[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3915 Engrossed in House (EH)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
110th CONGRESS
  1st Session
                                H. R. 3915

_______________________________________________________________________

                                 AN ACT


 
To amend the Truth in Lending Act to reform consumer mortgage practices 
 and provide accountability for such practices, to establish licensing 
and registration requirements for residential mortgage originators, to 
provide certain minimum standards for consumer mortgage loans, 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 ``Mortgage Reform 
and Anti-Predatory Lending Act of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
             TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION

 Subtitle A--Licensing System for Residential Mortgage Loan Originators

Sec. 101. Purposes and methods for establishing a mortgage licensing 
                            system and registry.
Sec. 102. Definitions.
Sec. 103. License or registration required.
Sec. 104. State license and registration application and issuance.
Sec. 105. Standards for State 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. Backup authority to establish a nationwide mortgage licensing 
                            and registry system.
Sec. 109. Fees.
Sec. 110. Background checks of loan originators.
Sec. 111. Confidentiality of information.
Sec. 112. Liability provisions.
Sec. 113. Enforcement under HUD backup licensing system.
      Subtitle B--Residential Mortgage Loan Origination Standards

Sec. 121. Definitions.
Sec. 122. Residential mortgage loan origination.
Sec. 123. Prohibition on steering incentives.
Sec. 124. Liability.
Sec. 125. Regulations.
               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Sec. 201. Ability to repay.
Sec. 202. Net tangible benefit for refinancing of residential mortgage 
                            loans.
Sec. 203. Safe harbor and rebuttable presumption.
Sec. 204. Liability.
Sec. 205. Defense to foreclosure.
Sec. 206. Additional standards and requirements.
Sec. 207. Rule of construction.
Sec. 208. Effect on State laws.
Sec. 209. Regulations.
Sec. 210. Amendments to civil liability provisions.
Sec. 211. Lender rights in the context of borrower deception.
Sec. 212. Six-month notice required before reset of hybrid adjustable 
                            rate mortgages.
Sec. 213. Required disclosures.
Sec. 214. Disclosures required in monthly statements for residential 
                            mortgage loans.
Sec. 215. Authorization of appropriations.
Sec. 216. Effective date.
Sec. 217. Report by the GAO.
                     TITLE III--HIGH-COST MORTGAGES

Sec. 301. Definitions relating to high-cost mortgages.
Sec. 302. Amendments to existing requirements for certain mortgages.
Sec. 303. Additional requirements for certain mortgages.
Sec. 304. Amendment to provision governing correction of errors.
Sec. 305. Regulations.
Sec. 306. Effective date.
                 TITLE IV--OFFICE OF HOUSING COUNSELING

Sec. 401. Short title.
Sec. 402. Establishment of Office of Housing Counseling.
Sec. 403. Counseling procedures.
Sec. 404. Grants for housing counseling assistance.
Sec. 405. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 406. Study of defaults and foreclosures.
Sec. 407. Definitions for counseling-related programs.
Sec. 408. Updating and simplification of mortgage information booklet.
 TITLE V--MORTGAGE DISCLOSURES UNDER REAL ESTATE SETTLEMENT PROCEDURES 
                              ACT OF 1974

Sec. 501. Universal mortgage disclosure in good faith estimate of 
                            settlement services costs.
                      TITLE VI--MORTGAGE SERVICING

Sec. 601. Escrow and impound accounts relating to certain consumer 
                            credit transactions.
Sec. 602. Disclosure notice required for consumers who waive escrow 
                            services.
Sec. 603. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 604. Mortgage servicing studies required.
Sec. 605. Escrows included in repayment analysis.
                    TITLE VII--APPRAISAL ACTIVITIES

Sec. 701. Property appraisal requirements.
Sec. 702. Unfair and deceptive practices and acts relating to certain 
                            consumer credit transactions.
Sec. 703. Appraisal subcommittee of FIEC, appraiser independence, and 
                            approved appraiser education.
Sec. 704. Study required on improvements in appraisal process and 
                            compliance programs.
Sec. 705. Consumer appraisal disclosure.

             TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION

 Subtitle A--Licensing System for Residential Mortgage Loan Originators

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

    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 license 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 accountability and tracking of loan 
        originators.
            (5) Streamlines the licensing process and reduces the 
        regulatory burden.
            (6) Enhances consumer protections and supports anti-fraud 
        measures.
            (7) Provides consumers with easily accessible information 
        regarding the employment history of, and publicly adjudicated 
        disciplinary and enforcement actions against, loan originators.

SEC. 102. DEFINITIONS.

    For purposes of this subtitle, 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) Depository institution.--The term ``depository 
        institution'' has the same meaning as in section 3 of the 
        Federal Deposit Insurance Act and includes any credit union.
            (3) 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 residential 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);
                            (iii) does not include any individual who 
                        is not otherwise described in clause (i) or 
                        (ii) and who performs purely administrative or 
                        clerical tasks on behalf of a person who is 
                        described in any such clause.
                            (iv) does not include a person or entity 
                        that only performs real estate brokerage 
                        activities and is licensed or registered in 
                        accordance with applicable State law, unless 
                        the person or entity is compensated by a 
                        lender, a mortgage broker, or other loan 
                        originator or by any agent of such lender, 
                        mortgage broker, or other loan originator.
                    (B) Other definitions relating to loan 
                originator.--For purposes of this subsection, an 
                individual ``assists a consumer in obtaining or 
                applying to obtain a residential mortgage loan'' by, 
                among other things, advising on loan terms (including 
                rates, fees, other costs), preparing loan packages, or 
                collecting information on behalf of the consumer with 
                regard to a residential mortgage loan.
                    (C) 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 residential mortgage loan.
                    (D) Real estate brokerage activity defined.--The 
                term ``real estate brokerage activity'' means any 
                activity that involves offering or providing real 
                estate brokerage services to the public, including--
                            (i) acting as a real estate agent or real 
                        estate broker for a buyer, seller, lessor, or 
                        lessee of real property;
                            (ii) listing or advertising real property 
                        for sale, purchase, lease, rental, or exchange;
                            (iii) providing advice in connection with 
                        sale, purchase, lease, rental, or exchange of 
                        real property;
                            (iv) bringing together parties interested 
                        in the sale, purchase, lease, rental, or 
                        exchange of real property;
                            (v) negotiating, on behalf of any party, 
                        any portion of a contract relating to the sale, 
                        purchase, lease, rental, or exchange of real 
                        property (other than in connection with 
                        providing financing with respect to any such 
                        transaction);
                            (vi) engaging in any activity for which a 
                        person engaged in the activity is required to 
                        be registered or licensed as a real estate 
                        agent or real estate broker under any 
                        applicable law; and
                            (vii) offering to engage in any activity, 
                        or act in any capacity, described in clause 
                        (i), (ii), (iii), (iv), (v), or (vi).
            (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--
                            (i) a State-licensed loan originator; or
                            (ii) a registered loan originator.
                    (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 residential 
                        mortgage loan; and
                            (ii) communicating with a consumer 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 consumers about residential mortgage 
                        loan rates or terms.
            (5) Nationwide mortgage licensing system and registry.--The 
        term ``Nationwide Mortgage Licensing System and Registry'' 
        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 and registration of State-licensed loan originators 
        and the registration of registered loan originators or any 
        system established by the Secretary under section 108.
            (6) Registered loan originator.--The term ``registered loan 
        originator'' means any individual who--
                    (A) meets the definition of loan originator and is 
                an employee of a depository institution or a subsidiary 
                of a depository institution; and
                    (B) is registered with, and maintains a unique 
                identifier through, the Nationwide Mortgage Licensing 
                System and Registry.
            (7) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means any loan primarily for personal, family, 
        or household use that is secured by a mortgage, deed of trust, 
        or other equivalent consensual security interest on a dwelling 
        (as defined in section 103(v) of the Truth in Lending Act) or 
        residential real estate upon which is constructed or intended 
        to be constructed a dwelling (as so defined).
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (9) 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 a depository institution 
                or any subsidiary of a depository institution; and
                    (C) is licensed by a State or by the Secretary 
                under section 107 and registered as a loan originator 
                with, and maintains a unique identifier through, the 
                Nationwide Mortgage Licensing System and Registry.
            (10) Unique identifier.--The term ``unique identifier'' 
        means a number or other identifier that--
                    (A) permanently identifies a loan originator; and
                    (B) is assigned by protocols established by the 
                Nationwide Mortgage Licensing System and Registry and 
                the Federal banking agencies to facilitate electronic 
                tracking of loan originators and uniform identification 
                of, and public access to, the employment history of and 
                the publicly adjudicated disciplinary and enforcement 
                actions against loan originators.

SEC. 103. LICENSE OR REGISTRATION REQUIRED.

    (a) In General.--An individual may not engage in the business of a 
loan originator without first--
            (1) obtaining and maintaining--
                    (A) a registration as a registered loan originator; 
                or
                    (B) a license and registration as a State-licensed 
                loan originator; and
            (2) obtaining a unique identifier.
    (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 perform any of the 
        activities of a loan originator shall not be required to be a 
        State-licensed loan originator or a registered loan originator.
            (2) Independent contractors.--A loan processor or 
        underwriter may not work as an independent contractor unless 
        such processor or underwriter is a State-licensed loan 
        originator or a registered loan originator.

SEC. 104. STATE LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.

    (a) Background Checks.--In connection with an application to any 
State for licensing and registration as a State-licensed loan 
originator, the applicant shall, at a minimum, furnish to the 
Nationwide Mortgage Licensing System and Registry 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 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 licensing and 
registration as a State-licensed loan originator 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 subtitle.
            (4) The applicant has completed the pre-licensing education 
        requirement described in subsection (c).
            (5) The applicant has passed a written test that meets the 
        test requirement described in subsection (d).
    (c) Pre-Licensing Education of Loan Originators.--
            (1) Minimum educational requirements.--In order to meet the 
        pre-licensing education requirement referred to in subsection 
        (b)(4), a person shall complete at least 20 hours of education 
        approved in accordance with paragraph (2), which shall include 
        at least 3 hours of Federal law and regulations and 3 hours of 
        ethics which shall include instruction on fraud, consumer 
        protection and fair lending issues.
            (2) Approved educational courses.--For purposes of 
        paragraph (1), pre-licensing education courses shall be 
        reviewed, and published by the Nationwide Mortgage Licensing 
        System and Registry.
            (3) Limitation and standards.--
                    (A) Limitation.--To maintain the independence of 
                the approval process, the Nationwide Mortgage Licensing 
                System and Registry shall not directly or indirectly 
                offer pre-licensure educational courses for loan 
                originators.
                    (B) Standards.--In approving courses under this 
                section, the Nationwide Mortgage Licensing System and 
                Registry shall apply reasonable standards in the review 
                and approval of courses.
    (d) Testing of Loan Originators.--
            (1) In general.--In order to meet the written test 
        requirement referred to in subsection (b)(5), an individual 
        shall pass, in accordance with the standards established under 
        this subsection, a qualified written test developed by the 
        Nationwide Mortgage Licensing System and Registry and 
        administered by an approved test provider.
            (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;
                            (iii) State law and regulation pertaining 
                        to mortgage origination; and
                            (iv) Federal and State law and regulation, 
                        including instruction on fraud, consumer 
                        protection, and fair lending issues.
            (3) Minimum competence.--
                    (A) Passing score.--An individual shall not be 
                considered to have passed a qualified written test 
                unless the individual achieves a test score of not less 
                than 75 percent correct answers to questions.
                    (B) Initial retests.--An individual 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, 
                an individual shall wait at least 14 days before taking 
                the test again.
                    (D) Retest after lapse of license.--A State-
                licensed loan originator who fails to maintain a valid 
                license for a period of 5 years or longer shall retake 
                the test, not taking into account any time during which 
                such individual is a registered loan originator.

SEC. 105. STANDARDS FOR STATE LICENSE RENEWAL.

    (a) In General.--The minimum standards for license renewal for 
State-licensed loan originators 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 described in subsection (b).
    (b) Continuing Education for State-Licensed Loan Originators.--
            (1) In general.--In order to meet the annual continuing 
        education requirements referred to in subsection (a)(2), a 
        State-licensed loan originator shall complete at least 8 hours 
        of education approved in accordance with paragraph (2), which 
        shall include at least 3 hours of Federal law and regulations 
        and 2 hours of ethics, including education on fraud, consumer 
        protection, and fair lending issues.
            (2) Approved educational courses.--For purposes of 
        paragraph (1), continuing education courses shall be reviewed, 
        and published by the Nationwide Mortgage Licensing System and 
        Registry.
            (3) Calculation of continuing education credits.--A State-
        licensed loan originator--
                    (A) may only receive credit for a continuing 
                education course in the year in which the course is 
                taken; and
                    (B) may not take the same approved course in the 
                same or successive years to meet the annual 
                requirements for continuing education.
            (4) Instructor credit.--A State-licensed loan originator 
        who is approved as an instructor of an approved continuing 
        education course may receive credit for the originator's own 
        annual continuing education requirement at the rate of 2 hours 
        credit for every 1 hour taught.
            (5) Limitation and standards.--
                    (A) Limitation.--To maintain the independence of 
                the approval process, the Nationwide Mortgage Licensing 
                System and Registry shall not directly or indirectly 
                offer any continuing education courses for loan 
                originators.
                    (B) Standards.--In approving courses under this 
                section, the Nationwide Mortgage Licensing System and 
                Registry shall apply reasonable standards in the review 
                and approval of courses.

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

    (a) Development.--
            (1) In general.--The Federal banking agencies shall jointly 
        develop and maintain a system for registering employees of 
        depository institutions or subsidiaries of depository 
        institutions as registered loan originators with the Nationwide 
        Mortgage Licensing System and Registry. The system shall be 
        implemented before the end of the 1-year period beginning on 
        the date of the enactment of this Act.
            (2) Registration requirements.--In connection with the 
        registration of any loan originator who is an employee of a 
        depository institution or a subsidiary of a depository 
        institution with the Nationwide Mortgage Licensing System and 
        Registry, the appropriate Federal banking agency shall, at a 
        minimum, furnish or cause to be furnished to the Nationwide 
        Mortgage Licensing System and Registry information concerning 
        the employees's identity, including--
                    (A) 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
                    (B) personal history and experience, including 
                authorization for the Nationwide Mortgage Licensing 
                System and Registry to obtain information related to 
                any administrative, civil or criminal findings by any 
                governmental jurisdiction.
    (b) Coordination.--
            (1) Unique identifier.--The Federal banking agencies, 
        through the Financial Institutions Examination Council, shall 
        coordinate with the Nationwide Mortgage Licensing System and 
        Registry to establish protocols for assigning a unique 
        identifier to each registered loan originator that will 
        facilitate electronic tracking and uniform identification of, 
        and public access to, the employment history of and publicly 
        adjudicated disciplinary and enforcement actions against loan 
        originators.
            (2) Nationwide mortgage licensing system and registry 
        development.--To facilitate the transfer of information 
        required by subsection (a)(2), the Nationwide Mortgage 
        Licensing System and Registry shall coordinate with the Federal 
        banking agencies, through the Financial Institutions 
        Examination Council, concerning the development and operation, 
        by such System and Registry, of the registration functionality 
        and data requirements for loan originators.
    (c) Consideration of Factors and Procedures.--In establishing the 
registration procedures under subsection (a) and the protocols for 
assigning a unique identifier to a registered loan originator, the 
Federal banking agencies shall make such de minimis exceptions as may 
be appropriate to paragraphs (1)(A) and (2) of section 103(a), shall 
make reasonable efforts to utilize existing information to minimize the 
burden of registering loan originators, and shall consider methods for 
automating the process to the greatest extent practicable consistent 
with the purposes of this subtitle.

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

    (a) Back up Licensing System.--If, by the end of the 1-year period, 
or the 2-year period in the case of a State whose legislature meets 
only biennially, beginning on the date of the enactment of this Act or 
at any time thereafter, the Secretary determines that a State does not 
have in place by law or regulation a system for licensing and 
registering loan originators that meets the requirements of sections 
104 and 105 and subsection (d) or does not participate in the 
Nationwide Mortgage Licensing System and Registry, the Secretary shall 
provide for the establishment and maintenance of a system for the 
licensing and registration by the Secretary of loan originators 
operating in such State as State-licensed loan originators.
    (b) Licensing and Registration Requirements.--The system 
established by the Secretary under subsection (a) for any State shall 
meet the requirements of sections 104 and 105 for State-licensed loan 
originators.
    (c) Unique Identifier.--The Secretary shall coordinate with the 
Nationwide Mortgage Licensing System and Registry to establish 
protocols for assigning a unique identifier to each loan originator 
licensed by the Secretary as a State-licensed loan originator that will 
facilitate electronic tracking and uniform identification of, and 
public access to, the employment history of and the publicly 
adjudicated disciplinary and enforcement actions against loan 
originators.
    (d) State Licensing Law Requirements.--For purposes of this 
section, the law in effect in a State meets the requirements of this 
subsection if the Secretary determines the law satisfies the following 
minimum requirements:
            (1) A State loan originator supervisory authority is 
        maintained to provide effective supervision and enforcement of 
        such law, including the suspension, termination, or nonrenewal 
        of a license for a violation of State or Federal law.
            (2) The State loan originator supervisory authority ensures 
        that all State-licensed loan originators operating in the State 
        are registered with Nationwide Mortgage Licensing System and 
        Registry.
            (3) The State loan originator supervisory authority is 
        required to regularly report violations of such law, as well as 
        enforcement actions and other relevant information, to the 
        Nationwide Mortgage Licensing System and Registry.
    (e) Temporary Extension of Period.--The Secretary may extend, by 
not more than 6 months, the 1-year or 2-year period, as the case may 
be, referred to in subsection (a) for the licensing of loan originators 
in any State under a State licensing law that meets the requirements of 
sections 104 and 105 and subsection (d) if the Secretary determines 
that such State is making a good faith effort to establish a State 
licensing law that meets such requirements, license mortgage 
originators under such law, and register such originators with the 
Nationwide Mortgage Licensing System and Registry.
    (f) Limitation on HUD-Licensed Loan Originators.--Any loan 
originator who is licensed by the Secretary under a system established 
under this section for any State may not use such license to originate 
loans in any other State.

