[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2595 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2595

  To create a national licensing system for residential mortgage loan 
originators, to develop minimum standards of conduct to be enforced by 
               State regulators, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 6, 2008

Mrs. Feinstein (for herself and Mr. Martinez) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To create a national licensing system for residential mortgage loan 
originators, to develop minimum standards of conduct to be enforced by 
               State regulators, 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 ``Secure and Fair 
Enforcement for Mortgage Licensing Act of 2008'' or ``S.A.F.E. Mortgage 
Licensing Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes and methods for establishing a mortgage licensing 
                            system and registry.
Sec. 3. Definitions.
Sec. 4. License or registration required.
Sec. 5. State license and registration application and issuance.
Sec. 6. Standards for State license renewal.
Sec. 7. System of registration administration by Federal banking 
                            agencies.
Sec. 8. Secretary of Housing and Urban Development backup authority to 
                            establish a loan originator licensing 
                            system.
Sec. 9. Backup authority to establish a nationwide mortgage licensing 
                            and registry system.
Sec. 10. Fees.
Sec. 11. Background checks of loan originators.
Sec. 12. Confidentiality of information.
Sec. 13. Liability provisions.
Sec. 14. Enforcement under HUD backup licensing system.
Sec. 15. Preemption of State law.
Sec. 16. Reports and recommendations to Congress.
Sec. 17. Study and reports on defaults and foreclosures

SEC. 2. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE LICENSING 
              SYSTEM AND REGISTRY.

