IB 110th CONGRESS 1st Session H. R. 3915 IN THE HOUSE OF REPRESENTATIVES 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.
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.
<enum>I</enum><header>Residential mortgage loan origination</header> <subtitle id="HE77451E11EE44BB9BC836C71791F9949"><enum>A</enum><header>Licensing system for residential mortgage loan originators</header> <section id="H4FD6271858194EBA89FF4E39D6593DD0"><enum>101.</enum><header>Purposes and methods for establishing a mortgage licensing system and registry</header><text display-inline="no-display-inline">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:</text> <paragraph id="H9A7C6E6019704707B2A87E6FF3F8300"><enum>(1)</enum><text>Provides uniform license applications and reporting requirements for State-licensed loan originators.</text> </paragraph><paragraph id="HCE56D8E6284E43FCA472B2D733957F4B"><enum>(2)</enum><text>Provides a comprehensive licensing and supervisory database.</text> </paragraph><paragraph id="HCF2DF9F0AAC3433E9085204F6DB4BC06"><enum>(3)</enum><text>Aggregates and improves the flow of information to and between regulators.</text> </paragraph><paragraph id="H15EEAC0757C14F63B222009FAF3D49FB"><enum>(4)</enum><text>Provides increased accountability and tracking of loan originators.</text> </paragraph><paragraph id="HEF9025BC6F564BB98838E893DD198F79"><enum>(5)</enum><text>Streamlines the licensing process and reduces the regulatory burden.</text> </paragraph><paragraph id="HA29BE6A323894A08B15DF81E48D2E3F4"><enum>(6)</enum><text>Enhances consumer protections and supports anti-fraud measures.</text> </paragraph><paragraph id="H163415AE01714F089BD10552A411A150"><enum>(7)</enum><text>Provides consumers with easily accessible information regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators.</text> </paragraph></section><section display-inline="no-display-inline" id="HB81393B271904B4991EE63D65C94AACC" section-type="subsequent-section"><enum>102.</enum><header>Definitions</header><text display-inline="no-display-inline">For purposes of this subtitle, the following definitions shall apply:</text> <paragraph id="HBDCA3DE68C5A4FC0B33329D7BC89364C"><enum>(1)</enum><header>Federal banking agencies</header><text>The term <term>Federal banking agencies</term> 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.</text> </paragraph><paragraph id="H91845836CBE44F369927005374980041"><enum>(2)</enum><header>Depository institution</header><text>The term <quote>depository institution</quote> has the same meaning as in section 3 of the Federal Deposit Insurance Act and includes any credit union.</text> </paragraph><paragraph id="H8B3AA74AF27B47709410C3333B7B8D28"><enum>(3)</enum><header>Loan originator</header> <subparagraph id="HFD66AE63CAFC435FAF7529C49B6482A"><enum>(A)</enum><header>In general</header><text>The term <term>loan originator</term>—</text> <clause id="HC326BB19B26445D4A19E467832CC4A7"><enum>(i)</enum><text>means an individual who—</text> <subclause id="H98AA85EFFB5545A4ADCFD9A194D8BB5"><enum>(I)</enum><text>takes a residential mortgage loan application;</text> </subclause><subclause id="H45D0B74FA3974AFFB9929699FB3673D"><enum>(II)</enum><text>assists a consumer in obtaining or applying to obtain a residential mortgage loan; or</text> </subclause><subclause id="HF9805505BC4449CEA6FB9EA2700FB00"><enum>(III)</enum><text>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;</text> </subclause></clause><clause id="HB0F190B2236F4960863FB6D2FB669722"><enum>(ii)</enum><text display-inline="yes-display-inline">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);</text> </clause><clause id="HE00F1831BD61405AA23877AD0516D8C4"><enum>(iii) </enum><text display-inline="yes-display-inline">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.</text> </clause><clause id="HDE0476B22D0F450B9E8224F01B7FE357"><enum>(iv)</enum><text display-inline="yes-display-inline">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.</text> </clause></subparagraph><subparagraph id="H47CDDD38858440DFA15FCECA19BE9E43"><enum>(B)</enum><header>Other definitions relating to loan originator</header><text display-inline="yes-display-inline">For purposes of this subsection, an individual <quote>assists a consumer in obtaining or applying to obtain a residential mortgage loan</quote> 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.</text> </subparagraph><subparagraph id="H571C59E945664964B12DF5B1984E8C4"><enum>(C)</enum><header>Administrative or clerical tasks</header><text>The term <term>administrative or clerical tasks</term> 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.</text> </subparagraph><subparagraph id="HDEDE51F71D14431DBF068BC2443FF486"><enum>(D)</enum><header>Real estate brokerage activity defined</header><text display-inline="yes-display-inline">The term <quote>real estate brokerage activity</quote> means any activity that involves offering or providing real estate brokerage services to the public, including—</text> <clause id="H03AD18B259BC4F43A4F0F37B5E5DDAC7"><enum>(i)</enum><text>acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;</text> </clause><clause id="H970EF7E1E065430BBE084922333FC2B8"><enum>(ii)</enum><text>listing or advertising real property for sale, purchase, lease, rental, or exchange;</text> </clause><clause id="H40B1E7DEECE84459AF5E672F2BD95B0"><enum>(iii)</enum><text>providing advice in connection with sale, purchase, lease, rental, or exchange of real property;</text> </clause><clause id="H6A7C3A7EDEC242D6AD831B3D93B26B9D"><enum>(iv)</enum><text>bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;</text> </clause><clause id="H710B7E68BF8E420DA6EAAA60E5EBDB"><enum>(v)</enum><text>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);</text> </clause><clause id="H676356FD5B06472D9E9EDAA300524333"><enum>(vi)</enum><text>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</text> </clause><clause id="H095E9DD36A404502971C7C6B95F91BFC"><enum>(vii)</enum><text>offering to engage in any activity, or act in any capacity, described in clause (i), (ii), (iii), (iv), (v), or (vi).</text> </clause></subparagraph></paragraph><paragraph id="H235BDC6BFB794570B136075EA3004C14"><enum>(4)</enum><header>Loan processor or underwriter</header> <subparagraph id="HBECAB864C3DD4D94BF008B973E810181"><enum>(A)</enum><header>In general</header><text>The term <term>loan processor or underwriter</term> means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of—</text> <clause id="H8DD468F65F2248AAB03C87820094175B"><enum>(i)</enum><text>a State-licensed loan originator; or</text> </clause><clause id="H0528C0AABD244369AA69568E1E50D19D"><enum>(ii)</enum><text>a registered loan originator.</text> </clause></subparagraph><subparagraph id="H9B44F8AC1DA343D388CB87AC17D33FB5"><enum>(B)</enum><header>Clerical or support duties</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the term <term>clerical or support duties</term> may include—</text> <clause id="HFD756572E7A74A9AADFAFB79B63D068F"><enum>(i)</enum><text display-inline="yes-display-inline">the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and</text> </clause><clause id="H3360D7FD8DC34B158FADDC16C15E2425"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text> </clause></subparagraph></paragraph><paragraph id="HABD62DCE667D4BD5BF6274511DDB7D00"><enum>(5)</enum><header>Nationwide Mortgage Licensing System and Registry</header><text>The term <term>Nationwide Mortgage Licensing System and Registry</term> 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.</text> </paragraph><paragraph id="HD9F32487F6CE49BABB2B3DED73A0DCEF"><enum>(6)</enum><header>Registered loan originator</header><text>The term <term>registered loan originator</term> means any individual who—</text> <subparagraph id="HCD5065BCB6DD41F6AA1DFD20F25DC0E2"><enum>(A)</enum><text>meets the definition of loan originator and is an employee of a depository institution or a subsidiary of a depository institution; and</text> </subparagraph><subparagraph id="H8261EC43A8004B97A7DA49FEA606FDB"><enum>(B)</enum><text>is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.</text> </subparagraph></paragraph><paragraph id="HD2A4415D761248C1961F1CF8418EB2CB"><enum>(7)</enum><header>Residential mortgage loan</header><text display-inline="yes-display-inline">The term <term>residential mortgage loan</term> 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).</text> </paragraph><paragraph id="HB721FDC712364DA9B674CFC539F91389"><enum>(8)</enum><header>Secretary</header><text>The term <quote>Secretary</quote> means the Secretary of Housing and Urban Development.</text> </paragraph><paragraph id="HE099B84E7EF04C8EB0963962C3A05E00"><enum>(9)</enum><header>State-licensed loan originator</header><text>The term <term>State-licensed loan originator</term> means any individual who—</text> <subparagraph id="H1D2EEFA7414D4BE5AF91007EA1338298"><enum>(A)</enum><text>is a loan originator;</text> </subparagraph><subparagraph id="H5A247ED0235B40CCBB6F3BF237C098E3"><enum>(B)</enum><text>is not an employee of a depository institution or any subsidiary of a depository institution; and</text> </subparagraph><subparagraph id="H55AB060BEF3D40AC83B6573467FBE3ED"><enum>(C)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph id="HBC632CDECC714CB7A4EC44EAE9D983B3"><enum>(10)</enum><header>Unique identifier</header><text display-inline="yes-display-inline">The term <term>unique identifier</term> means a number or other identifier that—</text> <subparagraph id="H84B8DBCC756A45A2BAB476491702D284"><enum>(A)</enum><text>permanently identifies a loan originator; and</text> </subparagraph><subparagraph id="HCFEB65DCEDBD41168F00336C9835F61B"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph></section><section id="HD470714EB6464EC4BBB02EFED9AB1041"><enum>103.</enum><header>License or registration required</header> <subsection id="HD532C810E9594857AD49368876CAD0A"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">An individual may not engage in the business of a loan originator without first—</text> <paragraph id="HBCCEC072A96E4F0094599582D4774FC7"><enum>(1)</enum><text>obtaining and maintaining—</text> <subparagraph id="HE96E8F17FCC0446296BCB44494B093E7"><enum>(A)</enum><text>a registration as a registered loan originator; or</text> </subparagraph><subparagraph id="HCCD9208B6F534B15A9C9CCF4DD1EF0"><enum>(B)</enum><text>a license and registration as a State-licensed loan originator; and</text> </subparagraph></paragraph><paragraph id="H3392CFDF6FA644B68B69E4F2C9107F54"><enum>(2)</enum><text>obtaining a unique identifier.</text> </paragraph></subsection><subsection id="H36D9B5871E7D4C2FB1262B5CE5BE57CB"><enum>(b)</enum><header>Loan processors and underwriters</header> <paragraph id="HAD4C7370891A47A197B77600FAE6E8F0"><enum>(1)</enum><header>Supervised loan processors and underwriters</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H232AEFB5622F45FC917B0044BE8F6B82"><enum>(2)</enum><header>Independent contractors</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection></section><section id="HB286680363564B3C882D868FEE05701"><enum>104.</enum><header>State license and registration application and issuance</header> <subsection id="H575DF742D43D49879837687480FADC26"><enum>(a)</enum><header>Background checks</header><text>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—</text> <paragraph id="H1B825AC7F5A94232A495294EC540BA2F"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H312B8DF4F7D0481B95C009D035AD32E0"><enum>(2)</enum><text>personal history and experience, including authorization for the System to obtain—</text> <subparagraph id="H746D289FB0EB47C58C6B18BA4D00D599"><enum>(A)</enum><text>an independent credit report obtained from a consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act; and</text> </subparagraph><subparagraph id="H756106694099408A9B261ED9C1AE04A0"><enum>(B)</enum><text>information related to any administrative, civil or criminal findings by any governmental jurisdiction.</text> </subparagraph></paragraph></subsection><subsection id="H41297B21B1BD448E8EF03CB901E3446"><enum>(b)</enum><header>Issuance of license</header><text>The minimum standards for licensing and registration as a State-licensed loan originator shall include the following:</text> <paragraph id="HD7A1B84189D54377A28070C700B5B357"><enum>(1)</enum><text>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.</text> </paragraph><paragraph id="H726A75BE8845453B80192BE77EDF9DD5"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H794461D5D39C42B8AF081511A509EA5"><enum>(3)</enum><text>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.</text> </paragraph><paragraph id="HCC1C202F751D4216A212AE7B03D16571"><enum>(4)</enum><text>The applicant has completed the pre-licensing education requirement described in subsection (c).</text> </paragraph><paragraph id="H87F8A07A8CA64A78A0874F5F7EC41471"><enum>(5)</enum><text>The applicant has passed a written test that meets the test requirement described in subsection (d).</text> </paragraph></subsection><subsection id="HAFB20064018F452FA54B508475C14384"><enum>(c)</enum><header>Pre-licensing education of loan originators</header> <paragraph id="H6E128E207C8E4DC987CFF68D67F66881"><enum>(1)</enum><header>Minimum educational requirements</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H02AF274A7A314CDABB20EFF5B800AFD"><enum>(2)</enum><header>Approved educational courses</header><text display-inline="yes-display-inline">For purposes of paragraph (1), pre-licensing education courses shall be reviewed, and published by the Nationwide Mortgage Licensing System and Registry.</text> </paragraph><paragraph id="H83CA523D3AD14DB99DD7A4E01FB8F209"><enum>(3)</enum><header>Limitation and standards</header> <subparagraph id="HD2B8F12E68754133889607AF1FFBF553"><enum>(A)</enum><header>Limitation</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H4321E8E4387043E1BF220074E0F4CF80"><enum>(B)</enum><header>Standards</header><text display-inline="yes-display-inline">In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and approval of courses.</text> </subparagraph></paragraph></subsection><subsection id="H6B66AD1018AE4415B0A274695258DE1C"><enum>(d)</enum><header>Testing of loan originators</header> <paragraph id="HD0F3C73A88C54C790097544462C7743F"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H38DBBDFB8D8A4A1F97E5C8A9AB64B2DB"><enum>(2)</enum><header>Qualified test</header><text>A written test shall not be treated as a qualified written test for purposes of paragraph (1) unless—</text> <subparagraph id="H3760122134DB4A78B95B06742F3D926D"><enum>(A)</enum><text>the test consists of a minimum of 100 questions; and</text> </subparagraph><subparagraph id="H7035CE1DDFDD4ED4823F4584C88E0012"><enum>(B)</enum><text>the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including—</text> <clause id="H8C18EBFA4A4D4E49B2746E6FF54C7800"><enum>(i)</enum><text>ethics;</text> </clause><clause id="HBBAB43B3DBD1417A8C36548D5E58ADE5"><enum>(ii)</enum><text>Federal law and regulation pertaining to mortgage origination;</text> </clause><clause id="HDA26AFA869294FDDA6D08D5B3D35F1DA"><enum>(iii)</enum><text>State law and regulation pertaining to mortgage origination; and</text> </clause><clause id="H8C16EE55122A45F1B303A49B7BD3C9EA"><enum>(iv)</enum><text display-inline="yes-display-inline">Federal and State law and regulation, including instruction on fraud, consumer protection, and fair lending issues.</text> </clause></subparagraph></paragraph><paragraph id="H1A4615F679244E1AB92CB7EC05F7E3E4"><enum>(3)</enum><header>Minimum competence</header> <subparagraph id="HA51D71A2DAEF41F8B2E3806F212B89C1"><enum>(A)</enum><header>Passing score</header><text>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.</text> </subparagraph><subparagraph id="HB3B318059DFC46BFA8C6006C4B029B1E"><enum>(B)</enum><header>Initial retests</header><text>An individual may retake a test 3 consecutive times with each consecutive taking occurring in less than 14 days after the preceding test.</text> </subparagraph><subparagraph id="HA498A17EF3154FB0A3234146DDB4499"><enum>(C)</enum><header>Subsequent retests</header><text>After 3 consecutive tests, an individual shall wait at least 14 days before taking the test again.</text> </subparagraph><subparagraph id="HF8A2EFD9F21041299583525C83FA0062"><enum>(D)</enum><header>Retest after lapse of license</header><text>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.</text> </subparagraph></paragraph></subsection></section><section id="H30ED867A6D834B969DC71C1B6F547EA3"><enum>105.</enum><header>Standards for State license renewal</header> <subsection id="HB3EE82C4200142D1BA1C4920D5837800"><enum>(a)</enum><header>In general</header><text>The minimum standards for license renewal for State-licensed loan originators shall include the following:</text> <paragraph id="H7BF3FE2050B849B982D63803532E011B"><enum>(1)</enum><text>The loan originator continues to meet the minimum standards for license issuance.</text> </paragraph><paragraph id="H1043A6D0650F4596A532278BB8A08E23"><enum>(2)</enum><text>The loan originator has satisfied the annual continuing education requirements described in subsection (b).</text> </paragraph></subsection><subsection id="H6A27586E2FB34369B4836DAEA3CDCEBB"><enum>(b)</enum><header>Continuing education for state-licensed loan originators</header> <paragraph id="H278116CF89B94345A3BE5BE167DD427"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HADAD8BB41D4C4EC9A270220018BA9827"><enum>(2)</enum><header>Approved educational courses</header><text display-inline="yes-display-inline">For purposes of paragraph (1), continuing education courses shall be reviewed, and published by the Nationwide Mortgage Licensing System and Registry.</text> </paragraph><paragraph id="H82B3F075DA754B0691A37478FD000804"><enum>(3)</enum><header>Calculation of continuing education credits</header><text display-inline="yes-display-inline">A State-licensed loan originator—</text> <subparagraph id="H4F25DAF4A7F3467980ED82E0FF319D47"><enum>(A)</enum><text>may only receive credit for a continuing education course in the year in which the course is taken; and</text> </subparagraph><subparagraph id="H55E81883DD014A1C80D279233EEFBA1"><enum>(B)</enum><text>may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.</text> </subparagraph></paragraph><paragraph id="H0D5A78B50AF64C7C9C17CE1112A7C2AD"><enum>(4)</enum><header>Instructor credit</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H65391D379BC74BF7A0BA1770ECAF2961"><enum>(5)</enum><header>Limitation and standards</header> <subparagraph id="H73D20C4FD35346CF9836F656ACF9405"><enum>(A)</enum><header>Limitation</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H93607516CA0849E88645EC851B82ED5C"><enum>(B)</enum><header>Standards</header><text display-inline="yes-display-inline">In approving courses under this section, the Nationwide Mortgage Licensing System and Registry shall apply reasonable standards in the review and approval of courses.</text> </subparagraph></paragraph></subsection></section><section id="H7156A0323C56458CB2CCBE0E3315DC4"><enum>106.</enum><header>System of registration administration by Federal banking agencies</header> <subsection id="HCB1FF931FA3C4A93A472A1752849D1DD"><enum>(a)</enum><header>Development</header> <paragraph id="H1051B4F775E148549D412B00F004A8E"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph id="H9361EC2104194EDB86332E028EE67646"><enum>(2)</enum><header>Registration requirements</header><text display-inline="yes-display-inline">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—</text> <subparagraph id="H7DEFD55590DE492D85853090B6A8F721"><enum>(A)</enum><text>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</text> </subparagraph><subparagraph id="H5A9D883F9AFE4A9ABDDE9629536E0033"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph></subsection><subsection id="H2E5D9A5A3C574EA796ED9226C4D1A340"><enum>(b)</enum><header>Coordination</header> <paragraph id="HF35108708B4147E9AF007BE155A90100"><enum>(1)</enum><header>Unique identifier</header><text>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.</text> </paragraph><paragraph id="HDEEBE0D7C60C4CF8B073A6DFAAA9C9E"><enum>(2)</enum><header>Nationwide mortgage licensing system and registry development</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="HC6EACD5FE30C47FF00E4B6F3022D5EC0"><enum>(c)</enum><header>Consideration of factors and procedures</header><text display-inline="yes-display-inline">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.</text> </subsection></section><section id="H5229D81C293A427EBDE755F5F4B3C2F"><enum>107.</enum><header>Secretary of Housing and Urban Development backup authority to establish a loan originator licensing system</header> <subsection id="H6351CD3C45834A0A9EA40095E8F40700"><enum>(a)</enum><header>Back up licensing system</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H65701BA1FB504889A25676EB97A8AAD9"><enum>(b)</enum><header>Licensing and registration requirements</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection display-inline="no-display-inline" id="HBFD563C35B4B43D1A2091100326E00DA"><enum>(c)</enum><header>Unique identifier</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection commented="no" id="H60CFBC93B17E42128012FD678D5ECA4E"><enum>(d)</enum><header>State licensing law requirements</header><text display-inline="yes-display-inline">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:</text> <paragraph commented="no" id="H4A7E3F90887F40CD9E28E2B0EAD8A8CD"><enum>(1)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph commented="no" id="H409286503F7F4711BE00F578B804AA04"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph commented="no" id="H21A5229009914780B791478742610073"><enum>(3)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection commented="no" id="H9569984EFF7749F4821DAF20B3F54057"><enum>(e)</enum><header>Temporary extension of period</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H16F0B4F40F4040FBA19C3551C60002A3"><enum>(f)</enum><header>Limitation on HUD-licensed loan originators</header><text>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.</text> </subsection></section><section id="HDF222E49C09C465B8186469258000509"><enum>108.</enum><header>Backup authority to establish a nationwide mortgage licensing and registry system</header><text display-inline="no-display-inline">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.</text> </section><section id="H73C0D1D106F74655BCFE268BDDC453F4"><enum>109.</enum><header>Fees</header><text display-inline="no-display-inline">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.</text> </section><section id="HBDB722F365364C08B6B6116F3EB21EB3"><enum>110.</enum><header>Background checks of loan originators</header> <subsection id="H92F594803BC44E39A07EB23C374F31F2"><enum>(a)</enum><header>Access to records</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H794BA65874C343DBBEFBF22422812B00"><enum>(b)</enum><header>Agent</header><text display-inline="yes-display-inline">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.</text> </subsection></section><section id="H0326C20BAE464BB6A4ACEE8CBF95CD72"><enum>111.</enum><header>Confidentiality of information</header> <subsection id="H9118C198DC21404B90F8890010FBE02D"><enum>(a)</enum><header>System confidentiality</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H28F461F34F3848B4884FBC7CD7260900"><enum>(b)</enum><header>Nonapplicability of certain requirements</header><text>Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to—</text> <paragraph id="HFB044E6AD84C400083C7C1260045BFA3"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H74C9F4445C144C08A9DD8E3DEB56CD18"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="H3A00C209A6934B5C8DA35800117749B3"><enum>(c)</enum><header>Coordination with other law</header><text>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.