SEC. 108. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE MORTGAGE LICENSING 
              AND REGISTRY SYSTEM.

    If at any time the Secretary determines that the Nationwide 
Mortgage Licensing System and Registry is failing to meet the 
requirements and purposes of this subtitle for a comprehensive 
licensing, supervisory, and tracking system for loan originators, the 
Secretary shall establish and maintain such a system to carry out the 
purposes of this subtitle and the effective registration and regulation 
of loan originators.

SEC. 109. FEES.

    The Federal banking agencies, the Secretary, and the Nationwide 
Mortgage Licensing System and Registry may charge reasonable fees to 
cover the costs of maintaining and providing access to information from 
the Nationwide Mortgage Licensing System and Registry to the extent 
such fees are not charged to consumers for access such system and 
registry.

SEC. 110. BACKGROUND CHECKS OF LOAN ORIGINATORS.

    (a) Access to Records.--Notwithstanding any other provision of 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 State-licensed 
loan originators to the extent criminal history background checks are 
required under the laws of the State for the licensing of such loan 
originators.
    (b) Agent.--For the purposes of this section and in order to reduce 
the points of contact 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 provided to 
the Nationwide Mortgage Licensing System and Registry or a system 
established by the Secretary under section 108, 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. Such information and 
material 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 
Federal and State laws.
    (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 Nationwide Mortgage 
        Licensing System and Registry or the Secretary with respect to 
        such information or material, the person to whom such 
        information or material pertains waives, in whole or in part, 
        in the discretion of such person, that privilege.
    (c) Coordination With Other 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.
    (d) Public Access to Information.--This section shall not apply 
with respect to the information or material relating to the employment 
history of, and publicly adjudicated disciplinary and enforcement 
actions against, loan originators that is included in Nationwide 
Mortgage Licensing System and Registry for access by the public.

SEC. 112. LIABILITY PROVISIONS.

    The Secretary, any State official or agency, any Federal banking 
agency, or any organization serving as the administrator of the 
Nationwide Mortgage Licensing System and Registry or a system 
established by the Secretary under section 108, or any officer or 
employee of any such entity, 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 of any such entity, while acting 
within the scope of office or employment, relating to the collection, 
furnishing, or dissemination of information concerning persons who are 
loan originators or are applying for licensing or registration as loan 
originators.

SEC. 113. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.

    (a) Summons Authority.--The Secretary may--
            (1) examine any books, papers, records, or other data of 
        any loan originator operating in any State which is subject to 
        a licensing system established by the Secretary under section 
        107; and
            (2) summon any loan originator referred to in paragraph (1) 
        or any person having possession, custody, or care of the 
        reports and records relating to such loan originator, to appear 
        before the Secretary or any delegate of the Secretary at a time 
        and place named in the summons and to produce such books, 
        papers, records, or other data, and to give testimony, under 
        oath, as may be relevant or material to an investigation of 
        such loan originator for compliance with the requirements of 
        this subtitle.
    (b) Examination Authority.--
            (1) In general.--If the Secretary establishes a licensing 
        system under section 107 for any State, the Secretary shall 
        appoint examiners for the purposes of administering such 
        section.
            (2) Power to examine.--Any examiner appointed under 
        paragraph (1) shall have power, on behalf of the Secretary, to 
        make any examination of any loan originator operating in any 
        State which is subject to a licensing system established by the 
        Secretary under section 107 whenever the Secretary determines 
        an examination of any loan originator is necessary to determine 
        the compliance by the originator with this subtitle.
            (3) Report of examination.--Each examiner appointed under 
        paragraph (1) shall make a full and detailed report of 
        examination of any loan originator examined to the Secretary.
            (4) Administration of oaths and affirmations; evidence.--In 
        connection with examinations of loan originators operating in 
        any State which is subject to a licensing system established by 
        the Secretary under section 107, or with other types of 
        investigations to determine compliance with applicable law and 
        regulations, the Secretary and examiners appointed by the 
        Secretary may administer oaths and affirmations and examine and 
        take and preserve testimony under oath as to any matter in 
        respect to the affairs of any such loan originator.
            (5) Assessments.--The cost of conducting any examination of 
        any loan originator operating in any State which is subject to 
        a licensing system established by the Secretary under section 
        107 shall be assessed by the Secretary against the loan 
        originator to meet the Secretary's expenses in carrying out 
        such examination.
    (c) Cease and Desist Proceeding.--
            (1) Authority of secretary.--If the Secretary finds, after 
        notice and opportunity for hearing, that any person is 
        violating, has violated, or is about to violate any provision 
        of this subtitle, or any regulation thereunder, with respect to 
        a State which is subject to a licensing system established by 
        the Secretary under section 107, the Secretary may publish such 
        findings and enter an order requiring such person, and any 
        other person that is, was, or would be a cause of the 
        violation, due to an act or omission the person knew or should 
        have known would contribute to such violation, to cease and 
        desist from committing or causing such violation and any future 
        violation of the same provision, rule, or regulation. Such 
        order may, in addition to requiring a person to cease and 
        desist from committing or causing a violation, require such 
        person to comply, or to take steps to effect compliance, with 
        such provision or regulation, upon such terms and conditions 
        and within such time as the Secretary may specify in such 
        order. Any such order may, as the Secretary deems appropriate, 
        require future compliance or steps to effect future compliance, 
        either permanently or for such period of time as the Secretary 
        may specify, with such provision or regulation with respect to 
        any loan originator.
            (2) Hearing.--The notice instituting proceedings pursuant 
        to paragraph (1) shall fix a hearing date not earlier than 30 
        days nor later than 60 days after service of the notice unless 
        an earlier or a later date is set by the Secretary with the 
        consent of any respondent so served.
            (3) Temporary order.--Whenever the Secretary determines 
        that the alleged violation or threatened violation specified in 
        the notice instituting proceedings pursuant to paragraph (1), 
        or the continuation thereof, is likely to result in significant 
        dissipation or conversion of assets, significant harm to 
        consumers, or substantial harm to the public interest prior to 
        the completion of the proceedings, the Secretary may enter a 
        temporary order requiring the respondent to cease and desist 
        from the violation or threatened violation and to take such 
        action to prevent the violation or threatened violation and to 
        prevent dissipation or conversion of assets, significant harm 
        to consumers, or substantial harm to the public interest as the 
        Secretary deems appropriate pending completion of such 
        proceedings. Such an order shall be entered only after notice 
        and opportunity for a hearing, unless the Secretary determines 
        that notice and hearing prior to entry would be impracticable 
        or contrary to the public interest. A temporary order shall 
        become effective upon service upon the respondent and, unless 
        set aside, limited, or suspended by the Secretary or a court of 
        competent jurisdiction, shall remain effective and enforceable 
        pending the completion of the proceedings.
            (4) Review of temporary orders.--
                    (A) Review by secretary.--At any time after the 
                respondent has been served with a temporary cease-and-
                desist order pursuant to paragraph (3), the respondent 
                may apply to the Secretary to have the order set aside, 
                limited, or suspended. If the respondent has been 
                served with a temporary cease-and-desist order entered 
                without a prior hearing before the Secretary, the 
                respondent may, within 10 days after the date on which 
                the order was served, request a hearing on such 
                application and the Secretary shall hold a hearing and 
                render a decision on such application at the earliest 
                possible time.
                    (B) Judicial review.--Within--
                            (i) 10 days after the date the respondent 
                        was served with a temporary cease-and-desist 
                        order entered with a prior hearing before the 
                        Secretary; or
                            (ii) 10 days after the Secretary renders a 
                        decision on an application and hearing under 
                        paragraph (1), with respect to any temporary 
                        cease-and-desist order entered without a prior 
                        hearing before the Secretary,
                the respondent may apply to the United States district 
                court for the district in which the respondent resides 
                or has its principal place of business, or for the 
                District of Columbia, for an order setting aside, 
                limiting, or suspending the effectiveness or 
                enforcement of the order, and the court shall have 
                jurisdiction to enter such an order. A respondent 
                served with a temporary cease-and-desist order entered 
                without a prior hearing before the Secretary may not 
                apply to the court except after hearing and decision by 
                the Secretary on the respondent's application under 
                subparagraph (A).
                    (C) No automatic stay of temporary order.--The 
                commencement of proceedings under subparagraph (B) 
                shall not, unless specifically ordered by the court, 
                operate as a stay of the Secretary's order.
            (5) Authority of the secretary to prohibit persons from 
        serving as loan originators.--In any cease-and-desist 
        proceeding under paragraph (1), the Secretary may issue an 
        order to prohibit, conditionally or unconditionally, and 
        permanently or for such period of time as the Secretary shall 
        determine, any person who has violated this subtitle or 
        regulations thereunder, from acting as a loan originator if the 
        conduct of that person demonstrates unfitness to serve as a 
        loan originator.
    (d) Authority of the Secretary To Assess Money Penalties.--
            (1) In general.--The Secretary may impose a civil penalty 
        on a loan originator operating in any State which is subject to 
        licensing system established by the Secretary under section 107 
        if the Secretary finds, on the record after notice and 
        opportunity for hearing, that such loan originator has violated 
        or failed to comply with any requirement of this subtitle or 
        any regulation prescribed by the Secretary under this subtitle 
        or order issued under subsection (c).
            (2) Maximum amount of penalty.--The maximum amount of 
        penalty for each act or omission described in paragraph (1) 
        shall be $5,000 for each day the violation continues.

      Subtitle B--Residential Mortgage Loan Origination Standards

SEC. 121. DEFINITIONS.

    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) Definitions Relating to Mortgage Origination and Residential 
Mortgage Loans.--
            ``(1) Commission.--Unless otherwise specified, the term 
        `Commission' means the Federal Trade Commission.
            ``(2) 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 Federal Deposit Insurance 
        Corporation, and the National Credit Union Administration 
        Board.
            ``(3) Mortgage originator.--The term `mortgage 
        originator'--
                    ``(A) means any 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 
                        residential 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 
                person can or will provide any of the services 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.
            ``(4) Nationwide mortgage licensing system and registry.--
        The term `Nationwide Mortgage Licensing System and Registry' 
        has the same meaning as in section 102(5) of the Mortgage 
        Reform and Anti-Predatory Lending Act of 2007.
            ``(5) Other definitions relating to mortgage originator.--
        For purposes of this subsection, a person `assists a consumer 
        in obtaining or applying to obtain a residential mortgage loan' 
        by, among other things, advising on residential mortgage loan 
        terms (including rates, fees, and other costs), preparing 
        residential mortgage loan packages, or collecting information 
        on behalf of the consumer with regard to a residential mortgage 
        loan.
            ``(6) Residential mortgage loan.--The term `residential 
        mortgage loan' means any consumer credit transaction that is 
        secured by a mortgage, deed of trust, or other equivalent 
        consensual security interest on a dwelling or on residential 
        real property that includes a dwelling, other than a consumer 
        credit transaction under an open end credit plan or a reverse 
        mortgage.
            ``(7) Secretary.--The term `Secretary', when used in 
        connection with any transaction or person involved with a 
        residential mortgage loan, means the Secretary of Housing and 
        Urban Development.
            ``(8) Securitization vehicle.--The term `securitization 
        vehicle' means a trust, corporation, partnership, limited 
        liability entity, or special purpose entity that--
                    ``(A) is the issuer, or is created by the issuer, 
                of mortgage pass-through certificates, participation 
                certificates, mortgage-backed securities, or other 
                similar securities backed by a pool of assets that 
                includes residential mortgage loans; and
                    ``(B) holds such loans.
            ``(9) Securitizer.--The term `securitizer' means the person 
        that transfers, conveys, or assigns, or causes the transfer, 
        conveyance, or assignment of, residential mortgage loans, 
        including through a special purpose vehicle, to any 
        securitization vehicle, excluding any trustee that holds such 
        loans solely for the benefit of the securitization vehicle.
            ``(10) Servicer.--The term `servicer' has the same meaning 
        as in section 6(i)(2) of the Real Estate Settlement Procedures 
        Act of 1974.''.

SEC. 122. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

    (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. Residential mortgage loan origination
    ``(a) Duty of Care.--
            ``(1) Standard.--Subject to regulations prescribed under 
        this subsection, each mortgage originator shall, in addition to 
        the duties imposed by otherwise applicable provisions of State 
        or Federal law--
                    ``(A) be qualified and, when required, registered 
                and licensed as a mortgage originator in accordance 
                with applicable State or Federal law including subtitle 
                A of title I of the Mortgage Reform and Anti-Predatory 
                Lending Act of 2007;
                    ``(B) with respect to each consumer seeking or 
                inquiring about a residential mortgage loan, diligently 
                work to present the consumer with a range of 
                residential mortgage loan products for which the 
                consumer likely qualifies and which are appropriate to 
                the consumer's existing circumstances, based on 
                information known by, or obtained in good faith by, the 
                originator;
                    ``(C) make full, complete, and timely disclosure to 
                each such consumer of--
                            ``(i) the comparative costs and benefits of 
                        each residential mortgage loan product offered, 
                        discussed, or referred to by the originator;
                            ``(ii) the nature of the originator's 
                        relationship to the consumer (including the 
                        cost of the services to be provided by the 
                        originator and a statement that the mortgage 
                        originator is or is not acting as an agent for 
                        the consumer, as the case may be); and
                            ``(iii) any relevant conflicts of interest;
                    ``(D) certify to the creditor, with respect to any 
                transaction involving a residential mortgage loan, that 
                the mortgage originator has fulfilled all requirements 
                applicable to the originator under this section with 
                respect to the transaction; and
                    ``(E) include the unique identifier of the 
                originator provided by the Nationwide Mortgage 
                Licensing System and Registry on all loan documents.
            ``(2) Clarification of extent of duty to present range of 
        products and appropriate products.--
                    ``(A) No duty to offer products for which 
                originator is not authorized to take an application.--
                Paragraph (1)(B) shall not be construed as requiring--
                            ``(i) a mortgage originator to present to 
                        any consumer any specific residential mortgage 
                        loan product that is offered by a creditor 
                        which does not accept consumer referrals from, 
                        or consumer applications submitted by or 
                        through, such originator; or
                            ``(ii) a creditor to offer products that 
                        the creditor does not offer to the general 
                        public.
                    ``(B) Appropriate loan product.--For purposes of 
                paragraph (1)(B), a residential mortgage loan shall be 
                presumed to be appropriate for a consumer if--
                            ``(i) the mortgage originator determines in 
                        good faith, based on then existing information 
                        and without undergoing a full underwriting 
                        process, that the consumer has a reasonable 
                        ability to repay and, in the case of a 
                        refinancing of an existing residential mortgage 
                        loan, receives a net tangible benefit, as 
                        determined in accordance with regulations 
                        prescribed under subsections (a) and (b) of 
                        section 129B.
                            ``(ii) the loan does not have predatory 
                        characteristics or effects (such as equity 
                        stripping and excessive fees and abusive terms) 
                        as determined in accordance with regulations 
                        prescribed under paragraph (4).
            ``(3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                    ``(A) creating an agency or fiduciary relationship 
                between a mortgage originator and a consumer if the 
                originator does not hold himself or herself out as such 
                an agent or fiduciary; or
                    ``(B) restricting a mortgage originator from 
                holding himself or herself out as an agent or fiduciary 
                of a consumer subject to any additional duty, 
                requirement, or limitation applicable to agents or 
                fiduciaries under any Federal or State law.
            ``(4) Regulations.--
                    ``(A) In general.--The Federal banking agencies, in 
                consultation with the Secretary, the Chairman of the 
                State Liaison Committee to the Financial Institutions 
                Examination Council, and the Commission, shall jointly 
                prescribe regulations to--
                            ``(i) further define the duty established 
                        under paragraph (1);
                            ``(ii) implement the requirements of this 
                        subsection;
                            ``(iii) establish the time period within 
                        which any disclosure required under paragraph 
                        (1) shall be made to the consumer; and
                            ``(iv) establish such other requirements 
                        for any mortgage originator as such regulatory 
                        agencies may determine to be appropriate to 
                        meet the purposes of this subsection.
                    ``(B) Complementary and nonduplicative 
                disclosures.--The agencies referred to in subparagraph 
                (A) shall endeavor to make the required disclosures to 
                consumers under this subsection complementary and 
                nonduplicative with other disclosures for mortgage 
                consumers to the extent such efforts--
                            ``(i) are practicable; and
                            ``(ii) do not reduce the value of any such 
                        disclosure to recipients of such disclosures.
            ``(5) Compliance procedures required.--The Federal banking 
        agencies shall prescribe regulations requiring depository 
        institutions to establish and maintain procedures reasonably 
        designed to assure and monitor the compliance of such 
        depository institutions, the subsidiaries of such institutions, 
        and the employees of such institutions or subsidiaries with the 
        requirements of this section and the registration procedures 
        established under section 106 of the Mortgage Reform and Anti-
        Predatory Lending Act of 2007.''.
    (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. Residential mortgage loan origination.''.

SEC. 123. PROHIBITION ON STEERING INCENTIVES.