    In order to increase uniformity, reduce regulatory burden, enhance 
consumer protection, and reduce fraud, the States, through the 
Conference of State Bank Supervisors and the American Association of 
Residential Mortgage Regulators, are hereby encouraged to establish a 
Nationwide Mortgage Licensing System and Registry for the residential 
mortgage industry that accomplishes all of the following objectives:
            (1) Provides uniform license applications and reporting 
        requirements for State-licensed loan originators.
            (2) Provides a comprehensive licensing and supervisory 
        database.
            (3) Aggregates and improves the flow of information to and 
        between regulators.
            (4) Provides increased accountability and tracking of loan 
        originators.
            (5) Streamlines the licensing process and reduces the 
        regulatory burden.
            (6) Enhances consumer protections and supports anti-fraud 
        measures.
            (7) Provides consumers with easily accessible information, 
        offered at no charge, utilizing electronic media, including the 
        Internet, regarding the employment history of, and publicly 
        adjudicated disciplinary and enforcement actions against, loan 
        originators.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Federal banking agencies.--The term ``Federal banking 
        agencies'' means the Board of Governors of the Federal Reserve 
        System, the Comptroller of the Currency, the Director of the 
        Office of Thrift Supervision, the National Credit Union 
        Administration, and the Federal Deposit Insurance Corporation.
            (2) Depository institution.--The term ``depository 
        institution'' has the same meaning as in section 3 of the 
        Federal Deposit Insurance Act, and includes any credit union.
            (3) Loan originator.--
                    (A) In general.--The term ``loan originator''--
                            (i) means an individual who--
                                    (I) takes a residential mortgage 
                                loan application;
                                    (II) assists a consumer in 
                                obtaining or applying to obtain a 
                                residential mortgage loan; or
                                    (III) offers or negotiates terms of 
                                a residential mortgage loan, for direct 
                                or indirect compensation or gain, or in 
                                the expectation of direct or indirect 
                                compensation or gain;
                            (ii) includes any individual who represents 
                        to the public, through advertising or other 
                        means of communicating or providing information 
                        (including the use of business cards, 
                        stationery, brochures, signs, rate lists, or 
                        other promotional items), that such individual 
                        can or will provide or perform any of the 
                        activities described in clause (i);
                            (iii) does not include any individual who 
                        is not otherwise described in clause (i) or 
                        (ii) and who performs purely administrative or 
                        clerical tasks on behalf of a person who is 
                        described in any such clause; and
                            (iv) does not include a person or entity 
                        that only performs real estate brokerage 
                        activities and is licensed or registered in 
                        accordance with applicable State law, unless 
                        the person or entity is compensated by a 
                        lender, a mortgage broker, or other loan 
                        originator or by any agent of such lender, 
                        mortgage broker, or other loan originator.
                    (B) Other definitions relating to loan 
                originator.--For purposes of this subsection, an 
                individual ``assists a consumer in obtaining or 
                applying to obtain a residential mortgage loan'' by, 
                among other things, advising on loan terms (including 
                rates, fees, other costs), preparing loan packages, or 
                collecting information on behalf of the consumer with 
                regard to a residential mortgage loan.
                    (C) Administrative or clerical tasks.--The term 
                ``administrative or clerical tasks'' means the receipt, 
                collection, and distribution of information common for 
                the processing or underwriting of a loan in the 
                mortgage industry and communication with a consumer to 
                obtain information necessary for the processing or 
                underwriting of a residential mortgage loan.
                    (D) Real estate brokerage activity defined.--The 
                term ``real estate brokerage activity'' means any 
                activity that involves offering or providing real 
                estate brokerage services to the public, including--
                            (i) acting as a real estate agent or real 
                        estate broker for a buyer, seller, lessor, or 
                        lessee of real property;
                            (ii) listing or advertising real property 
                        for sale, purchase, lease, rental, or exchange;
                            (iii) providing advice in connection with 
                        sale, purchase, lease, rental, or exchange of 
                        real property;
                            (iv) bringing together parties interested 
                        in the sale, purchase, lease, rental, or 
                        exchange of real property;
                            (v) negotiating, on behalf of any party, 
                        any portion of a contract relating to the sale, 
                        purchase, lease, rental, or exchange of real 
                        property (other than in connection with 
