[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3813 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3813

To amend the Truth in Lending Act to prohibit mortgage originators from 
   receiving incentive compensation that varies with the terms of a 
 residential mortgage loan and from steering consumers to residential 
 mortgage loans that are not in the consumers' best interest, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 10, 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 prohibit mortgage originators from 
   receiving incentive compensation that varies with the terms of a 
 residential mortgage loan and from steering consumers to residential 
 mortgage loans that are not in the consumers' best interest, 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 Kickback Prevention Act of 
2007''.

SEC. 2. ANTI-STEERING.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) by inserting after section 129 the following new section:
``Sec. 129A. Anti-steering requirement
    ``(a) Prohibition on Steering Incentives.--No mortgage originator 
may receive from any person, and no person may pay to any mortgage 
originator, any incentive compensation (including yield spread premium) 
that accrues directly or indirectly to the mortgage originator that is 
based on, or varies with, the terms of any residential mortgage loan.
    ``(b) Regulations.--
            ``(1) Authorized.--The Board and the Secretary, in 
        consultation with the Commission, may prescribe regulations 
        to--
                    ``(A) further define the terms `incentive 
                compensation' and `terms of any residential mortgage 
                loan'; and
                    ``(B) provide exceptions to the application of 
                paragraph (1), or additional requirements, with respect 
                to incentive compensation.
            ``(2) Conditions.--In prescribing any regulations that 
        permit an exception to paragraph (1) or adds additional 
        requirements, the Board and the Secretary shall ensure that 
        such regulations--
                    ``(A) promote the interest of the consumer in 
                obtaining--
                            ``(i) the best terms for a residential 
                        mortgage loan for which the consumer qualifies; 
                        and
                            ``(ii) useful information on the nature of 
                        the residential mortgage loan and the 
                        relationship of the consumer with the mortgage 
                        originator; and
                    ``(B) prohibit mortgage originators from steering, 
                counseling, or directing a consumer into any 
                residential mortgage loan that is not in the consumer's 
                best interest, based on information known by, or 
                provided in good faith to, the originator, the 
                characteristics of the property that secures or will 
                secure the extension of credit, and the loan terms for 
                which the consumer qualifies.
    ``(c) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Mortgage originator.--The term `mortgage 
        originator'--
                    ``(A) means a person 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;
                    ``(B) includes any person 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 subparagraph (A); and
                    ``(C) does not include any person who is not 
                otherwise described in subparagraph (A) or (B) and who 
                performs purely administrative or clerical tasks on 
                behalf of a person who is described in any such 
                subparagraph.
            ``(2) Residential mortgage loan.--The term `residential 
        mortgage loan' means any consumer credit transaction that is 
        secured by a mortgage or deed of trust on residential real 
        estate that includes a dwelling.''.
    (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. Anti steering requirement.''.
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