    Section 129A of the Truth in Lending Act (as added by section 
122(a)) is amended by inserting after subsection (a) the following new 
subsection:
    ``(b) Prohibition on Steering Incentives.--
            ``(1) Amount of originator compensation cannot vary based 
        on terms.--No mortgage originator may receive from any person, 
        and no person may pay to any mortgage originator, directly or 
        indirectly, any incentive compensation, including yield spread 
        premium or any equivalent compensation or gain, that is based 
        on, or varies with, the terms (other than the amount of 
        principal) of any loan that is not a qualified mortgage (as 
        defined in section 129B(c)(3)).
            ``(2) Regulations.--The Federal banking agencies, in 
        consultation with the Secretary and the Commission, shall 
        jointly prescribe regulations to prohibit--
                    ``(A) mortgage originators from steering any 
                consumer to a residential mortgage loan that--
                            ``(i) the consumer lacks a reasonable 
                        ability to repay (in accordance with 
                        regulations prescribed under section 129B(a));
                            ``(ii) in the case of a refinancing of a 
                        residential mortgage loan, does not provide the 
                        consumer with a net tangible benefit (in 
                        accordance with regulations prescribed under 
                        section 129B(b)); or
                            ``(iii) has predatory characteristics or 
                        effects (such as equity stripping, excessive 
                        fees, or abusive terms);
                    ``(B) mortgage originators from steering any 
                consumer from a residential mortgage loan for which the 
                consumer is qualified that is a qualified mortgage (as 
                defined in section 129B(c)(3)) to a residential 
                mortgage loan that is not a qualified mortgage; and
                    ``(C) abusive or unfair lending practices that 
                promote disparities among consumers of equal credit 
                worthiness but of different race, ethnicity, gender, or 
                age.
            ``(3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                    ``(A) limiting or affecting the ability of a 
                mortgage originator to sell residential mortgage loans 
                to subsequent purchasers;
                    ``(B) restricting a consumer's ability to finance, 
                including through rate or principal, any origination 
                fees or costs permitted under this subsection, or the 
                originator's ability to receive such fees or costs 
                (including compensation) from any person, so long as 
                such fees or costs were fully and clearly disclosed to 
                the consumer earlier in the application process as 
                required by 129A(a)(1)(C)(ii) and do not vary based on 
                the terms of the loan or the consumer's decision about 
                whether to finance such fees or costs; or
                    ``(C) prohibiting incentive payments to a mortgage 
                originator based on the number of residential mortgage 
                loans originated within a specified period of time.''.

SEC. 124. LIABILITY.

    Section 129A of the Truth in Lending Act is amended by inserting 
after subsection (b) (as added by section 123) the following new 
subsection:
    ``(c) Liability for Violations.--
            ``(1) In general.--For purposes of providing a cause of 
        action for any failure by a mortgage originator to comply with 
        any requirement imposed under this section and any regulation 
        prescribed under this section, subsections (a) and (b) of 
        section 130 shall be applied with respect to any such failure 
        by substituting `mortgage originator' for `creditor' each place 
        such term appears in each such subsection.
            ``(2) Maximum.--The maximum amount of any liability of a 
        mortgage originator under paragraph (1) to a consumer for any 
        violation of this section shall not exceed an amount equal to 3 
        times the total amount of direct and indirect compensation or 
        gain accruing to the mortgage originator in connection with the 
        residential mortgage loan involved in the violation, plus the 
        costs to the consumer of the action, including a reasonable 
        attorney's fee.''.

SEC. 125. REGULATIONS.

    The regulations required or authorized to be prescribed under this 
title or the amendments made by this title--
            (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
            (2) shall take effect not later than 18 months after the 
        date of the enactment of this Act.

               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

SEC. 201. ABILITY TO REPAY.

    (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 122(a)) the following new section:
``Sec. 129B. Minimum standards for residential mortgage loans
    ``(a) Ability To Repay.--
            ``(1) In general.--In accordance with regulations 
        prescribed jointly by the Federal banking agencies, in 
        consultation with the Commission, no creditor may make a 
        residential mortgage loan unless the creditor makes a 
        reasonable and good faith determination based on verified and 
        documented information that, at the time the loan is 
        consummated, the consumer has a reasonable ability to repay the 
        loan, according to its terms, and all applicable taxes, 
        insurance, and assessments.
            ``(2) Multiple loans.--If the creditor knows, or has reason 
        to know, that 1 or more residential mortgage loans secured by 
        the same dwelling will be made to the same consumer, the 
        creditor shall make a reasonable and good faith determination, 
        based on verified and documented information, that the consumer 
        has a reasonable ability to repay the combined payments of all 
        loans on the same dwelling according to the terms of those 
        loans and all applicable taxes, insurance, and assessments.
            ``(3) Basis for determination.--A determination under this 
        subsection of a consumer's ability to repay a residential 
        mortgage loan shall be based on consideration of the consumer's 
        credit history, current income, expected income the consumer is 
        reasonably assured of receiving, current obligations, debt-to-
        income ratio, employment status, and other financial resources 
        other than the consumer's equity in the dwelling or real 
        property that secures repayment of the loan.
            ``(4) Nonstandard loans.--
                    ``(A) Variable rate loans that defer repayment of 
                any principal or interest.--For purposes of 
                determining, under this subsection, a consumer's 
                ability to repay a variable rate residential mortgage 
                loan that allows or requires the consumer to defer the 
                repayment of any principal or interest, the creditor 
                shall take into consideration a fully amortizing 
                repayment schedule.
                    ``(B) Interest-only loans.--For purposes of 
                determining, under this subsection, a consumer's 
                ability to repay a residential mortgage loan that 
                permits or requires the payment of interest only, the 
                creditor shall take into consideration the payment 
                amount required to amortize the loan by its final 
                maturity.
                    ``(C) Calculation for negative amortization.--In 
                making any determination under this subsection, a 
                creditor shall also take into consideration any balance 
                increase that may accrue from any negative amortization 
                provision.
                    ``(D) Calculation process.--For purposes of making 
                any determination under this subsection, a creditor 
                shall calculate the monthly payment amount for 
                principal and interest on any residential mortgage loan 
                by assuming--
                            ``(i) the loan proceeds are fully disbursed 
                        on the date of the consummation of the loan;
                            ``(ii) the loan is to be repaid in 
                        substantially equal monthly amortizing payments 
                        for principal and interest over the entire term 
                        of the loan with no balloon payment, unless the 
                        loan contract requires more rapid repayment 
                        (including balloon payment), in which case the 
                        contract's repayment schedule shall be used in 
                        this calculation; and
                            ``(iii) the interest rate over the entire 
                        term of the loan is a fixed rate equal to the 
                        fully indexed rate at the time of the loan 
                        closing, without considering the introductory 
                        rate.
            ``(5) Fully-indexed rate defined.--For purposes of this 
        subsection, the term `fully indexed rate' means the index rate 
        prevailing on a residential mortgage loan at the time the loan 
        is made plus the margin that will apply after the expiration of 
        any introductory interest rates.''.
    (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 122(b)) the following new item:

``129B. Minimum standards for residential mortgage loans.''.

SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE 
              LOANS.

    Section 129B of the Truth in Lending Act (as added by section 
201(a)) is amended by inserting after subsection (a) the following new 
subsection:
    ``(b) Net Tangible Benefit for Refinancing of Residential Mortgage 
Loans.--
            ``(1) In general.--In accordance with regulations 
        prescribed under paragraph (3), no creditor may extend credit 
        in connection with any residential mortgage loan that involves 
        a refinancing of a prior existing residential mortgage loan 
        unless the creditor reasonably and in good faith determines, at 
        the time the loan is consummated and on the basis of 
        information known by or obtained in good faith by the creditor, 
        that the refinanced loan will provide a net tangible benefit to 
        the consumer.
            ``(2) Certain loans providing no net tangible benefit.--A 
        residential mortgage loan that involves a refinancing of a 
        prior existing residential mortgage loan shall not be 
        considered to provide a net tangible benefit to the consumer if 
        the costs of the refinanced loan, including points, fees and 
        other charges, exceed the amount of any newly advanced 
        principal without any corresponding changes in the terms of the 
        refinanced loan that are advantageous to the consumer.
            ``(3) Net tangible benefit.--The Federal banking agencies 
        shall jointly prescribe regulations defining the term `net 
        tangible benefit' for purposes of this subsection.''.

SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

    Section 129B of the Truth in Lending Act is amended by inserting 
after subsection (b) (as added by section 202) the following new 
subsection:
    ``(c) Presumption of Ability To Repay and Net Tangible Benefit.--
            ``(1) In general.--Any creditor with respect to any 
        residential mortgage loan, and any assignee or securitizer of 
        such loan, may presume that the loan has met the requirements 
        of subsections (a) and (b), if the loan is a qualified mortgage 
        or a qualified safe harbor mortgage.
            ``(2) Rebuttable presumption.--Any presumption established 
        under paragraph (1) with respect to any residential mortgage 
        loan shall be rebuttable only--
                    ``(A) against the creditor of such loan; and
                    ``(B) if such loan is a qualified safe harbor 
                mortgage.
            ``(3) Definitions.--For purposes of this section the 
        following definitions shall apply:
                    ``(A) Most recent conventional mortgage rate.--The 
                term `most recent conventional mortgage rate' means the 
                contract interest rate on commitments for fixed-rate 
                first mortgages most recently published in the Federal 
                Reserve Statistical Release on selected interest rates 
                (daily or weekly), and commonly referred to as the H.15 
                release (or any successor publication), in the week 
                preceding a date of determination for purposes of 
                applying this subsection.
                    ``(B) Qualified mortgage.--The term `qualified 
                mortgage' means--
                            ``(i) any residential mortgage loan that 
                        constitutes a first lien on the dwelling or 
                        real property securing the loan and either--
                                    ``(I) has an annual percentage rate 
                                that does not equal or exceed the yield 
                                on securities issued by the Secretary 
                                of the Treasury under chapter 31 of 
                                title 31, United States Code, that bear 
                                comparable periods of maturity by more 
                                than 3 percentage points; or
                                    ``(II) has an annual percentage 
                                rate that does not equal or exceed the 
                                most recent conventional mortgage rate, 
                                or such other annual percentage rate as 
                                may be established by regulation under 
                                paragraph (6), by more than 175 basis 
                                points;
                            ``(ii) any residential mortgage loan that 
                        is not the first lien on the dwelling or real 
                        property securing the loan and either--
                                    ``(I) has an annual percentage rate 
                                that does not equal or exceed the yield 
                                on securities issued by the Secretary 
                                of the Treasury under chapter 31 of 
                                title 31, United States Code, that bear 
                                comparable periods of maturity by more 
                                than 5 percentage points; or
                                    ``(II) has an annual percentage 
                                rate that does not equal or exceed the 
                                most recent conventional mortgage rate, 
                                or such other annual percentage rate as 
                                may be established by regulation under 
                                paragraph (6), by more than 375 basis 
                                points;
                            ``(iii) a loan made or guaranteed by the 
                        Secretary of Veterans Affairs; and
                            ``(iv) a mortgage insured under title II of 
                        the National Housing Act (12 U.S.C. 1707 et 
                        seq.).
                    ``(C) Qualified safe harbor mortgage.--The term 
                `qualified safe harbor mortgage' means any residential 
                mortgage loan--
                            ``(i) for which the income and financial 
                        resources of the consumer are verified and 
                        documented;
                            ``(ii) for which the residential mortgage 
                        loan underwriting process is based on the 
                        fully-indexed rate, and takes into account all 
                        applicable taxes, insurance, and assessments;
                            ``(iii) which does not provide for a 
                        repayment schedule that results in negative 
                        amortization at any time;
                            ``(iv) meets such other requirements as may 
                        be established by regulation; and
                            ``(v) for which any of the following 
                        factors apply with respect to such loan:
                                    ``(I) The periodic payment amount 
                                for principal and interest are fixed 
                                for a minimum of 5 years under the 
                                terms of the loan.
                                    ``(II) In the case of a variable 
                                rate loan, the annual percentage rate 
                                varies based on a margin that is less 
                                than 3 percent over a single generally 
                                accepted interest rate index that is 
                                the basis for determining the rate of 
                                interest for the mortgage.
                                    ``(III) The loan does not cause the 
                                consumer's total monthly debts, 
                                including amounts under the loan, to 
                                exceed a percentage established by 
                                regulation of his or her monthly gross 
                                income or such other maximum percentage 
                                of such income as may be prescribed by 
                                regulation under paragraph (6).
            ``(4) Determination of comparison to treasury securities.--
                    ``(A) In general.--Without regard to whether a 
                residential mortgage loan is subject to or reportable 
                under the Home Mortgage Disclosure Act of 1975 and 
                subject to subparagraph (B), the difference between the 
                annual percentage rate of such loan and the yield on 
                securities issued by the Secretary of the Treasury 
                under chapter 31 of title 31, United States Code, 
                having comparable periods of maturity shall be 
                determined using the same procedures and methods of 
                calculation applicable to loans that are subject to the 
                reporting requirements under the Home Mortgage 
                Disclosure Act of 1975.
                    ``(B) Date of determination of yield.--The yield on 
                the securities referred to in subparagraph (A) shall be 
                determined, for purposes of such subparagraph and 
                paragraph (3) with respect to any residential mortgage 
                loan, as of the 15th day of the month preceding the 
                month in which a completed application is submitted for 
                such loan.
            ``(5) APR in case of introductory offer.--For purposes of 
        making a determination of whether a residential mortgage loan 
        that provides for a fixed interest rate for an introductory 
        period and then resets or adjusts to a variable rate is a 
        qualified mortgage, the determination of the annual percentage 
        rate, as determined in accordance with regulations prescribed 
        by the Board under section 107, shall be based on the greater 
        of the introductory rate and the fully indexed rate of 
        interest.
            ``(6) Regulations.--
                    ``(A) In general.--The Federal banking agencies 
                shall jointly prescribe regulations to carry out the 
                purposes of this subsection.
                    ``(B) Revision of safe harbor criteria.--The 
                Federal banking agencies may jointly prescribe 
                regulations that revise, add to, or subtract from the 
                criteria that define a qualified mortgage and a 
                qualified safe harbor mortgage to the extent necessary 
                and appropriate to effectuate the purposes of this 
                subsection, to prevent circumvention or evasion of this 
                subsection, or to facilitate compliance with this 
                subsection.
            ``(7) Rule of construction.--No provision of this 
        subsection may be construed as implying that a residential 
        mortgage loan may be presumed to violate subsection (a) or (b) 
        if such loan is not a qualified mortgage or a qualified safe 
        harbor mortgage.''.

SEC. 204. LIABILITY.

    Section 129B of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 203) the following new 
subsection:
    ``(d) Liability for Violations.--
            ``(1) In general.--
                    ``(A) Rescission.--In addition to any other 
                liability under this title for a violation by a 
                creditor of subsection (a) or (b) (for example under 
                section 130) and subject to the statute of limitations 
                in paragraph (7), a civil action may be maintained 
                against a creditor for a violation of subsection (a) or 
                (b) with respect to a residential mortgage loan for the 
                rescission of the loan, and such additional costs as 
                the obligor may have incurred as a result of the 
                violation and in connection with obtaining a rescission 
                of the loan, including a reasonable attorney's fee.
                    ``(B) Cure.--A creditor shall not be liable for 
                rescission under subparagraph (A) with respect to a 
                residential mortgage loan if, no later than 90 days 
                after the receipt of notification from the consumer 
                that the loan violates subsection (a) or (b), the 
                creditor provides a cure.
            ``(2) Limited assignee and securitizer liability.--
        Notwithstanding sections 125(e) and 131 and except as provided 
        in paragraph (3), a civil action which may be maintained 
        against a creditor with respect to a residential mortgage loan 
        for a violation of subsection (a) or (b) may be maintained 
        against any assignee or securitizer of such residential 
        mortgage loan, who has acted in good faith, for the following 
        liabilities only:
                    ``(A) Rescission of the loan.
                    ``(B) Such additional costs as the obligor may have 
                incurred as a result of the violation and in connection 
                with obtaining a rescission of the loan, including a 
                reasonable attorney's fee.
            ``(3) Assignee and securitizer exemption.--No assignee or 
        securitizer of a residential mortgage loan shall be liable 
        under paragraph (2) with respect to such loan if--
                    ``(A) no later than 90 days after the receipt of 
                notification from the consumer that the loan violates 
                subsection (a) or (b), the assignee or securitizer 
                provides a cure so that the loan satisfies the 
                requirements of subsections (a) and (b); or
                    ``(B) each of the following conditions are met:
                            ``(i) The assignee or securitizer--
                                    ``(I) has a policy against buying 
                                residential mortgage loans other than 
                                qualified mortgages or qualified safe 
                                harbor mortgages (as defined in 
                                subsection (c));
                                    ``(II) the policy is intended to 
                                verify seller or assignor compliance 
                                with the representations and warranties 
                                required under clause (ii); and
                                    ``(III) in accordance with 
                                regulations which the Federal banking 
                                agencies and the Securities and 
                                Exchange Commission shall jointly 
                                prescribe, exercises reasonable due 
                                diligence to adhere to such policy in 
                                purchasing residential mortgage loans, 
                                including through adequate, thorough, 
                                and consistently applied sampling 
                                procedures.
                            ``(ii) The contract under which such 
                        assignee or securitizer acquired the 
                        residential mortgage loan from a seller or 
                        assignor of the loan contains representations 
                        and warranties that the seller or assignor--
                                    ``(I) is not selling or assigning 
                                any residential mortgage loan which is 
                                not a qualified mortgage or a qualified 
                                safe harbor mortgage; or
                                    ``(II) is a beneficiary of a 
                                representation and warranty from a 
                                previous seller or assignor to that 
                                effect,
                        and the assignee or securitizer in good faith 
                        takes reasonable steps to obtain the benefit of 
                        such representation or warranty.
            ``(4) Absent parties.--
                    ``(A) Absent creditor.--Notwithstanding the 
                exemption provided in paragraph (3), if the creditor 
                with respect to a residential mortgage loan made in 
                violation of subsection (a) or (b) has ceased to exist 
                as a matter of law or has filed for bankruptcy 
                protection under title 11, United States Code, or has 
                had a receiver or liquidating agent appointed, a 
                consumer may maintain a civil action against an 
                assignee to cure, but not rescind, the residential 
                mortgage loan, plus the costs and reasonable attorney's 
                fees incurred in obtaining such remedy.
                    ``(B) Absent creditor and assignee.--
                Notwithstanding the exemption provided in paragraph 
                (3), if the creditor with respect to a residential 
                mortgage loan made in violation of subsection (a) or 
                (b) and each assignee of such loan have ceased to exist 
                as a matter of law or have filed for bankruptcy 
                protection under title 11, United States Code, or have 
                had receivers or liquidating agents appointed, the 
                consumer may maintain the civil action referred to in 
                subparagraph (A) against the securitizer.
            ``(5) Cure defined.--For purposes of this subsection, the 
        term `cure' means, with respect to a residential mortgage loan 
        that violates subsection (a) or (b), the modification or 
        refinancing, at no cost to the consumer, of the loan to provide 
        terms that would have satisfied the requirements of subsections 
        (a) and (b) if the loan had contained such terms as of the 
        origination of the loan and the payment of such additional 
        costs as the obligor may have incurred as a result of the 
        violation and in connection with obtaining a cure of the loan, 
        including a reasonable attorney's fee.
            ``(6) Disagreement over cure.--If any creditor, assignee, 
        or securitizer and a consumer fail to reach agreement on a cure 
        with respect to a residential mortgage loan that violates 
        subsection (a) or (b), or the consumer fails to accept a cure 
        proffered by a creditor, assignee, or securitizer--
                    ``(A) the creditor, assignee, or securitizer may 
                provide the cure; and
                    ``(B) the consumer may challenge the adequacy of 
                the cure during the 6-month period beginning when the 
                cure is provided.
        If the consumer's challenge, under this paragraph, of a cure is 
        successful, the creditor, assignee, or securitizer shall be 
        liable to the consumer for rescission of the loan and such 
        additional costs under paragraph (2).
            ``(7) Inability to provide or obtain rescission.--If a 
        creditor, assignee, or securitizer cannot provide, or a 
        consumer cannot obtain, rescission under paragraph (1) or (2), 
        the liability of such creditor, assignee, or securitizer shall 
        be met by providing the financial equivalent of a rescission, 
        together with such additional costs as the obligor may have 
        incurred as a result of the violation and in connection with 
        obtaining a rescission of the loan, including a reasonable 
        attorney's fee.
            ``(8) No class actions against assignee or securitizer 
        under paragraph (2).--Only individual actions may be brought 
        against an assignee or securitizer of a residential mortgage 
        loan for a violation of subsection (a) or (b).
            ``(9) Statute of limitations.--The liability of a creditor, 
        assignee, or securitizer under this subsection shall apply in 
        any original action against a creditor under paragraph (1) or 
        an assignee or securitizer under paragraph (2) which is brought 
        before--
                    ``(A) in the case of any residential mortgage loan 
                other than a loan to which subparagraph (B) applies, 
                the end of the 3-year period beginning on the date the 
                loan is consummated; or
                    ``(B) in the case of a residential mortgage loan 
                that provides for a fixed interest rate for an 
                introductory period and then resets or adjusts to a 
                variable rate or that provides for a nonamortizing 
                payment schedule and then converts to an amortizing 
                payment schedule, the earlier of--
                            ``(i) the end of the 1-year period 
                        beginning on the date of such reset, 
                        adjustment, or conversion; or
                            ``(ii) the end of the 6-year period 
                        beginning on the date the loan is consummated.
            ``(10) Pools and investors in pools excluded.--In the case 
        of residential mortgage loans acquired or aggregated for the 
        purpose of including such loans in a pool of assets held for 
        the purpose of issuing or selling instruments representing 
        interests in such pools including through a securitization 
        vehicle, the terms `assignee' and `securitizer', as used in 
        this section, do not include the securitization vehicle, the 
        pools of such loans or any original or subsequent purchaser of 
        any interest in the securitization vehicle or any instrument 
        representing a direct or indirect interest in such pool.''.

