerical 
                or support duties at the direction of and subject to 
                the supervision and instruction of a licensed mortgage 
                broker, lender, insured depository institution, or 
                wholly-owned subsidiary of an insured depository 
                institution.
                    (B) Clerical or support duties.--For purposes of 
                subparagraph (A), the term ``clerical or support 
                duties'' may include--
                            (i) the receipt, collection, distribution, 
                        and analysis of information common for the 
                        processing or underwriting of a loan; and
                            (ii) communicating with a borrower to 
                        obtain the information necessary for the 
                        processing or underwriting of a loan, to the 
                        extent that such communication does not include 
                        offering or negotiating loan rates or terms, or 
                        counseling borrowers about loan rates or terms.
            (5) Mortgage broker or mortgage lender.--The term 
        ``mortgage broker or mortgage lender'' means any person who for 
        compensation or gain, or in the expectation of compensation or 
        gain--
                    (A) makes a residential mortgage loan or assists a 
                person in obtaining or applying to obtain a residential 
                mortgage loan; or
                    (B) represents to the public, through advertising 
                or other means of communicating or providing 
                information (including the use of business cards, 
                stationery, brochures, signs, rate lists, or other 
                promotional items), that such individual can or will 
                make a residential mortgage loan or assist a consumer 
                in obtaining or applying to obtain a residential 
                mortgage loan.
            (6) Nationwide mortgage licensing system.--The term 
        ``Nationwide Mortgage Licensing System'' means a mortgage 
        licensing system developed and maintained by the Conference of 
        State Bank Supervisors and the American Association of 
        Residential Mortgage Regulators for the State licensing of 
        State-licensed loan originators.
            (7) Registered loan originator.--The term ``registered loan 
        originator'' means any individual who--
                    (A) meets the definition of loan originator and is 
                an employee of an insured depository institution or a 
                wholly-owned operating subsidiary of an insured 
                depository institution; and
                    (B) is registered and maintains a unique identifier 
                through the Nationwide Mortgage Licensing System or 
                system.
            (8) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means any loan primarily for personal, family, 
        or household use that is secured by a mortgage or deed of trust 
        on residential real estate upon which is constructed or 
        intended to be constructed a single family dwelling of 4 or 
        fewer units.
            (9) Residential real estate.--The term ``residential real 
        estate'' means real property upon which is constructed or 
        intended to be constructed, a 1- to 4-family residence, except 
        that such term does not include any dwelling on leased or 
        rented land or space unless the mortgage broker treats such 
        property as residential real estate.
            (10) State-licensed loan originator.--The term ``State-
        licensed loan originator'' means any individual who--
                    (A) is a loan originator;
                    (B) is not an employee of an insured depository 
                institution or any wholly-owned operating subsidiary of 
                an insured depository institution; and
                    (C) is licensed as a loan originator through the 
                Nationwide Mortgage Licensing System.
            (11) Unique identifier.--The term ``unique identifier'' 
        means a number established as permanent identification of a 
        loan originator.

SEC. 103. LICENSE OR REGISTRATION REQUIRED.

    (a) In General.--A person may not engage in the business of a loan 
originator without first obtaining and maintaining a registration as a 
registered loan originator or a license as a State-licensed loan 
originator.
    (b) Loan Processors and Underwriters.--
            (1) Supervised loan processors and underwriters.--A loan 
        processor or underwriter who does not represent to the public, 
        through advertising or other means of communicating or 
        providing information (including the use of business cards, 
        stationery, brochures, signs, rate lists, or other promotional 
        items), that such individual can or will provide or perform any 
        of the activities of a mortgage broker, mortgage provider, or 
        loan originator shall not be required to have a loan originator 
        license.
            (2) Independents.--A loan processor or underwriter may not 
        work as an independent contractor unless licensed or registered 
        as a mortgage broker.

SEC. 104. LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.