</text> </subsection><subsection id="H7C79B10BC4554C2BB815D7AE6041F846"><enum>(d)</enum><header>Public access to information</header><text display-inline="yes-display-inline">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.</text> </subsection></section><section id="H32C2B4E286014FD98918B777550080B6"><enum>112.</enum><header>Liability provisions</header><text display-inline="no-display-inline">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.</text> </section><section id="HEFC2F220035D4881935EF45CB4CD3388" section-type="subsequent-section"><enum>113.</enum><header>Enforcement under HUD backup licensing system</header> <subsection id="H2E53CC982BC54F798EC23C30DEEAFC9C"><enum>(a)</enum><header>Summons authority</header><text display-inline="yes-display-inline">The Secretary may—</text> <paragraph id="H805355991C394611AECCD451BAE03050"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H96232A965DE7419D95178EDE7746FAFA"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="HD7770F3DA9B34AE3BEB12C23AD547CA6"><enum>(b)</enum><header>Examination authority</header> <paragraph id="H425F0506B22E412CB31C41EEE9485BC8"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HCFCF9EDFE59247F9B4E700B2E7000052"><enum>(2)</enum><header>Power to examine</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HC2F1EEDA40234DDE907646F5FA4C99D6"><enum>(3)</enum><header>Report of examination</header><text display-inline="yes-display-inline">Each examiner appointed under paragraph (1) shall make a full and detailed report of examination of any loan originator examined to the Secretary.</text> </paragraph><paragraph id="H6486B6C46AC84A2EB9ED6D16AF7CB4DE"><enum>(4)</enum><header>Administration of oaths and affirmations; evidence</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H77252E89FBF3402796643191F1AD2B22"><enum>(5)</enum><header>Assessments</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="HDAA7F87938D3464A9EAB5F1FBA4B2FD3"><enum>(c)</enum><header>Cease and desist proceeding</header> <paragraph id="HA34DD26F3E954CE7835B59B36EF0023D"><enum>(1)</enum><header>Authority of secretary</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HA35EF9BDE674411DB600299C61B6AB01"><enum>(2)</enum><header>Hearing</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H492F7D241F564A9DB83FE8B8AADDE5BC"><enum>(3)</enum><header>Temporary order</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HB7B601171664451AA786036F00AD345D"><enum>(4)</enum><header>Review of temporary orders</header> <subparagraph id="H4C07A2DEAA73447CA69789CFCBBAB3"><enum>(A)</enum><header>Review by secretary</header><text>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.</text> </subparagraph><subparagraph id="H344A524A4E94474CAA7DFAF5C0DABCDE"><enum>(B)</enum><header>Judicial review</header><text>Within—</text> <clause id="HAFE96CE6246445E399FD79588441DCD"><enum>(i)</enum><text>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</text> </clause><clause id="HE1A8428A297445C3BCB4015F8B27CFB9"><enum>(ii)</enum><text>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,</text> </clause><continuation-text continuation-text-level="subparagraph">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).</continuation-text></subparagraph><subparagraph id="H448238270951491FADCB40D25953B16"><enum>(C)</enum><header>No automatic stay of temporary order</header><text>The commencement of proceedings under subparagraph (B) shall not, unless specifically ordered by the court, operate as a stay of the Secretary's order.</text> </subparagraph></paragraph><paragraph id="H821304BB155544F5BCE176108B2DD319"><enum>(5)</enum><header>Authority of the Secretary to prohibit persons from serving as loan originators</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="H08B15258175542F29096B4D28723195F"><enum>(d)</enum><header>Authority of the secretary To assess money penalties</header> <paragraph id="H4A51B50997EE4C2BA188F71DDE8C66C3"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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).</text> </paragraph><paragraph id="H1A7CA67C054C48DFB0BBAFD582045581"><enum>(2)</enum><header>Maximum amount of penalty</header><text display-inline="yes-display-inline">The maximum amount of penalty for each act or omission described in paragraph (1) shall be $5,000 for each day the violation continues.</text> </paragraph></subsection></section></subtitle><subtitle id="HADDAA43109F04CF1973CF1E965C4009E"><enum>B</enum><header>Residential mortgage loan origination standards</header> <section id="H05FDD13051B84B93B1778D2C62F2000" section-type="subsequent-section"><enum>121.</enum><header>Definitions</header><text display-inline="no-display-inline">Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="H37EC79E84536499AA5EADBECA8DC004F" style="USC"> <subsection id="H99E493372C1A4F15A3220065A868CD6D"><enum>(cc)</enum><header>Definitions relating to mortgage origination and residential mortgage loans</header> <paragraph id="H624663DC00014AB7825337004928DBD"><enum>(1)</enum><header>Commission</header><text>Unless otherwise specified, the term <quote>Commission</quote> means the Federal Trade Commission.</text> </paragraph><paragraph display-inline="no-display-inline" id="H22ADFD6C5E96442789D8F0D365D52507"><enum>(2)</enum><header>Federal banking agencies</header><text display-inline="yes-display-inline">The term <term>Federal banking agencies</term> 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.</text> </paragraph><paragraph commented="no" id="HB9427C8D1F7848E1B864B4F364862DAB"><enum>(3)</enum><header>Mortgage originator</header><text>The term <quote>mortgage originator</quote>—</text> <subparagraph commented="no" id="H4166C7EB4795493292A1439B183BA9CC"><enum>(A)</enum><text display-inline="yes-display-inline">means any person who—</text> <clause commented="no" id="HB3699EFF58DB41658DBAFC1903E6809E"><enum>(i)</enum><text>takes a residential mortgage loan application;</text> </clause><clause commented="no" id="H0F19FD3E049A4FFF8296172B40E0AAD"><enum>(ii)</enum><text>assists a consumer in obtaining or applying to obtain a residential mortgage loan; or</text> </clause><clause commented="no" id="HD11136B18D4A4A31AD76BEC804001C80"><enum>(iii)</enum><text display-inline="yes-display-inline">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;</text> </clause></subparagraph><subparagraph commented="no" id="H3FC53CF3D4394BFA914D117E7940C8CC"><enum>(B)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph commented="no" id="H1C402C3AB8C44807B8795110D48E0141"><enum>(C)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph commented="no" id="H0B1D1E1987634A64AB21E4F4AD02B2F5"><enum>(4)</enum><header>Nationwide Mortgage Licensing System and Registry</header><text display-inline="yes-display-inline">The term <quote>Nationwide Mortgage Licensing System and Registry</quote> has the same meaning as in section 102(5) of the Mortgage Reform and Anti-Predatory Lending Act of 2007.</text> </paragraph><paragraph commented="no" id="H23E27C61088A43F08495365BACC95D02"><enum>(5)</enum><header>Other definitions relating to mortgage originator</header><text display-inline="yes-display-inline">For purposes of this subsection, a person <quote>assists a consumer in obtaining or applying to obtain a residential mortgage loan</quote> 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.</text> </paragraph><paragraph commented="no" display-inline="no-display-inline" id="H591EA44F70EC423F8B0243A9547DE32C"><enum>(6)</enum><header>Residential mortgage loan</header><text display-inline="yes-display-inline">The term <term>residential mortgage loan</term> 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.</text> </paragraph><paragraph id="H9F8FF0BCE13B42B980F811DC997E06C7"><enum>(7)</enum><header>Secretary</header><text>The term <quote>Secretary</quote>, when used in connection with any transaction or person involved with a residential mortgage loan, means the Secretary of Housing and Urban Development.</text> </paragraph><paragraph id="HD3AD4C0951BE436DB9BF5486FAE46E18"><enum>(8)</enum><header>Securitization vehicle</header><text display-inline="yes-display-inline">The term <quote>securitization vehicle</quote> means a trust, corporation, partnership, limited liability entity, or special purpose entity that—</text> <subparagraph id="HF527F6EE6B844B19AFBE3F7FFF8941"><enum>(A)</enum><text>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</text> </subparagraph><subparagraph id="H5E866F3D105D4093A0B17FBA11109E99"><enum>(B)</enum><text>holds such loans.</text> </subparagraph></paragraph><paragraph commented="no" id="HF4F499B338844BFCBC6D4F07001EF3DF"><enum>(9)</enum><header>Securitizer</header><text display-inline="yes-display-inline">The term <quote>securitizer</quote> 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.</text> </paragraph><paragraph id="HA0BD4342FEBA413FB9BAFA038372EB23"><enum>(10)</enum><header>Servicer</header><text display-inline="yes-display-inline">The term <term>servicer</term> has the same meaning as in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="H63D2F2FBE7AC4FEC8900C38841D2F44F" section-type="subsequent-section"><enum>122.</enum><header>Residential mortgage loan origination</header> <subsection id="HB2C35412E7ED419E94FBB004EE84E61"><enum>(a)</enum><header>In general</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="HFF3687EAAD6546CB8DAF1D0013A000D1" style="USC"> <section id="HE94A1A6431304AF8858050EB681B5613"><enum>129A.</enum><header>Residential mortgage loan origination</header> <subsection id="H6C222A1D22274C4E897962B4D5363EFB"><enum>(a)</enum><header>Duty of care</header> <paragraph id="H0275705EF8B64D4C9E7D00EE353EBF85"><enum>(1)</enum><header>Standard</header><text display-inline="yes-display-inline">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—</text> <subparagraph id="H15DFCC7E010746D3A32FDA1C24C895A0"><enum>(A)</enum><text display-inline="yes-display-inline">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;</text> </subparagraph><subparagraph id="HA076A948B8DE4C19A6371DBC59EC5172"><enum>(B)</enum><text display-inline="yes-display-inline">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;</text> </subparagraph><subparagraph id="H14B6D3D48A9F4D8EA9C5A8512DC849BF"><enum>(C)</enum><text>make full, complete, and timely disclosure to each such consumer of—</text> <clause id="H80CD170F5E61405CAB25491355A4FDD6"><enum>(i)</enum><text display-inline="yes-display-inline">the comparative costs and benefits of each residential mortgage loan product offered, discussed, or referred to by the originator;</text> </clause><clause id="H18A0762CBA69473C933C8CAF10598FF0"><enum>(ii)</enum><text>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</text> </clause><clause id="HBDAD60B0DCBF45658FB9384831CFD74D"><enum>(iii)</enum><text>any relevant conflicts of interest;</text> </clause></subparagraph><subparagraph id="H151F4E29E56F457598F8B18F5D1344D1"><enum>(D)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="H1740A6C53988476DA2438F6D5368E647"><enum>(E)</enum><text display-inline="yes-display-inline">include the unique identifier of the originator provided by the Nationwide Mortgage Licensing System and Registry on all loan documents.</text> </subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HB25A30BF8A3B4EF6912F06A439E2774"><enum>(2)</enum><header>Clarification of extent of duty to present range of products and appropriate products</header> <subparagraph id="HA5304A06B6BA4836A34009E956047706"><enum>(A)</enum><header>No duty to offer products for which originator is not authorized to take an application</header><text>Paragraph (1)(B) shall not be construed as requiring—</text> <clause id="H751944F5163B40ECBE21741344310821"><enum>(i)</enum><text>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</text> </clause><clause id="H899AA1F630EA4B03BDDDA58151B9B2EF"><enum>(ii)</enum><text>a creditor to offer products that the creditor does not offer to the general public.</text> </clause></subparagraph><subparagraph id="H89C8ABBE9C1E49EABADAE92BBA4863B"><enum>(B)</enum><header>Appropriate loan product</header><text display-inline="yes-display-inline">For purposes of paragraph (1)(B), a residential mortgage loan shall be presumed to be appropriate for a consumer if—</text> <clause id="H9A112E847BBF4E238FB4D048ED392E5"><enum>(i)</enum><text display-inline="yes-display-inline">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.</text> </clause><clause id="HFCE0080FE6EF4376B48BE7EE6B05DF90"><enum>(ii)</enum><text display-inline="yes-display-inline">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).</text> </clause></subparagraph></paragraph><paragraph id="H9C87262AB5504354B4EF40DE7CE1377F"><enum>(3)</enum><header>Rules of construction</header><text display-inline="yes-display-inline">No provision of this subsection shall be construed as—</text> <subparagraph id="H779BC989787C4536A48C032EDA93DC3E"><enum>(A)</enum><text>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</text> </subparagraph><subparagraph id="H8494B7A976F54E54B58885523C2B009F"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph><paragraph id="H6599615EDEFC40BD98884B21E55DCDF7"><enum>(4)</enum><header>Regulations</header> <subparagraph id="HC38B6C0C91F94DC9865980FD268EB3A1"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text> <clause id="H2C20B213FB7746DC92B96DF75420A24E"><enum>(i)</enum><text>further define the duty established under paragraph (1);</text> </clause><clause id="H7A8F0DF28A1344229C2F56CE3DCDE59"><enum>(ii)</enum><text>implement the requirements of this subsection;</text> </clause><clause id="HFAE084232F194B178D618470A6B5E514"><enum>(iii)</enum><text>establish the time period within which any disclosure required under paragraph (1) shall be made to the consumer; and</text> </clause><clause id="HECEF6F07BD2C4CEA00C7F76D7646F5C8"><enum>(iv)</enum><text>establish such other requirements for any mortgage originator as such regulatory agencies may determine to be appropriate to meet the purposes of this subsection.</text> </clause></subparagraph><subparagraph id="H8174088F7A4940ADA3BC797D3753DC87"><enum>(B)</enum><header>Complementary and nonduplicative disclosures</header><text display-inline="yes-display-inline">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—</text> <clause id="H5B1EEBF6BB184171A4ED2037696D08D"><enum>(i)</enum><text>are practicable; and</text> </clause><clause id="HE78CEE9C47BD4DFCAC78F04362403B1F"><enum>(ii)</enum><text>do not reduce the value of any such disclosure to recipients of such disclosures.</text> </clause></subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H11FF70AEA7D64036A1F0DDC3CC90676F"><enum>(5)</enum><header>Compliance procedures required</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H0AECABCBC52340E38544C9C73CEB2BC3"><enum>(b)</enum><header>Clerical amendment</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H8B974E94CD484BFE93F4A5E76E882FFE" style="USC"> <toc regeneration="no-regeneration"> <toc-entry level="section">129A. Residential mortgage loan origination.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section id="H50B6327C56E746F890F535DC768EC05"><enum>123.</enum><header>Prohibition on steering incentives</header><text display-inline="no-display-inline">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:</text> <quoted-block display-inline="no-display-inline" id="H0EF9452237EB45908083570413E4909B" style="USC"> <subsection id="H6860CBBBE12E47D8BAF9BD110AD9DDF"><enum>(b)</enum><header>Prohibition on steering incentives</header> <paragraph id="HA2A66092188A45D2842C00FB1519D158"><enum>(1)</enum><header>Amount of originator compensation cannot vary based on terms</header><text display-inline="yes-display-inline">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)).</text> </paragraph><paragraph id="H217B8553E985496DB6274D8D6302883C"><enum>(2)</enum><header>Regulations</header><text display-inline="yes-display-inline">The Federal banking agencies, in consultation with the Secretary and the Commission, shall jointly prescribe regulations to prohibit—</text> <subparagraph id="H01D431C2FA7E418BA081DF2C1600C7C2"><enum>(A)</enum><text>mortgage originators from steering any consumer to a residential mortgage loan that—</text> <clause id="H84D2758E33154A31AA6F34537693DDFC"><enum>(i)</enum><text display-inline="yes-display-inline">the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 129B(a));</text> </clause><clause id="H4656F27DC4654997BCDEF3E7BF7588F"><enum>(ii)</enum><text display-inline="yes-display-inline">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</text> </clause><clause id="HEF935E20DBD44171864C112E7CDCA646"><enum>(iii)</enum><text>has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);</text> </clause></subparagraph><subparagraph id="H14E56C958085466682EA5336FDE9BC6F"><enum>(B)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="HADE7BC8E33DE4391A88C0419EEFAF3C3"><enum>(C)</enum><text display-inline="yes-display-inline">abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age.</text> </subparagraph></paragraph><paragraph id="H2DE304DEA8364B78A226AC00FDCD354E"><enum>(3)</enum><header>Rules of construction</header><text>No provision of this subsection shall be construed as—</text> <subparagraph id="HEDBAE6EE91E24B01B7003084998FE400"><enum>(A)</enum><text>limiting or affecting the ability of a mortgage originator to sell residential mortgage loans to subsequent purchasers;</text> </subparagraph><subparagraph id="H4027BB30F28E454A00C100ED5CCC978B"><enum>(B)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="HD18F2A6175BB4A44A741521099403944"><enum>(C)</enum><text>prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.</text> </subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HCCCB43B5874E45E48B59EE2365565CB4"><enum>124.</enum><header>Liability</header><text display-inline="no-display-inline">Section 129A of the Truth in Lending Act is amended by inserting after subsection (b) (as added by section 123) the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="HC7E697D863B84F7C99DB1C9BD5A5F5B5" style="OLC"> <subsection id="H7AE301516BF44E01A9BE06F2C52FDD8"><enum>(c)</enum><header>Liability for violations</header> <paragraph id="H5CCA0D69EF544D7DBCA3DA02F3C398F4"><enum>(1)</enum><header>In general</header><text>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 <term>mortgage originator</term> for <term>creditor</term> each place such term appears in each such subsection.</text> </paragraph><paragraph id="H2AD8CF9CB69944288913F5AA9E9BDDE"><enum>(2)</enum><header>Maximum</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HCBB8B9C609484AA99E581E486C52EE00"><enum>125.</enum><header>Regulations</header><text display-inline="no-display-inline">The regulations required or authorized to be prescribed under this title or the amendments made by this title—</text> <paragraph id="H60A9227B14984E62B2246E33067000D8"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H75627A2661264C07A9008EFD94516857"><enum>(2)</enum><text>shall take effect not later than 18 months after the date of the enactment of this Act.</text> </paragraph></section></subtitle><enum>II</enum><header>Minimum Standards For Mortgages</header> <section id="HD42D75AD0B4542748E27EC4CE6419613"><enum>201.</enum><header>Ability to repay</header> <subsection id="HDBF0EEC8AE7F40238C09189BF881F0FA"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Chapter 2 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1631">15 U.S.C. 1631 et seq.</external-xref>) is amended by inserting after section 129A (as added by section 122(a)) the following new section:</text> <quoted-block display-inline="no-display-inline" id="H28D9EB397A394041B02EF400E530FB78" style="USC"> <section id="H404E409F1D414AAF9E8DDC2227BE9EBB"><enum>129B.</enum><header>Minimum standards for residential mortgage loans</header> <subsection id="HC5F372B9A989421C8F9498F45D9C462F"><enum>(a)</enum><header>Ability To repay</header> <paragraph id="HB49C5AADF8414FEB99EBB03006CC2E21"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H114F8DFCA6184EB9AEC5AFB06790400"><enum>(2)</enum><header>Multiple loans</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HAF15B0A5CB4D48CC83B21590002D05E1"><enum>(3)</enum><header>Basis for determination</header><text>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.</text> </paragraph><paragraph id="H9325EAE538DB444CB5F222C590692355"><enum>(4)</enum><header>Nonstandard loans</header> <subparagraph id="HC6EB2A9CCA634FEDA52EF879916702E3"><enum>(A)</enum><header>Variable rate loans that defer repayment of any principal or interest</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H30DA9628328E4927A680C31EBB7F68E"><enum>(B)</enum><header>Interest-only loans</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H953A0ECC6385497EA3ADC63002C04CFC"><enum>(C)</enum><header>Calculation for negative amortization</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="HAB6609C71A984B0D99A472B0252C2BC6"><enum>(D)</enum><header>Calculation process</header><text display-inline="yes-display-inline">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—</text> <clause id="H181B93DBADE3474293F74335B7FB982B"><enum>(i)</enum><text>the loan proceeds are fully disbursed on the date of the consummation of the loan;</text> </clause><clause display-inline="no-display-inline" id="H7D812E14055F4FBA8B621EC25987435B"><enum>(ii)</enum><text>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</text> </clause><clause id="H53B629C987B84DE796F9301900992DCB"><enum>(iii)</enum><text>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.</text> </clause></subparagraph></paragraph><paragraph commented="no" id="HE3409C92826A437CA4D859773EB12BA5"><enum>(5)</enum><header>Fully-indexed rate defined</header><text display-inline="yes-display-inline">For purposes of this subsection, the term <term>fully indexed rate</term> 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.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H953604BEFA85496D98DE85A9CA4961BF"><enum>(b)</enum><header>Clerical amendment</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="HA75B696D86AC46D6B386B167EA81368F" style="USC"> <toc regeneration="no-regeneration"> <toc-entry level="section">129B. Minimum standards for residential mortgage loans.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section id="HF285B475831343C5ADF5B9749CD0431"><enum>202.</enum><header>Net tangible benefit for refinancing of residential mortgage loans</header><text display-inline="no-display-inline">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:</text> <quoted-block display-inline="no-display-inline" id="H047E39E6123A4173BEEB265EBE7FFD00" style="OLC"> <subsection id="H6369A084301744B9A282EF2CBE16BF00"><enum>(b)</enum><header>Net tangible benefit for refinancing of residential mortgage loans</header> <paragraph id="H55CB009EA7424E249DBB392C2C87B3E"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H103CBBF13DD74C92BA4E74009CD49C74"><enum>(2)</enum><header>Certain loans providing no net tangible benefit</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph commented="no" id="H361477558A0940C3A548235EA4675235"><enum>(3)</enum><header>Net tangible benefit</header><text display-inline="yes-display-inline">The Federal banking agencies shall jointly prescribe regulations defining the term <term>net tangible benefit</term> for purposes of this subsection.