SEC. 205. DEFENSE TO FORECLOSURE.

    Section 129B of the Truth in Lending Act is amended by inserting 
after subsection (d) (as added by section 204) the following new 
subsection:
    ``(e) Defense to Foreclosure.--Notwithstanding any other provision 
of law--
            ``(1) when the holder of a residential mortgage loan or 
        anyone acting for such holder initiates a judicial or 
        nonjudicial foreclosure--
                    ``(A) a consumer who has the right to rescind under 
                this section with respect to such loan against the 
                creditor or any assignee or securitizer may assert such 
                right as a defense to foreclosure or counterclaim to 
                such foreclosure against the holder, or
                    ``(B) if the foreclosure proceeding begins after 
                the end of the period during which a consumer may bring 
                an action for rescission under subsection (d) and the 
                consumer would have had a valid basis for such an 
                action if it had been brought before the end of such 
                period, the consumer may seek actual damages incurred 
                by reason of the violation which gave rise to the right 
                of rescission, together with costs of the action, 
                including a reasonable attorney's fee against the 
                creditor or any assignee or securitizer; and
            ``(2) such holder or anyone acting for such holder or any 
        other applicable third party may sell, transfer, convey, or 
        assign a residential mortgage loan to a creditor, any assignee, 
        or any securitizer, or their designees, to effect a rescission 
        or cure.''.

SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS.

    (a) In General.--Section 129B of the Truth in Lending Act is 
amended by inserting after subsection (e) (as added by section 205) the 
following new subsections:
    ``(f) Prohibition on Certain Prepayment Penalties.--
            ``(1) Prohibited on certain loans.--A residential mortgage 
        loan that is not a qualified mortgage (as defined in subsection 
        (c)) may not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the principal 
        after the loan is consummated.
            ``(2) Phased-out penalties on qualified mortgages.--A 
        qualified mortgage (as defined in subsection (c)) may not 
        contain terms under which a consumer must pay a prepayment 
        penalty for paying all or part of the principal after the loan 
        is consummated in excess of the following limitations:
                    ``(A) During the 1-year period beginning on the 
                date the loan is consummated, the prepayment penalty 
                shall not exceed an amount equal to 3 percent of the 
                outstanding balance on the loan.
                    ``(B) During the 1-year period beginning after the 
                period described in subparagraph (A), the prepayment 
                penalty shall not exceed an amount equal to 2 percent 
                of the outstanding balance on the loan.
                    ``(C) During the 1-year period beginning after the 
                1-year period described in subparagraph (B), the 
                prepayment penalty shall not exceed an amount equal to 
                1 percent of the outstanding balance on the loan.
                    ``(D) After the end of the 3-year period beginning 
                on the date the loan is consummated, no prepayment 
                penalty may be imposed on a qualified mortgage.
            ``(3) Prohibited after initial period on loans with a 
        reset.--A qualified mortgage with a fixed interest rate for an 
        introductory period that adjusts or resets after such period 
        may not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the principal 
        after the beginning of the 3-month period ending on the date of 
        the adjustment or reset.
            ``(4) Option for no prepayment penalty required.--A 
        creditor may not offer a consumer a residential mortgage loan 
        product that has a prepayment penalty for paying all or part of 
        the principal after the loan is consummated as a term of the 
        loan without offering the consumer a residential mortgage loan 
        product that does not have a prepayment penalty as a term of 
        the loan.
    ``(g) Single Premium Credit Insurance Prohibited.--No creditor may 
finance, directly or indirectly, in connection with any residential 
mortgage loan or with any extension of credit under an open end 
consumer credit plan secured by the principal dwelling of the consumer 
(other than a reverse mortgage), any credit life, credit disability, 
credit unemployment or credit property insurance, or any other 
accident, loss-of-income, life or health insurance, or any payments 
directly or indirectly for any debt cancellation or suspension 
agreement or contract, except that--
            ``(1) insurance premiums or debt cancellation or suspension 
        fees calculated and paid in full on a monthly basis shall not 
        be considered financed by the creditor; and
            ``(2) this subsection shall not apply to credit 
        unemployment insurance for which the unemployment insurance 
        premiums are reasonable and at no additional cost to the 
        consumer, the creditor receives no direct or indirect 
        compensation in connection with the unemployment insurance 
        premiums, and the unemployment insurance premiums are paid 
        pursuant to another insurance contract and not paid to an 
        affiliate of the creditor.
    ``(h) Arbitration.--
            ``(1) In general.--No residential mortgage loan and no 
        extension of credit under an open end consumer credit plan 
        secured by the principal dwelling of the consumer, other than a 
        reverse mortgage, may include terms which require arbitration 
        or any other nonjudicial procedure as the method for resolving 
        any controversy or settling any claims arising out of the 
        transaction.
            ``(2) Post-controversy agreements.--Subject to paragraph 
        (3), paragraph (1) shall not be construed as limiting the right 
        of the consumer and the creditor, any assignee, or any 
        securitizer to agree to arbitration or any other nonjudicial 
        procedure as the method for resolving any controversy at any 
        time after a dispute or claim under the transaction arises.
            ``(3) No waiver of statutory cause of action.--No provision 
        of any residential mortgage loan or of any extension of credit 
        under an open end consumer credit plan secured by the principal 
        dwelling of the consumer (other than a reverse mortgage), and 
        no other agreement between the consumer and the creditor 
        relating to the residential mortgage loan or extension of 
        credit referred to in paragraph (1), shall be applied or 
        interpreted so as to bar a consumer from bringing an action in 
        an appropriate district court of the United States, or any 
        other court of competent jurisdiction, pursuant to section 130 
        or any other provision of law, for damages or other relief in 
        connection with any alleged violation of this section, any 
        other provision of this title, or any other Federal law.
    ``(i) Duty of Securitizer To Retain Access to Loans.--Any 
securitizer shall reserve the right and preserve an ability, in any 
document or contract establishing any pool of assets that includes any 
residential mortgage loan--
            ``(1) to identify and obtain access to any such loan in the 
        pool; and
            ``(2) to provide for and obtain a remedy under this title 
        for the obligor under any such loan.
    ``(j) Effect of Foreclosure on Preexisting Lease.--
            ``(1) In general.--In the case of any foreclosure on any 
        dwelling or residential real property securing an extension of 
        credit made under a contract entered into after the date of the 
        enactment of the Mortgage Reform and Anti-Predatory Lending Act 
        of 2007, any successor in interest in such property pursuant to 
        the foreclosure shall assume such interest subject to--
                    ``(A) the provision, by the successor in interest, 
                of a notice to vacate to any bona fide tenant at least 
                90 days before the effective date of the notice to 
                vacate; and
                    ``(B) the rights of any bona fide tenant, as of the 
                date of such notice of foreclosure--
                            ``(i) under any bona fide lease entered 
                        into before the notice of foreclosure to occupy 
                        the premises until the end of the remaining 
                        term of the lease or the end of the 6-month 
                        period beginning on the date of the notice of 
                        foreclosure, whichever occurs first, subject to 
                        the receipt by the tenant of the 90-day notice 
                        under subparagraph (A); or
                            ``(ii) without a lease or with a lease 
                        terminable at will under State law, subject to 
                        the receipt by the tenant of the 90-day notice 
                        under subparagraph (A).
            ``(2) Bona fide lease or tenancy.--For purposes of this 
        section, a lease or tenancy shall be considered bona fide only 
        if--
                    ``(A) the mortgagor under the contract is not the 
                tenant;
                    ``(B) the lease or tenancy was the result of an 
                arms-length transaction; or
                    ``(C) the lease or tenancy requires the receipt of 
                rent that is not substantially less than fair market 
                rent for the property.
    ``(k) Mortgages With Negative Amortization.--No creditor may extend 
credit to a borrower in connection with a consumer credit transaction 
under an open or closed end consumer credit plan secured by a dwelling 
or residential real property that includes a dwelling, other than a 
reverse mortgage, that provides or permits a payment plan that may, at 
any time over the term of the extension of credit, result in negative 
amortization unless, before such transaction is consummated--
            ``(1) the creditor provides the consumer with a statement 
        that--
                    ``(A) the pending transaction will or may, as the 
                case may be, result in negative amortization;
                    ``(B) describes negative amortization in such 
                manner as the Federal banking agencies shall prescribe;
                    ``(C) negative amortization increases the 
                outstanding principal balance of the account; and
                    ``(D) negative amortization reduces the consumer's 
                equity in the dwelling or real property; and
            ``(2) in the case of a first-time borrower with respect to 
        a residential mortgage loan that is not a qualified mortgage, 
        the first-time borrower provides the creditor with sufficient 
        documentation to demonstrate that the consumer received 
        homeownership counseling from organizations or counselors 
        certified by the Secretary of Housing and Urban Development as 
        competent to provide such counseling.
    ``(l) Annual Contact Information.--At least once annually and 
whenever there is a change in ownership of a residential mortgage loan, 
the servicer with respect to a residential mortgage loan shall provide 
a written notice to the consumer identifying the name of the creditor 
or any assignee or securitizer who should be contacted by the consumer 
for any reason concerning the consumer's rights with respect to the 
loan.''.
    (b) Conforming Amendment Relating to Enforcement.--Section 108(a) 
of the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting 
after paragraph (6) the following new paragraph:
            ``(7) sections 21B and 21C of the Securities Exchange Act 
        of 1934, in the case of a broker or dealer, other than a 
        depository institution, by the Securities and Exchange 
        Commission.''.

SEC. 207. RULE OF CONSTRUCTION.

    Except as otherwise expressly provided in section 129A or 129B of 
the Truth in Lending Act (as added by this Act), no provision of such 
section 129A or 129B shall be construed as superseding, repealing, or 
affecting any duty, right, obligation, privilege, or remedy of any 
person under any other provision of the Truth in Lending Act or any 
other provision of Federal or State law.

SEC. 208. EFFECT ON STATE LAWS.

    (a) In General.--Section 129B(d) of the Truth in Lending Act (as 
added by section 204) shall supersede any State law or application 
thereof that provides additional remedies against any assignee, 
securitizer, or securitization vehicle, and the remedies described in 
such section shall constitute the sole remedies against any assignee, 
securitizer, or securitization vehicle, for a violation of subsection 
(a) or (b) of section 129B of such Act or any other State law the terms 
of which address the specific subject matter of subsection (a) 
(determination of ability to repay) or (b) (requirement of a net 
tangible benefit) of such section 129B.
    (b) Rules of Construction.--No provision of this section shall be 
construed as limiting--
            (1) the application of any State law against a creditor;
            (2) the availability of remedies based upon fraud, 
        misrepresentation, deception, false advertising, or civil 
        rights laws--
                    (A) against any assignee, securitizer, or 
                securitization vehicle for its own conduct relating to 
                the making of a residential mortgage loan to a 
                consumer; or
                    (B) against any assignee, securitizer, or 
                securitization vehicle in the sale or purchase of 
                residential mortgage loans or securities; or
            (3) the application of any other State law against any 
        assignee, securitizer, or securitization vehicle except as 
        specifically provided in subsection (a) of this section.

SEC. 209. REGULATIONS.

    Regulations required or authorized to be prescribed under this 
title or the amendments made by this title--
            (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
            (2) shall take effect not later than 18 months after the 
        date of the enactment of this Act.

SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

    (a) Increase in Amount of Civil Money Penalties for Certain 
Violations.--Section 130(a)(2) of the Truth in Lending Act (15 U.S.C. 
1640(a)(2)) is amended--
            (1) by striking ``$100'' and inserting ``$200'';
            (2) by striking ``$1,000'' and inserting ``$2,000'';
            (3) by striking ``$200'' and inserting ``$400'';
            (4) by striking ``$2,000'' and inserting ``$4,000''; and
            (5) by striking ``$500,000'' and inserting ``$1,000,000''.
    (b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 
amended--
            (1) in the first sentence, by striking ``Any action'' and 
        inserting ``Except as provided in the subsequent sentence, any 
        action''; and
            (2) by inserting after the first sentence the following new 
        sentence: ``Any action under this section with respect to any 
        violation of section 129 may be brought in any United States 
        district court, or in any other court of competent 
        jurisdiction, before the end of the 3-year period beginning on 
        the date of the occurrence of the violation.''.

SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

    Section 130 of the Truth in Lending Act is amended by adding at the 
end the following new subsection:
    ``(j) Exemption From Liability and Rescission in Case of Borrower 
Fraud or Deception.--In addition to any other remedy available by law 
or contract, no creditor, assignee, or securitizer shall be liable to 
an obligor under this section, nor shall it be subject to the right of 
rescission of any obligor under 129B, if such obligor, or co-obligor, 
knowingly, or willfully and with actual knowledge furnished material 
information known to be false for the purpose of obtaining such 
residential mortgage loan.''.

SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE 
              RATE MORTGAGES.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 128 the following 
new section:
``Sec. 128A. Reset of hybrid adjustable rate mortgages
    ``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of 
this section, the term `hybrid adjustable rate mortgage' means a 
consumer credit transaction secured by the consumer's principal 
residence with a fixed interest rate for an introductory period that 
adjusts or resets to a variable interest rate after such period.
    ``(b) Notice of Reset and Alternatives.--During the 1-month period 
that ends 6 months before the date on which the interest rate in effect 
during the introductory period of a hybrid adjustable rate mortgage 
adjusts or resets to a variable interest rate, the creditor or servicer 
of such loan shall provide a written notice, separate and distinct from 
all other correspondence to the consumer, that includes the following:
            ``(1) Any index or formula used in making adjustments to or 
        resetting the interest rate and a source of information about 
        the index or formula.
            ``(2) An explanation of how the new interest rate and 
        payment would be determined, including an explanation of how 
        the index was adjusted, such as by the addition of a margin.
            ``(3) A good faith estimate, based on accepted industry 
        standards, of the creditor or servicer of the amount of the 
        monthly payment that will apply after the date of the 
        adjustment or reset, and the assumptions on which this estimate 
        is based.
            ``(4) A list of alternatives consumers may pursue before 
        the date of adjustment or reset, and descriptions of the 
        actions consumers must take to pursue these alternatives, 
        including--
                    ``(A) refinancing;
                    ``(B) renegotiation of loan terms;
                    ``(C) payment forbearances; and
                    ``(D) pre-foreclosure sales.
            ``(5) The names, addresses, telephone numbers, and Internet 
        addresses 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 or a State housing finance authority (as 
        defined in section 1301 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989).
            ``(6) The address, telephone number, and Internet address 
        for the State housing finance authority (as so defined) for the 
        State in which the consumer resides.''.
    (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 128 the following new item:

``128A. Reset of hybrid adjustable rate mortgages.''.

SEC. 213. REQUIRED DISCLOSURES.