    (a) Background Checks.--As a part of or in connection with an 
application for any loan originator license or registration, the 
applicant shall, at a minimum, furnish to the Nationwide Mortgage 
Licensing System or appropriate regulatory agency, information 
concerning the applicant's identity, including--
            (1) fingerprints for submission to the Federal Bureau of 
        Investigation, and any governmental agency or entity authorized 
        to receive such information for a State and national criminal 
        history background check; and
            (2) personal history and experience, including 
        authorization for the System or regulator agency to obtain--
                    (A) an independent credit report obtained from a 
                consumer reporting agency described in section 603(p) 
                of the Fair Credit Reporting Act; and
                    (B) information related to any administrative, 
                civil or criminal findings by any governmental 
                jurisdiction.
    (b) Issuance of License.--The minimum standards for license 
issuance shall include the following:
            (1) The applicant has not had a loan originator or similar 
        license revoked in any governmental jurisdiction during the 5-
        year period immediately preceding the filing of the present 
        application.
            (2) The applicant has not been convicted, pled guilty or 
        nolo contendere in a domestic, foreign, or military court of a 
        felony during the 7-year period immediately preceding the 
        filing of the present application.
            (3) The applicant has demonstrated financial 
        responsibility, character, and general fitness such as to 
        command the confidence of the community and to warrant a 
        determination that the loan originator will operate honestly, 
        fairly, and efficiently within the purposes of this title.
            (4) The applicant has completed pre-licensing education.
            (5) The applicant has passed a written test.
    (c) Pre-Licensing Education of Loan Originators.--
            (1) In general.--Before applying for a license, every loan 
        originator shall complete an education requirement.
            (2) Approved educational courses.--Satisfactory pre-
        licensing education courses shall be reviewed, approved and 
        published by the Nationwide Mortgage Licensing System or the 
        Secretary of Housing and Urban Development in consultation with 
        the Nationwide Mortgage Licensing System.
            (3) Minimum educational requirements.--The pre-licensing 
        education requirement shall be at least 20 hours of approved 
        education, which shall include at least 3 hours of Federal law 
        and regulations and 3 hours of ethics.
    (d) Testing of Loan Originators.--
            (1) In general.--No individual may be licensed as a loan 
        originator unless the individual has passed a qualified written 
        test developed and administered by the Nationwide Mortgage 
        Licensing System or the Secretary of Housing and Urban 
        Development in consultation with the Nationwide Mortgage 
        Licensing System.
            (2) Qualified test.--A written test shall not be treated as 
        a qualified written test for purposes of paragraph (1) unless--
                    (A) the test consists of a minimum of 100 
                questions; and
                    (B) the test adequately measures the applicant's 
                knowledge and comprehension in appropriate subject 
                areas, including--
                            (i) ethics;
                            (ii) Federal law and regulation pertaining 
                        to mortgage origination; and
                            (iii) State law and regulation pertaining 
                        to mortgage origination.
            (3) Minimum competence.--
                    (A) Passing score.--A passing test score of 75 
                percent correct answers to questions shall be required 
                before accepting and processing a license application.
                    (B) Initial retests.--A loan originator may retake 
                a test 3 consecutive times with each consecutive taking 
                occurring in less than 14 days after the preceding 
                test.
                    (C) Subsequent retests.--After 3 consecutive tests, 
                a loan originator shall wait at least 14 days before 
                taking the test again.
                    (D) Retest after lapse of license.--A loan 
                originator who fails to maintain a valid license for a 
                period of 5 years or longer shall retake the test.

SEC. 105. STANDARDS FOR LICENSE RENEWAL.

    (a) In General.--The minimum standards for license renewal shall 
include the following:
            (1) The loan originator continues to meet the minimum 
        standards for license issuance.
            (2) The loan originator has satisfied the annual continuing 
        education requirements set forth below.
    (b) Continuing Education for State-Licensed Loan Originators.--
            (1) In general.--Every loan originator shall complete an 
        annual continuing education requirement in order to renew their 
        loan originator license or registration each year. Satisfactory 
        continuing education courses shall be reviewed, approved and 
        published by the Nationwide Mortgage Licensing System or the 
        Secretary of Housing and Urban Development. The annual 
        continuing education requirement shall be at least 8 hours of 
        approved continuing education each year. Beginning with the 
        loan originator's first year and repeated each year thereafter 
        the annual continuing education requirement shall include at 
        least 3 hours of Federal law and regulations. Beginning with 
        the loan originator's first year and repeated each third year 
        thereafter, the annual continuing education requirement shall 
        include at least 2 hours of ethics.
    (c) Application.--Calculation of continuing education credits. 
Continuing education credits apply only to the year in which they are 
taken. A loan originator may not take the same approved course in the 
same or successive years to meet the annual requirements for continuing 
education. A loan originator, approved as an instructor of an approved 
continuing education course may receive credit for the annual education 
requirement at the rate of 2 hours credit for every 1 hour taught.

SEC. 106. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL BANKING 
              AGENCIES.

    (a) Development.--The Federal banking agencies shall have sole 
responsibility for developing and maintaining a system of registration 
for registered loan originators.
    (b) Unique Identifier.--The Federal banking agencies, through the 
Financial Institutions Examination Council, shall coordinate with the 
Nationwide Mortgage Licensing System to establish a unique identifier 
for all Loan Originators.
    (c) Linkage With State-Licenced Loan Originators.--To facilitate 
tracking and identification of, and public access to publicly-
adjudicated disciplinary and enforcement actions against, loan 
originators alternating between registration and licensing, the unique 
identifier used to register loan originators shall link electronically 
with the unique identifier used to license State-licensed loan 
originators.
    (d) Administration.--The Federal banking agencies may enter into a 
contract with the Nationwide Mortgage Licensing System to administer 
the registration of registered loan originators.

SEC. 107. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP AUTHORITY 
              TO ESTABLISH A LOAN ORIGINATOR LICENSING SYSTEM.