                        providing financing with respect to any such 
                        transaction);
                            (vi) engaging in any activity for which a 
                        person engaged in the activity is required to 
                        be registered or licensed as a real estate 
                        agent or real estate broker under any 
                        applicable law; and
                            (vii) offering to engage in any activity, 
                        or act in any capacity, described in clause 
                        (i), (ii), (iii), (iv), (v), or (vi).
            (4) Loan processor or underwriter.--
                    (A) In general.--The term ``loan processor or 
                underwriter'' means an individual who performs clerical 
                or support duties at the direction of and subject to 
                the supervision and instruction of--
                            (i) a State-licensed loan originator; or
                            (ii) a registered loan originator.
                    (B) Clerical or support duties.--For purposes of 
                subparagraph (A), the term ``clerical or support 
                duties'' may include--
                            (i) the receipt, collection, distribution, 
                        and analysis of information common for the 
                        processing or underwriting of a residential 
                        mortgage loan; and
                            (ii) communicating with a consumer to 
                        obtain the information necessary for the 
                        processing or underwriting of a loan, to the 
                        extent that such communication does not include 
                        offering or negotiating loan rates or terms, or 
                        counseling consumers about residential mortgage 
                        loan rates or terms.
            (5) Nationwide mortgage licensing system and registry.--The 
        term ``Nationwide Mortgage Licensing System and Registry'' 
        means a mortgage licensing system developed and maintained by 
        the Conference of State Bank Supervisors and the American 
        Association of Residential Mortgage Regulators for the State 
        licensing and registration of State-licensed loan originators 
        and the registration of registered loan originators or any 
        system established by the Secretary under section 9.
            (6) Registered loan originator.--The term ``registered loan 
        originator'' means any individual who--
                    (A) meets the definition of loan originator and is 
                an employee of a depository institution or a wholly-
                owned subsidiary of a depository institution; and
                    (B) is registered with, and maintains a unique 
                identifier through, the Nationwide Mortgage Licensing 
                System and Registry.
            (7) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means any loan primarily for personal, family, 
        or household use that is secured by a mortgage, deed of trust, 
        or other equivalent consensual security interest on a dwelling 
        (as defined in section 103(v) of the Truth in Lending Act) or 
        residential real estate upon which is constructed or intended 
        to be constructed a dwelling (as so defined).
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (9) State-licensed loan originator.--The term ``State-
        licensed loan originator'' means any individual who--
                    (A) is a loan originator;
                    (B) is not an employee of a depository institution 
                or any wholly-owned subsidiary of a depository 
                institution; and
                    (C) is licensed by a State or by the Secretary 
                under section 8 and registered as a loan originator 
                with, and maintains a unique identifier through, the 
                Nationwide Mortgage Licensing System and Registry.
            (10) Subprime mortgage.--The term ``subprime mortgage'' 
        means a residential mortgage loan--
                    (A) that is secured by real property that is used 
                or intended to be used as a principal dwelling;
                    (B) that is typically offered to borrowers having 
                weakened credit histories and reduced repayment 
                capacity, as measured by lower credit scores, debt-to-
                income ratios, and other relevant criteria; and
                    (C) the characteristics of which may include--
                            (i) low initial payments based on a fixed 
                        introductory rate that expires after a short 
                        period and then adjusts to a variable index 
                        rate plus a margin for the remaining term of 
                        the loan;
                            (ii) very high or no limits on how much the 
                        payment amount or the interest rate may 
                        increase (referred to as ``payment caps'' or 
                        ``rate caps'') on reset dates;
                            (iii) limited or no documentation of the 
                        income of the borrower;
                            (iv) product features likely to result in 
                        frequent refinancing to maintain an affordable 
                        monthly payment; and
                            (v) substantial prepayment penalties or 
                        prepayment penalties that extend beyond the 
                        initial fixed interest rate period.
            (11) Unique identifier.--The term ``unique identifier'' 
        means a number or other identifier that--
                    (A) permanently identifies a loan originator; and
                    (B) is assigned by protocols established by the 
                Nationwide Mortgage Licensing System and Registry and 
                the Federal banking agencies to facilitate electronic 
                tracking of loan originators and uniform identification 
                of, and public access to, the employment history of and 
                the publicly adjudicated disciplinary and enforcement 
                actions against loan originators.