    (a) Additional Information.--Section 128(a) of Truth in Lending Act 
(15 U.S.C. 1638(a)) is amended by adding at the end the following new 
paragraphs:
            ``(16) In the case of an extension of credit that is 
        secured by the dwelling of a consumer, under which the annual 
        rate of interest is variable, or with respect to which the 
        regular payments may otherwise be variable, in addition to the 
        other disclosures required under this subsection, the 
        disclosures provided under this subsection shall state the 
        maximum amount of the regular required payments on the loan, 
        based on the maximum interest rate allowed, introduced with the 
        following language in conspicuous type size and format: `Your 
        payment can go as high as $__', the blank to be filled in with 
        the maximum possible payment amount.
            ``(17) In the case of a residential mortgage loan for which 
        an escrow or impound account will be established for the 
        payment of all applicable taxes, insurance, and assessments, 
        the following statement: `Your payments will be increased to 
        cover taxes and insurance. In the first year, you will pay an 
        additional $__ [insert the amount of the monthly payment to the 
        account] every month to cover the costs of taxes and 
        insurance.'.
            ``(18) In the case of a variable rate residential mortgage 
        loan for which an escrow or impound account will be established 
        for the payment of all applicable taxes, insurance, and 
        assessments--
                    ``(A) the amount of initial monthly payment due 
                under the loan for the payment of principal and 
                interest, and the amount of such initial monthly 
                payment including the monthly payment deposited in the 
                account for the payment of all applicable taxes, 
                insurance, and assessments; and
                    ``(B) the amount of the fully indexed monthly 
                payment due under the loan for the payment of principal 
                and interest, and the amount of such fully indexed 
                monthly payment including the monthly payment deposited 
                in the account for the payment of all applicable taxes, 
                insurance, and assessments.
            ``(19) In the case of a residential mortgage loan, the 
        aggregate amount of settlement charges for all settlement 
        services provided in connection with the loan, the amount of 
        charges that are included in the loan and the amount of such 
        charges the borrower must pay at closing, the approximate 
        amount of the wholesale rate of funds in connection with the 
        loan, and the aggregate amount of other fees or required 
        payments in connection with the loan.
            ``(20) In the case of a residential mortgage loan, the 
        aggregate amount of fees paid to the mortgage originator in 
        connection with the loan, the amount of such fees paid directly 
        by the consumer, and any additional amount received by the 
        originator from the creditor based on the interest rate of the 
        loan.''.
    (b) Timing.--Section 128(b) of the Truth in Lending Act (15 U.S.C. 
1638(b)) is amended by adding at the end the following new paragraph:
            ``(4) Residential mortgage loan disclosures.--In the case 
        of a residential mortgage loan, the information required to be 
        disclosed under subsection (a) with respect to such loan shall 
        be disclosed before the earlier of--
                    ``(A) the time required under the first sentence of 
                paragraph (1); or
                    ``(B) the end of the 3-day period beginning on the 
                date the application for the loan from a consumer is 
                received by the creditor.''.
    (c) Enhanced Mortgage Loan Disclosures.--Section 128(b)(2) of the 
Truth in Lending Act (15 U.S.C. 1638(b)(2)) is amended--
            (1) by striking ``(2) In the'' and inserting the following:
            ``(2) Mortgage disclosures.--
                    ``(A) In general.--In the'';
            (2) by striking ``a residential mortgage transaction, as 
        defined in section 103(w)'' and inserting ``any extension of 
        credit that is secured by the dwelling of a consumer'';
            (3) by striking ``shall be made in accordance'' and all 
        that follows through ``extended, or'';
            (4) by striking ``If the'' and all that follows through the 
        end of the paragraph and inserting the following new 
        subparagraphs:
                    ``(B) Statement and timing of disclosures.--In the 
                case of an extension of credit that is secured by the 
                dwelling of a consumer, in addition to the other 
                disclosures required by subsection (a), the disclosures 
                provided under this paragraph shall state in 
                conspicuous type size and format, the following: `You 
                are not required to complete this agreement merely 
                because you have received these disclosures or signed a 
                loan application.'.
                            ``(i) state in conspicuous type size and 
                        format, the following: `You are not required to 
                        complete this agreement merely because you have 
                        received these disclosures or signed a loan 
                        application.'; and
                            ``(ii) be furnished to the borrower not 
                        later than 7 business days before the date of 
                        consummation of the transaction, subject to 
                        subparagraph (D).
                    ``(C) Variable rates or payment schedules.--In the 
                case of an extension of credit that is secured by the 
                dwelling of a consumer, under which the annual rate of 
                interest is variable, or with respect to which the 
                regular payments may otherwise be variable, in addition 
                to the other disclosures required by subsection (a), 
                the disclosures provided under this paragraph shall 
                label the payment schedule as follows: `Payment 
                Schedule: Payments Will Vary Based on Interest Rate 
                Changes.'.
                    ``(D) Updating apr.--In any case in which the 
                disclosure statement provided 7 business days before 
                the date of consummation of the transaction contains an 
                annual percentage rate of interest that is no longer 
                accurate, as determined under section 107(c), the 
                creditor shall furnish an additional, corrected 
                statement to the borrower, not later than 3 business 
                days before the date of consummation of the 
                transaction.''.

SEC. 214. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL 
              MORTGAGE LOANS.

    Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended 
by adding at the end the following new subsection:
    ``(e) Periodic Statements for Residential Mortgage Loans.--
            ``(1) In general.--The creditor, assignee, or servicer with 
        respect to any residential mortgage loan shall transmit to the 
        obligor, for each billing cycle, a statement setting forth each 
        of the following items, to the extent applicable, in a 
        conspicuous and prominent manner:
                    ``(A) The amount of the principal obligation under 
                the mortgage.
                    ``(B) The current interest rate in effect for the 
                loan.
                    ``(C) The date on which the interest rate may next 
                reset or adjust.
                    ``(D) The amount of any prepayment fee to be 
                charged, if any.
                    ``(E) A description of any late payment fees.
                    ``(F) A telephone number and electronic mail 
                address that may be used by the obligor to obtain 
                information regarding the mortgage.
                    ``(G) Such other information as the Board may 
                prescribe in regulations.
            ``(2) Development and use of standard form.--The Federal 
        banking agencies shall jointly develop and prescribe a standard 
        form for the disclosure required under this subsection, taking 
        into account that the statements required may be transmitted in 
        writing or electronically.''.

SEC. 215. AUTHORIZATION OF APPROPRIATIONS.

    For fiscal years 2008, 2009, 2010, 2011, and 2012, there are 
authorized to be appropriated to the Attorney General a total of--
            (1) $31,250,000 to support the employment of 30 additional 
        agents of the Federal Bureau of Investigation and 2 additional 
        dedicated prosecutors at the Department of Justice to 
        coordinate prosecution of mortgage fraud efforts with the 
        offices of the United States Attorneys; and
            (2) $750,000 to support the operations of interagency task 
        forces of the Federal Bureau of Investigation in the areas with 
        the 15 highest concentrations of mortgage fraud.

SEC. 216. EFFECTIVE DATE.

    The amendments made by this title shall apply to transactions 
consummated on or after the effective date of the regulations specified 
in section 209.

SEC. 217. REPORT BY THE GAO.

    (a) Report Required.--The Comptroller General shall conduct a study 
to determine the effects the enactment of this Act will have on the 
availability and affordability of credit for homebuyers and mortgage 
lending, including the effect--
            (1) on the mortgage market for mortgages that are not 
        within the safe harbor provided in the amendments made by this 
        title;
            (2) on the ability of prospective homebuyers to obtain 
        financing;
            (3) on the ability of homeowners facing resets or 
        adjustments to refinance--for example, do they have fewer 
        refinancing options due to the unavailability of certain loan 
        products that were available before the enactment of this Act;
            (4) on minorities' ability to access affordable credit 
        compared with other prospective borrowers;
            (5) on home sales and construction;
            (6) of extending the rescission right, if any, on 
        adjustable rate loans and its impact on litigation;
            (7) of State foreclosure laws and, if any, an investor's 
        ability to transfer a property after foreclosure;
            (8) of expanding the existing provisions of the Home 
        Ownership and Equity Protection Act of 1994;
            (9) of prohibiting prepayment penalties on high-cost 
        mortgages; and
            (10) of establishing counseling services under the 
        Department of Housing and Urban Development and offered through 
        the Office of Housing Counseling.
    (b) Report.--Before the end of the 1-year period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report to the Congress containing the findings and conclusions of the 
Comptroller General with respect to the study conducted pursuant to 
subsection (a).

                     TITLE III--HIGH-COST MORTGAGES

SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

    (a) High-Cost Mortgage Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that 
precedes paragraph (2) and inserting the following:
    ``(aa) High-Cost Mortgage.--
            ``(1) Definition.--
                    ``(A) In general.--The term `high-cost mortgage', 
                and a mortgage referred to in this subsection, means a 
                consumer credit transaction that is secured by the 
                consumer's principal dwelling, other than a reverse 
                mortgage transaction, if--
                            ``(i) in the case of a credit transaction 
                        secured--
                                    ``(I) by a first mortgage on the 
                                consumer's principal dwelling, the 
                                annual percentage rate at consummation 
                                of the transaction will exceed by more 
                                than 8 percentage (10 percentage 
                                points, if the dwelling is personal 
                                property and the transaction is for 
                                less than $50,000) points the yield on 
                                Treasury securities having comparable 
                                periods of maturity on the 15th day of 
                                the month immediately preceding the 
                                month in which the application for the 
                                extension of credit is received by the 
                                creditor; or
                                    ``(II) by a subordinate or junior 
                                mortgage on the consumer's principal 
                                dwelling, the annual percentage rate at 
                                consummation of the transaction will 
                                exceed by more than 10 percentage 
                                points the yield on Treasury securities 
                                having comparable periods of maturity 
                                on the 15th day of the month 
                                immediately preceding the month in 
                                which the application for the extension 
                                of credit is received by the creditor;
                            ``(ii) the total points and fees payable in 
                        connection with the transaction exceed--
                                    ``(I) in the case of a transaction 
                                for $20,000 or more, 5 percent of the 
                                total transaction amount; or
                                    ``(II) in the case of a transaction 
                                for less than $20,000, the lesser of 8 
                                percent of the total transaction amount 
                                or $1,000; or
                            ``(iii) the credit transaction documents 
                        permit the creditor to charge or collect 
                        prepayment fees or penalties more than 36 
                        months after the transaction closing or such 
                        fees or penalties exceed, in the aggregate, 
                        more than 2 percent of the amount prepaid.
                    ``(B) Introductory rates taken into account.--For 
                purposes of subparagraph (A)(i), the annual percentage 
                rate of interest shall be determined based on the 
                following interest rate:
                            ``(i) In the case of a fixed-rate 
                        transaction in which the annual percentage rate 
                        will not vary during the term of the loan, the 
                        interest rate in effect on the date of 
                        consummation of the transaction.
                            ``(ii) In the case of a transaction in 
                        which the rate of interest varies solely in 
                        accordance with an index, the interest rate 
                        determined by adding the index rate in effect 
                        on the date of consummation of the transaction 
                        to the maximum margin permitted at any time 
                        during the transaction agreement.
                            ``(iii) In the case of any other 
                        transaction in which the rate may vary at any 
                        time during the term of the loan for any 
                        reason, the interest charged on the transaction 
                        at the maximum rate that may be charged during 
                        the term of the transaction.''.
    (b) Adjustment of Percentage Points.--Section 103(aa)(2) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking 
subparagraph (B) and inserting the following new subparagraph:
                    ``(B) An increase or decrease under subparagraph 
                (A)--
                            ``(i) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(I) being less than 6 percentage 
                        points or greater than 10 percentage points; 
                        and
                            ``(ii) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(II) being less than 8 percentage 
                        points or greater than 12 percentage points.''.
    (c) Points and Fees Defined.--
            (1) In general.--Section 103(aa)(4) of the Truth in Lending 
        Act (15 U.S.C. 1602(aa)(4)) is amended--
                    (A) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) all compensation paid directly or indirectly 
                by a consumer or creditor to a mortgage broker from any 
                source, including a mortgage originator that originates 
                a loan in the name of the originator in a table-funded 
                transaction;'';
                    (B) in subparagraph (C)(ii), by inserting ``except 
                where applied to the charges set forth in section 
                106(e)(1) where a creditor may receive indirect 
                compensation solely as a result of obtaining 
                distributions of profits from an affiliated entity 
                based on its ownership interest in compliance with 
                section 8(c)(4) of the Real Estate Settlement 
                Procedures Act of 1974'' before the semicolon at the 
                end;
                    (C) in subparagraph (C)(iii), by striking ``; and'' 
                and inserting ``, except as provided for in clause 
                (ii);'';
                    (D) by redesignating subparagraph (D) as 
                subparagraph (G); and
                    (E) by inserting after subparagraph (C) the 
                following new subparagraphs:
                    ``(D) premiums or other charges payable at or 
                before closing for any credit life, credit disability, 
                credit unemployment, or credit property insurance, or 
                any other accident, loss-of-income, life or health 
                insurance, or any payments directly or indirectly for 
                any debt cancellation or suspension agreement or 
                contract, except that insurance premiums or debt 
                cancellation or suspension fees calculated and paid in 
                full on a monthly basis shall not be considered 
                financed by the creditor;
                    ``(E) except as provided in subsection (cc), the 
                maximum prepayment fees and penalties which may be 
                charged or collected under the terms of the credit 
                transaction;
                    ``(F) all prepayment fees or penalties that are 
                incurred by the consumer if the loan refinances a 
                previous loan made or currently held by the same 
                creditor or an affiliate of the creditor; and''.
            (2) Calculation of points and fees for open-end consumer 
        credit plans.--Section 103(aa) of the Truth in Lending Act (15 
        U.S.C. 1602(aa)) is amended--
                    (A) by redesignating paragraph (5) as paragraph 
                (6); and
                    (B) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) Calculation of points and fees for open-end consumer 
        credit plans.--In the case of open-end consumer credit plans, 
        points and fees shall be calculated, for purposes of this 
        section and section 129, by adding the total points and fees 
        known at or before closing, including the maximum prepayment 
        penalties which may be charged or collected under the terms of 
        the credit transaction, plus the minimum additional fees the 
        consumer would be required to pay to draw down an amount equal 
        to the total credit line.''.
    (d) High Cost Mortgage Lender.--Section 103(f) of the Truth in 
Lending Act (15 U.S.C. 1602(f)) is amended by striking the last 
sentence and inserting the following new sentence: ``Any person who 
originates or brokers 2 or more mortgages referred to in subsection 
(aa) in any 12-month period, any person who originates 1 or more such 
mortgages through a mortgage broker in any 12 month period, or, in 
connection with a table funding transaction of such a mortgage, any 
person to whom the obligation is initially assigned at or after 
settlement shall be considered to be a creditor for purposes of this 
title.''.
    (e) Bona Fide Discount Loan Discount Points and Prepayment 
Penalties.--Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 
amended by inserting after subsection (cc) (as added by section 121) 
the following new subsection:
    ``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the 
purposes of determining the amount of points and fees for purposes of 
subsection (aa), either the amounts described in paragraph (1) or (4) 
of the following paragraphs, but not both, may be excluded:
            ``(1) Exclusion of bona fide discount points.--The discount 
        points described in 1 of the following subparagraphs shall be 
        excluded from determining the amounts of points and fees with 
        respect to a high-cost mortgage for purposes of subsection 
        (aa):
                    ``(A) Up to and including 2 bona fide discount 
                points payable by the consumer in connection with the 
                mortgage, but only if the interest rate from which the 
                mortgage's interest rate will be discounted does not 
                exceed by more than 1 percentage point the required net 
                yield for a 90-day standard mandatory delivery 
                commitment for a reasonably comparable loan from either 
                the Federal National Mortgage Association or the 
                Federal Home Loan Mortgage Corporation, whichever is 
                greater.
                    ``(B) Unless 2 bona fide discount points have been 
                excluded under subparagraph (A), up to and including 1 
                bona fide discount point payable by the consumer in 
                connection with the mortgage, but only if the interest 
                rate from which the mortgage's interest rate will be 
                discounted does not exceed by more than 2 percentage 
                points the required net yield for a 90-day standard 
                mandatory delivery commitment for a reasonably 
                comparable loan from either the Federal National 
                Mortgage Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater.
            ``(2) Definition.--For purposes of paragraph (1), the term 
        `bona fide discount points' means loan discount points which 
        are knowingly paid by the consumer for the purpose of reducing, 
        and which in fact result in a bona fide reduction of, the 
        interest rate or time-price differential applicable to the 
        mortgage.
            ``(3) Exception for interest rate reductions inconsistent 
        with industry norms.--Paragraph (1) shall not apply to discount 
        points used to purchase an interest rate reduction unless the 
        amount of the interest rate reduction purchased is reasonably 
        consistent with established industry norms and practices for 
        secondary mortgage market transactions.
            ``(4) Allowance of conventional prepayment penalty.--
        Subsection (aa)(1)(4)(E) shall not apply so as to include a 
        prepayment penalty or fee that is authorized by law other than 
        this title and may be imposed pursuant to the terms of a high-
        cost mortgage (or other consumer credit transaction secured by 
        the consumer's principal dwelling) if--
                    ``(A) the annual percentage rate applicable with 
                respect to such mortgage or transaction (as determined 
                for purposes of subsection (aa)(1)(A)(i))--
                            ``(i) in the case of a first mortgage on 
                        the consumer's principal dwelling, does not 
                        exceed by more than 2 percentage points the 
                        yield on Treasury securities having comparable 
                        periods of maturity on the 15th day of the 
                        month immediately preceding the month in which 
                        the application for the extension of credit is 
                        received by the creditor; or
                            ``(ii) in the case of a subordinate or 
                        junior mortgage on the consumer's principal 
                        dwelling, does not exceed by more than 4 
                        percentage points the yield on such Treasury 
                        securities; and
                    ``(B) the total amount of any prepayment fees or 
                penalties permitted under the terms of the high-cost 
                mortgage or transaction does not exceed 2 percent of 
                the amount prepaid.''.

SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.

    (a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth 
in Lending Act (15 U.S.C. 1639(c)(2)) is amended--
            (1) by striking ``and'' after the semicolon at the end of 
        subparagraph (C);
            (2) by redesignating subparagraph (D) as subparagraph (E); 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) the amount of the principal obligation of the 
                mortgage exceeds the maximum principal obligation 
                limitation (for the applicable size residence) under 
                section 203(b)(2) of the National Housing Act for the 
                area in which the residence subject to the mortgage is 
                located; and''.
    (b) No Balloon Payments.--Section 129(e) of the Truth in Lending 
Act (15 U.S.C. 1639(e)) is amended to read as follows:
    ``(e) No Balloon Payments.--No high-cost mortgage may contain a 
scheduled payment that is more than twice as large as the average of 
earlier scheduled payments. This subsection shall not apply when the 
payment schedule is adjusted to the seasonal or irregular income of the 
consumer.''.
    (c) No Lending Without Due Regard to Ability To Repay.--Section 
129(h) of the Truth in Lending Act (15 U.S.C. 1639(h)) is amended--
            (1) by striking ``Payment Ability of Consumer.--A creditor 
        shall not'' and inserting ``Payment Ability of Consumer.--
            ``(1) Pattern or practice.--
                    ``(A) In general.--A creditor shall not'';
            (2) by inserting after subparagraph (A) (as so designated 
        by paragraph (1) of this subsection) the following new 
        subparagraph:
                    ``(B) Presumption of violation.--There shall be a 
                presumption that a creditor has violated this 
                subsection if the creditor engages in a pattern or 
                practice of making high-cost mortgages without 
                verifying or documenting the repayment ability of 
                consumers with respect to such mortgages.''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Prohibition on extending credit without regard to 
        payment ability of consumer.--
                    ``(A) In general.--A creditor may not extend credit 
                to a consumer under a high-cost mortgage unless a 
                reasonable creditor would believe at the time the 
                mortgage is closed that the consumer or consumers that 
                are residing or will reside in the residence subject to 
                the mortgage will be able to make the scheduled 
                payments associated with the mortgage, based upon a 
                consideration of current and expected income, current 
                obligations, employment status, and other financial 
                resources, other than equity in the residence.
                    ``(B) Presumption of ability.--For purposes of this 
                subsection, there shall be a rebuttable presumption 
                that a consumer is able to make the scheduled payments 
                to repay the obligation if, at the time the high-cost 
                mortgage is consummated, the consumer's total monthly 
                debts, including amounts under the mortgage, do not 
                exceed 50 percent of his or her monthly gross income as 
                verified by tax returns, payroll receipts, or other 
                third-party income verification.''.

SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

    (a) Additional Requirements for Certain Mortgages.--Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended--
            (1) by redesignating subsections (j), (k) and (l) as 
        subsections (n), (o) and (p) respectively; and
            (2) by inserting after subsection (i) the following new 
        subsections:
    ``(j) Recommended Default.--No creditor shall recommend or 
encourage default on an existing loan or other debt prior to and in 
connection with the closing or planned closing of a high-cost mortgage 
that refinances all or any portion of such existing loan or debt.
    ``(k) Late Fees.--
            ``(1) In general.--No creditor may impose a late payment 
        charge or fee in connection with a high-cost mortgage--
                    ``(A) in an amount in excess of 4 percent of the 
                amount of the payment past due;
                    ``(B) unless the loan documents specifically 
                authorize the charge or fee;
                    ``(C) before the end of the 15-day period beginning 
                on the date the payment is due, or in the case of a 
                loan on which interest on each installment is paid in 
                advance, before the end of the 30-day period beginning 
                on the date the payment is due; or
                    ``(D) more than once with respect to a single late 
                payment.
            ``(2) Coordination with subsequent late fees.--If a payment 
        is otherwise a full payment for the applicable period and is 
        paid on its due date or within an applicable grace period, and 
        the only delinquency or insufficiency of payment is 
        attributable to any late fee or delinquency charge assessed on 
        any earlier payment, no late fee or delinquency charge may be 
        imposed on such payment.
            ``(3) Failure to make installment payment.--If, in the case 
        of a loan agreement the terms of which provide that any payment 
        shall first be applied to any past due principal balance, the 
        consumer fails to make an installment payment and the consumer 
        subsequently resumes making installment payments but has not 
        paid all past due installments, the creditor may impose a 
        separate late payment charge or fee for any principal due 
        (without deduction due to late fees or related fees) until the 
        default is cured.
    ``(l) Acceleration of Debt.--No high-cost mortgage may contain a 
provision which permits the creditor, in its sole discretion, to 
accelerate the indebtedness. This provision shall not apply when 
repayment of the loan has been accelerated by default, pursuant to a 
due-on-sale provision, or pursuant to a material violation of some 
other provision of the loan documents unrelated to the payment 
schedule.
    ``(m) Restriction on Financing Points and Fees.--No creditor may 
directly or indirectly finance, in connection with any high-cost 
mortgage, any of the following:
            ``(1) Any prepayment fee or penalty payable by the consumer 
        in a refinancing transaction if the creditor or an affiliate of 
        the creditor is the noteholder of the note being refinanced.
            ``(2) Any points or fees.''.
    (b) Prohibitions on Evasions.--Section 129 of the Truth in Lending 
Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as 
so redesignated by subsection (a)(1)) the following new subsection:
    ``(q) Prohibitions on Evasions, Structuring of Transactions, and 
Reciprocal Arrangements.--A creditor may not take any action in 
connection with a high-cost mortgage--
            ``(1) to structure a loan transaction as an open-end credit 
        plan or another form of loan for the purpose and with the 
        intent of evading the provisions of this title; or
            ``(2) to divide any loan transaction into separate parts 
        for the purpose and with the intent of evading provisions of 
        this title.''.
    (c) Modification or Deferral Fees.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(q) (as added by subsection (b) of this section) the following new 
subsection:
    ``(r) Modification and Deferral Fees Prohibited.--A creditor may 
not charge a consumer any fee to modify, renew, extend, or amend a 
high-cost mortgage, or to defer any payment due under the terms of such 
mortgage, unless the modification, renewal, extension or amendment 
results in a lower annual percentage rate on the mortgage for the 
consumer and then only if the amount of the fee is comparable to fees 
imposed for similar transactions in connection with consumer credit 
transactions that are secured by a consumer's principal dwelling and 
are not high-cost mortgages.''.
    (d) Payoff Statement.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (r) (as added by 
subsection (c) of this section) the following new subsection:
    ``(s) Payoff Statement.--
            ``(1) Fees.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), no creditor or servicer may charge a 
                fee for informing or transmitting to any person the 
                balance due to pay off the outstanding balance on a 
                high-cost mortgage.
                    ``(B) Transaction fee.--When payoff information 
                referred to in subparagraph (A) is provided by 
                facsimile transmission or by a courier service, a 
                creditor or servicer may charge a processing fee to 
                cover the cost of such transmission or service in an 
                amount not to exceed an amount that is comparable to 
                fees imposed for similar services provided in 
                connection with consumer credit transactions that are 
                secured by the consumer's principal dwelling and are 
                not high-cost mortgages.
                    ``(C) Fee disclosure.--Prior to charging a 
                transaction fee as provided in subparagraph (B), a 
                creditor or servicer shall disclose that payoff 
                balances are available for free pursuant to 
                subparagraph (A).
                    ``(D) Multiple requests.--If a creditor or servicer 
                has provided payoff information referred to in 
                subparagraph (A) without charge, other than the 
                transaction fee allowed by subparagraph (B), on 4 
                occasions during a calendar year, the creditor or 
                servicer may thereafter charge a reasonable fee for 
                providing such information during the remainder of the 
                calendar year.
            ``(2) Prompt delivery.--Payoff balances shall be provided 
        within 5 business days after receiving a request by a consumer 
        or a person authorized by the consumer to obtain such 
        information.''.
    (e) Pre-Loan Counseling Required.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(s) (as added by subsection (d) of this section) the following new 
subsection:
    ``(t) Pre-Loan Counseling.--
            ``(1) In general.--A creditor may not extend credit to a 
        consumer under a high-cost mortgage without first receiving 
        certification from a counselor that is approved by the 
        Secretary of Housing and Urban Development, or at the 
        discretion of the Secretary, a state housing finance authority, 
        that the consumer has received counseling on the advisability 
        of the mortgage. Such counselor shall not be employed by the 
        creditor or an affiliate of the creditor or be affiliated with 
        the creditor.
            ``(2) Disclosures required prior to counseling.--No 
        counselor may certify that a consumer has received counseling 
        on the advisability of the high-cost mortgage unless the 
        counselor can verify that the consumer has received each 
        statement required (in connection with such loan) by this 
        section or the Real Estate Settlement Procedures Act of 1974 
        with respect to the transaction.
            ``(3) Regulations.--The Secretary of Housing and Urban 
        Development may prescribe such regulations as the Secretary 
        determines to be appropriate to carry out the requirements of 
        paragraph (1).''.
    (f) Flipping Prohibited.--Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended by inserting after subsection (t) (as added 
by subsection (e)) the following new subsection:
    ``(u) Flipping.--
            ``(1) In general.--No creditor may knowingly or 
        intentionally engage in the unfair act or practice of flipping 
        in connection with a high-cost mortgage.
            ``(2) Flipping defined.--For purposes of this subsection, 
        the term `flipping' means the making of a loan or extension of 
        credit in the form a high-cost mortgage to a consumer which 
        refinances an existing mortgage when the new loan or extension 
        of credit does not have reasonable, net tangible benefit (as 
        determined in accordance with regulations prescribed under 
        section 129B(b)) to the consumer considering all of the 
        circumstances, including the terms of both the new and the 
        refinanced loans or credit, the cost of the new loan or credit, 
        and the consumer's circumstances.''.

SEC. 304. AMENDMENT TO PROVISION GOVERNING CORRECTION OF ERRORS.

    Section 130(b) of the Truth in Lending Act (15 U.S.C. 1640(b)) is 
amended to read as follows:
    ``(b) Correction of Errors.--A creditor has no liability under this 
section or section 108 or 112 for any failure to comply with any 
requirement imposed under this chapter or chapter 5, if--
            ``(1) within 30 days of the loan closing and prior to the 
        institution of any action, the consumer is notified of or 
        discovers the violation, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                    ``(A) make the loan satisfy the requirements of 
                this chapter; or
                    ``(B) in the case of a high-cost mortgage, change 
                the terms of the loan in a manner beneficial to the 
                consumer so that the loan will no longer be a high-cost 
                mortgage; or
            ``(2) within 60 days of the creditor's discovery or receipt 
        of notification of an unintentional violation or bona fide 
        error as described in subsection (c) and prior to the 
        institution of any action, the consumer is notified of the 
        compliance failure, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                    ``(A) make the loan satisfy the requirements of 
                this chapter; or
                    ``(B) in the case of a high-cost mortgage, change 
                the terms of the loan in a manner beneficial so that 
                the loan will no longer be a high-cost mortgage.''.

SEC. 305. REGULATIONS.

    (a) In General.--The Board of Governors of the Federal Reserve 
System shall publish regulations implementing this title and the 
amendments made by this title in final form before the end of the 6-
month period beginning on the date of the enactment of this Act.
    (b) Consumer Mortgage Education.--
            (1) Regulations.--The Board of Governors of the Federal 
        Reserve System may prescribe regulations requiring or 
        encouraging creditors to provide consumer mortgage education to 
        prospective customers or direct such customers to qualified 
        consumer mortgage education or counseling programs in the 
        vicinity of the residence of the consumer.
            (2) Coordination with state law.--No requirement 
        established by the Board of Governors of the Federal Reserve 
        System pursuant to paragraph (1) shall be construed as 
        affecting or superseding any requirement under the law of any 
        State with respect to consumer mortgage counseling or 
        education.

SEC. 306. EFFECTIVE DATE.

    The amendments made by this title shall take effect at the end of 
the 6-month period beginning on the date of the enactment of this Act 
and shall apply to mortgages referred to in section 103(aa) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)) consummated after the end of 
such period.

                 TITLE IV--OFFICE OF HOUSING COUNSELING

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Expand and Preserve Home Ownership 
Through Counseling Act''.

SEC. 402. 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(g)(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(g) of the 
                        Housing and Urban Development Act of 1968, 
                        including the establishment, operation, and 
                        publication of the availability of the toll-
                        free telephone number under paragraph (2) of 
                        such section;
                            ``(iii) carrying out section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604) for home buying information 
                        booklets prepared pursuant to such section;
                            ``(iv) carrying out the certification 
                        program under section 106(e) of the Housing and 
                        Urban Development Act of 1968 (12 U.S.C. 
                        1701x(e));
                            ``(v) carrying out the assistance program 
                        under section 106(a)(4) of the Housing and 
                        Urban Development Act of 1968, including 
                        criteria for selection of applications to 
                        receive assistance;
                            ``(vi) carrying out any functions regarding 
                        abusive, deceptive, or unscrupulous lending 
                        practices relating to residential mortgage 
                        loans that the Secretary considers appropriate, 
                        which shall include conducting the study under 
                        section 6 of the Expand and Preserve Home 
                        Ownership Through Counseling Act;
                            ``(vii) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection;
                            ``(viii) collaborating with community-based 
                        organizations with expertise in the field of 
                        housing counseling; and
                            ``(ix) providing for the building of 
                        capacity to provide housing counseling services 
                        in areas that lack sufficient services.
            ``(4) Advisory committee.--
                    ``(A) In general.--The Secretary shall appoint an 
                advisory committee to provide advice 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. 403. COUNSELING PROCEDURES.

    (a) In General.--Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the 
following new subsection:
    ``(g) 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) of the Department of Housing and Urban 
        Development Act, 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 (III), by striking ``and'' at the end;
            (2) in subclause (IV) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after subclause (IV) the following new 
        subclause:
                                    ``(V) notify the housing or 
                                mortgage applicant of the availability 
                                of mortgage software systems provided 
                                pursuant to subsection (g)(3).''.

SEC. 404. 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 (g)(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 $45,000,000 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 (5) of subsection (g); and
                    ``(iii) assistance pursuant to this paragraph for 
                entities providing homeownership and rental 
                counseling.''.

SEC. 405. 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 (g)(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. 406. 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. 407. 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:
    ``(h) 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. 408. 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 inserting at the end 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 V--MORTGAGE DISCLOSURES UNDER REAL ESTATE SETTLEMENT PROCEDURES 
                              ACT OF 1974

SEC. 501. UNIVERSAL MORTGAGE DISCLOSURE IN GOOD FAITH ESTIMATE OF 
              SETTLEMENT SERVICES COSTS.

    (a) In General.--Section 5 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2604) is amended--
            (1) in subsection (c), by adding after the period at the 
        end the following: ``Each such good faith estimate shall 
        include the disclosure required under subsection (f) in the 
        form prescribed by the Secretary pursuant to such subsection, 
        except that if the Secretary at any time issues any regulations 
        requiring the use of a standard or uniform form or statement in 
        providing the good faith estimate required under this 
        subsection and prescribing such standard or uniform form or 
        statement, such disclosure shall not be required after the 
        effective date of such regulations.''; and
            (2) by adding at the end the following new subsection:
    ``(f) Universal Mortgage Disclosure Requirement for Good Faith 
Estimates.--
            ``(1) Disclosure.--The disclosure required under this 
        subsection is a written statement regarding the federally 
        related mortgage loan for which the good faith estimate under 
        subsection (c) is made, that consists of the following 
        statements, appropriately and in good faith completed by the 
        lender in accordance with the terms of the federally related 
        mortgage loan involved in the settlement:
                    ``(A) `Your Loan Amount will be' and `$____', each 
                statement appearing in a separate column of the 
                disclosure.
                    ``(B) `Your Loan is', `A Fixed Rate Loan', and `An 
                Adjustable Rate Loan ', each statement appearing in a 
                separate column and each of the last two such 
                statements preceded by a checkbox.
                    ``(C) `Your Loan Term is', `___ years', and `___ 
                years', each statement appearing in a separate column, 
                and the second such statement shall appear in the same 
                column as the statement required by subparagraph (B) 
                regarding fixed rate loans and the third such statement 
                shall appear in the same column as the statement 
                required by subparagraph (B) regarding adjustable rate 
                loans;
                    ``(D) `Your Estimated Interest Rate (APR) is', 
                `___%', and `___% initially, then it will adjust. In 
                ___ months, Your rate may adjust to a maximum of ___%', 
                each statement appearing in a separate column, the 
                second such statement shall appear in the same column 
                as the statement required by subparagraph (B) regarding 
                fixed rate loans and the third such statement shall 
                appear in the same column as the statement required by 
                subparagraph (B) regarding adjustable rate loans, and 
                the blanks relating to estimated interest rate shall be 
                completed by the lender using an annual percentage rate 
                determined in accordance with the Truth in Lending Act.
                    ``(E) `Your Total Estimated Monthly Payment 
                (Including loan Principal and Interest, and property 
                Taxes (based on current rates) and Insurance (PITI)) 
                is', `$____ which represents ___% of Your estimated 
                monthly income', and `$____ which represents ___% of 
                Your estimated monthly income. When Your interest rate 
                initially adjusts, Your maximum monthly payment may be 
                as high as $____ which represents ___% of Your 
                estimated monthly income', each statement appearing in 
                a separate column, and the second such statement shall 
                appear in the same column as the statement required by 
                subparagraph (B) regarding fixed rate loans and the 
                third such statement shall appear in the same column as 
                the statement required by subparagraph (B) regarding 
                adjustable rate loans.
                    ``(F) `Your Rate Lock Period is' and `___ days. 
                After You lock into Your interest rate, You must go to 
                settlement within this number of days to be guaranteed 
                this interest rate.', each statement appearing in a 
                separate column.
                    ``(G) `Does Your loan have a prepayment penalty?', 
                `YES, Your maximum prepayment penalty is $____', and 
                `NO', the first such statement and the last two such 
                statements appearing in a separate column, and each of 
                the last two such statements preceded by a checkbox.
                    ``(H) `Does Your loan have a balloon payment?', 
                `YES, Your balloon payment of $____ is due in ___ 
                months', and `NO', the first such statement and the 
                last two such statements appearing in a separate 
                column, and each of the last two such statements 
                preceded by a checkbox.
                    ``(I) `Your Total Estimated Settlement Charges Will 
                be $____ (a)' and `Your Total Estimated Down Payment 
                will be $____ (b)', each statement appearing in a 
                separate column.
                    ``(J) `Your Total Estimated Cash Needed at Closing 
                Will Be' and `$____ (a+b)', each statement appearing in 
                a separate column.
                    ``(K) `This represents a simple summary of Your 
                Good Faith Estimate (GFE). To understand the terms of 
                Your loan, You must see disclosure forms and the Truth 
                in Lending Act.', such statement appearing directly 
                below the entirety of the remainder of the disclosure.
            ``(2) Standard form.--
                    ``(A) Development and use.--The Secretary, in 
                consultation with the Secretary of Veterans Affairs, 
                the Federal Deposit Insurance Corporation, and the 
                Director of the Office of Thrift Supervision, shall 
                develop and prescribe a standard form for the 
                disclosure required under this subsection, which shall 
                be used without variation in all transactions in the 
                United States that involve federally related mortgage 
                loans.
                    ``(B) Appearance.--The standard form developed 
                pursuant to this paragraph shall--
                            ``(i) set forth each statement required 
                        under a separate subparagraph under paragraph 
                        (1) on a separate row of the disclosure;
                            ``(ii) be set forth in 8-point type;
                            ``(iii) be not more than 6 inches in width 
                        or 3.5 inches in height;
                            ``(iv) include such boldface type and 
                        shading as the Secretary considers appropriate;
                            ``(v) include such parenthetical statements 
                        directing the borrower to the terms of the loan 
                        (such as `see terms') as the Secretary 
                        considers appropriate, in such places as the 
                        Secretary considers appropriate; and
                            ``(vi) be located in the upper one-third of 
                        the first page of the good faith estimate 
                        required under subsection (c) in a manner that 
                        allows the identity, address, phone number, and 
                        other relevant information of the lender, the 
                        identity, address, phone number, and other 
                        relevant information of the borrower, and the 
                        address of the property for which the federally 
                        related mortgage loan is to be made, to be 
                        located above the standard form.''.
    (b) Regulations.--The Secretary of Housing and Urban Development 
shall issue regulations prescribing the standard form and the use of 
such form, as required by the amendment made by subsection (a), not 
later than the expiration of the 180-day period beginning upon the date 
of the enactment of this Act, and such regulations shall take effect 
upon issuance.