    (a) In General.--The provisions of this section and section 408 
shall take effect for States that do not meet the minimum standards set 
forth in this title for State-licensed loan originators, if and only 
if, by the end of a 3-year period beginning on the date of the 
enactment of this Act the State does not have in place by law or 
regulation the minimum requirements for licensing State-licensed loan 
originators that meet the specifications of this title and does not 
participate in the Nationwide Mortgage Licensing System.
    (b) Back up Licensing System.--The Secretary of Housing and Urban 
Development (hereafter in this title referred to as the ``Secretary'') 
shall provide for the establishment and maintenance of a system of 
licensed loan originators.
    (c) Administration.--
            (1) In general.--The Secretary shall either maintain and 
        administer the system established under this title or enter 
        into a contract with the Nationwide Mortgage Licensing System 
        to administer the system.
            (2) Consultation.--The Secretary shall consult with the 
        American Association of Residential Mortgage Regulators, the 
        Conference of State Bank Supervisors, and other appropriate 
        organizations in determining the information to be maintained 
        in the System.

SEC. 108. SYSTEM FOR STATE-LICENSED LOAN ORIGINATORS.

    (a) In General.--In order to facilitate the requirements of section 
407, the Secretary shall develop and maintain a system for State-
licensed mortgage originators.
    (b) Requirements for System.--The system established under 
subsection (a) shall, at a minimum, meet the following requirements:
            (1) Unique identifier.--The system shall include a unique 
        identifier listing each State-licensed loan originator as 
        follows:
                    (A) The Federal banking agencies, through the 
                Financial Institutions Examination Council, shall 
                coordinate with the Nationwide Mortgage Licensing 
                System to establish a unique identifier for all loan 
                originators.
                    (B) To facilitate tracking and identification of 
                loan originators alternating between registration and 
                licensing, the unique identifier used to register loan 
                originators shall link electronically with the unique 
                identifier used to license State-licensed loan 
                originators.
            (2) Availability of adverse information about 
        originators.--The system shall make available to the public 
        information regarding publicly-adjudicated disciplinary and 
        enforcement actions taken against each State-licensed loan 
        originator.
            (3) Regulatory information.--The system shall make 
        available to the Secretary and to each public agency or 
        official in a State responsible for regulating State-licensed 
        loan originators such information regarding State-licensed loan 
        originators as the Secretary, by regulation, considers 
        appropriate for the Secretary and such agencies and officials 
        to carry out their functions regarding regulation of State-
        licensed loan originators, including information regarding 
        employment histories and criminal backgrounds.
            (4) Availability of other information to consumers.--The 
        system shall make available to persons employing or using the 
        services of State-licensed loan originators such information 
        regarding State-licensed loan originators as the Secretary, by 
        regulation, considers appropriate.
            (5) Recordkeeping.--The system shall provide for the 
        maintenance of such other information as the Secretary 
        considers appropriate.
    (c) Name of System.--In the event the Secretary contracts with the 
Nationwide Mortgage Licensing System to administer the licensing of 
State-licensed loan originators, the system referenced in this 
subsection shall be known by the name Nationwide Mortgage Licensing 
System.

SEC. 109. FEES.

    The Federal banking agencies, the Secretary of Housing and Urban 
Development, and the Nationwide Mortgage Licensing System may charge 
reasonable fees to cover the costs of maintaining and providing access 
to information from the system to the extent such fees are not charged 
to the general public.

SEC. 110. MORTGAGE PROFESSIONAL BACKGROUND CHECKS.

    (a) Access to Records.--Notwithstanding any other provision of the 
law, in providing identification and processing functions, the Attorney 
General shall provide access to all criminal history information to the 
appropriate State officials responsible for regulating mortgage 
professionals if required under the laws of the State.
    (b) Agent.--For the purposes of this section and in order to reduce 
the points of contact with which the Federal Bureau of Investigation 
may have to maintain for purposes of subsection (a), the Conference of 
State Bank Supervisors or a wholly owned subsidiary may be used as a 
channeling agent of the States for requesting and distributing 
information between the Department of Justice and the appropriate State 
agencies.

SEC. 111. CONFIDENTIALITY OF INFORMATION.

    (a) System Confidentiality.--Except as otherwise provided in this 
section, any requirement under Federal or State law regarding the 
privacy or confidentiality of any information or material in the 
possession of the Secretary or any other organization serving as the 
administrator of the system proposed in this title, and any privilege 
arising under Federal or State law (including the rules of any Federal 
or State court) with respect to such information or material, shall 
continue to apply to such information or material after the information 
or material has been disclosed to the system. Information in the system 
may be shared with all State and Federal regulatory officials with 
mortgage industry oversight authority without the loss of privilege or 
the loss of confidentiality protections provided by the Federal and 
State laws of the States that have ownership of that information.
    (b) Nonapplicability of Certain Requirements.--Information or 
material that is subject to a privilege or confidentiality under 
subsection (a) shall not be subject to--
            (1) disclosure under any Federal or State law governing the 
        disclosure to the public of information held by an officer or 
        an agency of the Federal Government or the respective State; or
            (2) subpoena or discovery, or admission into evidence, in 
        any private civil action or administrative process, unless with 
        respect to any privilege held by the Secretary with respect to 
        such information or material, the participant waives, in whole 
        or in part, in the discretion of the participant, such 
        privilege.
    (c) Preemption of State Law.--Any State law, including any State 
open record law, relating to the disclosure of confidential supervisory 
information or any information or material described in subsection (a) 
that is inconsistent with subsection (a) shall be superseded by the 
requirements of such provision to the extent State law provides less 
confidentiality or a weaker privilege.