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="H69080B8172454B3DBF91395B671E9B23"><enum>203.</enum><header>Safe harbor and rebuttable presumption</header><text display-inline="no-display-inline">Section 129B of the Truth in Lending Act is amended by inserting after subsection (b) (as added by section 202) the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="H26F0C608D6C2497AB9DFE2575C72D86B" style="OLC"> <subsection id="HC0F96A62146247DAA6C7EDCD7CE54DC"><enum>(c)</enum><header>Presumption of ability To repay and net tangible benefit</header> <paragraph id="HF3A83161C20E4DACB5018D910377C720"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph id="HBF81FC374C45491880264CE178D9CA11"><enum>(2)</enum><header>Rebuttable presumption</header><text>Any presumption established under paragraph (1) with respect to any residential mortgage loan shall be rebuttable only—</text> <subparagraph id="HA44BA9023E50461191BD873C3CE20114"><enum>(A)</enum><text>against the creditor of such loan; and</text> </subparagraph><subparagraph id="HDFA6B9419592456998C52FEBE8B10576"><enum>(B)</enum><text>if such loan is a qualified safe harbor mortgage.</text> </subparagraph></paragraph><paragraph id="H03C83F05E1B848E2A90054D8D4F2AB4B"><enum>(3)</enum><header>Definitions</header><text>For purposes of this section the following definitions shall apply:</text> <subparagraph id="HEC2AC410B78A41A688FB807084F234AE"><enum>(A)</enum><header>Most recent conventional mortgage rate</header><text display-inline="yes-display-inline">The term <quote>most recent conventional mortgage rate</quote> 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.</text> </subparagraph><subparagraph id="H6F7E5945D6EA41BFAE71223B4570729E"><enum>(B)</enum><header>Qualified mortgage</header><text display-inline="yes-display-inline">The term <quote>qualified mortgage</quote> means—</text> <clause id="HABE95BE1DAF1438DBCDA1C37F11BD7C6"><enum>(i)</enum><text display-inline="yes-display-inline">any residential mortgage loan that constitutes a first lien on the dwelling or real property securing the loan and either—</text> <subclause id="H73E03606D1A74364AF790000C8066EE"><enum>(I)</enum><text display-inline="yes-display-inline">has an annual percentage rate that does not equal or exceed the yield on securities issued by the Secretary of the Treasury under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/31">chapter 31</external-xref> of title 31, United States Code, that bear comparable periods of maturity by more than 3 percentage points; or</text> </subclause><subclause id="H90C62EB997DC4072BB4D12E748DAF0DB"><enum>(II)</enum><text display-inline="yes-display-inline">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;</text> </subclause></clause><clause id="H58F13033A94C4F63A7B6FAD4EDB7D267"><enum>(ii)</enum><text display-inline="yes-display-inline">any residential mortgage loan that is not the first lien on the dwelling or real property securing the loan and either—</text> <subclause id="H006162AD9C2142E380B7FC02C0AEF528"><enum>(I)</enum><text display-inline="yes-display-inline">has an annual percentage rate that does not equal or exceed the yield on securities issued by the Secretary of the Treasury under <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/31">chapter 31</external-xref> of title 31, United States Code, that bear comparable periods of maturity by more than 5 percentage points; or</text> </subclause><subclause id="H5642AB38220A440B944274E399E6F326"><enum>(II)</enum><text display-inline="yes-display-inline">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;</text> </subclause></clause><clause id="H90D45AFB21EF4ED594206F08A2D292E6"><enum>(iii)</enum><text display-inline="yes-display-inline">a loan made or guaranteed by the Secretary of Veterans Affairs; and</text> </clause><clause id="H6797C8C71F2544B7A3CF88B8843774F4"><enum>(iv)</enum><text>a mortgage insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.).</text> </clause></subparagraph><subparagraph id="H2A5916C5565F40EF9816657893092BF9"><enum>(C)</enum><header>Qualified safe harbor mortgage</header><text>The term <quote>qualified safe harbor mortgage</quote> means any residential mortgage loan—</text> <clause id="HF010B560FA3C4C87ABED5D4DD3B0D9C8"><enum>(i)</enum><text>for which the income and financial resources of the consumer are verified and documented;</text> </clause><clause id="H06FC91AB97264A3FBE35C6002CA9DF58"><enum>(ii)</enum><text display-inline="yes-display-inline">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;</text> </clause><clause id="H42FDC8E4C59E415C00C20065D6613B8"><enum>(iii)</enum><text display-inline="yes-display-inline">which does not provide for a repayment schedule that results in negative amortization at any time;</text> </clause><clause id="H9F306CE6DD7A4FEA943F283F6B30CBFD"><enum>(iv)</enum><text>meets such other requirements as may be established by regulation; and</text> </clause><clause id="H6A4FC60238794B3CAAD7AA215B77ED99"><enum>(v)</enum><text>for which any of the following factors apply with respect to such loan:</text> <subclause id="HA4FA8BF202C44046AF57C9CFB1BCAB7C"><enum>(I)</enum><text display-inline="yes-display-inline">The periodic payment amount for principal and interest are fixed for a minimum of 5 years under the terms of the loan.</text> </subclause><subclause commented="no" id="H4412BEA8DEA64B5491CEE6768200CE39"><enum>(II)</enum><text display-inline="yes-display-inline">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.</text> </subclause><subclause display-inline="no-display-inline" id="HFC103354326848A78C2116EFBAF2769D"><enum>(III)</enum><text display-inline="yes-display-inline">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).</text> </subclause></clause></subparagraph></paragraph><paragraph id="HFEBB0E2BCD7840C9BDA86E004EB5D745"><enum>(4)</enum><header>Determination of comparison to treasury securities</header> <subparagraph id="H8B0F77CFD3974A0780A516EDA5C0719"><enum>(A)</enum><header>In general</header><text>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 <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/31">chapter 31</external-xref> 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.</text> </subparagraph><subparagraph id="HD2C29C6360B3408A9582786561C0A5A9"><enum>(B)</enum><header>Date of determination of yield</header><text>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.</text> </subparagraph></paragraph><paragraph id="HDA2C5B97A5E042158DD0CD0238A837B5"><enum>(5)</enum><header>APR in case of introductory offer</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H846886553DBB4BC0BFD144FEE0A6FC35"><enum>(6)</enum><header>Regulations</header> <subparagraph id="HFCE142D7250249C1A701BFAB75DB26F"><enum>(A)</enum><header>In general</header><text>The Federal banking agencies shall jointly prescribe regulations to carry out the purposes of this subsection.</text> </subparagraph><subparagraph id="HDA2F0784C69444F097C4D68B7D3540BB"><enum>(B)</enum><header>Revision of safe harbor criteria</header><text>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.</text> </subparagraph></paragraph><paragraph id="HC44B713E152445BAB727A12D88116F9F"><enum>(7)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section display-inline="no-display-inline" id="H895D4867D3CB4E149E7B999813BC7549"><enum>204.</enum><header>Liability</header><text display-inline="no-display-inline">Section 129B of the Truth in Lending Act is amended by inserting after subsection (c) (as added by section 203) the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="HB9B6D0C26B6F4154B3BC69002D66BF3B" style="OLC"> <subsection commented="no" id="H4F676B3B9A64442C97AE3E3B00002800"><enum>(d)</enum><header>Liability for violations</header> <paragraph id="HFCC31FB0A5FD4D85996B72E0181236E0"><enum>(1)</enum><header>In general</header> <subparagraph id="H2745386B3F86447CA56B6B53B9511D4"><enum>(A)</enum><header>Rescission</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H516573C35F9746FD972228104F2CAC09"><enum>(B)</enum><header>Cure</header><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph commented="no" id="H71477E595D4D49DCB1E47656C337CC16"><enum>(2)</enum><header>Limited assignee and securitizer liability</header><text display-inline="yes-display-inline">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:</text> <subparagraph commented="no" id="HF34A0B4D80E64999BA1F6B444200D9C0"><enum>(A)</enum><text display-inline="yes-display-inline">Rescission of the loan.</text> </subparagraph><subparagraph commented="no" id="HF36400BC6A2D4E29B5FD5275E05297C0"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph commented="no" id="H191726A295C24C92A1793CCE541067D4"><enum>(3)</enum><header>Assignee and securitizer exemption</header><text display-inline="yes-display-inline">No assignee or securitizer of a residential mortgage loan shall be liable under paragraph (2) with respect to such loan if—</text> <subparagraph id="HEEF77005C24140F7A77E9BAA57EA8F00"><enum>(A)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="HEEEBC6D934B44AF982D2A98BB5F3F3CC"><enum>(B)</enum><text>each of the following conditions are met:</text> <clause id="H7312ED7869984CCBB4B4D7AE16C64FA0"><enum>(i)</enum><text display-inline="yes-display-inline">The assignee or securitizer—</text> <subclause commented="no" id="HFAC891076A4144A98B2699BEA8AAA278"><enum>(I)</enum><text>has a policy against buying residential mortgage loans other than qualified mortgages or qualified safe harbor mortgages (as defined in subsection (c));</text> </subclause><subclause id="HAD754C4B8C5248BDB33D4860EEBB5D96"><enum>(II)</enum><text>the policy is intended to verify seller or assignor compliance with the representations and warranties required under clause (ii); and</text> </subclause><subclause commented="no" id="HE93E126E69E84992A7D3C3D5172C073D"><enum>(III)</enum><text display-inline="yes-display-inline">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.</text> </subclause></clause><clause id="HE73B353C947A4F9F007EDE4368B2D620"><enum>(ii)</enum><text display-inline="yes-display-inline">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—</text> <subclause id="H1D863FC8A6EC4EC78C50483985DD19CB"><enum>(I)</enum><text display-inline="yes-display-inline">is not selling or assigning any residential mortgage loan which is not a qualified mortgage or a qualified safe harbor mortgage; or</text> </subclause><subclause id="H87EF7CF7AEF5477294137BB0EE002B03"><enum>(II)</enum><text display-inline="yes-display-inline">is a beneficiary of a representation and warranty from a previous seller or assignor to that effect,</text> </subclause><continuation-text continuation-text-level="clause">and the assignee or securitizer in good faith takes reasonable steps to obtain the benefit of such representation or warranty.</continuation-text></clause></subparagraph></paragraph><paragraph id="HE594737D4A81402C83140048D1EAD945"><enum>(4)</enum><header>Absent parties</header> <subparagraph id="H0FE137A1DF3D4B5A8DCDD9BCBC574A0"><enum>(A)</enum><header>Absent creditor</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H9B2AFA4723C540688468EAAA4725DFC6"><enum>(B)</enum><header>Absent creditor and assignee</header><text>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.</text> </subparagraph></paragraph><paragraph id="H05CA89E7958F48C483B4D353F29C58D3"><enum>(5)</enum><header>Cure defined</header><text display-inline="yes-display-inline">For purposes of this subsection, the term <quote>cure</quote> 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.</text> </paragraph><paragraph id="HCA1DACDECA6A4097A493EED9DD008230"><enum>(6)</enum><header>Disagreement over cure</header><text display-inline="yes-display-inline">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—</text> <subparagraph id="HB7B6EE6DE65E42AE899BB5E094DE12AC"><enum>(A)</enum><text>the creditor, assignee, or securitizer may provide the cure; and</text> </subparagraph><subparagraph id="H131C1149E6B94EBFB27773FD30BFCD4F"><enum>(B)</enum><text>the consumer may challenge the adequacy of the cure during the 6-month period beginning when the cure is provided.</text> </subparagraph><continuation-text continuation-text-level="paragraph">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).</continuation-text></paragraph><paragraph id="H72AC79674208429AAF63B009A874457E"><enum>(7)</enum><header>Inability to provide or obtain rescission</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H03164B599FAD48879943AF7427327C1C"><enum>(8)</enum><header>No class actions against assignee or securitizer under paragraph <enum-in-header>(2)</enum-in-header></header><text>Only individual actions may be brought against an assignee or securitizer of a residential mortgage loan for a violation of subsection (a) or (b).</text> </paragraph><paragraph commented="no" id="HAF5A5D1E1E75404F992E9CA8441CDE00"><enum>(9)</enum><header>Statute of limitations</header><text display-inline="yes-display-inline">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—</text> <subparagraph id="H86F874D2FD2B4CB9A97915EA25991872"><enum>(A)</enum><text>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</text> </subparagraph><subparagraph commented="no" id="H389E4C6A282843929E1D5B007FBF8DDA"><enum>(B)</enum><text display-inline="yes-display-inline">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—</text> <clause display-inline="no-display-inline" id="H3BE501362DD9494399A2E5600A108E"><enum>(i)</enum><text>the end of the 1-year period beginning on the date of such reset, adjustment, or conversion; or</text> </clause><clause id="H871D1F49F8FC45E1B74E547D4CD8A6B"><enum>(ii)</enum><text display-inline="yes-display-inline">the end of the 6-year period beginning on the date the loan is consummated.</text> </clause></subparagraph></paragraph><paragraph commented="no" id="H6183C46B9B4E4A6E803007E7D906095"><enum>(10)</enum><header>Pools and investors in pools excluded</header><text display-inline="yes-display-inline">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 <quote>assignee</quote> and <quote>securitizer</quote>, 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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section display-inline="no-display-inline" id="H80B5AF7FC482442A961D1C67A70065C9" section-type="subsequent-section"><enum>205.</enum><header>Defense to foreclosure</header><text display-inline="no-display-inline">Section 129B of the Truth in Lending Act is amended by inserting after subsection (d) (as added by section 204) the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="HE4C6C008803E458EB5AC3CF2CB3F8500" style="OLC"> <subsection id="H6D5B482C09D4476C822FC0953D8123B1"><enum>(e)</enum><header>Defense to foreclosure</header><text display-inline="yes-display-inline">Notwithstanding any other provision of law—</text> <paragraph id="HF8DA529DE9AC4F04A04C4936F0003F7B"><enum>(1)</enum><text>when the holder of a residential mortgage loan or anyone acting for such holder initiates a judicial or nonjudicial foreclosure—</text> <subparagraph id="HEA748C2A5EA247F582453BC6B449FEF3"><enum>(A)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="H6451B96D8CAD4771BFE0679B3606E45"><enum>(B)</enum><text display-inline="yes-display-inline">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</text> </subparagraph></paragraph><paragraph id="HB1C7A461C70F41239EA42B73C3CF00BB"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HA27654F74A72406D93F19DEC93009518"><enum>206.</enum><header>Additional standards and requirements</header> <subsection id="HFED7C972CF6A4CDC005974125B612090"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 129B of the Truth in Lending Act is amended by inserting after subsection (e) (as added by section 205) the following new subsections:</text> <quoted-block display-inline="no-display-inline" id="H26F515F6D9344B0BAEF1C78D364212B" style="OLC"> <subsection id="HCEB95E065E254474B82CA3574511D600"><enum>(f)</enum><header>Prohibition on certain prepayment penalties</header> <paragraph id="HC824DDF3703E47ED85C4B1BB55277EB1"><enum>(1)</enum><header>Prohibited on certain loans</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HB780E923B15745A196C4F5448F52127"><enum>(2)</enum><header>Phased-out penalties on qualified mortgages</header><text>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:</text> <subparagraph id="H1F97B2CFC6CE4B6387923FEF5018AB94"><enum>(A)</enum><text>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.</text> </subparagraph><subparagraph id="HB8A88224148B4D02B45361FC9E4CE64D"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H23A831E7A033443E866C11000685AA98"><enum>(C)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H97BF2F5226354FEAB7B486ADF2A0EE9D"><enum>(D)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph commented="no" id="HDC301A71E5CA44D18FB1FA4BC26E7E60"><enum>(3)</enum><header>Prohibited after initial period on loans with a reset</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H3CEB1500091B4FE000AE253612805900"><enum>(4)</enum><header>Option for no prepayment penalty required</header><text>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.</text> </paragraph></subsection><subsection id="H54C0D3216D324ADA8987001702DED570"><enum>(g)</enum><header>Single Premium Credit Insurance Prohibited</header><text display-inline="yes-display-inline">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—</text> <paragraph id="HBA03CE19B5C44CD6AF74FD00C265F8E9"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H1ADCBD3560244818B11746D400667E51"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection display-inline="no-display-inline" id="H53F76B90C96D4712BAEED268827D5451"><enum>(h)</enum><header>Arbitration</header> <paragraph id="H6EB2D64243E54A16B5B2100C263F72D"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H84ADB6A3667C4000BBAFAF833446001E"><enum>(2)</enum><header>Post-controversy agreements</header><text>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.</text> </paragraph><paragraph id="H5B343E83371240769EB88E77C743456D"><enum>(3)</enum><header>No waiver of statutory cause of action</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="HBB986524D862493F862D00E1D0352EB2"><enum>(i)</enum><header>Duty of securitizer To retain access to loans</header><text>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—</text> <paragraph id="H743C495A0E3A4A1BBB851C00A73159A"><enum>(1)</enum><text>to identify and obtain access to any such loan in the pool; and</text> </paragraph><paragraph id="H0D26C081D614402E811DBEEEEE62691"><enum>(2)</enum><text>to provide for and obtain a remedy under this title for the obligor under any such loan.</text> </paragraph></subsection><subsection id="H44EE331AD5C14721B7AB48E1F6504C2F"><enum>(j)</enum><header>Effect of foreclosure on preexisting lease</header> <paragraph id="H3B1366D40BDE4BF39BC0DA46D2E5E113"><enum>(1)</enum><header>In general</header><text>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—</text> <subparagraph id="H2CF61C0302594CD6971EAD53FC4B68FF"><enum>(A)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="H5174DDFC819A48E29D77968486D37BC8"><enum>(B)</enum><text display-inline="yes-display-inline">the rights of any bona fide tenant, as of the date of such notice of foreclosure—</text> <clause id="HF2E2600A263C43AD004C90F125664D8E"><enum>(i)</enum><text display-inline="yes-display-inline">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</text> </clause><clause id="HC12DB47162324FF8AC0026C198F63021"><enum>(ii)</enum><text display-inline="yes-display-inline">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).</text> </clause></subparagraph></paragraph><paragraph id="H8A29E84328B84560A9EA66F75707A0A5"><enum>(2)</enum><header>Bona fide lease or tenancy</header><text display-inline="yes-display-inline">For purposes of this section, a lease or tenancy shall be considered bona fide only if—</text> <subparagraph id="H7A03C4B89730475FB0BDA9455C199F00"><enum>(A)</enum><text display-inline="yes-display-inline">the mortgagor under the contract is not the tenant;</text> </subparagraph><subparagraph id="H4C9C26B895BD47AAB1348E8BE2F1888F"><enum>(B)</enum><text>the lease or tenancy was the result of an arms-length transaction; or</text> </subparagraph><subparagraph id="H6B6FC7389B0B49BA92359982DBDF81D2"><enum>(C)</enum><text>the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property.</text> </subparagraph></paragraph></subsection><subsection id="H868A902537AA447EB8C2AE188B1FED5B"><enum>(k)</enum><header>Mortgages with negative amortization</header><text>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—</text> <paragraph id="H9F7ADEEF1AA5416491EF26AF995443B"><enum>(1)</enum><text>the creditor provides the consumer with a statement that—</text> <subparagraph id="HB100F6F2DAF148A59DCABAB468350080"><enum>(A)</enum><text>the pending transaction will or may, as the case may be, result in negative amortization;</text> </subparagraph><subparagraph id="H3A8FA28CD07D4012A32150BC06EA726B"><enum>(B)</enum><text>describes negative amortization in such manner as the Federal banking agencies shall prescribe;</text> </subparagraph><subparagraph id="H64A8BCB65B364E99BD00249161D85F37"><enum>(C)</enum><text display-inline="yes-display-inline">negative amortization increases the outstanding principal balance of the account; and</text> </subparagraph><subparagraph id="HDC8F5452A100403B9B04A0F4A3AFA5AD"><enum>(D)</enum><text display-inline="yes-display-inline">negative amortization reduces the consumer’s equity in the dwelling or real property; and</text> </subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HA44C840D1CCC421900EDC08592B680B6"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection display-inline="no-display-inline" id="H342825C72D474D3EBFFBD227B6A13498"><enum>(l)</enum><header>Annual contact information</header><text display-inline="yes-display-inline">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.</text> </subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HF9F081B771EB4D7AB02BADC97614D45D"><enum>(b)</enum><header>Conforming amendment relating to enforcement</header><text>Section 108(a) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1607">15 U.S.C. 1607(a)</external-xref>) is amended by inserting after paragraph (6) the following new paragraph:</text> <quoted-block display-inline="no-display-inline" id="H0A7FC45E1395418E8B2521CB55F9FF47" style="OLC"> <paragraph id="H58C1B74AAECC4815B2A002039EB2C0F4"><enum>(7)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section display-inline="no-display-inline" id="HD5FBCAE428B743AA8DCB84464FD8404D" section-type="subsequent-section"><enum>207.</enum><header>Rule of construction</header><text display-inline="no-display-inline">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.</text> </section><section commented="no" id="H0A84F2902AFE4A50ADB5A53EAA63D6F3"><enum>208.