[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2343 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2343

To amend the Real Estate Settlement Procedures Act to require mortgage 
            originators to make their fees more transparent.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 13, 2007

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

_______________________________________________________________________

                                 A BILL


 
To amend the Real Estate Settlement Procedures Act to require mortgage 
            originators to make their fees more transparent.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Real Estate Transparency Act of 
2007''.

SEC. 2. GREATER TRANSPARENCY OF SETTLEMENT FEES.

    (a) In General.--Section 4 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2603) is amended--
            (1) in subsection (a), in the first sentence, by striking 
        ``The Secretary,'' and inserting ``Provision of Settlement 
        Statement.--The Secretary,'';
            (2) in subsection (b)--
                    (A) in the first sentence--
                            (i) by striking ``The form'' and inserting 
                        ``Advance Inspection of Settlement Statement.--
                        The form''; and
                            (ii) by striking ``, except'' and all that 
                        follows through ``available at such time''; and
                    (B) in the second sentence--
                            (i) by striking ``Upon the request of the 
                        borrower to inspect the form prescribed under 
                        this section during the'' and inserting ``At 
                        least 1'';
                            (ii) by striking ``shall permit the'' and 
                        inserting ``shall provide a completed, written 
                        copy of the settlement statement to the''; and
                            (iii) by striking ``to inspect those'' and 
                        all that follows through ``preceding day''; and
            (3) by adding at the end the following:
    ``(c) Agreement for Originator Fees.--
            ``(1) Notice of fees.--Not later than 3 days after a person 
        applies for a federally related mortgage loan, the mortgage 
        originator of such loan shall provide to that person a written 
        agreement itemizing all of the fees that person may be charged 
        by the mortgage originator, including any origination fees, 
        underwriting fees, broker fees, and any other fees to be 
        charged at or before the settlement of such loan to be paid to 
        the mortgage originator. Bona fide discount points payable by 
        such person to reduce the interest rate of such loan need not 
        be included on any originator fees agreement under this 
        paragraph.
            ``(2) Method of payment.--
                    ``(A) In general.--Each originator fee agreement 
                under paragraph (1) shall set out the following 3 
                methods for the payment of the fees described in any 
                such agreement:
                            ``(i) Payment in cash before or at 
                        settlement.
                            ``(ii) Adding such fees into the total loan 
                        amount to be borrowed.
                            ``(iii) Increasing the interest rate of the 
                        loan.
                    ``(B) Borrower's choice of payment method.--Each 
                applicant for a federally related mortgage loan, in 
                determining how to pay any of the fees described in an 
                originator fees agreement under paragraph (1), shall 
                choose one of the payment methods described under 
                subparagraph (A), except that the applicant may choose 
                to combine the payment methods described under clauses 
                (i) and (ii) of subparagraph (A).
                    ``(C) Required explanation.--
                            ``(i) Written.--Each originator fee 
                        agreement under paragraph (1) shall include a 
                        written explanation of each of the payment 
                        options listed in subparagraph (A), along with 
                        a clear and concise illustration of the effect 
                        of each option on the amount borrowed, the 
                        interest rate, the payments required on the 
                        loan, and any other loan terms which might be 
                        affected by such option.
                            ``(ii) Oral.--Each mortgage originator of a 
                        federally related mortgage loan shall explain 
                        to each applicant for such a loan each of the 
                        payment options listed in subparagraph (A) 
                        before accepting any payment from that person.
                    ``(D) Required signature.--Before any applicant for 
                a federally related mortgage loan is obligated to pay 
                any of the fees described in the originator fees 
                agreement under paragraph (1), the person shall have--
                            ``(i) agreed to and signed the originator 
                        fees agreement described under paragraph (1); 
                        and
                            ``(ii) exercised the option for determining 
                        the method of payment for such fees.
    ``(d) Early Settlement Statement.--
            ``(1) In general.--Not later than 3 days after a person 
        applies for a federally related mortgage loan, the mortgage 
        originator of such loan shall provide to that person a written 
        early settlement statement of all of the settlement costs to be 
        charged to that person at or before settlement. The early 
        settlement statement shall be in the same or a similar form as 
        the statement of settlement costs provided to the person 
        pursuant to subsection (a).
            ``(2) Required inclusions.--Each early settlement statement 
        under this subsection shall include an itemization of the 
        following:
                    ``(A) All fees agreed to by the applicant of a 
                federally related mortgage loan pursuant to the 
                originator fees agreement described under subsection 
                (c)(1).
                    ``(B) All fees to be charged to that applicant by 
                independent third parties, including government 
                agencies at or before settlement of the loan, plus all 
                escrows reserves which may be required of that person.
    ``(e) Borrower Liability for Fees.--No borrower shall be liable for 
any fees which are not disclosed on an early settlement statement, 
except that the borrower is liable for such fees if--
            ``(1) the total amount charged for fees imposed by 
        independent third parties is--
                    ``(A) not more than 10 percent greater than that 
                stated in the early settlement statement; or
                    ``(B) greater than that allowed under subparagraph 
                (A) because bona fide and reasonable expenses were 
                incurred by such third parties for unanticipated 
                inspection, appraisal, survey, or flood certification 
                of the home which was the subject of such loan;
            ``(2) the mortgage originator provides a reasonable 
        explanation of the circumstances surrounding the settlement of 
        the loan of the borrower which were different than anticipated 
        by the mortgage originator when the statement was provided; and
            ``(3) the mortgage originator does not engage in a pattern 
        or practice of providing early settlement statements which 
        disclose individual fees of independent third parties in 
        different amounts than actually charged at settlement.
    ``(f) Liability for Failure To Comply.--
            ``(1) In general.--Whoever fails to comply with any 
        provision of this section shall be liable to the borrower for 
        an amount equal to the sum of--
                    ``(A) any actual damages to the borrower as a 
                result of the failure; and
                    ``(B) $5,000 for each such instance of 
                noncompliance.
            ``(2) Court costs.--In addition to any amount under 
        paragraph (1), in the case of any successful action brought by 
        a borrower under this subsection, such borrower shall be 
        reimbursed for the costs of the action, together with any 
        attorneys fees incurred in connection with such action as the 
        court may determine to be reasonable under the circumstances.
    ``(g) Definition.--As used in this section, the term `mortgage 
originator'--
            ``(1) means any person who, for direct or indirect 
        compensation or gain, or in the expectation of direct or 
        indirect compensation or gain--
                    ``(A) takes a residential mortgage loan 
                application; or
                    ``(B) assists a consumer in obtaining or applying 
                to obtain a residential mortgage loan; and
            ``(2) includes any person who makes loans directly or 
        brokers loans for others.''.
    (b) Conforming Amendment.--Section 5(c) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2604(c)) is hereby 
repealed.
                                 <all>