SEC. 112. LIABILITY PROVISIONS.

    The Secretary of Housing and Urban Development or any State 
official or agency, or organization serving as the administrator of the 
system proposed in this title, or employee thereof, shall not be 
subject to any civil action or proceeding for monetary damages by 
reason of the good-faith action or omission of any officer or employee, 
while acting within the scope of office or employment, relating to 
collecting, furnishing, or disseminating of information concerning 
persons who are mortgage professionals or are applying for licensing or 
registration as mortgage professionals or licensed loan officers or 
mortgage branches or mortgage companies, whether directly or through 
the system established under this title.

                    TITLE II--SIMPLIFIED DISCLOSURES

SEC. 201. BASIC MORTGAGE FACTS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 127A the following 
new section:
``Sec. 127B. Disclosure requirements required for all consumer credit 
              plans secured by the consumer's principal dwelling.
    ``(a) Simplified Disclosure of Basic Mortgage Facts Required.--No 
consumer credit transaction secured by the principal dwelling of the 
consumer (hereafter in this section referred to as the `mortgage') may 
be consummated unless--
            ``(1) the mortgagee under the mortgage has provided to the 
        consumer the written disclosures required under subsection (b) 
        at least 3 days before the date of the settlement and execution 
        of the mortgage; and
            ``(2) the consumer has signed the disclosure under 
        subsection (b)(1) and returned such disclosure to the 
        mortgagee.
    ``(b) Contents.--With respect to a mortgage, the written 
disclosures required under this subsection are as follows:
            ``(1) Statement of mortgage facts.--A single page, written 
        disclosure regarding the mortgage with the heading `Your Basic 
        Mortgage Facts' that sets forth, in accordance with such 
        requirements as the Board shall, by regulation, establish--
                    ``(A) the amount of the principal obligation under 
                the mortgage;
                    ``(B) the loan-to-value ratio for the mortgage;
                    ``(C) the final maturity date for the mortgage;
                    ``(D) the amount and due date for any balloon 
                payment under the mortgage;
                    ``(E) the amount of any prepayment fee to be 
                charged if the mortgage is paid in full before the 
                final maturity date for the mortgage;
                    ``(F) the initial interest rate under the mortgage 
                expressed as an annual percentage rate, and the amount 
                of the monthly payment due under such rate;
                    ``(G) the duration during which such initial 
                interest rate will be charged;
                    ``(H) the fully indexed rate of interest under the 
                mortgage expressed as an annual percentage rate and the 
                amount of the monthly payment due under such rate;
                    ``(I) the maximum possible rate of interest under 
                the mortgage expressed as an annual percentage rate and 
                the amount of the monthly payment due under such rate;
                    ``(J) the monthly household income of the mortgagor 
                upon which the mortgage is based;
                    ``(K) the amount of initial monthly payment due 
                under the mortgage, and the amount of such initial 
                monthly payment plus monthly amounts due for taxes and 
                insurance on the property subject to the mortgage, both 
                expressed as a percentage of the monthly household 
                income of the mortgagor;
                    ``(L) the amount of the fully indexed monthly 
                payment due under the mortgage, and the amount of such 
                fully indexed monthly payment plus monthly amounts due 
                for taxes and insurance on the property subject to the 
                mortgage, both expressed as a percentage of the monthly 
                household income of the mortgagor;
                    ``(M) the amount of any points to be paid by the 
                mortgagor under the mortgage and the aggregate amount 
                of any other closing costs in connection with the 
                mortgage;
                    ``(N) the amount of any late payment fees and a 
                brief description of the consequences of making any 
                payment late or defaulting on the mortgage, including 
                foreclosure;
                    ``(O) a name, telephone number, and electronic mail 
                address that may be used by the mortgagor to obtain 
                information regarding the mortgage;
                    ``(P) an authorized signature of the originator of 
                the mortgage;
                    ``(Q) a blank space for the signature of the 
                borrower; and
                    ``(R) immediately above such blank space, a 
                conspicuous statement in bold typeface, in all capital 
                letters, in a font at least equal in size to the 
                largest font otherwise used in the disclosure, as 
                follows: `DO NOT SIGN THIS IF YOU DON'T UNDERSTAND 
                IT!'.
            ``(2) Statement of definitions and explanations.--A 2-page 
        written disclosure that sets forth, in accordance with such 
        requirements as the Board shall, by regulation in accordance 
        with section 105, establish, basic easy-to-understand 
        definitions or explanations, for purposes of residential 
        mortgages, for all of the following terms: appraised value, 
        types of loans, initial interest rate, fully indexed rate of 
        interest, maximum possible rate of interest, monthly household 
        income, monthly mortgage payment including taxes and insurance, 
        fully indexed housing expense ratio, prepayment fee, balloon 
        payment, payment option loan, points, closing costs, and 
        default and foreclosure.
    ``(c) Preemption.--The provisions of this section relating to the 
disclosure of basic mortgage facts to a consumer in connection with any 
mortgage shall supersede the provisions of the law of any State 
relating to the disclosure of such facts.''.
    (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 127A the following new item:

