[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2114 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2114

To amend the Truth in Lending Act, to provide for enhanced disclosures 
to consumers and enhanced regulation of mortgage brokers, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 27, 2007

 Mrs. Clinton introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To amend the Truth in Lending Act, to provide for enhanced disclosures 
to consumers and enhanced regulation of mortgage brokers, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Enhanced residential mortgage disclosure requirements.
Sec. 4. National registry for mortgage brokers.
Sec. 5. Elimination of prepayment penalties for all mortgage products.
Sec. 6. Foreclosure prevention and mortgage refinancing fund.
Sec. 7. Affordable housing trust fund support grant program.
Sec. 8. Foreclosure prevention goal for government-sponsored 
                            enterprises.
Sec. 9. Mortgage fraud enforcement and prosecution.

SEC. 2. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Federal banking agencies.--The term ``Federal banking 
        agencies'' has the same meaning as in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813).
            (2) FFIEC.--The term ``FFIEC'' means Federal Financial 
        Institutions Examination Council.
            (3) Home mortgage loan.--The term ``home mortgage loan'' 
        means any consumer credit transaction in which a security 
        interest, including any such interest arising by operation of 
        law, is or will be retained or acquired in any real property 
        located within the United States which is or, upon the 
        completion of the transaction, will be used as the principle 
        residence of the consumer.
            (4) Mortgage broker.--The term ``mortgage broker''--
                    (A) means any person who, for compensation or in 
                anticipation of compensation, provides mortgage 
                brokerage services in connection with home mortgage 
                loans, with respect to which, the person is not the 
                creditor; and
                    (B) includes any loan officer that provides such 
                services.
            (5) Mortgage brokerage services.--The term ``mortgage 
        brokerage services'' means--
                    (A) arranging or negotiating, or attempting to 
                arrange or negotiate, home mortgage loans or 
                commitments for such loans;
                    (B) accepting or offering to accept an application 
                for a home mortgage loan;
                    (C) soliciting or offering to solicit a home 
                mortgage loan;
                    (D) referring consumer applicants or prospective 
                applicants for home mortgage loans to creditors;
                    (E) selecting or offering to select, on behalf of 
                consumers, creditors to whom requests for an extension 
                of a home mortgage loan may be made;
                    (F) negotiating the terms or conditions of a home 
                mortgage loan;
                    (G) issuing home mortgage loan commitments or 
                interest rate guarantee agreements to borrowers; or
                    (H) engaging in tablefunding of home mortgage 
                loans, whether done through contact by telephone, by 
                electronic means, by mail, or in person with the 
                borrower or potential borrower.
            (6) Mortgage originator.--The term ``mortgage originator'' 
        means any creditor or other person, including a mortgage 
        broker, and any employee or agent thereof, who, for 
        compensation or in anticipation of compensation, engages either 
        directly or indirectly in--
                    (A) the acceptance of applications for home 
                mortgage loans;
                    (B) solicitation of home mortgage loans on behalf 
                of borrowers;
                    (C) negotiation of terms or conditions of home 
                mortgage loans on behalf of borrowers or lenders; or
                    (D) negotiation of sales of existing home mortgage 
                loans to institutional or noninstitutional lenders.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.

SEC. 3. ENHANCED RESIDENTIAL MORTGAGE DISCLOSURE REQUIREMENTS.

    (a) In General.--The Truth in Lending Act (15 U.S.C. 1601 et seq.) 
is amended by inserting after section 129 the following new section:

``SEC. 129A. RESPONSIBILITIES OF MORTGAGE BROKERS.