SEC. 4. LICENSE OR REGISTRATION REQUIRED.

    (a) In General.--An individual may not engage in the business of a 
loan originator without first--
            (1) obtaining and maintaining, through an annual renewal--
                    (A) a registration as a registered loan originator; 
                or
                    (B) a license and registration as a State-licensed 
                loan originator; and
            (2) obtaining a unique identifier.
    (b) Loan Processors and Underwriters.--
            (1) Supervised loan processors and underwriters.--A loan 
        processor or underwriter who does not represent to the public, 
        through advertising or other means of communicating or 
        providing information (including the use of business cards, 
        stationery, brochures, signs, rate lists, or other promotional 
        items), that such individual can or will perform any of the 
        activities of a loan originator shall not be required to be a 
        State-licensed loan originator or a registered loan originator.
            (2) Independent contractors.--A loan processor or 
        underwriter may not work as an independent contractor unless 
        such processor or underwriter is a State-licensed loan 
        originator or a registered loan originator.

SEC. 5. STATE LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.

    (a) Background Checks.--In connection with an application to any 
State for licensing and registration as a State-licensed loan 
originator, the applicant shall, at a minimum, furnish to the 
Nationwide Mortgage Licensing System and Registry information 
concerning the applicant's identity, including--
            (1) fingerprints for submission to the Federal Bureau of 
        Investigation, and any governmental agency or entity authorized 
        to receive such information for a State and national criminal 
        history background check; and
            (2) personal history and experience, including 
        authorization for the System to obtain--
                    (A) an independent credit report obtained from a 
                consumer reporting agency described in section 603(p) 
                of the Fair Credit Reporting Act; and
                    (B) information related to any administrative, 
                civil or criminal findings by any governmental 
                jurisdiction.
    (b) Issuance of License.--The minimum standards for licensing and 
registration as a State-licensed loan originator shall include the 
following:
            (1) The applicant has never had a loan originator or 
        similar license revoked in any governmental jurisdiction.
            (2) The applicant has never been convicted of, or pled 
        guilty or nolo contendere to, a felony in a domestic, foreign, 
        or military court.
            (3) The applicant has demonstrated financial 
        responsibility, character, and general fitness such as to 
        command the confidence of the community and to warrant a 
        determination that the loan originator will operate honestly, 
        fairly, and efficiently within the purposes of this Act.
            (4) The applicant has completed the pre-licensing education 
        requirement described in subsection (c).
            (5) The applicant has passed a written test that meets the 
        test requirement described in subsection (d).
    (c) Pre-Licensing Education of Loan Originators.--
            (1) Minimum educational requirements.--In order to meet the 
        pre-licensing education requirement referred to in subsection 
        (b)(4), a person shall complete at least 20 hours of education 
        approved in accordance with paragraph (2), which shall include 
        at least--
                    (A) 3 hours of Federal law and regulations;
                    (B) 3 hours of ethics, which shall include 
                instruction on fraud, consumer protection, and fair 
                lending issues; and
                    (C) 2 hours of training related to lending 
                standards for the subprime mortgage marketplace.
            (2) Approved educational courses.--For purposes of 
        paragraph (1), pre-licensing education courses shall be 
        reviewed, and approved by the Nationwide Mortgage Licensing 
        System and Registry.
            (3) Limitation and standards.--
                    (A) Limitation.--To maintain the independence of 
                the approval process, the Nationwide Mortgage Licensing 
                System and Registry shall not directly or indirectly 
                offer pre-licensure educational courses for loan 
                originators.
                    (B) Standards.--In approving courses under this 
                section, the Nationwide Mortgage Licensing System and 
                Registry shall apply reasonable standards in the review 
                and approval of courses.
    (d) Testing of Loan Originators.--
            (1) In general.--In order to meet the written test 
        requirement referred to in subsection (b)(5), an individual 
        shall pass, in accordance with the standards established under 
        this subsection, a qualified written test developed by the 
        Nationwide Mortgage Licensing System and Registry and 
        administered by an approved test provider.
            (2) Qualified test.--A written test shall not be treated as 
        a qualified written test for purposes of paragraph (1) unless--
                    (A) the test consists of a minimum of 100 
                questions; and
                    (B) the test adequately measures the applicant's 
                knowledge and comprehension in appropriate subject 
                areas, including--
                            (i) ethics;
                            (ii) Federal law and regulation pertaining 
                        to mortgage origination;
                            (iii) State law and regulation pertaining 
                        to mortgage origination; and
                            (iv) Federal and State law and regulation, 
                        including instruction on fraud, consumer 
                        protection, subprime mortgage marketplace, and 
                        fair lending issues.
            (3) Minimum competence.--
                    (A) Passing score.--An individual shall not be 
                considered to have passed a qualified written test 
                unless the individual achieves a test score of not less 
                than 75 percent correct answers to questions.
                    (B) Initial retests.--An individual may retake a 
                test 3 consecutive times with each consecutive taking 
                occurring in less than 14 days after the preceding 
                test.
                    (C) Subsequent retests.--After 3 consecutive tests, 
                an individual shall wait at least 14 days before taking 
                the test again.
                    (D) Retest after lapse of license.--A State-
                licensed loan originator who fails to maintain a valid 
                license for a period of 5 years or longer shall retake 
                the test, not taking into account any time during which 
                such individual is a registered loan originator.
    (e) Mortgage Call Reports.--Each mortgage licensee shall submit to 
the Nationwide Mortgage Licensing System and Registry reports of 
condition, which shall be in such form and shall contain such 
information as the Nationwide Mortgage Licensing System and Registry 
may require.

SEC. 6. STANDARDS FOR STATE LICENSE RENEWAL.

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

SEC. 7. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL BANKING 
              AGENCIES.