                      TITLE VI--MORTGAGE SERVICING

SEC. 601. 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 129B (as added by 
section 201) the following new section:

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

    ``(a) In General.--Except as provided in subsection (b) or (c), a 
creditor, in connection with the formation or consummation of a 
consumer credit transaction secured by a first lien on the principal 
dwelling of the consumer, other than a consumer credit transaction 
under an open end credit plan or a reverse mortgage, shall establish, 
at the time of the consummation of such transaction, an escrow or 
impound account for the payment of taxes and hazard insurance, and, if 
applicable, flood insurance, mortgage insurance, ground rents, and any 
other required periodic payments or premiums with respect to the 
property or the loan terms, as provided in, and in accordance with, 
this section.
    ``(b) When Required.--No impound, trust, or other type of account 
for the payment of property taxes, insurance premiums, or other 
purposes relating to the property may be required as a condition of a 
real property sale contract or a loan secured by a first deed of trust 
or mortgage on the principal dwelling of the consumer, other than a 
consumer credit transaction under an open end credit plan or a reverse 
mortgage, except when--
            ``(1) any such impound, trust, or other type of escrow or 
        impound account for such purposes is required by Federal or 
        State law;
            ``(2) a loan is made, guaranteed, or insured by a State or 
        Federal governmental lending or insuring agency;
            ``(3) the consumer's debt-to-income ratio at the time the 
        home mortgage is established taking into account income from 
        all sources including the consumer's employment exceeds 50 
        percent;
            ``(4) the transaction is secured by a first mortgage or 
        lien on the consumer's principal dwelling and the annual 
        percentage rate on the credit, at the time of consummation of 
        the transaction, will exceed by more than 3.0 percentage points 
        the yield on Treasury securities having comparable periods of 
        maturity on the 15th day of the month immediately preceding the 
        month in which the application of the extension of credit is 
        received by the creditor;
            ``(5) a consumer obtains a mortgage referred to in section 
        103(aa);
            ``(6) the original principal amount of such loan at the 
        time of consummation of the transaction is--
                    ``(A) 90 percent or more of the sale price, if the 
                property involved is purchased with the proceeds of the 
                loan; or
                    ``(B) 90 percent or more of the appraised value of 
                the property securing the loan;
            ``(7) the combined principal amount of all loans secured by 
        the real property exceeds 95 percent of the appraised value of 
        the property securing the loans at the time of consummation of 
        the last mortgage transaction;
            ``(8) the consumer was the subject of a proceeding under 
        title 11, United States Code, at any time during the 7-year 
        period preceding the date of the transaction (as determined on 
        the basis of the date of entry of the order for relief or the 
        date of adjudication, as the case may be, with respect to such 
        proceeding and included in a consumer report on the consumer 
        under the Fair Credit Reporting Act) ; or
            ``(9) so required by the Board pursuant to regulation.
    ``(c) Duration of Mandatory Escrow or Impound Account.--An escrow 
or impound account established pursuant to subsection (b), shall remain 
in existence for a minimum period of 5 years and until such borrower 
has sufficient equity in the dwelling securing the consumer credit 
transaction so as to no longer be required to maintain private mortgage 
insurance, or such other period as may be provided in regulations to 
address situations such as borrower delinquency, unless the underlying 
mortgage establishing the account is terminated.
    ``(d) Clarification on Escrow Accounts for Loans Not Meeting 
Statutory Test.--For mortgages not covered by the requirements of 
subsection (b), no provision of this section shall be construed as 
precluding the establishment of an impound, trust, or other type of 
account for the payment of property taxes, insurance premiums, or other 
purposes relating to the property--
            ``(1) on terms mutually agreeable to the parties to the 
        loan;
            ``(2) at the discretion of the lender or servicer, as 
        provided by the contract between the lender or servicer and the 
        borrower; or
            ``(3) pursuant to the requirements for the escrowing of 
        flood insurance payments for regulated lending institutions in 
        section 102(d) of the Flood Disaster Protection Act of 1973.
    ``(e) Administration of Mandatory Escrow or Impound Accounts.--
            ``(1) In general.--Except as may otherwise be provided for 
        in this title or in regulations prescribed by the Board, escrow 
        or impound accounts established pursuant to subsection (b) 
        shall be established in a federally insured depository 
        institution.
            ``(2) Administration.--Except as provided in this section 
        or regulations prescribed under this section, an escrow or 
        impound account subject to this section shall be administered 
        in accordance with--
                    ``(A) the Real Estate Settlement Procedures Act of 
                1974 and regulations prescribed under such Act;
                    ``(B) the Flood Disaster Protection Act of 1973 and 
                regulations prescribed under such Act; and
                    ``(C) the law of the State, if applicable, where 
                the real property securing the consumer credit 
                transaction is located.
            ``(3) Applicability of payment of interest.--If prescribed 
        by applicable State or Federal law, each creditor shall pay 
        interest to the consumer on the amount held in any impound, 
        trust, or escrow account that is subject to this section in the 
        manner as prescribed by that applicable State or Federal law.
            ``(4) Penalty coordination with respa.--Any action or 
        omission on the part of any person which constitutes a 
        violation of the Real Estate Settlement Procedures Act of 1974 
        or any regulation prescribed under such Act for which the 
        person has paid any fine, civil money penalty, or other damages 
        shall not give rise to any additional fine, civil money 
        penalty, or other damages under this section, unless the action 
        or omission also constitutes a direct violation of this 
        section.
    ``(f) Disclosures Relating to Mandatory Escrow or Impound 
Account.--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 at least 3 business days before the consummation of the 
consumer credit transaction giving rise to such account or in 
accordance with timeframes established in prescribed regulations the 
following information:
            ``(1) The fact that an escrow or impound account will be 
        established at consummation of the transaction.
            ``(2) The amount required at closing to initially fund the 
        escrow or impound account.
            ``(3) The amount, in the initial year after the 
        consummation of the transaction, of the estimated taxes and 
        hazard insurance, including flood insurance, if applicable, and 
        any other required periodic payments or premiums that reflects, 
        as appropriate, either the taxable assessed value of the real 
        property securing the transaction, including the value of any 
        improvements on the property or to be constructed on the 
        property (whether or not such construction will be financed 
        from the proceeds of the transaction) or the replacement costs 
        of the property.
            ``(4) The estimated monthly amount payable to be escrowed 
        for taxes, hazard insurance (including flood insurance, if 
        applicable) and any other required periodic payments or 
        premiums.
            ``(5) The fact that, if the consumer chooses to terminate 
        the account at the appropriate time in the future, the consumer 
        will become responsible for the payment of all taxes, hazard 
        insurance, and flood insurance, if applicable, as well as any 
        other required periodic payments or premiums on the property 
        unless a new escrow or impound account is established.
    ``(g) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Flood insurance.--The term `flood insurance' means 
        flood insurance coverage provided under the national flood 
        insurance program pursuant to the National Flood Insurance Act 
        of 1968.
            ``(2) Hazard insurance.--The term `hazard insurance' shall 
        have the same meaning as provided for `hazard insurance', 
        `casualty insurance', `homeowner's insurance', or other similar 
        term under the law of the State where the real property 
        securing the consumer credit transaction is located.''.
    (b) Implementation.--
            (1) Regulations.--The Board of Governors of the Federal 
        Reserve System, the Comptroller of the Currency, the Director 
        of the Office of Thrift Supervision, the Federal Deposit 
        Insurance Corporation, the National Credit Union Administration 
        Board, (hereafter in this Act referred to as the ``Federal 
        banking agencies'') and the Federal Trade Commission shall 
        prescribe, in final form, such regulations as determined to be 
        necessary to implement the amendments made by subsection (a) 
        before the end of the 180-day period beginning on the date of 
        the enactment of this Act.
            (2) Effective date.--The amendments made by subsection (a) 
        shall only apply to covered mortgage loans consummated after 
        the end of the 1-year period beginning on the date of the 
        publication of final regulations in the Federal Register.
    (c) 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 129B (as added by section 201) the following new item:

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

SEC. 602. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW 
              SERVICES.

    (a) In General.--Section 129C of the Truth in Lending Act (as added 
by section 601) is amended by adding at the end the following new 
subsection:
    ``(h) Disclosure Notice Required for Consumers Who Waive Escrow 
Services.--
            ``(1) In general.--If--
                    ``(A) an impound, trust, or other type of account 
                for the payment of property taxes, insurance premiums, 
                or other purposes relating to real property securing a 
                consumer credit transaction is not established in 
                connection with the transaction; or
                    ``(B) a consumer chooses, at any time after such an 
                account is established in connection with any such 
                transaction and in accordance with any statute, 
                regulation, or contractual agreement, to close such 
                account,
        the creditor or servicer 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.
            ``(2) Disclosure requirements.--Any disclosure provided to 
        a consumer under paragraph (1) shall include the following:
                    ``(A) Information concerning any applicable fees or 
                costs associated with either the non-establishment of 
                any such account at the time of the transaction, or any 
                subsequent closure of any such account.
                    ``(B) A 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 the fact that the costs for taxes, 
                insurance, and related fees can be substantial.
                    ``(C) A clear explanation of the consequences of 
                any failure to pay non-escrowed items, including the 
                possible requirement for the forced placement of 
                insurance by the creditor or servicer 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.''.
    (b) Implementation.--
            (1) Regulations.--The Federal banking agencies and the 
        Federal Trade Commission shall prescribe, in final form, such 
        regulations as such agencies determine to be necessary to 
        implement the amendments made by subsection (a) before the end 
        of the 180-day period beginning on the date of the enactment of 
        this Act.
            (2) Effective date.--The amendments made by subsection (a) 
        shall only apply in accordance with the regulations established 
        in paragraph (1) and beginning on the date occurring 180-days 
        after the date of the publication of final regulations in the 
        Federal Register.

SEC. 603. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.

    (a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end 
the following new subsections:
    ``(k) Servicer Prohibitions.--
            ``(1) In general.--A servicer of a federally related 
        mortgage shall not--
                    ``(A) obtain force-placed hazard insurance unless 
                there is a reasonable basis to believe the borrower has 
                failed to comply with the loan contract's requirements 
                to maintain property insurance;
                    ``(B) charge fees for responding to valid qualified 
                written requests (as defined in regulations which the 
                Secretary shall prescribe) under this section;
                    ``(C) fail to take timely action to respond to a 
                borrower's requests to correct errors relating to 
                allocation of payments, final balances for purposes of 
                paying off the loan, or avoiding foreclosure, or other 
                standard servicer's duties;
                    ``(D) fail to respond within 10 business days to a 
                request from a borrower to provide the identity, 
                address, and other relevant contact information about 
                the owner assignee of the loan; or
                    ``(E) fail to comply with any other obligation 
                found by the Secretary, by regulation, to be 
                appropriate to carry out the consumer protection 
                purposes of this Act.
            ``(2) Force-placed insurance defined.--For purposes of this 
        subsection and subsections (l) and (m), the term `force-placed 
        insurance' means hazard insurance coverage obtained by a 
        servicer of a federally related mortgage when the borrower has 
        failed to maintain or renew hazard insurance on such property 
        as required of the borrower under the terms of the mortgage.
    ``(l) Requirements for Force-Placed Insurance.--A servicer of a 
federally related mortgage shall not be construed as having a 
reasonable basis for obtaining force-placed insurance unless the 
requirements of this subsection have been met.
            ``(1) Written notices to borrower.--A servicer may not 
        impose any charge on any borrower for force-placed insurance 
        with respect to any property securing a federally related 
        mortgage unless--
                    ``(A) the servicer has sent, by first-class mail, a 
                written notice to the borrower containing--
                            ``(i) a reminder of the borrower's 
                        obligation to maintain hazard insurance on the 
                        property securing the federally related 
                        mortgage;
                            ``(ii) a statement that the servicer does 
                        not have evidence of insurance coverage of such 
                        property;
                            ``(iii) a clear and conspicuous statement 
                        of the procedures by which the borrower may 
                        demonstrate that the borrower already has 
                        insurance coverage; and
                            ``(iv) a statement that the servicer may 
                        obtain such coverage at the borrower's expense 
                        if the borrower does not provide such 
                        demonstration of the borrower's existing 
                        coverage in a timely manner;
                    ``(B) the servicer has sent, by first-class mail, a 
                second written notice, at least 30 days after the 
                mailing of the notice under subparagraph (A) that 
                contains all the information described in each clauses 
                of such subparagraph; and
                    ``(C) the servicer has not received from the 
                borrower any demonstration of hazard insurance coverage 
                for the property securing the mortgage by the end of 
                the 15-day period beginning on the date the notice 
                under subparagraph (B) was sent by the servicer.
            ``(2) Sufficiency of demonstration.--A servicer of a 
        federally related mortgage shall accept any reasonable form of 
        written confirmation from a borrower of existing insurance 
        coverage, which shall include the existing insurance policy 
        number along with the identity of, and contact information for, 
        the insurance company or agent.
            ``(3) Termination of force-placed insurance.--Within 15 
        days of the receipt by a servicer of confirmation of a 
        borrower's existing insurance coverage, the servicer shall--
                    ``(A) terminate the force-placed insurance; and
                    ``(B) refund to the consumer all force-placed 
                insurance premiums paid by the borrower during any 
                period during which the borrower's insurance coverage 
                and the force-placed insurance coverage were each in 
                effect, and any related fees charged to the consumer's 
                account with respect to the force-placed insurance 
                during such period.
            ``(4) Clarification with respect to flood disaster 
        protection act.--No provision of this section shall be 
        construed as prohibiting a servicer from providing simultaneous 
        or concurrent notice of a lack of flood insurance pursuant to 
        section 102(e) of the Flood Disaster Protection Act of 1973.
    ``(m) Limitations on Force-Placed Insurance Charges.--All charges 
for force-placed insurance premiums shall be bona fide and reasonable 
in amount.
    ``(n) Prompt Crediting of Payments Required.--
            ``(1) In general.--All amounts received by a lender or a 
        servicer on a home loan at the address where the borrower has 
        been instructed to make payments shall be accepted and 
        credited, or treated as credited, on the business day received, 
        to the extent that the borrower has made the full contractual 
        payment and has provided sufficient information to credit the 
        account.
            ``(2) Scheduled method.--If a servicer uses the scheduled 
        method of accounting, any regularly scheduled payment made 
        prior to the scheduled due date shall be credited no later than 
        the due date.
            ``(3) Notice of noncredit.--If any payment is received by a 
        lender or a servicer on a home loan and not credited, or 
        treated as credited, the borrower shall be notified within 10 
        business days by mail at the borrower's last known address of 
        the disposition of the payment, the reason the payment was not 
        credited, or treated as credited to the account, and any 
        actions necessary by the borrower to make the loan current.''.
    (b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
            (1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000'' 
        each place such term appears and inserting ``$2,000''; and
            (2) in paragraph (2)(B)(i), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
    (c) Decrease in Response Times.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
            (1) in paragraph (1)(A), by striking ``20 days'' and 
        inserting ``10 days'';
            (2) in paragraph (2), by striking ``60 days'' and inserting 
        ``30 days''; and
            (3) by adding at the end the following new paragraph:
            ``(4) Limited extension of response time.--The 30-day 
        period described in paragraph (2) may be extended for not more 
        than 30 days if, before the end of such 30-day period, the 
        servicer notifies the borrower of the extension and the reasons 
        for the delay in responding.''.
    (d) Requests for Pay-Off Amounts.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended by 
inserting after paragraph (4) (as added by subsection (c) of this 
section) the following new paragraph:
            ``(5) Requests for pay-off amounts.--A creditor or servicer 
        shall send a payoff balance within 7 business days of the 
        receipt of a written request for such balance from or on behalf 
        of the borrower.''.
    (e) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g)) 
is amended by adding at the end the following new sentence: ``Any 
balance in any such account that is within the servicer's control at 
the time the loan is paid off shall be promptly returned to the 
borrower within 20 business days or credited to a similar account for a 
new mortgage loan to the borrower with the same lender.''.

