[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3296 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3296

    To amend the Truth in Lending Act to establish transparency and 
    accountability requirements for mortgage brokers, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 1, 2007

  Mr. Murphy of Connecticut introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
    To amend the Truth in Lending Act to establish transparency and 
    accountability requirements for mortgage brokers, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Mortgage Broker Transparency and 
Accountability Act of 2007''.

SEC. 2. MORTGAGE BROKER REQUIREMENTS.

    The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by 
inserting after section 129 the following new section:
``Sec. 129A. Duties of mortgage brokers
    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Home mortgage loan.--The term `home mortgage loan' 
        means any consumer credit transaction in which a security 
        interest, including any such interest arising by operation of 
        law, is or will be retained or acquired in any real property 
        located within the United States which is or, upon the 
        completion of the transaction, will be used as the principal 
        residence of the consumer.
            ``(2) Mortgage broker.--The term `mortgage broker' means 
        any person who, for compensation or in anticipation of 
        compensation, provides mortgage brokerage services with respect 
        to home mortgage loans for which the person is not the creditor 
        and includes any loan correspondents that provide such 
        services.
            ``(3) Mortgage brokerage services.--The term `mortgage 
        brokerage services' means any of the following services:
                    ``(A) Arranging or negotiating, or attempting to 
                arrange or negotiate, home mortgage loans or 
                commitments for such loans.
                    ``(B) Referring consumer applicants or prospective 
                applicants for home mortgage loans to creditors.
                    ``(C) Selecting or offering to select, on behalf of 
                consumers, creditors to whom requests for an extension 
                of a home mortgage loan may be made.
    ``(b) Mortgage Broker Responsibilities and Duties.--
            ``(1) Agency by operation of law.--A mortgage broker who 
        provides mortgage brokerage services to any consumer shall be 
        deemed to have an agency relationship with the consumer for 
        such purposes and the broker shall be subject to all 
        requirements for agents of consumers that are applicable under 
        State or Federal law in connection with providing such 
        services.
            ``(2) Broker duties.--In providing any mortgage brokerage 
        services to any consumer, the mortgage broker shall--
                    ``(A) act with reasonable skill, care, and 
                diligence in providing any such services to the 
                consumer and provide the consumer with a reasonable 
                choice among available home mortgage loan products that 
                meet the consumer's stated needs for mortgage 
                financing;
                    ``(B) disclose to a consumer the risks and benefits 
                of each home mortgage loan product offered to the 
                borrower, including any possibility of, and the 
                possible extent of, a payment increase at the time of 
                any resetting of rate, the extent of any prepayment 
                penalties, balloon payments, and the consumer's 
                responsibilities to pay taxes and insurance with 
                respect to such product;
                    ``(C) disclose to the consumer--
                            ``(i) all fees or other payments the 
                        mortgage broker may or will receive, if any, 
                        from a creditor in connection with each home 
                        mortgage loan product that is offered or 
                        disclosed to the consumer, directly or 
                        indirectly, in the course of providing such 
                        services;
                            ``(ii) the amount of each such fee or 
                        payment;
                            ``(iii) the rate used to determine the 
                        amount of any such fee;
                            ``(iv) how the consumer may use the amount 
                        of such fees or payments to reduce settlement 
                        costs otherwise applicable to the consumer upon 
                        entering into consumer credit transaction 
                        involving such home mortgage loan product; and
                            ``(v) all fees or other payments the 
                        mortgage broker may or will receive, if any, 
                        from the consumer in connection with each home 
                        mortgage loan product that is offered or 
                        disclosed to the consumer, directly or 
                        indirectly, in the course of providing such 
                        services;
                    ``(D) meet all applicable licensing requirements 
                under State or local law; and
                    ``(E) obtain and permanently maintain a bond--
                            ``(i) for an amount equal to not less than 
                        1 percent of the aggregate value of all direct 
                        and indirect fees received by the mortgage 
                        broker in connection with providing mortgage 
                        brokerage services in the calendar year 
                        preceding the date of the transaction;
                            ``(ii) that inures, first, to the benefit 
                        of any consumer who has any claim against the 
                        mortgage broker under this title or any other 
                        applicable provision of law; and, second, to 
                        the benefit of creditors that deal with 
                        mortgage brokers in accordance with this title; 
                        and
                            ``(iii) under which any assignee or 
                        subsequent transferee or trustee of a consumer 
                        or creditor remains a beneficiary of the bond.
            ``(3) Steering prohibited.--In connection with a home 
        mortgage loan, a mortgage broker may not steer, counsel, or 
        direct a consumer to a higher-cost mortgage as evidenced by 
        higher rates, charges, principal amounts, or the inclusion of 
        prepayment penalties or other terms than a lower-cost mortgage 
        for which the consumer would otherwise qualify, considering the 
        loan features requested by the consumer.
    ``(c) Statutory Obligation.--No requirement imposed on any mortgage 
broker under this section may be waived by any consumer or by the terms 
of any agreement executed between the mortgage broker and any consumer.
    ``(d) Enforcement.--For purposes of providing a cause of action for 
any failure to comply with any requirement imposed this section, 
section 130(a) shall be applied with respect to any such failure--
            ``(1) by substituting `mortgage broker' for `creditor' each 
        place such term appears in such section; and
            ``(2) by treating all points, fees, and costs incurred in 
        the origination of any home mortgage loan as actual damages 
        sustained by the consumer as a result of the failure.''.

SEC. 3. DISCLOSURE OF AFFILIATIONS.

    The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended by 
inserting after section 129A (as added by section 2 of this Act) the 
following new section:
``Sec. 129B. Disclosures in connection with all home mortgage loans
    ``Each creditor, mortgage broker (as defined in section 129A), or 
other person involved in making or obtaining a home mortgage loan (as 
defined in section 129A) to or for any consumer shall disclose to the 
consumer any financial or other business relationship the creditor, 
mortgage broker, or other person has with any person that may be 
involved in the transaction resulting in the home mortgage loan, 
including any real estate agent, any person providing title insurance, 
any person providing settlement services (as defined in section 3 of 
the Real Estate Settlement Procedures Act of 1974), or any person 
providing table-top financing (in the case of a loan correspondent) and 
information sufficient to inform the consumer about the relationship, 
including whether the relationship is exclusive.''.

SEC. 4. CLERICAL AMENDMENT.

    The table of sections for chapter 2 of the Truth in Lending Act is 
amended by inserting after the item relating to section 129 the 
following new items:

``129A. Duties of mortgage brokers.
``129B. Disclosures in connection with all home mortgage loans.''.
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