``127B. Disclosure requirements required for all consumer credit plans 
                            secured by the consumer's principal 
                            dwelling.''.

                     TITLE III--HOUSING COUNSELING

                    Subtitle A--Consumer Counseling

SEC. 301. CONSUMER COUNSELING REQUIREMENTS.

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

         Subtitle B--Expanded Housing Counseling Opportunities

SEC. 311. SHORT TITLE.

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

SEC. 312. 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) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection; and
                            ``(vii) 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 3 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, 4 
                shall be appointed for a term of 1 year and 4 shall be 
                appointed for a term of 2 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. 313. COUNSELING PROCEDURES.

    (a) In General.--Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x), as amended by the preceding provisions 
of this title, is further amended by adding at the end the following 
new subsection:
    ``(h) Procedures and Activities.--
            ``(1) Counseling procedures.--
                    ``(A) In general.--The Secretary shall establish, 
                coordinate, and monitor the administration by the 
                Department of Housing and Urban Development of the 
                counseling procedures for homeownership counseling and 
                rental housing counseling provided in connection with 
                any program of the Department, including all 
                requirements, standards, and performance measures that 
                relate to homeownership and rental housing counseling.
                    ``(B) Homeownership counseling.--For purposes of 
                this subsection and as used in the provisions referred 
                to in this subparagraph, the term `homeownership 
                counseling' means counseling related to homeownership 
                and residential mortgage loans. Such term includes 
                counseling related to homeownership and residential 
                mortgage loans that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 8(y)(1)(D) (42 
                                U.S.C. 1437f(y)(1)(D));
                                    ``(III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(IV) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(V) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(VI) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B));
                                    ``(VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                    ``(VIII) section 304(c)(4) (42 
                                U.S.C. 1437aaa-3(c)(4));
                            ``(iii) section 302(a)(4) of the American 
                        Homeownership and Economic Opportunity Act of 
                        2000 (42 U.S.C. 1437f note);
                            ``(iv) sections 233(b)(2) and 258(b) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12773(b)(2), 12808(b));
                            ``(v) this section and section 101(e) of 
                        the Housing and Urban Development Act of 1968 
                        (12 U.S.C. 1701x, 1701w(e));
                            ``(vi) section 220(d)(2)(G) of the Low-
                        Income Housing Preservation and Resident 
                        Homeownership Act of 1990 (12 U.S.C. 
                        4110(d)(2)(G));
                            ``(vii) sections 422(b)(6), 423(b)(7), 
                        424(c)(4), 442(b)(6), and 443(b)(6) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 
                        12874(c)(4), 12892(b)(6), and 12893(b)(6));
                            ``(viii) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(ix) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A));
                            ``(x) in the National Housing Act--
                                    ``(I) in section 203 (12 U.S.C. 
                                1709), the penultimate undesignated 
                                paragraph of paragraph (2) of 
                                subsection (b), subsection (c)(2)(A), 
                                and subsection (r)(4);
                                    ``(II) subsections (a) and (c)(3) 
                                of section 237 (12 U.S.C. 1715z-2); and
                                    ``(III) subsections (d)(2)(B) and 
                                (m)(1) of section 255 (12 U.S.C. 1715z-
                                20);
                            ``(xi) section 502(h)(4)(B) of the Housing 
                        Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7).
                    ``(C) Rental housing counseling.--For purposes of 
                this subsection, the term `rental housing counseling' 
                means counseling related to rental of residential 
                property, which may include counseling regarding future 
                homeownership opportunities and providing referrals for 
                renters and prospective renters to entities providing 
                counseling and shall include counseling related to such 
                topics that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(III) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(IV) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(V) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B)); and
                                    ``(VI) section 302(b)(6) (42 U.S.C. 
                                1437aaa-1(b)(6));
                            ``(iii) section 233(b)(2) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12773(b)(2));
                            ``(iv) section 106 of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x);
                            ``(v) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(b)(6));
                            ``(vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(vii) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A)); and
                            ``(viii) the rental assistance program 
                        under section 8 of the United States Housing 
                        Act of 1937 (42 U.S.C. 1437f).
            ``(2) 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).