    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Federal banking agencies.--The term `Federal banking 
        agencies' has the same meaning as in section 3 of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813).
            ``(2) FFIEC.--The term `FFIEC' means Federal Financial 
        Institutions Examination Council.
            ``(3) Home mortgage loan.--The term `home mortgage loan' 
        means any consumer credit transaction in which a security 
        interest, including any such interest arising by operation of 
        law, is or will be retained or acquired in any real property 
        located within the United States which is or, upon the 
        completion of the transaction, will be used as the principle 
        residence of the consumer.
            ``(4) Mortgage broker.--The term `mortgage broker'--
                    ``(A) means any person who, for compensation or in 
                anticipation of compensation, provides mortgage 
                brokerage services in connection with home mortgage 
                loans, with respect to which, the person is not the 
                creditor; and
                    ``(B) includes any loan officer that provides such 
                services.
            ``(5) Mortgage brokerage services.--The term `mortgage 
        brokerage services' means--
                    ``(A) arranging or negotiating, or attempting to 
                arrange or negotiate, home mortgage loans or 
                commitments for such loans;
                    ``(B) accepting or offering to accept an 
                application for a home mortgage loan;
                    ``(C) soliciting or offering to solicit a home 
                mortgage loan;
                    ``(D) referring consumer applicants or prospective 
                applicants for home mortgage loans to creditors;
                    ``(E) selecting or offering to select, on behalf of 
                consumers, creditors to whom requests for an extension 
                of a home mortgage loan may be made;
                    ``(F) negotiating the terms or conditions of a home 
                mortgage loan;
                    ``(G) issuing home mortgage loan commitments or 
                interest rate guarantee agreements to borrowers; and
                    ``(H) engaging in tablefunding of home mortgage 
                loans, whether done through contact by telephone, by 
                electronic means, by mail, or in person with the 
                borrower or potential borrower.
            ``(6) Mortgage originator.--The term `mortgage originator' 
        means any creditor or other person, including a mortgage 
        broker, and any employee or agent thereof, who, for 
        compensation or in anticipation of compensation, engages either 
        directly or indirectly in--
                    ``(A) the acceptance of applications for home 
                mortgage loans;
                    ``(B) solicitation of home mortgage loans on behalf 
                of borrowers;
                    ``(C) negotiation of terms or conditions of home 
                mortgage loans on behalf of borrowers or lenders; or
                    ``(D) negotiation of sales of existing home 
                mortgage loans to institutional or noninstitutional 
                lenders.
            ``(7) Secretary.--The term `Secretary' means the Secretary 
        of Housing and Urban Development.
    ``(b) Full Disclosure of Mortgage Broker and Originator 
Compensation.--
            ``(1) In general.--Upon entering into mortgage brokerage 
        services, each mortgage broker or mortgage originator shall--
                    ``(A) establish a fee for mortgage brokerage 
                services performed for a borrower, and shall disclose 
                that fee to the borrower; and
                    ``(B) disclose to the consumer, in an easy to 
                understand format, at a minimum--
                            ``(i) any payment to the mortgage broker or 
                        mortgage originator from the home mortgage loan 
                        lender or any other party connected to the 
                        transaction;
                            ``(ii) a clear demonstration of how the 
                        compensation of the broker is affected by the 
                        mortgage rate and fees to be paid by the 
                        borrower; and
                            ``(iii) the total fee and any associated 
                        payment arrangement.
            ``(2) Borrower acknowledgment.--The borrower shall 
        acknowledge confirmation of fees disclosed under paragraph (1), 
        either through written or electronic communication, before 
        mortgage brokerage services may be provided with respect to 
        that borrower.
    ``(c) Comprehensive Underwriting Assessment.--Any mortgage 
originator or lender that has primary responsibility for conducting an 
underwriting assessment on a home mortgage loan for a borrower shall 
include the ability of the borrower to repay other costs, such as 
property taxes, property fees, adjustments in interest rates, and 
property insurance.
    ``(d) Full Disclosure of Mortgage Broker Relationship.--
            ``(1) In general.--Each mortgage broker shall clearly 
        disclose to each potential borrower the relationship it has to 
        the borrower.
            ``(2) Contents.--The disclosure required by paragraph (1) 
        shall require the broker to advise the borrower--
                    ``(A) of whether the broker is or is not acting as 
                an agent of the borrower;
                    ``(B) if not an agent of the borrower, that the 
                broker does not represent the interests of the borrower 
                and is not legally responsible for getting the borrower 
                the best rate or product for their home mortgage loan; 
                and
                    ``(C) if an agent of the borrower, that the broker 
                has a duty to fully and fairly represent the interests 
                of the borrower in obtaining a home mortgage loan 
                product.''.
    (b) Rulemaking.--Not later than 180 days after the date of 
enactment of this Act, the Federal banking agencies, through the FFIEC, 
in conjunction with the Secretary, shall issue regulations to carry out 
section 129A of the Truth in Lending Act, as added by this Act, after a 
public comment period of not less than 60 days.