</enum><header>Effect on State laws</header> <subsection commented="no" id="H583E461756084B36B78B6355D0DD970"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H42459A5D3B4A4CFCA841207156C623D9"><enum>(b)</enum><header>Rules of construction</header><text display-inline="yes-display-inline">No provision of this section shall be construed as limiting—</text> <paragraph id="HE62B9A9F68114F4DB43589C97C00A5BE"><enum>(1)</enum><text display-inline="yes-display-inline">the application of any State law against a creditor;</text> </paragraph><paragraph id="H3967B0DB92F4415D8182E1625D00DD5B"><enum>(2)</enum><text display-inline="yes-display-inline">the availability of remedies based upon fraud, misrepresentation, deception, false advertising, or civil rights laws—</text> <subparagraph id="H7B588DB3FB3548FAA49C354F116CE800"><enum>(A)</enum><text display-inline="yes-display-inline">against any assignee, securitizer, or securitization vehicle for its own conduct relating to the making of a residential mortgage loan to a consumer; or</text> </subparagraph><subparagraph id="HB99C2969488B45D7BC9680DC26007196"><enum>(B)</enum><text>against any assignee, securitizer, or securitization vehicle in the sale or purchase of residential mortgage loans or securities; or</text> </subparagraph></paragraph><paragraph id="H375F40D765D04803B8ED76FB4BDA1FF8"><enum>(3)</enum><text display-inline="yes-display-inline">the application of any other State law against any assignee, securitizer, or securitization vehicle except as specifically provided in subsection (a) of this section.</text> </paragraph></subsection></section><section display-inline="no-display-inline" id="HBF4124BA98CD452085602EAFBAA715A4" section-type="subsequent-section"><enum>209.</enum><header>Regulations</header><text display-inline="no-display-inline">Regulations required or authorized to be prescribed under this title or the amendments made by this title—</text> <paragraph id="H5AA6F0E6925C46FBAAC708717BBE24F"><enum>(1)</enum><text>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</text> </paragraph><paragraph id="H252318A3229349D2AA6EB86164976E6D"><enum>(2)</enum><text display-inline="yes-display-inline">shall take effect not later than 18 months after the date of the enactment of this Act.</text> </paragraph></section><section commented="no" id="HE50C5D89035B49D59DDF7F07375EAEE4"><enum>210.</enum><header>Amendments to civil liability provisions</header> <subsection commented="no" id="HBBD457D21F3248B583A6DE3C9D21D938"><enum>(a)</enum><header>Increase in amount of civil money penalties for certain violations</header><text>Section 130(a)(2) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1640">15 U.S.C. 1640(a)(2)</external-xref>) is amended—</text> <paragraph id="H660E18A1A97E48B1A0C8726731CE58E7"><enum>(1)</enum><text>by striking <quote>$100</quote> and inserting <quote>$200</quote>;</text> </paragraph><paragraph id="HCE2CC0B131964F2DB1D7651904D8008C"><enum>(2)</enum><text>by striking <quote>$1,000</quote> and inserting <quote>$2,000</quote>;</text> </paragraph><paragraph id="H9D19FFEB94F14DFCAF51FC31A06C56ED"><enum>(3)</enum><text>by striking <quote>$200</quote> and inserting <quote>$400</quote>;</text> </paragraph><paragraph id="HC32EF05FD6494DFDB9F6FBC2112EF3E0"><enum>(4)</enum><text>by striking <quote>$2,000</quote> and inserting <quote>$4,000</quote>; and</text> </paragraph><paragraph id="H2A9A3AD35188478FA111663CC5C5D3F1"><enum>(5)</enum><text>by striking <quote>$500,000</quote> and inserting <quote>$1,000,000</quote>.</text> </paragraph></subsection><subsection commented="no" id="H5254C835A4F74AB4983B49AC2700CD84"><enum>(b)</enum><header>Statute of limitations extended for section 129 violations</header><text>Section 130(e) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1640">15 U.S.C. 1640(e)</external-xref>) is amended—</text> <paragraph commented="no" id="HD35F0DC3704E4779B2813E7716366C6C"><enum>(1)</enum><text>in the first sentence, by striking <quote>Any action</quote> and inserting <quote>Except as provided in the subsequent sentence, any action</quote>; and</text> </paragraph><paragraph commented="no" id="H60249761DE764D7C9D6E005F213F1277"><enum>(2)</enum><text>by inserting after the first sentence the following new sentence: <quote>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.</quote>.</text> </paragraph></subsection></section><section id="H5E4CD3D53CD54735821000663DB007CC"><enum>211.</enum><header>Lender rights in the context of borrower deception</header><text display-inline="no-display-inline">Section 130 of the Truth in Lending Act is amended by adding at the end the following new subsection:</text> <quoted-block id="H429E3BA30F994AED87BACCCB95978AD" style="OLC"> <subsection id="HCABCB432A99C41DCAE6C78D93FA2D454"><enum>(j)</enum><header>Exemption from liability and rescission in case of borrower fraud or deception</header><text display-inline="yes-display-inline">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.</text> </subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HFD03EAF7FAE3488DB6F80163DF0187B"><enum>212.</enum><header>Six-month notice required before reset of hybrid adjustable rate mortgages</header> <subsection id="H28FBAB9ADCBA48E395833BCD08226CCD"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Chapter 2 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1631">15 U.S.C. 1631 et seq.</external-xref>) is amended by inserting after section 128 the following new section:</text> <quoted-block display-inline="no-display-inline" id="H9EBE8EBE2F2B42A195F5262BE97911F3" style="USC"> <section id="H9739CAEAB1B646F0A2A6FE92C87B3C37"><enum>128A.</enum><header>Reset of hybrid adjustable rate mortgages</header> <subsection id="H5FD2637C748A4F6BA64CF1E74F9C7EC1"><enum>(a)</enum><header>Hybrid adjustable rate mortgages defined</header><text display-inline="yes-display-inline">For purposes of this section, the term <quote>hybrid adjustable rate mortgage</quote> 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.</text> </subsection><subsection id="HE9619D02515C43568B6F00A6D94F3821"><enum>(b)</enum><header>Notice of Reset and alternatives</header><text display-inline="yes-display-inline">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:</text> <paragraph id="H4E8ACE092BF34834A5AA295022D80629"><enum>(1)</enum><text display-inline="yes-display-inline">Any index or formula used in making adjustments to or resetting the interest rate and a source of information about the index or formula.</text> </paragraph><paragraph id="H8D8A6235DF2246C0BA57EFD2DD89FD4D"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HF94E251176C2429C97F0007C6F49DEC"><enum>(3)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H922C8F597C3B4477B95C00FFD3AF8B6D"><enum>(4)</enum><text display-inline="yes-display-inline">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—</text> <subparagraph id="H725ECFB83707495487777E6BF9F86649"><enum>(A)</enum><text>refinancing;</text> </subparagraph><subparagraph id="H0F0163018E8643BFBBFD19A522E982B1"><enum>(B)</enum><text>renegotiation of loan terms;</text> </subparagraph><subparagraph id="HD2AACB2CD2D746BD9E5B851DDA011FC7"><enum>(C)</enum><text>payment forbearances; and</text> </subparagraph><subparagraph id="H687F9CF814744DCB98005479844B3C84"><enum>(D)</enum><text>pre-foreclosure sales.</text> </subparagraph></paragraph><paragraph id="H6BD79EBCF12D495590BF3C76FF00AF5"><enum>(5)</enum><text display-inline="yes-display-inline">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).</text> </paragraph><paragraph id="H737C50999E8F437BA0BF3B44AC8C6516"><enum>(6)</enum><text display-inline="yes-display-inline">The address, telephone number, and Internet address for the State housing finance authority (as so defined) for the State in which the consumer resides.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H51959FD715064241B01F1EF1E44B212C"><enum>(b)</enum><header>Clerical amendment</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H39257E0222FD415BA0C455F0BC4FBF04" style="OLC"> <toc regeneration="no-regeneration"> <toc-entry level="section">128A. Reset of hybrid adjustable rate mortgages.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section id="H5E19AE57E5904F1680C0498EB5B97715" section-type="subsequent-section"><enum>213.</enum><header>Required disclosures</header> <subsection id="HA293E27F1CF14D8DBE586D9F00EAA6ED"><enum>(a)</enum><header>Additional information</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H4EEFEEED2BF0480CBAE894FABC47A497" style="OLC"> <paragraph id="HF58B933082E34CE49FEF1400CFA570CB"><enum>(16)</enum><text display-inline="yes-display-inline">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:<quote>Your payment can go as high as $__</quote>, the blank to be filled in with the maximum possible payment amount.</text> </paragraph><paragraph id="HC50554E97C3746389E28B49023643FF2"><enum>(17)</enum><text display-inline="yes-display-inline">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: <quote>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.</quote>.</text> </paragraph><paragraph id="H8780EF512EA5492C9BB6E5FC29E23B19"><enum>(18)</enum><text display-inline="yes-display-inline">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—</text> <subparagraph id="HB2F09C7C737142A200CBDD7DC0871338"><enum>(A)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="H593F8ACA606A45DB89B4B070D989D38D"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph id="HD6C8CF49D15244D393BE1CB4FEA303A3"><enum>(19)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H17AF4D04A7B44D0A82A2D8F7ADB442B0"><enum>(20)</enum><text display-inline="yes-display-inline">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.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H1776546D58904784A06C6202202FFF79"><enum>(b)</enum><header>Timing</header><text>Section 128(b) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1638">15 U.S.C. 1638(b)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block display-inline="no-display-inline" id="H4F61F8F37F334CDFB46F8E92CCBDFC48" style="OLC"> <paragraph id="HD69248AF32564BA89DE8F5A6B85E4EEB"><enum>(4)</enum><header>Residential mortgage loan disclosures</header><text display-inline="yes-display-inline">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—</text> <subparagraph id="HA447C95B93FF446DAD103D60B230279F"><enum>(A)</enum><text>the time required under the first sentence of paragraph (1); or</text> </subparagraph><subparagraph id="H9B003691BDEB463EB3AD8BDFDA002B23"><enum>(B)</enum><text>the end of the 3-day period beginning on the date the application for the loan from a consumer is received by the creditor.</text> </subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HD12262E2AE904C7394A6F2DE24F7529D"><enum>(c)</enum><header>Enhanced mortgage loan disclosures</header><text display-inline="yes-display-inline">Section 128(b)(2) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1638">15 U.S.C. 1638(b)(2)</external-xref>) is amended—</text> <paragraph id="HD6CFFF0573B14A42988B8054E598A672"><enum>(1)</enum><text>by striking <quote>(2) In the</quote> and inserting the following:</text> <quoted-block display-inline="no-display-inline" id="HD3549625E23C45CEBBCD4000E07720DE" style="OLC"> <paragraph id="HD838FFD1FD2D4E1F9BA2946E1212BEA"><enum>(2)</enum><header>Mortgage disclosures</header> <subparagraph id="HBC3D277BA333429994B56BE2DE52A1FB"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">In the</text> </subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block> </paragraph><paragraph id="H059F683EF3BA42E1B589006771107D04"><enum>(2)</enum><text>by striking <quote>a residential mortgage transaction, as defined in section 103(w)</quote> and inserting <quote>any extension of credit that is secured by the dwelling of a consumer</quote>;</text> </paragraph><paragraph id="H8061458F23A2478288E747E27ED6304D"><enum>(3)</enum><text>by striking <quote>shall be made in accordance</quote> and all that follows through <quote>extended, or</quote>;</text> </paragraph><paragraph id="HFA1D53A8DF8145D4BC6F1F00453773EF"><enum>(4)</enum><text>by striking <quote>If the</quote> and all that follows through the end of the paragraph and inserting the following new subparagraphs:</text> <quoted-block display-inline="no-display-inline" id="H0D01B711E78848608640C198877F9193" style="OLC"> <subparagraph id="H53E9E0FDDDD04C01BD008C9440DF6959"><enum>(B)</enum><header>Statement and timing of disclosures</header><text display-inline="yes-display-inline">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: <quote>You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.</quote>.</text> <clause id="HD2252F0A2A0E4604A7E600D185A99B93"><enum>(i)</enum><text>state in conspicuous type size and format, the following: <quote>You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.</quote>; and</text> </clause><clause id="HD4901D8B5B4847A2B9045CA1D2F1AA23"><enum>(ii)</enum><text>be furnished to the borrower not later than 7 business days before the date of consummation of the transaction, subject to subparagraph (D).</text> </clause></subparagraph><subparagraph id="H2D0A5D875DAC4279BFED1904ADED3315"><enum>(C)</enum><header>Variable rates or payment schedules</header><text display-inline="yes-display-inline">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: <quote>Payment Schedule: Payments Will Vary Based on Interest Rate Changes.</quote>.</text> </subparagraph><subparagraph id="H04F0FD28EDA44D5291146386C355333B"><enum>(D)</enum><header>Updating apr</header><text>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.</text> </subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection></section><section id="H7558B25FF627446C9253E5C000D6472"><enum>214.</enum><header>Disclosures required in monthly statements for residential mortgage loans</header><text display-inline="no-display-inline">Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended by adding at the end the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="H110844566BAA43AABC00F41686D5F4A" style="OLC"> <subsection id="H1646DD43E05B4D3CA48E532B704D4789"><enum>(e)</enum><header>Periodic statements for residential mortgage loans</header> <paragraph id="H0EFE9223A1A34A9383CB54588284D808"><enum>(1)</enum><header>In general</header><text>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:</text> <subparagraph id="HC69EAEDBB7EA40DC9D68FAF0F27EC3D5"><enum>(A)</enum><text display-inline="yes-display-inline">The amount of the principal obligation under the mortgage.</text> </subparagraph><subparagraph id="HD99E5760207E4CEA9477FDBCF69404C3"><enum>(B)</enum><text>The current interest rate in effect for the loan.</text> </subparagraph><subparagraph id="H0985D175DA1A4B74AD962F42DDC0160"><enum>(C)</enum><text>The date on which the interest rate may next reset or adjust.</text> </subparagraph><subparagraph id="HC07F57EB4FAC4D4CB33FC1441ECFF51"><enum>(D)</enum><text>The amount of any prepayment fee to be charged, if any.</text> </subparagraph><subparagraph id="H88C929270F164DAB9DB0786CA349D307"><enum>(E)</enum><text>A description of any late payment fees.</text> </subparagraph><subparagraph id="HE452FF33663C4FB181F140F8C73BE955"><enum>(F)</enum><text>A telephone number and electronic mail address that may be used by the obligor to obtain information regarding the mortgage.</text> </subparagraph><subparagraph id="H6AE9E54A4FAA42B88228B611AB9D38D0"><enum>(G)</enum><text>Such other information as the Board may prescribe in regulations.</text> </subparagraph></paragraph><paragraph id="H28A34167648349EDA3B483303CF7401C"><enum>(2)</enum><header>Development and use of standard form</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HA43358B3834949DB84005751741494E0"><enum>215.</enum><header>Authorization of appropriations</header><text display-inline="no-display-inline">For fiscal years 2008, 2009, 2010, 2011, and 2012, there are authorized to be appropriated to the Attorney General a total of—</text> <paragraph id="H4DD4666D760D4615A6EEEE2870678B1"><enum>(1)</enum><text>$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</text> </paragraph><paragraph id="HF0D616B6EA1242148C524785FD45F3E0"><enum>(2)</enum><text display-inline="yes-display-inline">$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.</text> </paragraph></section><section id="H1D6EA77D651B44CD86E8486781D1A3C0"><enum>216.</enum><header>Effective date</header><text display-inline="no-display-inline">The amendments made by this title shall apply to transactions consummated on or after the effective date of the regulations specified in section 209.</text> </section><section id="HF56DE491466546DAB215F93EB15D335D"><enum>217.</enum><header>Report by the GAO</header> <subsection id="HEB2BD318B1E044E6B6CD059D2D7B7D1B"><enum>(a)</enum><header>Report required</header><text display-inline="yes-display-inline">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—</text> <paragraph id="H2BFF3BDAC020481A822BD793AF686F25"><enum>(1)</enum><text display-inline="yes-display-inline">on the mortgage market for mortgages that are not within the safe harbor provided in the amendments made by this title;</text> </paragraph><paragraph id="H4031840C29A5429D925824D826528281"><enum>(2)</enum><text>on the ability of prospective homebuyers to obtain financing;</text> </paragraph><paragraph id="HE970C54BF4D341A0A8544D2DA206BE4"><enum>(3)</enum><text>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;</text> </paragraph><paragraph id="H5938732DE8D3431A80F4001C75167E83"><enum>(4)</enum><text>on minorities’ ability to access affordable credit compared with other prospective borrowers;</text> </paragraph><paragraph id="H63CC79AB2FEE4E33A8A42E2831BA97A5"><enum>(5)</enum><text>on home sales and construction;</text> </paragraph><paragraph id="H8A438ADB5B214BD9867F5483F7648C58"><enum>(6)</enum><text>of extending the rescission right, if any, on adjustable rate loans and its impact on litigation;</text> </paragraph><paragraph id="H680520A51A3E4330BBB1CE4827B8BE06"><enum>(7)</enum><text>of State foreclosure laws and, if any, an investor’s ability to transfer a property after foreclosure;</text> </paragraph><paragraph id="HEE24CA0A578244BEB9DB7B29E43CE100"><enum>(8)</enum><text>of expanding the existing provisions of the Home Ownership and Equity Protection Act of 1994;</text> </paragraph><paragraph id="H85A1E81B00D3409EA8B6EAF404A8F113"><enum>(9)</enum><text>of prohibiting prepayment penalties on high-cost mortgages; and</text> </paragraph><paragraph id="H653F00A1E5FE4CBCBABA3E9DC18B00"><enum>(10)</enum><text display-inline="yes-display-inline">of establishing counseling services under the Department of Housing and Urban Development and offered through the Office of Housing Counseling.</text> </paragraph></subsection><subsection id="H3F5732272BF24F8E91E2AFF003FFA6DD"><enum>(b)</enum><header>Report</header><text>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).</text> </subsection></section><enum>III</enum><header>High-Cost Mortgages</header> <section id="H17F8AC79DBFF4EFA8EB1A2C9E9ABBF00"><enum>301.</enum><header>Definitions relating to high-cost mortgages</header> <subsection id="H83CDA81A5F9841E9A021AE7B2B709F21"><enum>(a)</enum><header>High-cost mortgage defined</header><text>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:</text> <quoted-block id="H8075161447074578BC2C5E6636B8E755"> <subsection id="HEB6D016A4D12470BAC58384CB59DD1A4"><enum>(aa)</enum><header>High-cost mortgage</header> <paragraph id="H7FEE3C84C32F4AEEBC130172FB2CCBF3"><enum>(1)</enum><header>Definition</header> <subparagraph id="H2C7011B24A514C9FBB008461E4975085"><enum>(A)</enum><header>In general</header><text>The term <term>high-cost mortgage</term>, 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—</text> <clause id="H8C34C5F314904BA1951C81C62093B500"><enum>(i)</enum><text>in the case of a credit transaction secured—</text> <subclause id="HA6D83F1CF3CA4BD7A12CDC7EACD488E9"><enum>(I)</enum><text display-inline="yes-display-inline">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</text> </subclause><subclause id="HBA68A96DB1974C8CA6AFC1AED0C1DCA3"><enum>(II)</enum><text>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;</text> </subclause></clause><clause id="HCF8E40193FF7471FB1144671B6E8721C"><enum>(ii)</enum><text>the total points and fees payable in connection with the transaction exceed—</text> <subclause id="HEFA51FF506D342BDBBB8B2D458DF49A1"><enum>(I)</enum><text display-inline="yes-display-inline">in the case of a transaction for $20,000 or more, 5 percent of the total transaction amount; or</text> </subclause><subclause id="H2D80C01663A244D59EA874C931587B36"><enum>(II)</enum><text>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</text> </subclause></clause><clause id="HF050D6DEE444405898AE33FA668B2011"><enum>(iii)</enum><text display-inline="yes-display-inline">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.</text> </clause></subparagraph><subparagraph id="H53DC59217D234CC2915F4EFEF854B2F"><enum>(B)</enum><header>Introductory rates taken into account</header><text>For purposes of subparagraph (A)(i), the annual percentage rate of interest shall be determined based on the following interest rate:</text> <clause id="H471401B8BD3140DCA222A7A28F1ED24B"><enum>(i)</enum><text>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.</text> </clause><clause id="HC51650C16C0B43518448AFD519001E2E"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text> </clause><clause id="H08AFA5D251084F93AB617B1B98073488"><enum>(iii)</enum><text display-inline="yes-display-inline">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.</text> </clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HE484D3FD7480424E85F8C5C056B59F77"><enum>(b)</enum><header>Adjustment of percentage points</header><text>Section 103(aa)(2) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1602">15 U.S.C. 1602(aa)(2)</external-xref>) is amended by striking subparagraph (B) and inserting the following new subparagraph:</text> <quoted-block id="H0A42ED31EE494F439F5E8D1D36A2D1B5"> <subparagraph id="H43BDF70A1D4545F4A029674F3EE7DBCB"><enum>(B)</enum><text>An increase or decrease under subparagraph (A)—</text> <clause id="H83B970233AA8494CAC68811829ED71BB"><enum>(i)</enum><text>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</text> </clause><clause id="H6A69A0E44D09452800478019D7D4BE06"><enum>(ii)</enum><text>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.</text> </clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HFC2E427742D34F8BB38D9B011491EAB6"><enum>(c)</enum><header>Points and fees defined</header> <paragraph id="H9FAB388A912E4D8B00150080914929BD"><enum>(1)</enum><header>In general</header><text>Section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is amended—</text> <subparagraph id="H5911B65EAD124846A0E528A78B405600"><enum>(A)</enum><text>by striking subparagraph (B) and inserting the following:</text> <quoted-block id="HBD725834E9554AB98F32E0B364C5513"> <subparagraph id="H0E62DEFFC6BC4FEBABF458B3987343CF"><enum>(B)</enum><text display-inline="yes-display-inline">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;</text> </subparagraph><after-quoted-block>;</after-quoted-block></quoted-block> </subparagraph><subparagraph id="H40E865EEC86F4DE08B4B11C945972E64"><enum>(B)</enum><text display-inline="yes-display-inline">in subparagraph (C)(ii), by inserting <quote>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</quote> before the semicolon at the end;</text> </subparagraph><subparagraph id="HA14ED355E51F4B778C4BBFFBF69B6C59"><enum>(C)</enum><text>in subparagraph (C)(iii), by striking <quote>; and</quote> and inserting <quote>, except as provided for in clause (ii);</quote>;</text> </subparagraph><subparagraph id="HC0BFF4711FD9450D94C9A4E015BE9B32"><enum>(D)</enum><text>by redesignating subparagraph (D) as subparagraph (G); and</text> </subparagraph><subparagraph id="HCAAEF54425F4403CB8AAF197C31E4F"><enum>(E)</enum><text>by inserting after subparagraph (C) the following new subparagraphs:</text> <quoted-block id="H34948F603753487EA7FBFDFB85346FD8"> <subparagraph id="H388784604FBB4575800050624896F325"><enum>(D)</enum><text>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;</text> </subparagraph><subparagraph id="H3DE1461313CC4E51ABD616A305C62BC9"><enum>(E)</enum><text>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;</text> </subparagraph><subparagraph id="HC2B169FED4F344EBB23C0058FC9B1CDC"><enum>(F)</enum><text>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</text> </subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </subparagraph></paragraph><paragraph id="H4A63D78FA8254CACB0C560C6B5B8289B"><enum>(2)</enum><header>Calculation of points and fees for open-end consumer credit plans</header><text>Section 103(aa) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1602">15 U.S.C. 1602(aa)</external-xref>) is amended—</text> <subparagraph id="H1B7A9C7FBBC741C29075C66B8C94847D"><enum>(A)</enum><text>by redesignating paragraph (5) as paragraph (6); and</text> </subparagraph><subparagraph id="H62B20DBEC43C456280E9B4B4B28052F"><enum>(B)</enum><text>by inserting after paragraph (4) the following new paragraph:</text> <quoted-block display-inline="no-display-inline" id="H9A7404F61FBF4798AD00A663215F9C1B" style="OLC"> <paragraph id="H4A5481E41ED24AFE9BAAD8B44D53196"><enum>(5)</enum><header>Calculation of points and fees for open-end consumer credit plans</header><text display-inline="yes-display-inline">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.