    (a) Development.--
            (1) In general.--The Federal banking agencies shall 
        jointly, through the Federal Financial Institutions Examination 
        Council, develop and maintain a system for registering 
        employees of depository institutions or subsidiaries of 
        depository institutions as registered loan originators with the 
        Nationwide Mortgage Licensing System and Registry. The system 
        shall be implemented before the end of the 1-year period 
        beginning on the date of the enactment of this Act.
            (2) Registration requirements.--In connection with the 
        registration of any loan originator who is an employee of a 
        depository institution or a wholly-owned subsidiary of a 
        depository institution with the Nationwide Mortgage Licensing 
        System and Registry, the appropriate Federal banking agency 
        shall, at a minimum, furnish or cause to be furnished to the 
        Nationwide Mortgage Licensing System and Registry information 
        concerning the employees's identity, including--
                    (A) fingerprints for submission to the Federal 
                Bureau of Investigation, and any governmental agency or 
                entity authorized to receive such information for a 
                State and national criminal history background check; 
                and
                    (B) personal history and experience, including 
                authorization for the Nationwide Mortgage Licensing 
                System and Registry to obtain information related to 
                any administrative, civil or criminal findings by any 
                governmental jurisdiction.
    (b) Coordination.--
            (1) Unique identifier.--The Federal banking agencies, 
        through the Financial Institutions Examination Council, shall 
        coordinate with the Nationwide Mortgage Licensing System and 
        Registry to establish protocols for assigning a unique 
        identifier to each registered loan originator that will 
        facilitate electronic tracking and uniform identification of, 
        and public access to, the employment history of and publicly 
        adjudicated disciplinary and enforcement actions against loan 
        originators.
            (2) Nationwide mortgage licensing system and registry 
        development.--To facilitate the transfer of information 
        required by subsection (a)(2), the Nationwide Mortgage 
        Licensing System and Registry shall coordinate with the Federal 
        banking agencies, through the Financial Institutions 
        Examination Council, concerning the development and operation, 
        by such System and Registry, of the registration functionality 
        and data requirements for loan originators.
    (c) Consideration of Factors and Procedures.--In establishing the 
registration procedures under subsection (a) and the protocols for 
assigning a unique identifier to a registered loan originator, the 
Federal banking agencies shall make such de minimis exceptions as may 
be appropriate to paragraphs (1)(A) and (2) of section 4(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 Act.

SEC. 8. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP AUTHORITY TO 
              ESTABLISH A LOAN ORIGINATOR LICENSING SYSTEM.

    (a) Back up Licensing System.--If, by the end of the 1-year period, 
or the 2-year period in the case of a State whose legislature meets 
only biennially, beginning on the date of the enactment of this Act or 
at any time thereafter, the Secretary determines that a State does not 
have in place by law or regulation a system for licensing and 
registering loan originators that meets the requirements of sections 5 
and 6 and subsection (d) of this section, or does not participate in 
the Nationwide Mortgage Licensing System and Registry, the Secretary 
shall provide for the establishment and maintenance of a system for the 
licensing and registration by the Secretary of loan originators 
operating in such State as State-licensed loan originators.
    (b) Licensing and Registration Requirements.--The system 
established by the Secretary under subsection (a) for any State shall 
meet the requirements of sections 5 and 6 for State-licensed loan 
originators.
    (c) Unique Identifier.--The Secretary shall coordinate with the 
Nationwide Mortgage Licensing System and Registry to establish 
protocols for assigning a unique identifier to each loan originator 
licensed by the Secretary as a State-licensed loan originator that will 
facilitate electronic tracking and uniform identification of, and 
public access to, the employment history of and the publicly 
adjudicated disciplinary and enforcement actions against loan 
originators.
    (d) State Licensing Law Requirements.--For purposes of this 
section, the law in effect in a State meets the requirements of this 
subsection if the Secretary determines the law satisfies the following 
minimum requirements:
            (1) A State loan originator supervisory authority is 
        maintained to provide effective supervision and enforcement of 
        such law, including the suspension, termination, or nonrenewal 
        of a license for a violation of State or Federal law.
            (2) The State loan originator supervisory authority ensures 
        that all State-licensed loan originators operating in the State 
        are registered with Nationwide Mortgage Licensing System and 
        Registry.
            (3) The State loan originator supervisory authority is 
        required to regularly report violations of such law, as well as 
        enforcement actions and other relevant information, to the 
        Nationwide Mortgage Licensing System and Registry.
    (e) Temporary Extension of Period.--The Secretary may extend, by 
not more than 12 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 5 and 6 and subsection (d) if the Secretary determines that 
such State is making a good faith effort to establish a State licensing 
law that meets such requirements, license mortgage originators under 
such law, and register such originators with the Nationwide Mortgage 
Licensing System and Registry.
    (f) Limitation on HUD-Licensed Loan Originators.--Any loan 
originator who is licensed by the Secretary under a system established 
under this section for any State may not use such license to originate 
loans in any other State.
    (g) Contracting Authority.--The Secretary may enter into contracts 
with qualified independent parties, as necessary to efficiently fulfill 
the obligations of the Secretary under this Section.