SEC. 4. NATIONAL REGISTRY FOR MORTGAGE BROKERS.

    (a) Mortgage Broker Registry.--
            (1) In general.--Not later than 240 days after the date of 
        enactment of this Act, the Federal banking agencies, through 
        the FFIEC, in consultation with the Secretary, the Attorney 
        General of the United States, the Conference of State Bank 
        Supervisors, the American Association of Residential Mortgage 
        Regulators, and the National Association of State Attorneys 
        General, shall establish a nationwide registry and database 
        system for all mortgage brokers.
            (2) Content.--The registry and database required by this 
        section shall be maintained by the FFIEC, and shall contain the 
        names of all mortgage brokers in the United States.
            (3) Public availability.--The registry required by this 
        section shall be made available to the public, and shall be 
        readily and easily searchable electronically and through an 
        Internet portal.
    (b) Required Registration.--It shall be unlawful for any person in 
the United States to engage in the provision of mortgage brokerage 
services, unless that person has registered in the nationwide database 
established under this section.
    (c) Rulemaking.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this Act, the FFIEC, after a public comment period 
        of not less than 60 days--
                    (A) shall issue final regulations to carry out this 
                section; and
                    (B) rules for compliance with the registry.
            (2) Content.--At a minimum, the regulations required by 
        paragraph (1) shall require that individuals registering with 
        the database furnish information concerning their identity, 
        including--
                    (A) full name, current address, and contact 
                information;
                    (B) 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
                    (C) professional history experience, including 
                authorization for the registry to obtain--
                            (i) an independent credit report obtained 
                        from a consumer reporting agency described in 
                        section 603(p) of the Fair Credit Reporting 
                        Act; and
                            (ii) information related to any 
                        administrative, civil, or criminal findings by 
                        any governmental jurisdiction.
    (d) Authority To Modify.--The FFIEC may make amendments to the 
regulations required by this section in order to improve the efficiency 
of the registry or compliance with the requirements of this section.
    (e) No Preemption.--Nothing in this section shall be construed as 
preempting any State licensing or registration requirement.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the FFIEC, such funds as may be necessary to carry out 
this section.

SEC. 5. ELIMINATION OF PREPAYMENT PENALTIES FOR ALL MORTGAGE PRODUCTS.

    Section 129A of the Truth in Lending Act, as added by this Act, is 
amended by adding at the end the following:
    ``(e) Limitation on Terms.--Notwithstanding any other provision of 
law, a home mortgage loan may not contain terms under which a consumer 
must pay a prepayment penalty for paying all or part of the principal 
before the date on which the principal is due under the terms of the 
loan agreement.''.

SEC. 6. FORECLOSURE PREVENTION AND MORTGAGE REFINANCING FUND.

    (a) In General.--The Secretary of the Department of Housing and 
Urban Development (hereafter in this Act referred to as the 
``Secretary'') shall make grants to State governments and tribal 
organizations (as defined in section 4(l) of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b(l))) to 
assist State programs established for the purpose of foreclosure 
mitigation, and to encourage the refinancing of distressed or at risk 
mortgages.
    (b) Preference.--In providing grants under this section, the 
Secretary shall give preference to States and tribal organizations that 
have created partnerships through their State housing or mortgage 
finance agencies and government-sponsored enterprises, private mortgage 
lenders, nonprofit community organizations, and mortgage insurance 
companies, to create stable refinancing options for at risk mortgages.
    (c) Regulations.--Not later than 180 days after the date of 
enactment of this Act, the Secretary shall issue regulations, after a 
public comment period of not less than 60 days, prescribing the 
criteria for the selection of grant recipients under this section, and 
shall update such regulations as necessary.
    (d) Authorization of Funds.--There are authorized to be 
appropriated to the Secretary, not more than $1,000,000,000 to make 
grants under this section.

SEC. 7. AFFORDABLE HOUSING TRUST FUND SUPPORT GRANT PROGRAM.