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subparagraph></paragraph></subsection><subsection id="HFBEE3328BD3D4225A63D6D00D9DEEC77"><enum>(d)</enum><header>High cost mortgage lender</header><text>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: <quote>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.</quote>.</text> </subsection><subsection id="H2CD49D6A648F42BA87382D1F20FFAC39"><enum>(e)</enum><header>Bona fide discount loan discount points and prepayment penalties</header><text>Section 103 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1602">15 U.S.C. 1602</external-xref>) is amended by inserting after subsection (cc) (as added by section 121) the following new subsection:</text> <quoted-block id="HD039A82E5D8E4FEDB2B25BB0435B7793"> <subsection id="HED91FBFFB6BC4C3FBE003B07D58FEB8B"><enum>(dd)</enum><header>Bona fide discount points and prepayment penalties</header><text>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:</text> <paragraph id="H5BFC30789A3247BA94A5F3EC16DD9639"><enum>(1)</enum><header>Exclusion of bona fide discount points</header><text>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):</text> <subparagraph id="HDF39DC723A2F452495A0867EEB008375"><enum>(A)</enum><text>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.</text> </subparagraph><subparagraph id="H84BB25D28C07419592EBA3851B8600FA"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph><paragraph id="HBCCA1A458E24458FA400F9E61DF33181"><enum>(2)</enum><header>Definition</header><text>For purposes of paragraph (1), the term <term>bona fide discount points</term> 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.</text> </paragraph><paragraph id="H2413A4A7F86F45109C824ECA916DFBF"><enum>(3)</enum><header>Exception for interest rate reductions inconsistent with industry norms</header><text>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.</text> </paragraph><paragraph commented="no" id="H2704A6152CA8475A9FC9247BC5454853"><enum>(4)</enum><header>Allowance of conventional prepayment penalty</header><text>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—</text> <subparagraph commented="no" id="H3927B4425AEA4909972E8CE7EAD57666"><enum>(A)</enum><text>the annual percentage rate applicable with respect to such mortgage or transaction (as determined for purposes of subsection (aa)(1)(A)(i))—</text> <clause commented="no" id="H706502DE56B542488990C7DD67DA09CB"><enum>(i)</enum><text>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</text> </clause><clause commented="no" id="H4D2EEB1D38AF4F2AACC0C3868FFE7B13"><enum>(ii)</enum><text>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</text> </clause></subparagraph><subparagraph commented="no" id="H4C2D20B5FA164E4DA0B8A629BC2B47DA"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section display-inline="no-display-inline" id="H7E8AABC039944E9CB0EB11AA55E8A500" section-type="subsequent-section"><enum>302.</enum><header>Amendments to existing requirements for certain mortgages</header> <subsection commented="no" id="H88ACE9BACAE24D88945B1400A7A34400"><enum>(a)</enum><header>Prepayment penalty provisions</header><text>Section 129(c)(2) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639(c)(2)</external-xref>) is amended—</text> <paragraph commented="no" id="H541BEB4CDAC6415999474C2E736BB8BD"><enum>(1)</enum><text>by striking <quote>and</quote> after the semicolon at the end of subparagraph (C);</text> </paragraph><paragraph commented="no" id="H250068E0AFFA4036ACF4D4100ED00EC"><enum>(2)</enum><text>by redesignating subparagraph (D) as subparagraph (E); and</text> </paragraph><paragraph commented="no" id="HFAA0B22588934EDAA10077005C2702B"><enum>(3)</enum><text>by inserting after subparagraph (C) the following new subparagraph:</text> <quoted-block display-inline="no-display-inline" id="H8528EFA07D3C40D3A769ED04292C0079" style="OLC"> <subparagraph commented="no" id="HE123B0E949774F38A780E1BD2B9E351C"><enum>(D)</enum><text>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</text> </subparagraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection><subsection id="HC69716B5D6FC434EB8822F4CA2D136AA"><enum>(b)</enum><header>No balloon payments</header><text>Section 129(e) of the Truth in Lending Act (15 U.S.C. 1639(e)) is amended to read as follows:</text> <quoted-block id="HFEF75D28F9BE420EB000F52CE6B41FF"> <subsection id="H7B7B06583F8245698DF4FB0034DF90B1"><enum>(e)</enum><header>No Balloon Payments</header><text>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.</text> </subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection commented="no" id="HD95FE59124B4416B000009428EC1E1CA"><enum>(c)</enum><header>No lending without due regard to ability To repay</header><text>Section 129(h) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639(h)</external-xref>) is amended—</text> <paragraph commented="no" id="HAA046EEDDCB64F11B0ED779975BEA7F0"><enum>(1)</enum><text>by striking <quote><header-in-text level="subsection">Payment Ability of Consumer</header-in-text>.—A creditor shall not</quote> and inserting</text> <quoted-block display-inline="yes-display-inline" id="H9E2472CFC17D4BB5B398DE017456AADF" style="OLC"> <text><header-in-text level="subsection" style="OLC">Payment Ability of Consumer.—</header-in-text></text><paragraph commented="no" id="HE54946055AFE47D0835CD5B254B997C3"><enum>(1)</enum><header>Pattern or practice</header> <subparagraph commented="no" id="H6ED56A2FCD90401BAF4997FD1B760603"><enum>(A)</enum><header>In general</header><text>A creditor shall not</text> </subparagraph></paragraph><after-quoted-block>;</after-quoted-block></quoted-block> </paragraph><paragraph commented="no" id="H4EAFE90754B14CFAB9EA3EE25BB4E92F"><enum>(2)</enum><text>by inserting after subparagraph (A) (as so designated by paragraph (1) of this subsection) the following new subparagraph:</text> <quoted-block display-inline="no-display-inline" id="H5629461923C842318C3002F216AE8972" style="OLC"> <subparagraph commented="no" id="H4E58AF55B80C4D428791DA8405C85D27"><enum>(B)</enum><header>Presumption of violation</header><text>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.</text> </subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block> </paragraph><paragraph commented="no" id="H1501483F956544189F4300352133AC81"><enum>(3)</enum><text>by adding at the end the following new paragraph:</text> <quoted-block id="H87454B355CB54BD48DF39D6287127379"> <paragraph commented="no" id="H6C5DAC816E244B80AE6FEC2654D0F7E7"><enum>(2)</enum><header>Prohibition on extending credit without regard to payment ability of consumer</header> <subparagraph commented="no" id="H530D9A77D6B34964B142DAE326D17EA4"><enum>(A)</enum><header>In general</header><text>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.</text> </subparagraph><subparagraph commented="no" id="HD9183D813C8A45A0821300E897DEBB1"><enum>(B)</enum><header>Presumption of ability</header><text>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.</text> </subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection></section><section commented="no" id="HF29FFC3652504628ACB1CA4612370000"><enum>303.</enum><header>Additional requirements for certain mortgages</header> <subsection commented="no" id="H19C2ABBD151C4CD7A94965CC946E1B1D"><enum>(a)</enum><header>Additional Requirements for Certain Mortgages</header><text>Section 129 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639</external-xref>) is amended—</text> <paragraph commented="no" id="H49D6BAB70CC54ED69709456500C62857"><enum>(1)</enum><text>by redesignating subsections (j), (k) and (l) as subsections (n), (o) and (p) respectively; and</text> </paragraph><paragraph commented="no" id="HF2FC81E22EBE4675B7A397D1995B5E09"><enum>(2)</enum><text>by inserting after subsection (i) the following new subsections:</text> <quoted-block id="H00A0DB4CF94649BFB1CEE700E121D483"> <subsection commented="no" id="HA1D539EC2BEC41D88CE6F90087C90077"><enum>(j)</enum><header>Recommended Default</header><text>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.</text> </subsection><subsection commented="no" id="HC07FA96BD9AB4EEAB7B9574934002367"><enum>(k)</enum><header>Late fees</header> <paragraph commented="no" id="HB80BE9A5C353406CBB08A02748B9074"><enum>(1)</enum><header>In general</header><text>No creditor may impose a late payment charge or fee in connection with a high-cost mortgage—</text> <subparagraph commented="no" id="HCE370024053F4F2981D783C07F73847C"><enum>(A)</enum><text>in an amount in excess of 4 percent of the amount of the payment past due;</text> </subparagraph><subparagraph commented="no" id="HFCCE238E0331498AA4FEA0EAEF9C7444"><enum>(B)</enum><text>unless the loan documents specifically authorize the charge or fee;</text> </subparagraph><subparagraph commented="no" id="H20ACF34BA58345CC951E73B5917E7887"><enum>(C)</enum><text>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</text> </subparagraph><subparagraph commented="no" id="H319C70FB12034BFC985F00FACDE95114"><enum>(D)</enum><text>more than once with respect to a single late payment.</text> </subparagraph></paragraph><paragraph commented="no" id="H811BD3767E0D4554936C59EC5F7075AF"><enum>(2)</enum><header>Coordination with subsequent late fees</header><text>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.</text> </paragraph><paragraph commented="no" id="HAB3EE0047E0143A0917897E8C61F5E4E"><enum>(3)</enum><header>Failure to make installment payment</header><text>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.</text> </paragraph></subsection><subsection commented="no" id="HB966890A6FA54F81A785B56E7CECD9BD"><enum>(l)</enum><header>Acceleration of debt</header><text>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.</text> </subsection><subsection commented="no" id="HDBDDCBC1FC174528A591CB4D3E31E5BA"><enum>(m)</enum><header>Restriction on financing points and fees</header><text>No creditor may directly or indirectly finance, in connection with any high-cost mortgage, any of the following:</text> <paragraph commented="no" id="HE0E8073E3F2F420F8FF3BD710049A2D7"><enum>(1)</enum><text>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.</text> </paragraph><paragraph commented="no" id="HE7B1B45A2A8C4E7A885C38F736CEA7B1"><enum>(2)</enum><text>Any points or fees.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection><subsection commented="no" id="HD94BA425F6AB49108D00DE5D9928CF92"><enum>(b)</enum><header>Prohibitions on evasions</header><text>Section 129 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639</external-xref>) is amended by inserting after subsection (p) (as so redesignated by subsection (a)(1)) the following new subsection:</text> <quoted-block id="HBCD9F6B3B72540FDA617D91000486CF"> <subsection commented="no" id="H64DB0D9CF9024F28BA875F933E9FF913"><enum>(q)</enum><header>Prohibitions on evasions, structuring of transactions, and reciprocal arrangements</header><text>A creditor may not take any action in connection with a high-cost mortgage—</text> <paragraph commented="no" id="HB8D533F9A7CF4D14BEBCF08D16EA112F"><enum>(1)</enum><text>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</text> </paragraph><paragraph commented="no" id="H61FC099C59C14994A8EDC637F1F8B06"><enum>(2)</enum><text>to divide any loan transaction into separate parts for the purpose and with the intent of evading provisions of this title.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection commented="no" id="HC44A84D728924A94803B66F87FBEFEA"><enum>(c)</enum><header>Modification or Deferral Fees</header><text>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:</text> <quoted-block id="HE990B70B85E248EA82B5CCDECC49115C"> <subsection commented="no" id="H70B9C4A9B9D94256A52BA02CA6EBAEB"><enum>(r)</enum><header>Modification and deferral fees prohibited</header><text>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.</text> </subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection commented="no" id="H85B6CD442B734B539B73ADBEDFF8D712"><enum>(d)</enum><header>Payoff statement</header><text>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:</text> <quoted-block id="H2ED3D817799B418EBE09DB48D011F37B"> <subsection commented="no" id="H4A66F3E6C013468DA3CE97B849B252BD"><enum>(s)</enum><header>Payoff statement</header> <paragraph commented="no" id="HF215A3DF56BF499A87DF58FFA718434F"><enum>(1)</enum><header>Fees</header> <subparagraph commented="no" id="HEDCAF753D7E846A5BC03003DF98BBD21"><enum>(A)</enum><header>In general</header><text>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.</text> </subparagraph><subparagraph commented="no" id="HE02049D1FFCF40ABB8756FDD29696E2E"><enum>(B)</enum><header>Transaction fee</header><text>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.</text> </subparagraph><subparagraph commented="no" id="H1DBA9E1F9CB14D30B8D8F118A61FF132"><enum>(C)</enum><header>Fee disclosure</header><text>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).</text> </subparagraph><subparagraph commented="no" id="HB18A8F3ACD83472CA67E2DE25D9E622C"><enum>(D)</enum><header>Multiple requests</header><text>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.</text> </subparagraph></paragraph><paragraph commented="no" id="H1B5B586C827F49D1B56EA5FA342199AB"><enum>(2)</enum><header>Prompt delivery</header><text>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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection commented="no" id="HC4D4AF46B6CC4CDAB254F7373E90E9EF"><enum>(e)</enum><header>Pre-Loan Counseling Required</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H4D08C127EF51470CB289D3E909AF569C" style="OLC"> <subsection commented="no" id="HFE936718CFB24A1999AFE1E6D7CBDE0"><enum>(t)</enum><header>Pre-Loan Counseling</header> <paragraph commented="no" id="HD764A3AC52DD44EA94C187A1787591DD"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph commented="no" id="HD78F4E9D98CB4EA7BB389FCED4E8F5DB"><enum>(2)</enum><header>Disclosures required prior to counseling</header><text>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.</text> </paragraph><paragraph commented="no" id="HD699E9414D0C47C2838F5920BF9E0516"><enum>(3)</enum><header>Regulations</header><text>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).</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H729511D0ABC34C6AB25F00DA5F062FE5"><enum>(f)</enum><header>Flipping prohibited</header><text display-inline="yes-display-inline">Section 129 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639</external-xref>) is amended by inserting after subsection (t) (as added by subsection (e)) the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="HA6679B0A7070428BAB8363DD888C04A9" style="OLC"> <subsection id="H8CF9536854864B2600CB8C9B73BFAA07"><enum>(u)</enum><header>Flipping</header> <paragraph id="H38F3378694904FBEAFA4CD9EC355967C"><enum>(1)</enum><header>In general</header><text>No creditor may knowingly or intentionally engage in the unfair act or practice of flipping in connection with a high-cost mortgage.</text> </paragraph><paragraph id="H50D0EFC0D3DC4D38001F2DB4CB00C188"><enum>(2)</enum><header>Flipping defined</header><text display-inline="yes-display-inline">For purposes of this subsection, the term <term>flipping</term> 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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section commented="no" display-inline="no-display-inline" id="H6F624983DA8D4E2DB95BEE59BE006028" section-type="subsequent-section"><enum>304.</enum><header>Amendment to provision governing correction of errors</header><text display-inline="no-display-inline">Section 130(b) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1640">15 U.S.C. 1640(b)</external-xref>) is amended to read as follows:</text> <quoted-block id="HE2858A7FEEC04998A261008870F2E390"> <subsection commented="no" id="HD061B802B48544BC874167A884017EAE"><enum>(b)</enum><header>Correction of errors</header><text>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—</text> <paragraph commented="no" id="HEF38714B7D3A45FDA19C7103A7400011"><enum>(1)</enum><text>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—</text> <subparagraph commented="no" id="HDDE67C8670924FEFA0422BD020932C29"><enum>(A)</enum><text>make the loan satisfy the requirements of this chapter; or</text> </subparagraph><subparagraph commented="no" id="HA8977FDA2F89470FA569F58D36CB03F8"><enum>(B)</enum><text>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</text> </subparagraph></paragraph><paragraph commented="no" id="HA711D68E32A14827B39715DF6E5D995C"><enum>(2)</enum><text>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—</text> <subparagraph commented="no" id="H190858264E5343FEA51FB25EDBAF7BE6"><enum>(A)</enum><text>make the loan satisfy the requirements of this chapter; or</text> </subparagraph><subparagraph commented="no" id="HACEEC4120EE64258BAC05C6F6203CC5B"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="H34697D6F7F064BD9A1B7B67C60D440FB"><enum>305.</enum><header>Regulations</header> <subsection id="H68EA4DDA53004297A455016B47986654"><enum>(a)</enum><header>In General</header><text>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.</text> </subsection><subsection id="H25CC85F443C14FC981E8D2BAD135C77B"><enum>(b)</enum><header>Consumer Mortgage Education</header> <paragraph id="HF6E9692DD5AB4416AD860026F20003F9"><enum>(1)</enum><header>Regulations</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HECFC646765114C868046E2A1DBEFD435"><enum>(2)</enum><header>Coordination with state law</header><text>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.</text> </paragraph></subsection></section><section id="HBC7ECD1A895F4470BB4F3F1BB1BAA2C7"><enum>306.</enum><header>Effective date</header><text display-inline="no-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/1602">15 U.S.C. 1602(aa)</external-xref>) consummated after the end of such period.</text> </section><enum>IV</enum><header>Office of Housing Counseling</header> <section id="HF2E01D1A721041BAB826A300F704FA47"><enum>401.</enum><header>Short title</header><text display-inline="no-display-inline">This title may be cited as the <quote>Expand and Preserve Home Ownership Through Counseling Act</quote>.</text> </section><section id="H704E29325CE1438A9B9934C1C6DF8D5D"><enum>402.</enum><header>Establishment of Office of Housing Counseling</header><text display-inline="no-display-inline">Section 4 of the Department of <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> (42 U.S.C. 3533) is amended by adding at the end the following new subsection:</text> <quoted-block act-name="Housing" id="H91CF98E4C4454D32B3007871E212F05D"> <subsection id="HA475E7C493C5421FBAA975C6AEFAC14"><enum>(g)</enum><header>Office of Housing Counseling</header> <paragraph id="HBD54FC8103F04D899B69F692703B63CC"><enum>(1)</enum><header>Establishment</header><text>There is established, in the Office of the Secretary, the Office of Housing Counseling.</text> </paragraph><paragraph id="HA88A7F93FD564D349B5FEDF694DAC68"><enum>(2)</enum><header>Director</header><text>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.</text> </paragraph><paragraph id="H2921BFB81D31470BA172513062B90300"><enum>(3)</enum><header>Functions</header> <subparagraph id="H38BEFF8DC0734AD0BB900228D400263B"><enum>(A)</enum><header>In general</header><text>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—</text> <clause id="H1F74DFCBFD0A4106A1F7E57E13AE8287"><enum>(i)</enum><text>research, grant administration, public outreach, and policy development relating to such counseling; and</text> </clause><clause id="H6B9F5A4CBF6A4EDEB262DEE77BF5FD32"><enum>(ii)</enum><text>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.</text> </clause></subparagraph><subparagraph id="H47467F61CF7C43C88CE4B7208893BC54"><enum>(B)</enum><header>Specific functions</header><text display-inline="yes-display-inline">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—</text> <clause id="H381EDCE3A1674DBFA77256CCEB6EC71C"><enum>(i)</enum><text>the counseling procedures under section 106(g)(1) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (12 U.S.C. 1701x(h)(1));</text> </clause><clause id="H53A6D55C9C1C4D9EBAFB2EE8001F08CC"><enum>(ii)</enum><text>carrying out all other functions of the Secretary under section 106(g) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968, including the establishment, operation, and publication of the availability of the toll-free telephone number under paragraph (2) of such section;</text> </clause><clause id="HDDFA359980714584A0A68F2E2497714B"><enum>(iii)</enum><text>carrying out section 5 of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2604">12 U.S.C. 2604</external-xref>) for home buying information booklets prepared pursuant to such section;</text> </clause><clause id="HC9AFD1FE8E0443FEB931C8DC88263E80"><enum>(iv)</enum><text>carrying out the certification program under section 106(e) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(e)</external-xref>);</text> </clause><clause id="H392A8BDEC8B54C81878323A5F66546BF"><enum>(v)</enum><text>carrying out the assistance program under section 106(a)(4) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968, including criteria for selection of applications to receive assistance;</text> </clause><clause id="HF77CA7A5DFEF4E3C852153DE75EFD81C"><enum>(vi)</enum><text>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;</text> </clause><clause id="HF158793E34F7400AB6E4D437F1E69C1"><enum>(vii)</enum><text>providing for operation of the advisory committee established under paragraph (4) of this subsection;</text> </clause><clause id="H9A9A602C058D457100C9A8DD503C9CE"><enum>(viii)</enum><text>collaborating with community-based organizations with expertise in the field of housing counseling; and</text> </clause><clause id="HC1A0F620AAD14CB3AE544590CDC39067"><enum>(ix)</enum><text>providing for the building of capacity to provide housing counseling services in areas that lack sufficient services.</text> </clause></subparagraph></paragraph><paragraph id="HB05FEF3708D4413B9464A1CE93718D9B"><enum>(4)</enum><header>Advisory Committee</header> <subparagraph id="H399A6CA7093A41DE0081D865DA6EEDF"><enum>(A)</enum><header>In general</header><text>The Secretary shall appoint an advisory committee to provide advice regarding the carrying out of the functions of the Director.</text> </subparagraph><subparagraph id="HB1EFBD3D7D37403D9400656F23180440"><enum>(B)</enum><header>Members</header><text>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.</text> </subparagraph><subparagraph id="HC479B4E559E4425A85C524CDB0C30996"><enum>(C)</enum><header>Terms</header><text>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.