SEC. 9. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE MORTGAGE LICENSING 
              AND REGISTRY SYSTEM.

    If at any time the Secretary determines that the Nationwide 
Mortgage Licensing System and Registry is failing to meet the 
requirements and purposes of this Act 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 Act and the effective registration and regulation of loan 
originators.

SEC. 10. FEES.

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

SEC. 11. BACKGROUND CHECKS OF LOAN ORIGINATORS.

    (a) Access to Records.--Notwithstanding any other provision of law, 
in providing identification and processing functions, the Attorney 
General shall provide access to all criminal history information to the 
appropriate State officials responsible for regulating State-licensed 
loan originators to the extent criminal history background checks are 
required under the laws of the State for the licensing of such loan 
originators.
    (b) Agent.--For the purposes of this section and in order to reduce 
the points of contact which the Federal Bureau of Investigation may 
have to maintain for purposes of subsection (a), the Conference of 
State Bank Supervisors or a wholly owned subsidiary may be used as a 
channeling agent of the States for requesting and distributing 
information between the Department of Justice and the appropriate State 
agencies.

SEC. 12. CONFIDENTIALITY OF INFORMATION.

    (a) System Confidentiality.--Except as otherwise provided in this 
section, any requirement under Federal or State law regarding the 
privacy or confidentiality of any information or material provided to 
the Nationwide Mortgage Licensing System and Registry or a system 
established by the Secretary under section 9, and any privilege arising 
under Federal or State law (including the rules of any Federal or State 
court) with respect to such information or material, shall continue to 
apply to such information or material after the information or material 
has been disclosed to the system. Such information and material may be 
shared with all State and Federal regulatory officials with mortgage 
industry oversight authority without the loss of privilege or the loss 
of confidentiality protections provided by Federal and State laws.
    (b) Nonapplicability of Certain Requirements.--Information or 
material that is subject to a privilege or confidentiality under 
subsection (a) shall not be subject to--
            (1) disclosure under any Federal or State law governing the 
        disclosure to the public of information held by an officer or 
        an agency of the Federal Government or the respective State; or
            (2) subpoena or discovery, or admission into evidence, in 
        any private civil action or administrative process, unless with 
        respect to any privilege held by the Nationwide Mortgage 
        Licensing System and Registry or the Secretary with respect to 
        such information or material, the person to whom such 
        information or material pertains waives, in whole or in part, 
        in the discretion of such person, that privilege.
    (c) Coordination With Other Law.--Any State law, including any 
State open record law, relating to the disclosure of confidential 
supervisory information or any information or material described in 
subsection (a) that is inconsistent with subsection (a) shall be 
superseded by the requirements of such provision to the extent State 
law provides less confidentiality or a weaker privilege.
    (d) Public Access to Information.--This section shall not apply 
with respect to the information or material relating to the employment 
history of, and publicly adjudicated disciplinary and enforcement 
actions against, loan originators that is included in Nationwide 
Mortgage Licensing System and Registry for access by the public.

SEC. 13. LIABILITY PROVISIONS.

    The Secretary, any State official or agency, any Federal banking 
agency, or any organization serving as the administrator of the 
Nationwide Mortgage Licensing System and Registry or a system 
established by the Secretary under section 9, or any officer or 
employee of any such entity, shall not be subject to any civil action 
or proceeding for monetary damages by reason of the good-faith action 
or omission of any officer or employee of any such entity, while acting 
within the scope of office or employment, relating to the collection, 
furnishing, or dissemination of information concerning persons who are 
loan originators or are applying for licensing or registration as loan 
originators.

SEC. 14. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.