            ``(3) Mortgage software systems.--
                    ``(A) Certification.--The Secretary shall provide 
                for the certification of various computer software 
                programs for consumers to use in evaluating different 
                residential mortgage loan proposals. The Secretary 
                shall require, for such certification, that the 
                mortgage software systems take into account--
                            ``(i) the consumer's financial situation 
                        and the cost of maintaining a home, including 
                        insurance, taxes, and utilities;
                            ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan;
                            ``(iii) such other factors as the Secretary 
                        considers appropriate to assist the consumer in 
                        evaluating whether to pay points, to lock in an 
                        interest rate, to select an adjustable or fixed 
                        rate loan, to select a conventional or 
                        government-insured or guaranteed loan and to 
                        make other choices during the loan application 
                        process.
                If the Secretary determines that available existing 
                software is inadequate to assist consumers during the 
                residential mortgage loan application process, the 
                Secretary shall arrange for the development by private 
                sector software companies of new mortgage software 
                systems that meet the Secretary's specifications.
                    ``(B) Use and initial availability.--Such certified 
                computer software programs shall be used to supplement, 
                not replace, housing counseling. The Secretary shall 
                provide that such programs are initially used only in 
                connection with the assistance of housing counselors 
                certified pursuant to subsection (e).
                    ``(C) Availability.--After a period of initial 
                availability under subparagraph (B) as the Secretary 
                considers appropriate, the Secretary shall take 
                reasonable steps to make mortgage software systems 
                certified pursuant to this paragraph widely available 
                through the Internet and at public locations, including 
                public libraries, senior-citizen centers, public 
                housing sites, offices of public housing agencies that 
                administer rental housing assistance vouchers, and 
                housing counseling centers.
            ``(4) National public service multimedia campaigns to 
        promote housing counseling.--
                    ``(A) In general.--The Director of Housing 
                Counseling shall develop, implement, and conduct 
                national public service multimedia campaigns designed 
                to make persons facing mortgage foreclosure, persons 
                considering a subprime mortgage loan to purchase a 
                home, elderly persons, persons who face language 
                barriers, low-income persons, and other potentially 
                vulnerable consumers aware that it is advisable, before 
                seeking or maintaining a residential mortgage loan, to 
                obtain homeownership counseling from an unbiased and 
                reliable sources and that such homeownership counseling 
                is available, including through programs sponsored by 
                the Secretary of Housing and Urban Development.
                    ``(B) Contact information.--Each segment of the 
                multimedia campaign under subparagraph (A) shall 
                publicize the toll-free telephone number and web site 
                of the Department of Housing and Urban Development 
                through which persons seeking housing counseling can 
                locate a housing counseling agency in their State that 
                is certified by the Secretary of Housing and Urban 
                Development and can provide advice on buying a home, 
                renting, defaults, foreclosures, credit issues, and 
                reverse mortgages.
                    ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary, not to 
                exceed $3,000,000 for fiscal years 2008, 2009, and 
                2010, for the develop, implement, and conduct of 
                national public service multimedia campaigns under this 
                paragraph.
            ``(5) Education programs.--The Secretary shall provide 
        advice and technical assistance to States, units of general 
        local government, and nonprofit organizations regarding the 
        establishment and operation of, including assistance with the 
        development of content and materials for, educational programs 
        to inform and educate consumers, particularly those most 
        vulnerable with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-income 
        persons, 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. 314. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

    Section 106(a) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new 
paragraph:
    ``(4) Homeownership and Rental Counseling Assistance.--
            ``(A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to States, units of 
        general local governments, and nonprofit organizations 
        providing homeownership or rental counseling (as such terms are 
        defined in subsection (h)(1)).
            ``(B) Qualified entities.--The Secretary shall establish 
        standards and guidelines for eligibility of organizations 
        (including governmental and nonprofit organizations) to receive 
        assistance under this paragraph.
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
            ``(D) Authorization of appropriations.--There are 
        authorized to be appropriated $100,000,000 for each of fiscal 
        years 2008 through 2011 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. 315. 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. 316. STUDY OF DEFAULTS AND FORECLOSURES.

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

SEC. 317. 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. 318. 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.''.