</text> </subparagraph><subparagraph id="H086EE02D526A43C2B9F1F5A61C79FF2"><enum>(D)</enum><header>Terms of initial appointees</header><text>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.</text> </subparagraph><subparagraph id="HBFC02848E21F41E9AA2F6801592C4843"><enum>(E)</enum><header>Prohibition of pay; travel expenses</header><text>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 <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/57">chapter 57</external-xref> of title 5, United States Code.</text> </subparagraph><subparagraph id="H4770FC728ECA452F9700D63EE722BF25"><enum>(F)</enum><header>Advisory role only</header><text>The advisory committee shall have no role in reviewing or awarding housing counseling grants.</text> </subparagraph></paragraph><paragraph id="H3F8BAE6B34764E4387FBA9FC8D187727"><enum>(5)</enum><header>Scope of homeownership counseling</header><text>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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HB47DEAB4F6B046ADA6925D008CDCEE1"><enum>403.</enum><header>Counseling procedures</header> <subsection id="HC847785A7FB2461A9175DD027986F3EB"><enum>(a)</enum><header>In general</header><text>Section 106 of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x</external-xref>) is amended by adding at the end the following new subsection:</text> <quoted-block act-name="Housing" id="H32C4FBC8B9714280B529AC9C87F55BB"> <subsection id="H2901D5D255434E74B106AE31DAF44268"><enum>(g)</enum><header>Procedures and activities</header> <paragraph id="H0939AB1F77924B32A8336E312D10ECFE"><enum>(1)</enum><header>Counseling procedures</header> <subparagraph id="H4AE694EC80164C70B8AD2F494E113E8B"><enum>(A)</enum><header>In general</header><text>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.</text> </subparagraph><subparagraph id="HCCB738DB102F4FDA8D148D7DC3ABF3B6"><enum>(B)</enum><header>Homeownership counseling</header><text>For purposes of this subsection and as used in the provisions referred to in this subparagraph, the term <term>homeownership counseling</term> 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—</text> <clause id="H65FFC8C2438B4F3A8277677C9087E43E"><enum>(i)</enum><text>section 105(a)(20) of the <act-name parsable-cite="HCDA">Housing and Community Development Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/5305">42 U.S.C. 5305(a)(20)</external-xref>);</text> </clause><clause id="HBA3CB3D8732C4DF18267D128E13EBDF3"><enum>(ii)</enum><text>in the <act-name parsable-cite="USHA">United States Housing Act of 1937</act-name>—</text> <subclause id="H0955724BA88A40FCA750B56E67473F7"><enum>(I)</enum><text>section 9(e) (42 U.S.C. 1437g(e));</text> </subclause><subclause id="HF587C8E41B4A466EB3B97EEEF129329E"><enum>(II)</enum><text>section 8(y)(1)(D) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437f">42 U.S.C. 1437f(y)(1)(D)</external-xref>);</text> </subclause><subclause id="H11257251C3554B5E9370D952A89D5ECF"><enum>(III)</enum><text>section 18(a)(4)(D) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437p">42 U.S.C. 1437p(a)(4)(D)</external-xref>);</text> </subclause><subclause id="HCE366F1DFDDE41829325A0AFF2AD19E5"><enum>(IV)</enum><text>section 23(c)(4) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437u">42 U.S.C. 1437u(c)(4)</external-xref>);</text> </subclause><subclause id="H57A0C4BAC22C4A14BC00CAA3D7A2C8BE"><enum>(V)</enum><text>section 32(e)(4) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437z-4">42 U.S.C. 1437z–4(e)(4)</external-xref>);</text> </subclause><subclause id="HB044F2CA2CFC49B38D234CA7F9DDE8AE"><enum>(VI)</enum><text>section 33(d)(2)(B) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437z-5">42 U.S.C. 1437z–5(d)(2)(B)</external-xref>);</text> </subclause><subclause id="H4666A0B4114148DAAE6F2836E4957B76"><enum>(VII)</enum><text>sections 302(b)(6) and 303(b)(7) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437aaa-1">42 U.S.C. 1437aaa–1(b)(6)</external-xref>, 1437aaa–2(b)(7)); and</text> </subclause><subclause id="HD03940A68AA2495385E4FB22FFCF12"><enum>(VIII)</enum><text>section 304(c)(4) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437aaa-3">42 U.S.C. 1437aaa–3(c)(4)</external-xref>);</text> </subclause></clause><clause id="HB61F74BAECE64609BB4E92605EDD7864"><enum>(iii)</enum><text>section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (<external-xref legal-doc="usc" parsable-cite="usc/42/1437f">42 U.S.C. 1437f</external-xref> note);</text> </clause><clause id="HCD29C20BBE454190B3F4CB7656BDF24D"><enum>(iv)</enum><text>sections 233(b)(2) and 258(b) of the <act-name parsable-cite="CGNHA">Cranston-Gonzalez National Affordable Housing Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/12773">42 U.S.C. 12773(b)(2)</external-xref>, 12808(b));</text> </clause><clause id="HD8EA10FC15194BAA8C85C7702C6D6FC1"><enum>(v)</enum><text>this section and section 101(e) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x</external-xref>, 1701w(e));</text> </clause><clause id="HC307EF2DB1E2405D85D1AE7ED7525008"><enum>(vi)</enum><text>section 220(d)(2)(G) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (<external-xref legal-doc="usc" parsable-cite="usc/12/4110">12 U.S.C. 4110(d)(2)(G)</external-xref>);</text> </clause><clause id="H2A24F7863B2F47B6BB7265832218B5AF"><enum>(vii)</enum><text>sections 422(b)(6), 423(b)(7), 424(c)(4), 442(b)(6), and 443(b)(6) of the <act-name parsable-cite="CGNHA">Cranston-Gonzalez National Affordable Housing Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/12872">42 U.S.C. 12872(b)(6)</external-xref>, 12873(b)(7), 12874(c)(4), 12892(b)(6), and 12893(b)(6));</text> </clause><clause id="HEE10983C80BE40A2ADE30514A126DB74"><enum>(viii)</enum><text>section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));</text> </clause><clause id="H4EDAC11AFD944A4483C02F0000664CF4"><enum>(ix)</enum><text>sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (<external-xref legal-doc="usc" parsable-cite="usc/25/4132">25 U.S.C. 4132(3)</external-xref>, 4229(b)(2)(A));</text> </clause><clause id="HA91251FA11D44830A080EE243B3AEF5"><enum>(x)</enum><text>in the <act-name parsable-cite="NHA">National Housing Act</act-name>—</text> <subclause id="H7F632C202A5C4EE08049BCF04E99EB2C"><enum>(I)</enum><text>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);</text> </subclause><subclause id="HF1545E73D4294AD1B4B86C4B41004C37"><enum>(II)</enum><text>subsections (a) and (c)(3) of section 237 (<external-xref legal-doc="usc" parsable-cite="usc/12/1715z-2">12 U.S.C. 1715z–2</external-xref>); and</text> </subclause><subclause id="H0DD85B2BF6E44E8798CB45EA7F7EC26C"><enum>(III)</enum><text>subsections (d)(2)(B) and (m)(1) of section 255 (<external-xref legal-doc="usc" parsable-cite="usc/12/1715z-20">12 U.S.C. 1715z–20</external-xref>);</text> </subclause></clause><clause id="HC8FE41278D2044E5BDCC6EED2FE1850"><enum>(xi)</enum><text>section 502(h)(4)(B) of the <act-name parsable-cite="HA49">Housing Act of 1949</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/1472">42 U.S.C. 1472(h)(4)(B)</external-xref>); and</text> </clause><clause id="HDD60CC874DC447EF8B24ED78D4F9A8AA"><enum>(xii)</enum><text>section 508 of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701z-7">12 U.S.C. 1701z–7</external-xref>).</text> </clause></subparagraph><subparagraph id="HD580829FCE6B4B418299D17BB05F83F4"><enum>(C)</enum><header>Rental housing counseling</header><text>For purposes of this subsection, the term <term>rental housing counseling</term> 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—</text> <clause id="HA8AC33698ED24F2200E93D397BDBCF66"><enum>(i)</enum><text>section 105(a)(20) of the <act-name parsable-cite="HCDA">Housing and Community Development Act of 1974</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/5305">42 U.S.C. 5305(a)(20)</external-xref>);</text> </clause><clause id="H6F22F3CD31974D23B8A309260012D5ED"><enum>(ii)</enum><text>in the <act-name parsable-cite="USHA">United States Housing Act of 1937</act-name>—</text> <subclause id="H1528EC43B3CD4B24B6C88D421F404100"><enum>(I)</enum><text>section 9(e) (42 U.S.C. 1437g(e));</text> </subclause><subclause id="HD11DD81716CA4B17A9459D6CC321EA7B"><enum>(II)</enum><text>section 18(a)(4)(D) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437p">42 U.S.C. 1437p(a)(4)(D)</external-xref>);</text> </subclause><subclause id="HFB323ACE10834E8481F40068FFDC7EFA"><enum>(III)</enum><text>section 23(c)(4) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437u">42 U.S.C. 1437u(c)(4)</external-xref>);</text> </subclause><subclause id="H283AA1713AE541E083ECE006E3F57CE"><enum>(IV)</enum><text>section 32(e)(4) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437z-4">42 U.S.C. 1437z–4(e)(4)</external-xref>);</text> </subclause><subclause id="H3497EBA58B7B424085E23B00AEC80064"><enum>(V)</enum><text>section 33(d)(2)(B) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437z-5">42 U.S.C. 1437z–5(d)(2)(B)</external-xref>); and</text> </subclause><subclause id="HCCA9162CD7A145879DA3C6E2502006F"><enum>(VI)</enum><text>section 302(b)(6) (<external-xref legal-doc="usc" parsable-cite="usc/42/1437aaa-1">42 U.S.C. 1437aaa–1(b)(6)</external-xref>);</text> </subclause></clause><clause id="HAD7E8AE8D8A94543AAE57FAFC297F8E5"><enum>(iii)</enum><text>section 233(b)(2) of the <act-name parsable-cite="CGNHA">Cranston-Gonzalez National Affordable Housing Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/12773">42 U.S.C. 12773(b)(2)</external-xref>);</text> </clause><clause id="H12CAF29F3856414C8F71DBED192F0042"><enum>(iv)</enum><text>section 106 of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x</external-xref>);</text> </clause><clause id="HA46043B8ED0E430295D79F6E17D7FD38"><enum>(v)</enum><text>section 422(b)(6) of the <act-name parsable-cite="CGNHA">Cranston-Gonzalez National Affordable Housing Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/12872">42 U.S.C. 12872(b)(6)</external-xref>);</text> </clause><clause id="H33184D8879544FCFA7C150EA209FB7A5"><enum>(vi)</enum><text>section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));</text> </clause><clause id="H775EDFE32A39472A808F570082B60848"><enum>(vii)</enum><text>sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (<external-xref legal-doc="usc" parsable-cite="usc/25/4132">25 U.S.C. 4132(3)</external-xref>, 4229(b)(2)(A)); and</text> </clause><clause id="H6296248938B14AB1B605D094D6BCA1D7"><enum>(viii)</enum><text>the rental assistance program under section 8 of the <act-name parsable-cite="USHA">United States Housing Act of 1937</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/1437f">42 U.S.C. 1437f</external-xref>).</text> </clause></subparagraph></paragraph><paragraph id="H18752AC0FD2D4C4CB655C668E2349098"><enum>(2)</enum><header>Standards for materials</header><text display-inline="yes-display-inline">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).</text> </paragraph><paragraph id="HEDE26D0933844D5D8BF225BD800936AB"><enum>(3)</enum><header>Mortgage software systems</header> <subparagraph id="H4E9B834733DD4D08B4AD69DB064B077F"><enum>(A)</enum><header>Certification</header><text>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—</text> <clause id="H1F661679333840BDBFA5D6CC36CBFAAA"><enum>(i)</enum><text>the consumer’s financial situation and the cost of maintaining a home, including insurance, taxes, and utilities;</text> </clause><clause id="H685BA0A701A84D6E9F00A64F8F454CDE"><enum>(ii)</enum><text>the amount of time the consumer expects to remain in the home or expected time to maturity of the loan;</text> </clause><clause id="HE33DBBC9A154412099AD31A50569B4C"><enum>(iii)</enum><text>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.</text> </clause><continuation-text continuation-text-level="subparagraph">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.</continuation-text></subparagraph><subparagraph id="H79823C50CF08471B9DF1D5A57D8CDB00"><enum>(B)</enum><header>Use and initial availability</header><text>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).</text> </subparagraph><subparagraph id="H7AB50D8B8EF54BB7BF6C8C446CA03D12"><enum>(C)</enum><header>Availability</header><text>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.</text> </subparagraph></paragraph><paragraph id="HF27EE6CE9CDD4DCF91EF90F75BD1477"><enum>(4)</enum><header>National public service multimedia campaigns to promote housing counseling</header> <subparagraph id="H6AAA4517CFBA4B29888FAE2DD2B210A4"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H60888DECE97849AF87B15026D419FE5"><enum>(B)</enum><header>Contact information</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="HA8DCB729AD7B48C9886C6FF878003074"><enum>(C)</enum><header>Authorization of appropriations</header><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><paragraph id="HA1DF070B7BBA45CCAB2B7F6D24A918DA"><enum>(5)</enum><header>Education programs</header><text>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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H8A53380A91FB4270BF3E00E4CA698EA"><enum>(b)</enum><header>Conforming amendments to grant program for homeownership counseling organizations</header><text>Section 106(c)(5)(A)(ii) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(c)(5)(A)(ii)</external-xref>) is amended—</text> <paragraph id="HE8EA272A5C144227AC81D9E9BD837F7C"><enum>(1)</enum><text>in subclause (III), by striking <quote>and</quote> at the end;</text> </paragraph><paragraph id="HE0080B1D1F77477FBFF13B87F654AFE"><enum>(2)</enum><text>in subclause (IV) by striking the period at the end and inserting <quote>; and</quote>; and</text> </paragraph><paragraph id="HCF34390C02094CEE9BF2CF9E4CA8F71"><enum>(3)</enum><text>by inserting after subclause (IV) the following new subclause:</text> <quoted-block id="H67576EFF7E0A4CBE9CD17774A76E742B"> <subclause id="HEDEC0C6DC7BD493B816D991FF8136090"><enum>(V)</enum><text>notify the housing or mortgage applicant of the availability of mortgage software systems provided pursuant to subsection (g)(3).</text> </subclause><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection></section><section id="H7B8A834D02CB4F58A26300F6957C411"><enum>404.</enum><header>Grants for housing counseling assistance</header><text display-inline="no-display-inline">Section 106(a) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(a)(3)</external-xref>) is amended by adding at the end the following new paragraph:</text> <quoted-block act-name="Housing" id="H9174FBD0109844AFA6A5173776CA600"> <paragraph id="H31216877F03C4A12B66100D42C3FA0E" indent="up1"><enum>(4)</enum><header>Homeownership and rental counseling assistance</header> <subparagraph id="H21731385CB1F45769EEFDBFA6990C5C6"><enum>(A)</enum><header>In general</header><text>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)).</text> </subparagraph><subparagraph id="H798FB9CA50C84E66B2801CBB3CA8B47E"><enum>(B)</enum><header>Qualified entities</header><text>The Secretary shall establish standards and guidelines for eligibility of organizations (including governmental and nonprofit organizations) to receive assistance under this paragraph.</text> </subparagraph><subparagraph id="H0F3B7B1366294FC7AE685D450000BE76"><enum>(C)</enum><header>Distribution</header><text>Assistance made available under this paragraph shall be distributed in a manner that encourages efficient and successful counseling programs.</text> </subparagraph><subparagraph id="H0249815577C9401B965D198703C91398"><enum>(D)</enum><header>Authorization of appropriations</header><text>There are authorized to be appropriated $45,000,000 for each of fiscal years 2008 through 2011 for—</text> <clause id="H6B75D367169345EAAA00B2281D895CBC"><enum>(i)</enum><text>the operations of the Office of Housing Counseling of the Department of Housing and Urban Development;</text> </clause><clause id="H5C1BBBFDF4934D299B1852BEA65C79A8"><enum>(ii)</enum><text>the responsibilities of the Secretary under paragraphs (2) through (5) of subsection (g); and</text> </clause><clause id="HB9F164D4F9AB4F13888112A480F6E2C3"><enum>(iii)</enum><text>assistance pursuant to this paragraph for entities providing homeownership and rental counseling.</text> </clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="HBEBFE6420AD54007B0DCA8371305BBCE"><enum>405.</enum><header>Requirements to use HUD-certified counselors under HUD programs</header><text display-inline="no-display-inline">Section 106(e) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(e)</external-xref>) is amended—</text> <paragraph id="HFFE41F113C5A422A89D55BA83FCEB67"><enum>(1)</enum><text>by striking paragraph (1) and inserting the following new paragraph:</text> <quoted-block id="H6266D62B88524FEE9FAF7D6D73C6DB8"> <paragraph id="HE172F2220A9B49880076D27E2DABD178"><enum>(1)</enum><header>Requirement for assistance</header><text>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.</text> </paragraph><after-quoted-block>;</after-quoted-block></quoted-block> </paragraph><paragraph id="H7603FFB24C34450E919C435E64D53B98"><enum>(2)</enum><text>in paragraph (2)—</text> <subparagraph id="H9ADFA4F0973243E88E1F4C85747900BE"><enum>(A)</enum><text>by inserting <quote>and for certifying organizations</quote> before the period at the end of the first sentence; and</text> </subparagraph><subparagraph id="H20334503E1F64331AA473B1520E260AB"><enum>(B)</enum><text>in the second sentence by striking <quote>for certification</quote> and inserting <quote>, for certification of an organization, that each individual through which the organization provides counseling shall demonstrate, and, for certification of an individual,</quote>;</text> </subparagraph></paragraph><paragraph id="H947418BACA594F5B80913300FC66A703"><enum>(3)</enum><text>in paragraph (3), by inserting <quote>organizations and</quote> before <quote>individuals</quote>;</text> </paragraph><paragraph id="HE6EB6D39D93445DA8B9DA8E4E0738F18"><enum>(4)</enum><text>by redesignating paragraph (3) as paragraph (5); and</text> </paragraph><paragraph id="H16C94E82FBDB42CD8DE2BEB20000C683"><enum>(5)</enum><text>by inserting after paragraph (2) the following new paragraphs:</text> <quoted-block id="HEEA08E2810224984A03B74C750D29C40"> <paragraph id="H4B42C87D24324CCD80CF744B24158532"><enum>(3)</enum><header>Requirement under hud programs</header><text>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.</text> </paragraph><paragraph id="H98CD994759264D11B9263B00EA93697"><enum>(4)</enum><header>Outreach</header><text>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).</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></section><section id="H7F39674447E84A0AAFED30764DCA7B58"><enum>406.</enum><header>Study of defaults and foreclosures</header><text display-inline="no-display-inline">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.</text> </section><section id="HEC0471C0CA9C4B1200EA000700F21C2E"><enum>407.</enum><header>Definitions for counseling-related programs</header><text display-inline="no-display-inline">Section 106 of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x</external-xref>), as amended by the preceding provisions of this title, is further amended by adding at the end the following new subsection:</text> <quoted-block act-name="Housing" id="H35B04BEF037249B6B73FEB249375A2B"> <subsection id="HD7401359927D436EBE2F85EF6F08C294"><enum>(h)</enum><header>Definitions</header><text>For purposes of this section:</text> <paragraph id="H2079A661075C4F8185BE0088CDAF3479"><enum>(1)</enum><header>Nonprofit organization</header><text>The term <term>nonprofit organization</term> has the meaning given such term in section 104(5) of the <act-name parsable-cite="CGNHA">Cranston-Gonzalez National Affordable Housing Act</act-name> (<external-xref legal-doc="usc" parsable-cite="usc/42/12704">42 U.S.C. 12704(5)</external-xref>), except that subparagraph (D) of such section shall not apply for purposes of this section.</text> </paragraph><paragraph id="H319A6C2F551244898BFE60AF85B2A0AC"><enum>(2)</enum><header>State</header><text>The term <term>State</term> 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.</text> </paragraph><paragraph id="H7DB0BE03F6AC40A381F068442F30D963"><enum>(3)</enum><header>Unit of general local government</header><text>The term <term>unit of general local government</term> means any city, county, parish, town, township, borough, village, or other general purpose political subdivision of a State.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="H07E81858E18D45D89ECE20B9F07781CD"><enum>408.</enum><header>Updating and simplification of mortgage information booklet</header><text display-inline="no-display-inline">Section 5 of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2604">12 U.S.C. 2604</external-xref>) is amended—</text> <paragraph id="H998EC5308D5C44E78F14E4CD022CD888"><enum>(1)</enum><text>in the section heading, by striking <quote><header-in-text level="section" style="traditional">special</header-in-text></quote> and inserting <quote><header-in-text level="section" style="traditional">home buying</header-in-text></quote>;</text> </paragraph><paragraph id="H096DD09427DB48B6A0E7E5A1CC718120"><enum>(2)</enum><text>by striking subsections (a) and (b) and inserting the following new subsections:</text> <quoted-block id="HD146BC93625E4EB089C9B7860044D0F6"> <subsection id="H568291C46A354210BA8BD8FD104831E8"><enum>(a)</enum><header>Preparation and distribution</header><text>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 <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(e)</external-xref>) for use in complying with the requirement under subsection (c) of this section.</text> </subsection><subsection id="H5A20972B1BD24D17967B10FE50468B9"><enum>(b)</enum><header>Contents</header><text>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:</text> <paragraph id="H68BF039631C74B8997B79064B789786"><enum>(1)</enum><text>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—</text> <subparagraph id="H95F95C701C414C649CF39EC53BA6240"><enum>(A)</enum><text>balloon payments;</text> </subparagraph><subparagraph id="H051326C8504C4C0FBE3265A2F56D97AB"><enum>(B)</enum><text>prepayment penalties; and</text> </subparagraph><subparagraph id="HA7F2D7B71E634F94B7AC89CDF56175F8"><enum>(C)</enum><text>the trade-off between closing costs and the interest rate over the life of the loan.</text> </subparagraph></paragraph><paragraph id="H560765FAF8034F0592FA2B857CC4F650"><enum>(2)</enum><text>An explanation and sample of the uniform settlement statement required by section 4.</text> </paragraph><paragraph id="HDDA6C2B14E0F4F8FB0B42B323513BCE2"><enum>(3)</enum><text>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.</text> </paragraph><paragraph id="HE29FF15D6C964144AD5E948B55001DA2"><enum>(4)</enum><text>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.</text> </paragraph><paragraph id="H3AF2EE192C9D49838644696B3CFD4E9D"><enum>(5)</enum><text>An explanation of the right of rescission as to certain transactions provided by sections 125 and 129 of the Truth in Lending Act.</text> </paragraph><paragraph id="H129792DC6DA14B978E009D32D1F9979"><enum>(6)</enum><text>A brief explanation of the nature of a variable rate mortgage and a reference to the booklet entitled <quote>Consumer Handbook on Adjustable Rate Mortgages</quote>, published by the Board of Governors of the Federal Reserve System pursuant to <external-xref legal-doc="regulation" parsable-cite="cfr/12/226.19">section 226.19(b)(1)</external-xref> 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.