SEC. 604. MORTGAGE SERVICING STUDIES REQUIRED.

    (a) Mortgage Servicing Practices.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Federal banking agencies, and the 
        Federal Trade Commission, shall conduct a comprehensive study 
        on mortgage servicing practices and their potential for fraud 
        and abuse.
            (2) Issues to be included.--In addition to other issues the 
        Secretary of Housing and Urban Development, the Federal banking 
        agencies, and the Federal Trade Commission may determine to be 
        appropriate and possibly pertinent to the study conducted under 
        paragraph (1), the study shall include the following issues:
                    (A) A survey of the industry in order to examine 
                the issue of the timely or effective posting of 
                payments by servicers.
                    (B) The employment of daily interest when payments 
                are made after a due date.
                    (C) The charging of late fees on the entire 
                outstanding principal.
                    (D) The charging of interest on servicing fees.
                    (E) The utilization of collection practices that 
                failed to comply with the Fair Debt Collection 
                Practices Act.
                    (F) The charging of prepayment penalties when not 
                authorized by either the note or law.
                    (G) The employment of unconscionable forbearance 
                agreements.
                    (H) Foreclosure abuses.
            (3) Report.--Before the end of the 12-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate.
    (b) Mortgage Servicing Improvements.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Federal banking agencies, and the 
        Federal Trade Commission, shall conduct a comprehensive study 
        on means to improve the best practices of the mortgage 
        servicing industry, and Federal and State laws governing such 
        industry.
            (2) Report.--Before the end of the 18-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate, together with such recommendations for administrative 
        or legislative action as the Secretary, in consultation with 
        the Board and the Commission, may determine to be appropriate.

SEC. 605. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

    (a) In General.--Section 128(b) of the Truth in Lending Act (15 
U.S.C. 1638(b)) is amended by adding at the end the following new 
paragraph:
            ``(4) Repayment analysis required to include escrow 
        payments.--
                    ``(A) In general.--In the case of any consumer 
                credit transaction secured by a first mortgage or lien 
                on the principal dwelling of the consumer, other than a 
                consumer credit transaction under an open end credit 
                plan or a reverse mortgage, for which an impound, 
                trust, or other type of account has been or will be 
                established in connection with the transaction for the 
                payment of property taxes, hazard and flood (if any) 
                insurance premiums, or other periodic payments or 
                premiums with respect to the property, the information 
                required to be provided under subsection (a) with 
                respect to the number, amount, and due dates or period 
                of payments scheduled to repay the total of payments 
                shall take into account the amount of any monthly 
                payment to such account for each such repayment in 
                accordance with section 10(a)(2) of the Real Estate 
                Settlement Procedures Act of 1974.
                    ``(B) Assessment value.--The amount taken into 
                account under subparagraph (A) for the payment of 
                property taxes, hazard and flood (if any) insurance 
                premiums, or other periodic payments or premiums with 
                respect to the property shall reflect the taxable 
                assessed value of the real property securing the 
                transaction after the consummation of the transaction, 
                including the value of any improvements on the property 
                or to be constructed on the property (whether or not 
                such construction will be financed from the proceeds of 
                the transaction), if known, and the replacement costs 
                of the property for hazard insurance, in the initial 
                year after the transaction.''.

                    TITLE VII--APPRAISAL ACTIVITIES

SEC. 701. PROPERTY APPRAISAL REQUIREMENTS.

    Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (u) (as added by section 303(f)) the 
following new subsection:
    ``(v) Property Appraisal Requirements.--
            ``(1) In general.--A creditor may not extend credit in the 
        form of a mortgage referred to in section 103(aa) 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 property visit.--An appraisal of 
                property to be secured by a mortgage referred to in 
                section 103(aa) does not meet the requirement of this 
                subsection unless it is performed by a qualified 
                appraiser who conducts a physical property visit of the 
                interior of the mortgaged property.
                    ``(B) Second appraisal under certain 
                circumstances.--
                            ``(i) In general.--If the purpose of a 
                        mortgage referred to in section 103(aa) 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 different qualified appraiser. 
                        The second appraisal shall include an analysis 
                        of the difference in sale prices, changes in 
                        market conditions, and any improvements made to 
                        the property between the date of the previous 
                        sale and the current sale.
                            ``(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 the 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 mortgage referred to in section 
        103(aa) to the consumer without charge, and at least 3 days 
        prior to the transaction closing date.
            ``(4) Consumer notification.--At the time of the initial 
        mortgage application, the consumer shall be provided with a 
        statement by the creditor that any appraisal prepared for the 
        mortgage is for the sole use of the creditor, and that the 
        consumer may choose to have a separate appraisal conducted at 
        their own expense.
            ``(5) 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. 702. UNFAIR AND DECEPTIVE PRACTICES AND ACTS 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 129C (as added by 
section 601) the following new section:

``SEC. 129D. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO 
              CERTAIN CONSUMER CREDIT TRANSACTIONS.

    ``(a) In General.--It shall be unlawful, in providing any services 
for a consumer credit transaction secured by the principal dwelling of 
the consumer, to engage in any unfair or deceptive act or practice as 
described in or pursuant to regulations prescribed under this section.
    ``(b) Appraisal Independence.--For purposes of subsection (a), 
unfair and deceptive practices shall include--
            ``(1) any appraisal of a property offered as security for 
        repayment of the consumer credit transaction that is conducted 
        in connection with such transaction in which a person with an 
        interest in the underlying transaction compensates, coerces, 
        extorts, colludes, instructs, induces, bribes, or intimidates a 
        person conducting or involved in an appraisal, or attempts, to 
        compensate, coerce, extort, collude, instruct, induce, bribe, 
        or intimidate such a person, for the purpose of causing the 
        appraised value assigned, under the appraisal, to the property 
        to be based on any factor other than the independent judgment 
        of the appraiser;
            ``(2) mischaracterizing, or suborning any 
        mischaracterization of, the appraised value of the property 
        securing the extension of the credit;
            ``(3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the making or 
        pricing of the transaction; and
            ``(4) failing to timely compensate an appraiser for a 
        completed appraisal regardless of whether the transaction 
        closes.
    ``(c) Exceptions.--The requirements of subsection (b) shall not be 
construed as prohibiting a mortgage lender, mortgage broker, mortgage 
banker, real estate broker, appraisal management company, employee of 
an appraisal management company, 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:
            ``(1) Consider additional, appropriate property 
        information, including the consideration of additional 
        comparable properties to make or support an appraisal.
            ``(2) Provide further detail, substantiation, or 
        explanation for the appraiser's value conclusion.
            ``(3) Correct errors in the appraisal report.
    ``(d) Rulemaking Proceedings.--The Board, the Comptroller of the 
Currency, the Director of the Office of Thrift Supervision, the Federal 
Deposit Insurance Corporation, the National Credit Union Administration 
Board, and the Federal Trade Commission--
            ``(1) shall, for purposes of this section, jointly 
        prescribe regulations defining with specificity acts or 
        practices which are unfair or deceptive in the provision of 
        mortgage lending services for a consumer credit transaction 
        secured by the principal dwelling of the consumer or mortgage 
        brokerage services for such a transaction and defining any 
        terms in this section or such regulations; and
            ``(2) may jointly issue interpretive guidelines and general 
        statements of policy with respect to unfair or deceptive acts 
        or practices in the provision of mortgage lending services for 
        a consumer credit transaction secured by the principal dwelling 
        of the consumer and mortgage brokerage services for such a 
        transaction, within the meaning of subsections (a), (b), and 
        (c).
    ``(e) Penalties.--
            ``(1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who violates 
        this section shall forfeit and pay a civil penalty of not more 
        than $10,000 for each day any such violation continues.
            ``(2) Subsequent violations.--In the case of any person on 
        whom a civil penalty has been imposed under paragraph (1), 
        paragraph (1) shall be applied by substituting `$20,000' for 
        `$10,000' with respect to all subsequent violations.
            ``(3) Assessment.--The agency referred to in subsection (a) 
        or (c) of section 108 with respect to any person described in 
        paragraph (1) shall assess any penalty under this subsection to 
        which such person is subject.''.
    (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 129C (as added by section 601) the following new item:

``129D. Unfair and deceptive practices and acts relating to certain 
                            consumer credit transactions.''.

SEC. 703. APPRAISAL SUBCOMMITTEE OF FIEC, APPRAISER INDEPENDENCE, AND 
              APPROVED APPRAISER EDUCATION.

    (a) Consumer Protection Mission.--
            (1) Purpose.--A purpose for the establishment and operation 
        of the Appraisal Subcommittee of the Financial Institutions 
        Examination Council (hereafter in this section referred to as 
        the ``Appraisal Subcommittee'') shall be to establish a 
        consumer protection mandate.
            (2) Functions of appraisal subcommittee.--It shall be a 
        function of the Appraisal Subcommittee to protect the consumer 
        from improper appraisal practices and the predations of 
        unlicensed appraisers.
            (3) Threshold levels.--In establishing a threshold level 
        under section 1112(b) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3341(b)), each 
        agency shall determine in writing that the threshold level 
        provides reasonable protection for consumers who purchase 1-4 
        unit single-family residences.
    (b) Annual Report of Appraisal Subcommittee.--The annual report of 
the Appraisal Subcommittee under section 1103(a)(4) of Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 shall detail 
the activities of the Appraisal Subcommittee, including the results of 
all audits of State appraiser regulatory agencies, and provide an 
accounting of disapproved actions and warnings taken in the previous 
year, including a description of the conditions causing the 
disapproval.
    (c) Open Meetings.--All meetings of the Appraisal Subcommittee 
shall be held in public session after notice in the Federal Register.
    (d) Regulations.--The Appraisal Subcommittee may prescribe 
regulations after notice and opportunity for comment. Any regulations 
prescribed by the Appraisal Subcommittee shall (unless otherwise 
provided in this section or title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989) be limited to the 
following functions: temporary practice, national registry, information 
sharing, and enforcement. For purposes of prescribing regulations, the 
Appraisal Subcommittee shall establish an advisory committee of 
industry participants, including appraisers, lenders, consumer 
advocates, and government agencies, and hold regular meetings.
    (e) Field Appraisals and Appraisal Reviews.--All field appraisals 
performed at a property within a State shall be prepared by appraisers 
licensed in the State where the property is located. All Uniform 
Standards of Professional Appraisal Practice-compliant appraisal 
reviews shall be performed by an appraiser who is duly licensed by a 
State appraisal board.
    (f) State Agency Reporting Requirement.--Each State with an 
appraiser certifying and licensing agency whose certifications and 
licenses comply with title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 shall transmit reports on 
sanctions, disciplinary actions, license and certification revocations, 
and license and certification suspensions on a timely basis to the 
national registry of the Appraisal Subcommittee.
    (g) Registry Fees Modified.--
            (1) In general.--The annual registry fees for persons 
        performing appraisals in federally related transactions shall 
        be increased from $25 to $40. The maximum amount up to which 
        the Appraisal Subcommittee may adjust any registry fees shall 
        be increased from $50 to $80 per annum. The Appraisal 
        Subcommittee shall consider at least once every 5 years whether 
        to adjust the dollar amount of the registry fees to account for 
        inflation. In implementing any change in registry fees, the 
        Appraisal Subcommittee shall provide flexibility to the States 
        for multi-year certifications and licenses already in place, as 
        well as a transition period to implement the changes in 
        registry fees.
            (2) Incremental revenues.--Incremental revenues collected 
        pursuant to the increases required by this section shall be 
        placed in a separate account at the United States Treasury, 
        entitled the Appraisal Subcommittee Account.
    (h) Grants and Reports.--
            (1) In general.--Amounts appropriated for or collected by 
        the Appraisal Subcommittee after the date of the enactment of 
        this Act shall, in addition to other uses authorized, be used--
                    (A) to make grants to State appraiser regulatory 
                agencies to help defray those costs relating to 
                enforcement activities; and
                    (B) to report to all State appraiser certifying and 
                licensing agencies when a license or certification is 
                surrendered, revoked, or suspended.
            (2) Limitation on obligations.--Obligations authorized 
        under this section may not exceed 75 percent of the fiscal year 
        total of incremental increase in fees collected and deposited 
        in the Appraisal Subcommittee Account pursuant to section 
        703(g) of this Act.
    (i) Criteria.--
            (1) Definition.--For purposes of this section and title XI 
        of the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 (notwithstanding section 1116(c) of such title), 
        the term ``State licensed appraiser'' means an individual who 
        has satisfied the requirements for State licensing in a State 
        or territory whose criteria for the licensing of a real estate 
        appraiser currently meet or exceed the minimum criteria issued 
        by the Appraisal Qualifications Board of The Appraisal 
        Foundation for the licensing of real estate appraisers.
            (2) Minimum qualification requirements.--Any requirements 
        established for individuals in the position of ``Trainee 
        Appraiser'' and ``Supervisory Appraiser'' shall meet or exceed 
        the minimum qualification requirements of the Appraiser 
        Qualifications Board of The Appraisal Foundation. The Appraisal 
        Subcommittee shall have the authority to enforce these 
        requirements.
    (j) Monitoring of State Appraiser Certifying and Licensing 
Agencies.--The Appraisal Subcommittee shall monitor State appraiser 
certifying and licencing agencies for the purpose of determining 
whether a State agency's funding and staffing are consistent with the 
requirements of title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989, whether a State agency processes 
complaints and completes exams in a reasonable time period, and whether 
a State agency reports claims and disciplinary actions on a timely 
basis to the national registry maintained by the Appraisal 
Subcommittee. The Appraisal Subcommittee shall have the authority to 
impose interim sanctions and suspensions.
    (k) 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 or 
        exceed the licensure standards established by the State where 
        an individual seeks appraisal licensure.
    (l) Consideration of Professional Appraisal Designations.--No 
provision of section 1122(d) of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 shall be construed as prohibiting 
consideration of designations conferred by recognized national 
professional appraisal organizations, such as sponsoring organizations 
of The Appraisal Foundation.
    (m) Appraiser Independence.--
            (1) Prohibitions on interested parties in a real estate 
        transaction.--No mortgage lender, mortgage broker, mortgage 
        banker, real estate broker, appraisal management company, 
        employee of an appraisal management company, 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, collusion, 
        compensation, instruction, inducement, intimidation, non-
        payment for services rendered, 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, appraisal 
        management company, employee of an appraisal management 
        company, 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, including the consideration of additional 
                comparable properties to make or support an appraisal.
                    (B) Provide further detail, substantiation, or 
                explanation for the appraiser's value conclusion.
                    (C) Correct errors in the appraisal report.
            (3) Prohibitions on conflicts of interest.--No certified or 
        licensed appraiser conducting an appraisal may have a direct or 
        indirect interest, financial or otherwise, in the property or 
        transaction involving the appraisal.
            (4) Mandatory reporting.--Any mortgage lender, mortgage 
        broker, mortgage banker, real estate broker, appraisal 
        management company, employee of an appraisal management 
        company, or any other person with an interest in a real estate 
        transaction involving an appraisal who has a reasonable basis 
        to believe an appraiser is violating applicable laws, or is 
        otherwise engaging in unethical conduct, shall refer the matter 
        to the applicable State appraiser certifying and licensing 
        agency.
            (5) Regulations.--The Federal financial institutions 
        regulatory agencies (as defined in section 1003(1) of the 
        Federal Financial Institutions Examination Council Act of 1978) 
        shall prescribe such regulations as may be necessary to carry 
        out the provisions of this subsection.
            (6) Penalties.--Any person who violates any provision of 
        this subsection shall be subject to civil penalties under 
        section 8(i)(2) of the Federal Deposit Insurance Act or section 
        206(k)(2) of the Federal Credit Union Act, as appropriate.
            (7) Proceeding.--A proceeding with respect to a violation 
        of this subsection shall be an administrative proceeding which 
        may be conducted by a Federal financial institutions regulatory 
        agency in accordance with the procedures set forth in 
        subchapter II of chapter 5 of title 5, United States Code.
    (n) Approved Education.--The Appraisal Subcommittee shall encourage 
the States to accept courses approved by the Appraiser Qualification 
Board's Course Approval Program.

SEC. 704. 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 the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989. In addition, this study shall 
examine the existing de minimis loan levels established by Federal 
regulators for compliance under title XI and whether there is a need to 
revise them to reflect the addition of consumer protection to the 
purposes and functions of the Appraisal Subcommittee.
    (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.

SEC. 705. CONSUMER APPRAISAL DISCLOSURE.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129D (as added by 
section 702) the following new section:

``SEC. 129E. CONSUMER APPRAISAL DISCLOSURE.

    ``In any case in which an appraisal is performed in connection with 
an extension of credit secured by an interest in real property, the 
creditor or other mortgage originator shall make available to the 
applicant for the extension of credit a copy of all appraisal valuation 
reports upon completion but no later than 3 business days prior to the 
transaction closing date.''.
    (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 129D (as added by section 702) the following new item:

``129E. Consumer appraisal disclosure.''.

            Passed the House of Representatives November 15, 2007.

            Attest:

                                                                 Clerk.
110th CONGRESS

  1st Session

                               H. R. 3915

_______________________________________________________________________

                                 AN ACT

To amend the Truth in Lending Act to reform consumer mortgage practices 
 and provide accountability for such practices, to establish licensing 
and registration requirements for residential mortgage originators, to 
provide certain minimum standards for consumer mortgage loans, and for 
                            other purposes.