               TITLE IV--PROHIBITION ON ABUSIVE PRACTICES

                     Subtitle A--Mortgage Servicing

SEC. 401. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
              CREDIT TRANSACTIONS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129A (as added by 
section 301(a) of this Act) the following new section:

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

    ``(a) In General.--A creditor, in connection with the formation or 
consummation of a subprime mortgage, shall establish, at the time of 
the consummation of such mortgage, an escrow or impound account for the 
payment of taxes and hazard insurance as provided in, and in accordance 
with, this section, unless such an account already exists.
    ``(b) Duration of Escrow or Impound Account.--An escrow or impound 
account established pursuant to this section, shall remain in existence 
for a minimum period of 5 years, unless the underlying mortgage is 
terminated.
    ``(c) Administration of Escrow or Impound Accounts.--Except as may 
otherwise be provided for in this title or in regulations prescribed by 
the Board, escrow or impound accounts established pursuant to this 
section shall be established in an insured depository institution.
    ``(d) Disclosures Relating to Escrow or Impound Account.--
            ``(1) In general.--In the case of any impound, trust, or 
        escrow account that is subject to this section, the creditor 
        shall disclose by written notice to the consumer within 3 
        business days before the consummation of the consumer credit 
        transaction giving rise to such account the following 
        information:
                    ``(A) The fact that an escrow or impound account 
                will be established at consummation of the transaction.
                    ``(B) The amount required at closing to initially 
                fund the escrow or impound account.
                    ``(C) The amount in the initial year of the 
                estimated taxes and hazard insurance premiums.
                    ``(D) The estimated monthly amount payable for 
                taxes and hazard insurance.
                    ``(E) The fact that if the consumer chooses to 
                terminate the account after 5 years, the consumer will 
                become responsible for the payment of all taxes and 
                hazard insurance on the property unless a new escrow or 
                impound account is established.
            ``(2) Regulations.--The Board shall prescribe by regulation 
        the contents of the notice required in paragraph (1) no later 
        than 90 days after the date of the enactment of the Fair 
        Mortgage Practices Act of 2007.
    ``(e) Hazard Insurance Defined.--For purposes of this section, the 
term `hazard insurance' shall have the same meaning as provided under 
the law of the State where the real property securing the consumer 
credit transaction is located.''.
    (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 129A (as added by section 301(a) of this Act) the following new 
item:

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

SEC. 402. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO OPT OUT OF 
              ESCROW SERVICES.

    Section 129B of the Truth in Lending Act (as added by section 
401(a) of this title) is amended by adding at the end the following new 
subsections:
    ``(g) Disclosure Notice Required for Consumers Who Opt Out of 
Escrow Services.--
            ``(1) In general.--If an impound, trust, or other type of 
        account for the payment of property taxes, insurance premiums, 
        or other purposes relating to property securing a consumer 
        credit transaction is not established in connection with any 
        consumer credit transaction secured by the principal dwelling 
        of the consumer, or if a consumer chooses, at any time after 
        such an account is established in connection with any such 
        transaction, to close such account, the creditor shall provide 
        a timely and clearly written disclosure to the consumer that 
        advises the consumer of the responsibilities of the consumer 
        and implications for the consumer in the absence of any such 
        account, including--
                    ``(A) information concerning any applicable fees 
                associated with either the nonestablishment of any such 
                account at the time of the transaction, or any 
                subsequent closure of any such account;
                    ``(B) clear and prominent notice that the consumer 
                is responsible for personally and directly paying the 
                non-escrowed items, in addition to paying the mortgage 
                loan payment, in the absence of any such account; and
                    ``(C) a clear explanation of the consequences of 
                any failure to pay non-escrowed items, including the 
                possible requirement for direct placement of insurance 
                by the creditor and the potentially higher cost 
                (including any potential commission payments to the 
                servicer) or reduced coverage for the consumer in the 
                event of any such creditor-placed insurance.
            ``(2) Regulations.--The Board shall prescribe such 
        regulations as are necessary to implement the requirements of 
        this subsection in final form before the end of the 12-month 
        period beginning on the date of the enactment of the Fair 
        Mortgage Practices Act of 2007.
    ``(h) Preemption.--The provisions of this section requiring 
disclosures relating to impound, trust, or escrow accounts, including 
disclosures under subsection (g) to a consumer shall supersede the 
provisions of the law of any State relating to such disclosures.''.

             Subtitle B--Nontraditional Mortgage Provisions

SEC. 411. PREPAYMENT PENALTIES.

    Section 129A of the Truth in Lending Act (as added by section 
301(a)) is amended by adding at the end the following new subsection:
    ``(b) Limitation on Prepayment Penalties for Hybrid ARMs.--
            ``(1) In general.--In the case of a consumer credit 
        transaction secured by the consumer's principal residence with 
        a fixed interest rate for an introductory period that resets to 
        a variable interest rate after such period, the transaction may 
        not contain terms under which a consumer must pay a prepayment 
        penalty for paying all or part of the principal before the date 
        on which the principal is due at any time after the beginning 
        of the 120-day period ending on the date of the reset to a 
        variable interest rate.
            ``(2) Preemption.--The provisions of this section relating 
        to prepayment penalties with respect to any consumer credit 
        transaction secured by the consumer's principal residence with 
        a fixed interest rate for an introductory period that resets to 
        a variable interest rate after such period shall supersede the 
        provisions of the law of any State relating to prepayment 
        penalties with respect to any such transaction.''.

SEC. 412. ABILITY TO REPAY.