</text> </paragraph><paragraph id="H23E3D797E8364EA800DC81E04BB07D50"><enum>(7)</enum><text>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.</text> </paragraph><paragraph id="HAA939A3201D242C0A2EF07BBB92DD54D"><enum>(8)</enum><text>Information about homeownership counseling services made available pursuant to section 106(a)(4) of the <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(a)(4)</external-xref>), 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.</text> </paragraph><paragraph id="H032D0FB0961E4041A9A22D5FE1D8F4FE"><enum>(9)</enum><text>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.</text> </paragraph><paragraph id="H8BBFC01831864BFBB0A2F3AE9835947E"><enum>(10)</enum><text>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.</text> </paragraph><paragraph id="HB136CCA6E3F74D97B53D68DE0036609D"><enum>(11)</enum><text>An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction.</text> </paragraph><paragraph id="H1EEFCEB462F94FA7A4DE7B035B27A217"><enum>(12)</enum><text>An explanation of the nature and purpose of real estate appraisals, including the difference between an appraisal and a home inspection.</text> </paragraph><paragraph id="H89B9CB3BD61B4FB894F0B9D5BB28312B"><enum>(13)</enum><text>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.</text> </paragraph><continuation-text continuation-text-level="subsection">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.</continuation-text></subsection><after-quoted-block>;</after-quoted-block></quoted-block> </paragraph><paragraph id="H15D04C8DAC68473EA336A414FE8C2EBB"><enum>(3)</enum><text>in subsection (c), by inserting at the end the following new sentence: <quote>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 <act-name parsable-cite="HUDA">Housing and Urban Development Act</act-name> of 1968 (<external-xref legal-doc="usc" parsable-cite="usc/12/1701x">12 U.S.C. 1701x(e)</external-xref>) and located in the area of the lender.</quote>; and</text> </paragraph><paragraph id="H10D20A0047AF4603A5D83EF514D2542F"><enum>(4)</enum><text>in subsection (d), by inserting after the period at the end of the first sentence the following: <quote>The lender shall provide the HUD-issued booklet in the version that is most appropriate for the person receiving it.</quote>.</text> </paragraph></section><enum>V</enum><header>Mortgage disclosures under Real Estate Settlement Procedures Act of 1974</header> <section id="HE3C11EB834194EB19C0078B45C48509"><enum>501.</enum><header>Universal mortgage disclosure in good faith estimate of settlement services costs</header> <subsection id="HF2F524ADF5B24E0C8D95C98713F1F52C"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 5 of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2604">12 U.S.C. 2604</external-xref>) is amended—</text> <paragraph id="H7EB7025CADFE420EB6C3809EA200821C"><enum>(1)</enum><text>in subsection (c), by adding after the period at the end the following: <quote>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.</quote>; and</text> </paragraph><paragraph id="H4C81A673B89A41878EEAD3E07B55A029"><enum>(2)</enum><text>by adding at the end the following new subsection:</text> <quoted-block display-inline="no-display-inline" id="H732DA09EDDC348B18D66C2BBC4AE0061" style="OLC"> <subsection id="HD47591635DBC4AEF9B2833CD7E05CE91"><enum>(f)</enum><header>Universal mortgage disclosure requirement for good faith estimates</header> <paragraph id="HE189ABC3BFAA4ABFAD34D7DB9BFD026"><enum>(1)</enum><header>Disclosure</header><text display-inline="yes-display-inline">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:</text> <subparagraph id="HA586BC73816D44C6A1CE8244406EA454"><enum>(A)</enum><text display-inline="yes-display-inline"><quote>Your Loan Amount will be</quote> and <quote>$____</quote>, each statement appearing in a separate column of the disclosure.</text> </subparagraph><subparagraph id="H033D5E20583F474D96E097A615C8AB"><enum>(B)</enum><text><quote>Your Loan is</quote>, <quote>A Fixed Rate Loan</quote>, and <quote>An Adjustable Rate Loan </quote>, each statement appearing in a separate column and each of the last two such statements preceded by a checkbox.</text> </subparagraph><subparagraph id="HA5E741E1EF2645C781F2D9E0FB969BF2"><enum>(C)</enum><text display-inline="yes-display-inline"><quote>Your Loan Term is</quote>, <quote>___ years</quote>, and <quote>___ years</quote>, 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;</text> </subparagraph><subparagraph id="H7FA9E0041B72418395F7EB9EF9BBC56D"><enum>(D)</enum><text display-inline="yes-display-inline"><quote>Your Estimated Interest Rate (APR) is</quote>, <quote>___%</quote>, and <quote>___% initially, then it will adjust. In ___ months, Your rate may adjust to a maximum of ___%</quote>, 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.</text> </subparagraph><subparagraph id="H8A702B04E29E4201AFE7AE044B031D69"><enum>(E)</enum><text display-inline="yes-display-inline"><quote>Your Total Estimated Monthly Payment (Including loan Principal and Interest, and property Taxes (based on current rates) and Insurance (PITI)) is</quote>, <quote>$____ which represents ___% of Your estimated monthly income</quote>, and <quote>$____ 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</quote>, 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.</text> </subparagraph><subparagraph id="HD89755F1681D4B3AA2CEC13CBA37908B"><enum>(F)</enum><text><quote>Your Rate Lock Period is</quote> and <quote>___ days. After You lock into Your interest rate, You must go to settlement within this number of days to be guaranteed this interest rate.</quote>, each statement appearing in a separate column.</text> </subparagraph><subparagraph id="HF6E9DC84CFBA4A338B27C813717C6F31"><enum>(G)</enum><text><quote>Does Your loan have a prepayment penalty?</quote>, <quote>YES, Your maximum prepayment penalty is $____</quote>, and <quote>NO</quote>, 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.</text> </subparagraph><subparagraph id="H399A2D1C20C149F68316B475F100BC9E"><enum>(H)</enum><text display-inline="yes-display-inline"><quote>Does Your loan have a balloon payment?</quote>, <quote>YES, Your balloon payment of $____ is due in ___ months</quote>, and <quote>NO</quote>, 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.</text> </subparagraph><subparagraph id="H44CD997C35B44DE086F2FEAAEC11AB15"><enum>(I)</enum><text><quote>Your Total Estimated Settlement Charges Will be $____ (a)</quote> and <quote>Your Total Estimated Down Payment will be $____ (b)</quote>, each statement appearing in a separate column.</text> </subparagraph><subparagraph id="HDB738575CD6B4F46A1B85F21B2B714C8"><enum>(J)</enum><text><quote>Your Total Estimated Cash Needed at Closing Will Be</quote> and <quote>$____ (a+b)</quote>, each statement appearing in a separate column.</text> </subparagraph><subparagraph id="HA886A5D77AE148D9B1B4FDBB2F5976F0"><enum>(K)</enum><text><quote>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.</quote>, such statement appearing directly below the entirety of the remainder of the disclosure.</text> </subparagraph></paragraph><paragraph id="H06CF22258D5E4DDD96F4CFA2897EC78"><enum>(2)</enum><header>Standard form</header> <subparagraph id="HBAE77CED9B6245DCB63F9FABD04FDB19"><enum>(A)</enum><header>Development and use</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="H0A6EE4289F5549C58E3B3CFECB32BA0"><enum>(B)</enum><header>Appearance</header><text display-inline="yes-display-inline">The standard form developed pursuant to this paragraph shall—</text> <clause id="H291F8885259E43279400B44BC0064A9"><enum>(i)</enum><text>set forth each statement required under a separate subparagraph under paragraph (1) on a separate row of the disclosure;</text> </clause><clause id="HBD83565EF4F64B0DADB8026531B25692"><enum>(ii)</enum><text>be set forth in 8-point type;</text> </clause><clause id="H5F62D6F1708D46A198B91945D2401DE8"><enum>(iii)</enum><text>be not more than 6 inches in width or 3.5 inches in height;</text> </clause><clause id="H8F3160376C6243B29BDF189EBCEEFE51"><enum>(iv)</enum><text>include such boldface type and shading as the Secretary considers appropriate;</text> </clause><clause id="HA05E21BC42C44772BCBE4588C0A6D49F"><enum>(v)</enum><text>include such parenthetical statements directing the borrower to the terms of the loan (such as <quote>see terms</quote>) as the Secretary considers appropriate, in such places as the Secretary considers appropriate; and</text> </clause><clause id="H266B41BA337B4697B6BFD3DB43081C77"><enum>(vi)</enum><text>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.</text> </clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection><subsection id="H2E0E95024C634CF58FAB52E77822D2D7"><enum>(b)</enum><header>Regulations</header><text>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.</text> </subsection></section><enum>VI</enum><header>Mortgage Servicing</header> <section display-inline="no-display-inline" id="HD2DC4C8668184753A4869C814982FF2F" section-type="subsequent-section"><enum>601.</enum><header>Escrow and impound accounts relating to certain consumer credit transactions</header> <subsection id="HBDC6B99C9D1749DBB3D2AB4461F3FDF6"><enum>(a)</enum><header>In general</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="HD449A0AE17F34672A9C707C3B6A85284" style="OLC"> <section id="H0239207828D348FEB9D9009CC38C1DF7"><enum>129C.</enum><header>Escrow or impound accounts relating to certain consumer credit transactions</header> <subsection id="H50A419CD93AF41AD95FA38584601894B"><enum>(a)</enum><header>In general</header><text>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.</text> </subsection><subsection id="H7DF771514E53454FB58F858FAE81DB57"><enum>(b)</enum><header>When required</header><text>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—</text> <paragraph id="H417E4296C7C3453D94CAD2B1211F857F"><enum>(1)</enum><text>any such impound, trust, or other type of escrow or impound account for such purposes is required by Federal or State law;</text> </paragraph><paragraph id="H5D3C26AC7A8A455494A299D5AAFD1C4D"><enum>(2)</enum><text>a loan is made, guaranteed, or insured by a State or Federal governmental lending or insuring agency;</text> </paragraph><paragraph id="HC76EC419C8D044528CCEF04216A99B14"><enum>(3)</enum><text>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;</text> </paragraph><paragraph id="H57557E0484674A75BA66C5131E026C35"><enum>(4)</enum><text>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;</text> </paragraph><paragraph id="HA982852D69C04591BAAB93FBD2741083"><enum>(5)</enum><text>a consumer obtains a mortgage referred to in section 103(aa);</text> </paragraph><paragraph id="HA639646ADBD1435DA871A100AF801361"><enum>(6)</enum><text>the original principal amount of such loan at the time of consummation of the transaction is—</text> <subparagraph id="HDA903CDE2EED4AA1B8CDC11382E32276"><enum>(A)</enum><text>90 percent or more of the sale price, if the property involved is purchased with the proceeds of the loan; or</text> </subparagraph><subparagraph id="HA1913BFF540A43B69EDCB1BF572DE6F0"><enum>(B)</enum><text>90 percent or more of the appraised value of the property securing the loan;</text> </subparagraph></paragraph><paragraph id="H5AE0B94C4ED94B0A886153ADFBD7A3D8"><enum>(7)</enum><text>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;</text> </paragraph><paragraph id="HAFAFEC8B5A1F49F79D31B86E121B9EEF"><enum>(8)</enum><text display-inline="yes-display-inline">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</text> </paragraph><paragraph id="H6426D1100F3F4AF300A97E8957B6173C"><enum>(9)</enum><text>so required by the Board pursuant to regulation.</text> </paragraph></subsection><subsection id="H2370472CFDE04F22BD844786A60B0BE"><enum>(c)</enum><header>Duration of mandatory escrow or impound account</header><text>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.</text> </subsection><subsection id="H91B1E9F5E9F8448BABD2AF665737F665"><enum>(d)</enum><header>Clarification on escrow accounts for loans not meeting statutory test</header><text>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—</text> <paragraph id="H96357228172940038891382327A18032"><enum>(1)</enum><text>on terms mutually agreeable to the parties to the loan;</text> </paragraph><paragraph id="H12F348E3D2EF453C001CFB6847AE0064"><enum>(2)</enum><text>at the discretion of the lender or servicer, as provided by the contract between the lender or servicer and the borrower; or</text> </paragraph><paragraph id="H2F1BC5FAF41B44D184A8F640BF438036"><enum>(3)</enum><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="H4D5F5FC27CAC4DB38DED821825DE323D"><enum>(e)</enum><header>Administration of mandatory escrow or impound accounts</header><text></text> <paragraph id="H11B8003FDABA4D52B2D69CEEE1A158B7"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph id="HC9249568A1204D5A9743F427DEB8D809"><enum>(2)</enum><header>Administration</header><text>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—</text> <subparagraph id="H4F94306ED34048C700B727C3771937CA"><enum>(A)</enum><text>the Real Estate Settlement Procedures Act of 1974 and regulations prescribed under such Act;</text> </subparagraph><subparagraph id="H15DD8830C42B47C595F759CF481B6E3F"><enum>(B)</enum><text>the Flood Disaster Protection Act of 1973 and regulations prescribed under such Act; and</text> </subparagraph><subparagraph id="H46F7C3AF7A3A496C9F152B00F97D7000"><enum>(C)</enum><text>the law of the State, if applicable, where the real property securing the consumer credit transaction is located.</text> </subparagraph></paragraph><paragraph id="H15057A9C81E6490782A92913E7A47731"><enum>(3)</enum><header>Applicability of payment of interest</header><text>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.</text> </paragraph><paragraph id="H675B757E093E40C0A3B7B47004D68B0"><enum>(4)</enum><header>Penalty coordination with RESPA</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="HDFDAC47E9E994D36BB26BC2EC606F795"><enum>(f)</enum><header>Disclosures relating to mandatory escrow or impound account</header><text>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:</text> <paragraph id="H1C9B26629D9C43E19763F7ADA14E74CE"><enum>(1)</enum><text>The fact that an escrow or impound account will be established at consummation of the transaction.</text> </paragraph><paragraph id="HC541EC935F81459588E53F09F2B3A99C"><enum>(2)</enum><text>The amount required at closing to initially fund the escrow or impound account.</text> </paragraph><paragraph id="HE29949078C8B47489800775F2190E3E9"><enum>(3)</enum><text>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.</text> </paragraph><paragraph id="H63C416AC90904163B286DF83E8CB654"><enum>(4)</enum><text>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.</text> </paragraph><paragraph id="H0E6AA41B67344F18A7A0F9C8A95551F4"><enum>(5)</enum><text>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.</text> </paragraph></subsection><subsection id="HEB8D1B9D89ED47B9B2DD00A8DCE1BAFC"><enum>(g)</enum><header>Definitions</header><text>For purposes of this section, the following definitions shall apply:</text> <paragraph id="H524358E05E6F467D00DDD59CFA049F46"><enum>(1)</enum><header>Flood insurance</header><text>The term <quote>flood insurance</quote> means flood insurance coverage provided under the national flood insurance program pursuant to the National Flood Insurance Act of 1968.</text> </paragraph><paragraph id="H303A3165B2594524B4FA998FA4161F86"><enum>(2)</enum><header>Hazard insurance</header><text>The term <quote>hazard insurance</quote> shall have the same meaning as provided for <quote>hazard insurance</quote>, <quote>casualty insurance</quote>, <quote>homeowner’s insurance</quote>, or other similar term under the law of the State where the real property securing the consumer credit transaction is located.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H0609C5740D5444038049FFC546B13432"><enum>(b)</enum><header>Implementation</header> <paragraph id="H47149CCA29934CA8A818FF135F7952CE"><enum>(1)</enum><header>Regulations</header><text display-inline="yes-display-inline">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 <quote>Federal banking agencies</quote>) 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.</text> </paragraph><paragraph id="HA622C922445147AFBAEE3B3297E5545E"><enum>(2)</enum><header>Effective date</header><text>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.</text> </paragraph></subsection><subsection id="H755BF6C0996E43779CB1E238F420206"><enum>(c)</enum><header>Clerical Amendment</header><text display-inline="yes-display-inline">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:</text> <quoted-block display-inline="no-display-inline" id="HE5F83F7E5BBC457997CA63AFE2530553" style="OLC"> <toc regeneration="no-regeneration"> <toc-entry level="section">129C. Escrow or impound accounts relating to certain consumer credit transactions.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section id="H473656CBDE794068A5631100DC1436C3"><enum>602.</enum><header>Disclosure notice required for consumers who waive escrow services</header> <subsection id="HA9D9A5F0E7F2435FAAB9FECE0464D284"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 129C of the Truth in Lending Act (as added by section 601) is amended by adding at the end the following new subsection:</text> <quoted-block id="H8E5D2468B2C14D4FA4598D9046572DEE" style="OLC"> <subsection id="H4B18822B47324B6EA8A797B1A9D99100"><enum>(h)</enum><header>Disclosure notice required for consumers who waive escrow services</header><text></text> <paragraph id="H4972353F6D314691AFDD98F9F6F64556"><enum>(1)</enum><header>In general</header><text>If—</text> <subparagraph id="H481BB5824B8F46AF95305FE0005F88CA"><enum>(A)</enum><text>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</text> </subparagraph><subparagraph id="H1EDE4CDA91E943629B8825C552AC119E"><enum>(B)</enum><text>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,</text> </subparagraph><continuation-text continuation-text-level="paragraph">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.</continuation-text></paragraph><paragraph id="H4386956AACF74CB48DB0C456D0D431B9"><enum>(2)</enum><header>Disclosure requirements</header><text>Any disclosure provided to a consumer under paragraph (1) shall include the following:</text> <subparagraph id="H7104F7F8A0DF4B919F8D10111DD4ABE"><enum>(A)</enum><text>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.</text> </subparagraph><subparagraph id="H3801D77E4366426EB4DB925DCD4C439B"><enum>(B)</enum><text>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.</text> </subparagraph><subparagraph id="H615A56E2C24B42B0918BE6F37206B2E5"><enum>(C)</enum><text>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.</text> </subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="HD708A74530E94A3CADDBAF8278A91039"><enum>(b)</enum><header>Implementation</header> <paragraph id="HE9E498A0958743649CB519BF704231D7"><enum>(1)</enum><header>Regulations</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H606FB213EA7E49D0BF4351F2DF7BD74B"><enum>(2)</enum><header>Effective date</header><text>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.</text> </paragraph></subsection></section><section id="HCA200ABE187644888BAD9780026FA5D"><enum>603.</enum><header>Real Estate Settlement Procedures Act of 1974 amendments</header> <subsection id="H9F6A4C8D84AA4907BD7CDE989D5966D0"><enum>(a)</enum><header>Servicer prohibitions</header><text>Section 6 of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2605">12 U.S.C. 2605</external-xref>) is amended by adding at the end the following new subsections:</text> <quoted-block id="H8ADCB295AB2A43E6A8C9107440CD77BC" style="OLC"> <subsection id="HF9BE68FB072F492DA2BBE1598E85EC0"><enum>(k)</enum><header>Servicer prohibitions</header> <paragraph id="HA5DDA2EAFB9A4D4AA64F395841A8A08E"><enum>(1)</enum><header>In general</header><text>A servicer of a federally related mortgage shall not—</text> <subparagraph id="H8E87CE80971A4D5AAB2DAC92DAAA5940"><enum>(A)</enum><text>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;</text> </subparagraph><subparagraph id="HC0269F7BD7DA4A8E914CDD5755ABCB5D"><enum>(B)</enum><text>charge fees for responding to valid qualified written requests (as defined in regulations which the Secretary shall prescribe) under this section;</text> </subparagraph><subparagraph id="H780E141CE6D14E7FA60166B177B09967"><enum>(C)</enum><text>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;</text> </subparagraph><subparagraph id="H0BC0D35E6A624C94AD04788315D6D37E"><enum>(D)</enum><text>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</text> </subparagraph><subparagraph id="H55FC39C8E0514B7EA6AB08BAC6CC9763"><enum>(E)</enum><text>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.</text> </subparagraph></paragraph><paragraph id="HA1DFF645FC334AD6BFC30040E74F6861"><enum>(2)</enum><header>Force-placed insurance defined</header><text>For purposes of this subsection and subsections (l) and (m), the term <quote>force-placed insurance</quote> 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.</text> </paragraph></subsection><subsection id="H8C84E11E94B047B7969CC49067A8A230"><enum>(l)</enum><header>Requirements for force-placed insurance</header><text>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.</text> <paragraph id="HBAFA0D8C427C4F85A41C391915E1741F"><enum>(1)</enum><header>Written notices to borrower</header><text>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—</text> <subparagraph id="HC491422C62874DA69338F961BF40923C"><enum>(A)</enum><text display-inline="yes-display-inline">the servicer has sent, by first-class mail, a written notice to the borrower containing—</text> <clause id="HB1786FAA883840D096FDDECB591B6146"><enum>(i)</enum><text>a reminder of the borrower’s obligation to maintain hazard insurance on the property securing the federally related mortgage;</text> </clause><clause id="HE49D35773EF544E69DF11D419C36798E"><enum>(ii)</enum><text>a statement that the servicer does not have evidence of insurance coverage of such property;</text> </clause><clause id="HBBC87531D1F04A4A8F55F25C35AEBBB5"><enum>(iii)</enum><text>a clear and conspicuous statement of the procedures by which the borrower may demonstrate that the borrower already has insurance coverage; and</text> </clause><clause commented="no" id="HC2DC4ED43DF74670818EBB00AD271BAE"><enum>(iv)</enum><text display-inline="yes-display-inline">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;</text> </clause></subparagraph><subparagraph id="HA7D64781209E4E42B5C0017D4DE58D6"><enum>(B)</enum><text display-inline="yes-display-inline">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</text> </subparagraph><subparagraph id="H89E56DA5F7DF4C77AC74E6B4EE2291D7"><enum>(C)</enum><text>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.</text> </subparagraph></paragraph><paragraph id="HA791A4112D70411B94E66505A2CBC71B"><enum>(2)</enum><header>Sufficiency of demonstration</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H398CCC3833A74E95A4DCD451C6CEFFC"><enum>(3)</enum><header>Termination of force-placed insurance</header><text display-inline="yes-display-inline">Within 15 days of the receipt by a servicer of confirmation of a borrower’s existing insurance coverage, the servicer shall—</text> <subparagraph commented="no" id="HF2D47ADE0BAD4989B084000147A6BD78"><enum>(A)</enum><text>terminate the force-placed insurance; and</text> </subparagraph><subparagraph id="HBBA76162CFE24078BEB50405117300EB"><enum>(B)</enum><text>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.