    (a) Summons Authority.--The Secretary may--
            (1) examine any books, papers, records, or other data of 
        any loan originator operating in any State which is subject to 
        a licensing system established by the Secretary under section 
        8; and
            (2) summon any loan originator referred to in paragraph (1) 
        or any person having possession, custody, or care of the 
        reports and records relating to such loan originator, to appear 
        before the Secretary or any delegate of the Secretary at a time 
        and place named in the summons and to produce such books, 
        papers, records, or other data, and to give testimony, under 
        oath, as may be relevant or material to an investigation of 
        such loan originator for compliance with the requirements of 
        this Act.
    (b) Examination Authority.--
            (1) In general.--If the Secretary establishes a licensing 
        system under section 8 for any State, the Secretary shall 
        appoint examiners for the purposes of administering such 
        section.
            (2) Power to examine.--Any examiner appointed under 
        paragraph (1) shall have power, on behalf of the Secretary, to 
        make any examination of any loan originator operating in any 
        State which is subject to a licensing system established by the 
        Secretary under section 8 whenever the Secretary determines an 
        examination of any loan originator is necessary to determine 
        the compliance by the originator with this Act.
            (3) Report of examination.--Each examiner appointed under 
        paragraph (1) shall make a full and detailed report of 
        examination of any loan originator examined to the Secretary.
            (4) Administration of oaths and affirmations; evidence.--In 
        connection with examinations of loan originators operating in 
        any State which is subject to a licensing system established by 
        the Secretary under section 8, or with other types of 
        investigations to determine compliance with applicable law and 
        regulations, the Secretary and examiners appointed by the 
        Secretary may administer oaths and affirmations and examine and 
        take and preserve testimony under oath as to any matter in 
        respect to the affairs of any such loan originator.
            (5) Assessments.--The cost of conducting any examination of 
        any loan originator operating in any State which is subject to 
        a licensing system established by the Secretary under section 8 
        shall be assessed by the Secretary against the loan originator 
        to meet the Secretary's expenses in carrying out such 
        examination.
    (c) Cease and Desist Proceeding.--
            (1) Authority of secretary.--If the Secretary finds, after 
        notice and opportunity for hearing, that any person is 
        violating, has violated, or is about to violate any provision 
        of this Act, or any regulation thereunder, with respect to a 
        State which is subject to a licensing system established by the 
        Secretary under section 8, the Secretary may publish such 
        findings and enter an order requiring such person, and any 
        other person that is, was, or would be a cause of the 
        violation, due to an act or omission the person knew or should 
        have known would contribute to such violation, to cease and 
        desist from committing or causing such violation and any future 
        violation of the same provision, rule, or regulation. Such 
        order may, in addition to requiring a person to cease and 
        desist from committing or causing a violation, require such 
        person to comply, or to take steps to effect compliance, with 
        such provision or regulation, upon such terms and conditions 
        and within such time as the Secretary may specify in such 
        order. Any such order may, as the Secretary deems appropriate, 
        require future compliance or steps to effect future compliance, 
        either permanently or for such period of time as the Secretary 
        may specify, with such provision or regulation with respect to 
        any loan originator.
            (2) Hearing.--The notice instituting proceedings pursuant 
        to paragraph (1) shall fix a hearing date not earlier than 30 
        days nor later than 60 days after service of the notice unless 
        an earlier or a later date is set by the Secretary with the 
        consent of any respondent so served.
            (3) Temporary order.--Whenever the Secretary determines 
        that the alleged violation or threatened violation specified in 
        the notice instituting proceedings pursuant to paragraph (1), 
        or the continuation thereof, is likely to result in significant 
        dissipation or conversion of assets, significant harm to 
        consumers, or substantial harm to the public interest prior to 
        the completion of the proceedings, the Secretary may enter a 
        temporary order requiring the respondent to cease and desist 
        from the violation or threatened violation and to take such 
        action to prevent the violation or threatened violation and to 
        prevent dissipation or conversion of assets, significant harm 
        to consumers, or substantial harm to the public interest as the 
        Secretary deems appropriate pending completion of such 
        proceedings. Such an order shall be entered only after notice 
        and opportunity for a hearing, unless the Secretary determines 
        that notice and hearing prior to entry would be impracticable 
        or contrary to the public interest. A temporary order shall 
        become effective upon service upon the respondent and, unless 
        set aside, limited, or suspended by the Secretary or a court of 
        competent jurisdiction, shall remain effective and enforceable 
        pending the completion of the proceedings.
            (4) Review of temporary orders.--
                    (A) Review by secretary.--At any time after the 
                respondent has been served with a temporary cease-and-
                desist order pursuant to paragraph (3), the respondent 
                may apply to the Secretary to have the order set aside, 
                limited, or suspended. If the respondent has been 
                served with a temporary cease-and-desist order entered 
                without a prior hearing before the Secretary, the 
                respondent may, within 10 days after the date on which 
                the order was served, request a hearing on such 
                application and the Secretary shall hold a hearing and 
                render a decision on such application at the earliest 
                possible time.
                    (B) Judicial review.--Within--
                            (i) 10 days after the date the respondent 
                        was served with a temporary cease-and-desist 
                        order entered with a prior hearing before the 
                        Secretary; or
                            (ii) 10 days after the Secretary renders a 
                        decision on an application and hearing under 
                        paragraph (1), with respect to any temporary 
                        cease-and-desist order entered without a prior 
                        hearing before the Secretary,
                the respondent may apply to the United States district 
                court for the district in which the respondent resides 
                or has its principal place of business, or for the 
                District of Columbia, for an order setting aside, 
                limiting, or suspending the effectiveness or 
                enforcement of the order, and the court shall have 
                jurisdiction to enter such an order. A respondent 
                served with a temporary cease-and-desist order entered 
                without a prior hearing before the Secretary may not 
                apply to the court except after hearing and decision by 
                the Secretary on the respondent's application under 
                subparagraph (A).
                    (C) No automatic stay of temporary order.--The 
                commencement of proceedings under subparagraph (B) 
                shall not, unless specifically ordered by the court, 
                operate as a stay of the Secretary's order.
            (5) Authority of the secretary to prohibit persons from 
        serving as loan originators.--In any cease-and-desist 
        proceeding under paragraph (1), the Secretary may issue an 
        order to prohibit, conditionally or unconditionally, and 
        permanently or for such period of time as the Secretary shall 
        determine, any person who has violated this Act or regulations 
        thereunder, from acting as a loan originator if the conduct of 
        that person demonstrates unfitness to serve as a loan 
        originator.
    (d) Authority of the Secretary To Assess Money Penalties.--
            (1) In general.--The Secretary may impose a civil penalty 
        on a loan originator operating in any State which is subject to 
        licensing system established by the Secretary under section 8, 
        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 Act or any 
        regulation prescribed by the Secretary under this Act or order 
        issued under subsection (c).
            (2) Maximum amount of penalty.--The maximum amount of 
        penalty for each act or omission described in paragraph (1) 
        shall be $5,000 for each day the violation continues.