    (a) In General.--The Secretary shall make grants to State, county, 
municipal governments, and tribal organizations (as defined in section 
4(l) of the Indian Self-Determination and Education Assistance Act (25 
U.S.C. 450b(l))) to assist housing trust funds that support low- and 
moderate-income housing opportunities.
    (b) Preference.--In providing grants under this section, the 
Secretary shall give preference to States, counties, municipalities, 
and tribal organizations with housing trust funds that can 
demonstrate--
            (1) that the fund--
                    (A) serves a purpose not already addressed by 
                existing housing agencies and programs;
                    (B) is established under an agency that already 
                handles Federal housing programs;
                    (C) has nonlapsing or a dedicated source of income; 
                and
                    (D) has some type of oversight board; and
            (2) any other factors that the Secretary determines to be 
        appropriate.
    (c) Criteria.--Not later than 180 days after the date of enactment 
of this Act, the Secretary shall issue regulations, after a public 
comment period of not less than 60 days, prescribing the criteria for 
the selection of grant recipients under this section, and shall update 
such regulations as necessary.
    (d) Authorization of Funds.--There are authorized to be 
appropriated to the Secretary not more than $1,000,000,000 to make 
grants under this section.

SEC. 8. FORECLOSURE PREVENTION GOAL FOR GOVERNMENT-SPONSORED 
              ENTERPRISES.

    (a) In General.--The Federal Housing Enterprises Financial Safety 
and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) is amended--
            (1) by redesignating sections 1336 through 1338 as sections 
        1337 through 1139, respectively; and
            (2) by inserting after section 1335 the following:

``SEC. 1336. FORECLOSURE PROTECTION.

    ``(a) In General.--The Secretary shall establish an annual goal for 
each enterprise to identify and assist homeowners at risk of default or 
foreclosure on their mortgage, but would be able to stabilize their 
financial situation if their mortgage was recast or refinanced into 
more traditional mortgage terms, such as a fixed rate 30- or 40-year 
mortgage. This goal shall not be enforceable under the provisions of 
this title or any provision of the Federal National Mortgage 
Association Charter Act or the Federal Home Loan Mortgage Corporation 
Act.
    ``(b) Factors To Be Considered.--In meeting the goal established 
under this section, each enterprise may--
            ``(1) enter into partnerships and develop relationships 
        with nonprofit and for-profit organizations and State, county, 
        tribal, and municipal agencies, programs, or initiatives that 
        provide foreclosure counseling, foreclosure mitigation and 
        abatement, and mortgage refinancing services to at-risk 
        homeowners to help identify borrowers that could benefit from 
        mortgage refinancing;
            ``(2) identify communities in which foreclosure risk is 
        disproportionately high, including minority communities that 
        receive higher cost loans at a disproportionate rate;
            ``(3) work to develop and offer refinancing products for 
        borrowers that have been identified as at-risk, but can be 
        prevented from entering foreclosure with a recast or refinanced 
        mortgage; and
            ``(4) establish a dialogue with private lenders to identify 
        opportunities to encourage servicing and workout agreements for 
        at-risk borrowers.''.
    (b) Conforming Amendments.--Title XIII of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 
et seq.) is amended--
            (1) by striking ``section 1336'' each place that term 
        appears and inserting ``section 1337'';
            (2) by striking ``1336'' each place that term appears and 
        inserting ``1337'';
            (3) in each of sections 1341 and 1345(a)(3), by striking 
        ``1337'' and inserting ``section 1338''; and
            (4) in each of subsections (a)(3)(B) and (b) of section 
        1371 (12 U.S.C. 4631), by striking ``1337'' and inserting 
        ``1338''.

SEC. 9. MORTGAGE FRAUD ENFORCEMENT AND PROSECUTION.

    For each of fiscal years 2008 through 2012, there are authorized to 
be appropriated to the Attorney General of the United States, a total 
of $20,000,000, to support the employment of additional agents of the 
Federal Bureau of Investigation, and additional prosecutors at the 
Department of Justice to coordinate the prosecution of mortgage fraud 
efforts with the offices of the United States Attorneys.
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