</text> </subparagraph></paragraph><paragraph id="H38773594566A4F18AD217D16D4E3B0DE"><enum>(4)</enum><header>Clarification with respect to Flood Disaster Protection Act</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><subsection id="H7A85082DB60D4E778DC53C6B33AE3E25"><enum>(m)</enum><header>Limitations on force-placed insurance charges</header><text>All charges for force-placed insurance premiums shall be bona fide and reasonable in amount.</text> </subsection><subsection id="HB7214E0905654E6D8477B6FA0031ADCF"><enum>(n)</enum><header>Prompt crediting of payments required</header> <paragraph id="HF398D8A3944142669E318DEA2367FC23"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HCABF866780B541229FDC67C802D1344F"><enum>(2)</enum><header>Scheduled method</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="HCC5BBFB4B9CC4DEAB2FA3BB1F69CEDB"><enum>(3)</enum><header>Notice of noncredit</header><text display-inline="yes-display-inline">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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H282B1EB886304625B0AF71AFFBD0D4C"><enum>(b)</enum><header>Increase in penalty amounts</header><text>Section 6(f) of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2605">12 U.S.C. 2605(f)</external-xref>) is amended—</text> <paragraph id="H82CDC35212524BA9894E5B64AA884D7"><enum>(1)</enum><text>in paragraphs (1)(B) and (2)(B), by striking <quote>$1,000</quote> each place such term appears and inserting <quote>$2,000</quote>; and</text> </paragraph><paragraph id="HC3544F2E890545F1B9EFA7DFFE3D800"><enum>(2)</enum><text>in paragraph (2)(B)(i), by striking <quote>$500,000</quote> and inserting <quote>$1,000,000</quote>.</text> </paragraph></subsection><subsection id="H4B15E8938325452BA100F797AA31B16D"><enum>(c)</enum><header>Decrease in response times</header><text>Section 6(e) of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2605">12 U.S.C. 2605(e)</external-xref>) is amended—</text> <paragraph id="HCC8C247C46E34AEEBFD87600343794A6"><enum>(1)</enum><text>in paragraph (1)(A), by striking <quote>20 days</quote> and inserting <quote>10 days</quote>;</text> </paragraph><paragraph id="HDF01A710205A4FA7B144228C79469C5F"><enum>(2)</enum><text>in paragraph (2), by striking <quote>60 days</quote> and inserting <quote>30 days</quote>; and</text> </paragraph><paragraph id="H2131918E9AA04568A3017CDDA5909152"><enum>(3)</enum><text>by adding at the end the following new paragraph:</text> <quoted-block id="HC83978F0C13E4335AE1C730191CF3D7E" style="OLC"> <paragraph id="HEDECDCA7C7634C758506B492FC3DA376"><enum>(4)</enum><header>Limited extension of response time</header><text>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.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </paragraph></subsection><subsection id="HDD8CF742E58247CCABB1B2A31FCA692"><enum>(d)</enum><header>Requests for pay-off amounts</header><text>Section 6(e) of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2605">12 U.S.C. 2605(e)</external-xref>) is amended by inserting after paragraph (4) (as added by subsection (c) of this section) the following new paragraph:</text> <quoted-block id="HCB81FBD94A6343AC9C479413C14902ED" style="OLC"> <paragraph id="H47CE9B61F57347A392000742AF0488E7"><enum>(5)</enum><header>Requests for pay-off amounts</header><text>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.</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H30B4911D220C4FE3A8347522B436449F"><enum>(e)</enum><header>Prompt refund of escrow accounts upon payoff</header><text>Section 6(g) of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2605">12 U.S.C. 2605(g)</external-xref>) is amended by adding at the end the following new sentence: <quote>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.</quote>.</text> </subsection></section><section id="H257BD243E1FA434AAADABEDD1B3DECC2"><enum>604.</enum><header>Mortgage servicing studies required</header> <subsection id="H3ABA5032C74E4AEF9750E83338DC073B"><enum>(a)</enum><header>Mortgage servicing practices</header><text></text> <paragraph id="HE7050ED9AA794FD483B4A1D3A6B98DCF"><enum>(1)</enum><header>Study</header><text>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.</text> </paragraph><paragraph id="HEF358F095746462DA52645C0CB5B7798"><enum>(2)</enum><header>Issues to be included</header><text display-inline="yes-display-inline">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:</text> <subparagraph id="H20D8B30F3EF3425A88D1C833FDBBC05D"><enum>(A)</enum><text>A survey of the industry in order to examine the issue of the timely or effective posting of payments by servicers.</text> </subparagraph><subparagraph id="HD45C77D0C20D4CBF0013001412C5C41E"><enum>(B)</enum><text>The employment of daily interest when payments are made after a due date.</text> </subparagraph><subparagraph id="HEAD8957A072D4C23B9262050AF03E520"><enum>(C)</enum><text>The charging of late fees on the entire outstanding principal.</text> </subparagraph><subparagraph id="H5457E6FED61A4280BE884CD1006FA400"><enum>(D)</enum><text>The charging of interest on servicing fees.</text> </subparagraph><subparagraph id="H06B026BE0D3D40EDA44664A184C045F9"><enum>(E)</enum><text>The utilization of collection practices that failed to comply with the Fair Debt Collection Practices Act.</text> </subparagraph><subparagraph id="HB391D7B37EB24A28AF29E37D92FE78D4"><enum>(F)</enum><text>The charging of prepayment penalties when not authorized by either the note or law.</text> </subparagraph><subparagraph id="HBB0771CB7DE446DDAE8B42F94E6CE354"><enum>(G)</enum><text>The employment of unconscionable forbearance agreements.</text> </subparagraph><subparagraph id="H4CDC456C2522405B971051EAF871C172"><enum>(H)</enum><text>Foreclosure abuses.</text> </subparagraph></paragraph><paragraph id="H4547B3969C1E44E500A3289447F00F1"><enum>(3)</enum><header>Report</header><text>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.</text> </paragraph></subsection><subsection id="HD6A9C3D062FD4C56BC88F9BE89B344F7"><enum>(b)</enum><header>Mortgage servicing improvements</header><text></text> <paragraph id="HAC1418F47EE14F2E9812534DC9BD410"><enum>(1)</enum><header>Study</header><text>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.</text> </paragraph><paragraph id="H90FF87B7CA084D7DB606C052DD00A611"><enum>(2)</enum><header>Report</header><text>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.</text> </paragraph></subsection></section><section id="H63B3C64BAF2E4E1090D2159569500084"><enum>605.</enum><header>Escrows included in repayment analysis</header> <subsection id="H282E9909FC2549F09518E5712BA5B700"><enum>(a)</enum><header>In general</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="HAD541EAB0A1143F4AFD0E6D500004119" style="OLC"> <paragraph id="H48D1BDC13F794DEE870000C8BC000098"><enum>(4)</enum><header>Repayment analysis required to include escrow payments</header> <subparagraph id="HA7E5992CFFAE4E7D8DBB93BD498BFBB"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph display-inline="no-display-inline" id="H55878A9C2C2E4D15841E69A5B65C412F"><enum>(B)</enum><header>Assessment value</header><text display-inline="yes-display-inline">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.</text> </subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><enum>VII</enum><header>APPRAISAL ACTIVITIES</header> <section id="H31ACD70913AB4D04BA6E334B9276BC8"><enum>701.</enum><header>Property appraisal requirements</header><text display-inline="no-display-inline">Section 129 of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639">15 U.S.C. 1639</external-xref>) is amended by inserting after subsection (u) (as added by section 303(f)) the following new subsection:</text> <quoted-block id="H0437DC56314D4A6780B97FC378D547F7" style="OLC"> <subsection id="H6E47280F27B24F61AAC07337D39CA71"><enum>(v)</enum><header>Property appraisal requirements</header><text></text> <paragraph id="H915435F45B494B21B6B3589C3572EC60"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph id="H1AAB097D6FA948A4A7B367D00F999D0"><enum>(2)</enum><header>Appraisal requirements</header><text></text> <subparagraph id="HFF2075069FBA4DC4B72563759149D590"><enum>(A)</enum><header>Physical property visit</header><text display-inline="yes-display-inline">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.</text> </subparagraph><subparagraph id="HBCF9A41066314E0591A7437D752E0010"><enum>(B)</enum><header>Second appraisal under certain circumstances</header><text></text> <clause id="H9440086DA1374274AE49C0961D97716E"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </clause><clause id="HA625A756B7AB4931985DA311800E5CC"><enum>(ii)</enum><header>No cost to consumer</header><text>The cost of any second appraisal required under clause (i) may not be charged to the consumer.</text> </clause></subparagraph><subparagraph id="H65A038701A474A22A774F1DF552EFF37"><enum>(C)</enum><header>Qualified appraiser defined</header><text>For purposes of this subsection, the term <quote>qualified appraiser</quote> means a person who—</text> <clause id="H4F407D5AF48D4BC08D156DA57829792"><enum>(i)</enum><text>is certified or licensed by the State in which the property to be appraised is located; and</text> </clause><clause id="HF286B60E86234E8FAF003884D72E03DA"><enum>(ii)</enum><text>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.</text> </clause></subparagraph></paragraph><paragraph id="H294BE06E8CCD485B929B96CA8BB53A7"><enum>(3)</enum><header>Free copy of appraisal</header><text>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.</text> </paragraph><paragraph id="HD67F0FD6492D4D5CAA55283EE14B9E03"><enum>(4)</enum><header>Consumer notification</header><text>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.</text> </paragraph><paragraph id="H40F6E2CB6FB841D9B8C714FA54554340"><enum>(5)</enum><header>Violations</header><text>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.</text> </paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block> </section><section id="H5B26475661204083B94200D409C4BC3E"><enum>702.</enum><header>Unfair and deceptive practices and acts relating to certain consumer credit transactions</header> <subsection id="HBBD41E7942AC4639008986A92C2D4F39"><enum>(a)</enum><header>In general</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="HD18FA6944B404E8F003F94D457D1CDC2" style="OLC"> <section id="H2201B9AB59F444649DF0365822C1F6C0"><enum>129D.</enum><header>Unfair and deceptive practices and acts relating to certain consumer credit transactions</header> <subsection id="HB443C73C51274A22BD9904AD00B86FFA"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H67AD59C284DF47F080BB4EEC34E629BE"><enum>(b)</enum><header>Appraisal independence</header><text>For purposes of subsection (a), unfair and deceptive practices shall include—</text> <paragraph id="HCA842745D80744438F77B113CF6BA5D5"><enum>(1)</enum><text>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;</text> </paragraph><paragraph id="H292EE81CFFB34B4AAF4853CBA64990D1"><enum>(2)</enum><text display-inline="yes-display-inline">mischaracterizing, or suborning any mischaracterization of, the appraised value of the property securing the extension of the credit;</text> </paragraph><paragraph id="H139AC22A61EB4995868E2E00B71B998E"><enum>(3)</enum><text display-inline="yes-display-inline">seeking to influence an appraiser or otherwise to encourage a targeted value in order to facilitate the making or pricing of the transaction; and</text> </paragraph><paragraph id="H3CEC2650CEC04C13B018C100D72CBC7"><enum>(4)</enum><text>failing to timely compensate an appraiser for a completed appraisal regardless of whether the transaction closes.</text> </paragraph></subsection><subsection id="H54C2C7D407E3494C90646E6C44FA4B80"><enum>(c)</enum><header>Exceptions</header><text>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:</text> <paragraph id="H95F263EAA15347BFBF6749A386723D29"><enum>(1)</enum><text>Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.</text> </paragraph><paragraph id="H7937DCACAA664F90AD952D00C7C4A446"><enum>(2)</enum><text>Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.</text> </paragraph><paragraph id="H82DEC6F91A894CA2812CC9D0E1EACDC5"><enum>(3)</enum><text>Correct errors in the appraisal report.</text> </paragraph></subsection><subsection id="HBBC123907F374906B0C3E600D25FC7"><enum>(d)</enum><header>Rulemaking proceedings</header><text display-inline="yes-display-inline">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—</text> <paragraph id="H352961EE460F4E9F98A480C573ED4FF"><enum>(1)</enum><text display-inline="yes-display-inline">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</text> </paragraph><paragraph id="H418892D1299E4694A376E7F9B7FDF5F6"><enum>(2)</enum><text display-inline="yes-display-inline">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).</text> </paragraph></subsection><subsection id="H447CE8585BB54378ABFFF06BFC62D4AD"><enum>(e)</enum><header>Penalties</header><text></text> <paragraph id="H55DAA4B5B2B24149901366BD6400199F"><enum>(1)</enum><header>First violation</header><text>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.</text> </paragraph><paragraph id="HC0079149B1E1404993BC4630680D4FD"><enum>(2)</enum><header>Subsequent violations</header><text>In the case of any person on whom a civil penalty has been imposed under paragraph (1), paragraph (1) shall be applied by substituting <quote>$20,000</quote> for <quote>$10,000</quote> with respect to all subsequent violations.</text> </paragraph><paragraph id="H7A2AD8353BDB4562BDF825B9E08B757D"><enum>(3)</enum><header>Assessment</header><text>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.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H101408793748477499B6050003D6005B"><enum>(b)</enum><header>Clerical Amendment</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H5BDDC63393B840009D54F6D6D044B470" style="OLC"> <toc regeneration="no-regeneration"> <toc-entry level="section">129D. Unfair and deceptive practices and acts relating to certain consumer credit transactions.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section><section display-inline="no-display-inline" id="HB778E0C1A5154CF40013C13D76F94042" section-type="subsequent-section"><enum>703.</enum><header>Appraisal subcommittee of FIEC, appraiser independence, and approved appraiser education</header> <subsection id="HB0A6C3DBFB89414E80034FDD2582788D"><enum>(a)</enum><header>Consumer protection mission</header> <paragraph id="H1CA51F4BE14D46189DC7F98B83CA922C"><enum>(1)</enum><header>Purpose</header><text display-inline="yes-display-inline">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 <quote>Appraisal Subcommittee</quote>) shall be to establish a consumer protection mandate.</text> </paragraph><paragraph id="H991890A66BAC4E97A5D900F0994EFE7C"><enum>(2)</enum><header>Functions of appraisal subcommittee</header><text>It shall be a function of the Appraisal Subcommittee to protect the consumer from improper appraisal practices and the predations of unlicensed appraisers.</text> </paragraph><paragraph id="HE0B72C45DD60494891D916236D631FE"><enum>(3)</enum><header>Threshold levels</header><text display-inline="yes-display-inline">In establishing a threshold level under section 1112(b) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (<external-xref legal-doc="usc" parsable-cite="usc/12/3341">12 U.S.C. 3341(b)</external-xref>), each agency shall determine in writing that the threshold level provides reasonable protection for consumers who purchase 1-4 unit single-family residences.</text> </paragraph></subsection><subsection id="HC4AC4C1606E74F4D89FAB9FC29E0B3EA"><enum>(b)</enum><header>Annual report of appraisal subcommittee</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="HE3A1E5DE117E424E9B2CDEA097899239"><enum>(c)</enum><header>Open meetings</header><text display-inline="yes-display-inline">All meetings of the Appraisal Subcommittee shall be held in public session after notice in the Federal Register.</text> </subsection><subsection id="H74D9D0362EF140DEA8F5DE07CA7CC71D"><enum>(d)</enum><header>Regulations</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H676E3D7ACE354938B5B85C56FB8B00DF"><enum>(e)</enum><header>Field appraisals and appraisal reviews</header><text>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.</text> </subsection><subsection id="H04136E7C585447778590AD798C79D3A9"><enum>(f)</enum><header>State agency reporting requirement</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="HBD1D78C402E24895B52641B2A7EDD9CA"><enum>(g)</enum><header>Registry fees modified</header> <paragraph display-inline="no-display-inline" id="HBF891B25C5E04C5AB151D276B854B5D"><enum>(1)</enum><header>In general</header><text>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.</text> </paragraph><paragraph id="H250E39C86AE04CF69D746ECEF1C74BAE"><enum>(2)</enum><header>Incremental revenues</header><text>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.</text> </paragraph></subsection><subsection id="H39935AD0E5DC42DA9377AF123E5925A5"><enum>(h)</enum><header>Grants and reports</header> <paragraph id="H94574A99A9DD4A43AF4C53149253A3D1"><enum>(1)</enum><header>In general</header><text>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—</text> <subparagraph id="H59BD1AAAD91F44FA943D2CB600759862"><enum>(A)</enum><text>to make grants to State appraiser regulatory agencies to help defray those costs relating to enforcement activities; and</text> </subparagraph><subparagraph id="H10AF349027064661946DED296CBA61E"><enum>(B)</enum><text>to report to all State appraiser certifying and licensing agencies when a license or certification is surrendered, revoked, or suspended.</text> </subparagraph></paragraph><paragraph id="H2938F2C899DC42AF86ABBD15C4B1CBC0"><enum>(2)</enum><header>Limitation on obligations</header><text>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.</text> </paragraph></subsection><subsection id="H2F2E2928945940F5BCF71300302F56CC"><enum>(i)</enum><header>Criteria</header> <paragraph id="H2F99F5799D204112A9437CB03BCDAA25"><enum>(1)</enum><header>Definition</header><text display-inline="yes-display-inline">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 <quote>State licensed appraiser</quote> 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.</text> </paragraph><paragraph id="H0D086FCF8CC04B25B3BC696B42405C3B"><enum>(2)</enum><header>Minimum qualification requirements</header><text>Any requirements established for individuals in the position of <quote>Trainee Appraiser</quote> and <quote>Supervisory Appraiser</quote> 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.</text> </paragraph></subsection><subsection id="H8895FA0C60824990B7B8DD22E1846F4B"><enum>(j)</enum><header>Monitoring of state appraiser certifying and licensing agencies</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="H88FFF6E5BEBB4075B166D96007F400E6"><enum>(k)</enum><header>Reciprocity</header><text>A State appraiser certifying or licensing agency shall issue a reciprocal certification or license for an individual from another State when—</text> <paragraph id="H5EDA0B4D6754486A8284C017024552A3"><enum>(1)</enum><text>the appraiser licensing and certification program of such other State is in compliance with the provisions of this title; and</text> </paragraph><paragraph id="H0E757A7C74584E31947DE680FA4D590"><enum>(2)</enum><text>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.</text> </paragraph></subsection><subsection id="H546714F7196040099DA2855581A67982"><enum>(l)</enum><header>Consideration of professional appraisal designations</header><text display-inline="yes-display-inline">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.</text> </subsection><subsection id="HD1122C1C17634C24A100F08E92B80025"><enum>(m)</enum><header>Appraiser independence</header> <paragraph id="H58336AB6AB404D73BF0914CAA9A43465"><enum>(1)</enum><header>Prohibitions on interested parties in a real estate transaction</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H9C45624954B94398B0E5634300D0435F"><enum>(2)</enum><header>Exceptions</header><text>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:</text> <subparagraph id="HF3746D60DB004F668250CEA65329F1AF"><enum>(A)</enum><text>Consider additional, appropriate property information, including the consideration of additional comparable properties to make or support an appraisal.</text> </subparagraph><subparagraph id="HB837293A46BF49419CF6698BBFD08126"><enum>(B)</enum><text>Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.</text> </subparagraph><subparagraph id="H388E8E6E5B444E65BB5E14F5159D34BF"><enum>(C)</enum><text>Correct errors in the appraisal report.</text> </subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H0D306808234941F7B4DAA1D72D497BCC"><enum>(3)</enum><header>Prohibitions on conflicts of interest</header><text>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.</text> </paragraph><paragraph id="HF2F72C1F9C2E470EA6F038358E12AC49"><enum>(4)</enum><header>Mandatory reporting</header><text display-inline="yes-display-inline">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.</text> </paragraph><paragraph id="H3D215CAA9635490E86A413E98E641144"><enum>(5)</enum><header>Regulations</header><text>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.</text> </paragraph><paragraph id="H4EEE1FAE8763488BAC01D5C297E8BC89"><enum>(6)</enum><header>Penalties</header><text>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.</text> </paragraph><paragraph id="HE7F8DEE5CEC24289909025FC88A1E306"><enum>(7)</enum><header>Proceeding</header><text>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 <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/5">chapter 5</external-xref> of title 5, United States Code.</text> </paragraph></subsection><subsection id="H352CAD0394964FFBB0DFB7CA1EFCEC5"><enum>(n)</enum><header>Approved education</header><text>The Appraisal Subcommittee shall encourage the States to accept courses approved by the Appraiser Qualification Board’s Course Approval Program.</text> </subsection></section><section id="HD3D05D7C2A6647BF8F572D07C2DBBE08"><enum>704.</enum><header>Study required on improvements in appraisal process and compliance programs</header> <subsection id="HF13014F34432440E8000E66026902E6F"><enum>(a)</enum><header>Study</header><text>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.</text> </subsection><subsection id="H8DB0D12D7BD044918EDB17A5DC41C83D"><enum>(b)</enum><header>Report</header><text>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.</text> </subsection></section><section id="H7BF60FA3BD844224A561A3D7082CF411"><enum>705.</enum><header>Consumer appraisal disclosure</header> <subsection id="H79704B472FB84F0C8864A37635B0FF7D"><enum>(a)</enum><header>In general</header><text>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:</text> <quoted-block display-inline="no-display-inline" id="H917ED39E2027426196819CC8A4C94020" style="OLC"> <section id="H937F304F1F924EBEA7B8A3E11DBE6726"><enum>129E.</enum><header>Consumer appraisal disclosure</header><text display-inline="no-display-inline">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.</text> </section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H371032DEEA654CF4B0A776729140845B"><enum>(b)</enum><header>Clerical amendment</header><text>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:</text> <quoted-block id="H4072F14724054ADAB68E39ECF600C648" style="OLC"> <toc regeneration="no-regeneration"> <toc-entry level="section">129E. Consumer appraisal disclosure.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section> Passed the House of Representatives November 15, 2007. Lorraine C. Miller, Clerk.