    Section 129A of the Truth in Lending Act is amended by inserting 
after subsection (b) (as added by section 411 of this subtitle) the 
following new subsection:
    ``(c) Ability To Repay.--The Board, in consultation with other 
Federal banking agencies (as defined in section 3 of the Federal 
Deposit Insurance Act), shall prescribe regulations in accordance with 
section 105, or issue guidance, that encourages any creditor with 
respect to a consumer credit transaction secured by the consumer's 
principal residence to evaluate the consumer's ability to repay the 
transaction under the terms of the transaction.''.

                        TITLE V--MORTGAGE FRAUD

SEC. 501. AUTHORIZATION OF APPROPRIATIONS FOR MORTGAGE FRAUD 
              PREVENTION, INVESTIGATION, AND PROSECUTION.

    For fiscal years 2008, 2009, 2010, 2011, and 2012, there are 
authorized to be appropriated to the Attorney General a total of 
$20,000,000, in addition to other amounts authorized to be appropriated 
to the Attorney General for any such fiscal year, for the purpose of 
enhancing the efforts of the Department of Justice and the Federal 
Bureau of Investigation to prevent, investigate, and prosecute mortgage 
fraud.

                     TITLE VI--APPRAISAL ACTIVITIES

SEC. 601. PROPERTY APPRAISAL REQUIREMENTS.

    Section 129A of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 412 of this Act) the 
following new subsection:
    ``(d) Property Appraisal Requirements.--
            ``(1) In general.--A creditor may not extend credit in the 
        form of a subprime mortgage to any consumer without first 
        obtaining a written appraisal of the property to be mortgaged 
        prepared in accordance with the requirements of this 
        subsection.
            ``(2) Appraisal requirements.--
                    ``(A) Physical inspection.--An appraisal of 
                property to be secured by a subprime mortgage does not 
                meet the requirement of this subsection unless it is 
                performed by a qualified appraiser who conducts a 
                physical inspection of the mortgaged property.
                    ``(B) Second appraisal under certain 
                circumstances.--
                            ``(i) In general.--If the purpose of the 
                        subprime mortgage is to finance the purchase or 
                        acquisition of the mortgaged property from a 
                        person within 180 days of the purchase or 
                        acquisition of such property by that person at 
                        a price that was lower than the current sale 
                        price of the property, the creditor shall 
                        obtain a second appraisal from a second 
                        qualified appraiser that supports the current 
                        sale price of the property.
                            ``(ii) No cost to consumer.--The cost of 
                        any second appraisal required under clause (i) 
                        may not be charged to the consumer.
                    ``(C) Qualified appraiser defined.--For purposes of 
                this subsection, the term `qualified appraiser' means a 
                person who--
                            ``(i) is certified or licensed by the State 
                        in which property to be appraised is located; 
                        and
                            ``(ii) performs each appraisal in 
                        conformity with the Uniform Standards of 
                        Professional Appraisal Practice and Title XI of 
                        the Financial Institutions Reform, Recovery, 
                        and Enforcement Act of 1989, and the 
                        regulations prescribed under such title, as in 
                        effect on the date of the appraisal.
            ``(3) Free copy of appraisal.--A creditor shall provide 1 
        copy of each appraisal conducted in accordance with this 
        subsection in connection with a higher-cost mortgage to the 
        consumer without charge.
            ``(4) Violations.--In addition to any other liability to 
        any person under this title, a creditor found to have willfully 
        failed to obtain an appraisal as required in this subsection 
        shall be liable to the consumer for the sum of $2,000.''.

SEC. 602. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC, 
              APPRAISER INDEPENDENCE, AND APPROVED APPRAISER EDUCATION.

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

SEC. 603. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND 
              COMPLIANCE PROGRAMS.

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

                TITLE VII--INCENTIVES FOR BEST PRACTICES

SEC. 701. CRA CREDIT FOR CERTAIN LENDER PRACTICES.

    Section 804 of the Community Reinvestment Act of 1977 (12 U.S.C. 
2903) is amended by adding at the end the following new subsection:
    ``(d) Efforts on Behalf of Subprime Borrowers.--In assessing and 
taking into account, under subsection (a), the record of a regulated 
financial institution, the appropriate Federal financial supervisory 
agency may consider as a factor, in accordance with such guidelines as 
the agency may issue, any of the following programs undertaken by the 
institution:
            ``(1) A program to provide or support the provision of home 
        ownership or credit counseling to low- and moderate-income 
        consumer borrowers through programs reasonably available to the 
        consumer that have been certified or approved by the Secretary 
        of Housing and Urban Development for such purpose.
            ``(2) A program to provide or support the provision of 
        foreclosure-prevention counseling and other prevention efforts 
        to low- and moderate-income consumer borrowers through programs 
        reasonably available to the consumer that have been certified 
        or approved by the Secretary of Housing and Urban Development 
        for such purpose.
            ``(3) A program to transition low- and moderate-income 
        consumer borrowers from higher-cost mortgage loans to lower-
        cost mortgage loans.''.
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