SEC. 15. PREEMPTION OF STATE LAW.

    Nothing in this Act may be construed to preempt the law of any 
State, to the extent that such State law provides greater protection to 
consumers than is provided under this Act.

SEC. 16. REPORTS AND RECOMMENDATIONS TO CONGRESS.

    (a) Annual Reports.--Not later than 1 year after the date of 
enactment of this Act, and annually thereafter, the Secretary shall 
submit a report to Congress on the effectiveness of the provisions of 
this Act, including legislative recommendations, if any, for 
strengthening consumer protections, enhancing examination standards, 
and streamlining communication between all stakeholders involved in 
residential mortgage loan origination and processing.
    (b) Legislative Recommendations.--Not later than 6 months after the 
date of enactment of this Act, the Secretary shall make recommendations 
to Congress on legislative reforms to the Real Estate Settlement 
Procedures Act of 1974, that the Secretary deems appropriate to promote 
more transparent disclosures, allowing consumers to better shop and 
compare mortgage loan terms and settlement costs.

SEC. 17. STUDY AND REPORTS ON DEFAULTS AND FORECLOSURES.

    (a) Study Required.--The Secretary shall conduct an extensive study 
of the root causes of default and foreclosure of home loans, using as 
much empirical data as is available.
    (b) Preliminary Report to Congress.--Not later than 6 months after 
the date of enactment of this Act, the Secretary shall submit to 
Congress a preliminary report regarding the study required by this 
section.
    (c) Final Report to Congress.--Not later than 12 months after the 
date of enactment of this Act, the Secretary shall submit to Congress a 
final report regarding the results of the study required by this 
section, which shall include any recommended legislation relating to 
the study, and recommendations for best practices and for a process to 
provide targeted assistance to populations with the highest risk of 
potential default or foreclosure.
                                 <all>