[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3581 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3581

 To establish a Federal Mortgage Origination Commission, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 25 (legislative day, September 17), 2008

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

_______________________________________________________________________

                                 A BILL


 
 To establish a Federal Mortgage Origination Commission, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Mortgage 
Origination Commission 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.
Sec. 3. Definitions.
     TITLE I--ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION

Sec. 101. Establishment of the Mortgage Origination Commission.
Sec. 102. Director of the Commission.
Sec. 103. Deputy Director of the Commission.
Sec. 104. Personnel, services, and facilities.
Sec. 105. Funding for Commission operations.
   TITLE II--EVALUATION OF STATE MORTGAGE SUPERVISION AND ENFORCEMENT

Sec. 201. Evaluation criteria.
Sec. 202. Periodic assessment of State programs.
Sec. 203. Commission information.
 TITLE III--SUPERVISION OF MORTGAGE COMPANIES AND MORTGAGE ORIGINATORS

Sec. 301. Clarification of Truth in Lending Act enforcement 
                            responsibilities.
Sec. 302. Board of Governors examination authority.
Sec. 303. Office of Thrift Supervision examination authority.

SEC. 2. PURPOSES.

    The purposes of this Act are--
            (1) to enhance protection and fair treatment of consumers 
        in the mortgage origination process by establishing uniform 
        State minimum licensing and qualification standards for 
        mortgage originators;
            (2) to establish a method to evaluate the adequacy and 
        effectiveness of State licensing, supervision, and enforcement 
        programs for regulating mortgage originators other than 
        federally regulated depository institutions and their 
        subsidiaries and employees;
            (3) to provide disclosure and transparency to consumers, 
        investors, and regulators on the adequacy of such State 
        programs; and
            (4) to clarify oversight responsibilities and enforcement 
        authority under Federal laws governing mortgage origination and 
        lending activities conducted outside of federally regulated 
        depository institutions and their subsidiaries.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Commission.--The term ``Commission'' means the Mortgage 
        Origination Commission established under this Act.
            (2) Company.--The term ``company'' means any corporation, 
        limited liability corporation, partnership, limited 
        partnership, business trust, business association, sole 
        proprietorship, or similar organization.
            (3) Depository institution.--The term ``depository 
        institution'' has the same meaning as in section 3 of the 
        Federal Deposit Insurance Act (12 U.S.C. 1813) and includes any 
        credit union.
            (4) Mortgage company.----
                    (A) In general.--The term ``mortgage company'' 
                means a company that, through mortgage loan 
                originators, engages in the business of--
                            (i) extending residential mortgage loans to 
                        others; or
                            (ii) underwriting or preparing residential 
                        mortgage loan applications on behalf of or for 
                        submission to others.
                    (B) Depository institutions and subsidiaries 
                excluded.--The term ``mortgage company'' does not 
                include a depository institution or subsidiary of a 
                depository institution.
            (5) Mortgage loan originator.--
                    (A) In general.--The term ``mortgage loan 
                originator''--
                            (i) means an individual who--
                                    (I) accepts from or prepares for a 
                                consumer 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 as a 
                        real estate broker in accordance with 
                        applicable State law, unless the person or 
                        entity is compensated by a lender, a mortgage 
                        broker, or other mortgage loan originator or by 
                        any agent of such lender, mortgage broker, or 
                        other mortgage loan originator.
                    (B) Other definitions relating to mortgage loan 
                originator.--For purposes of this paragraph, 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, and other costs), preparing loan documents 
                or packages, or collecting information on behalf of the 
                consumer with regard to a residential mortgage loan.
                    (C) Administrative or clerical tasks.--For purposes 
                of this paragraph, the term ``administrative or 
                clerical tasks'' means the receipt, collection, or 
                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.--For 
                purposes of this paragraph, 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).
            (6) Nationwide mortgage licensing system and registry.--The 
        term ``Nationwide Mortgage Licensing System and Registry'' 
        means--
                    (A) a mortgage licensing system developed and 
                maintained by the Conference of State Banking 
                Supervisors and the American Association of Residential 
                Mortgage Regulators for the registration of, or State 
                licensing and registration of, mortgage loan 
                originators; or
                    (B) the alternate mortgage licensing system and 
                registry established by the Secretary of Housing and 
                Urban Development pursuant to section 1508 of the 
                Housing and Economic Recovery Act of 2008 (12 U.S.C. 
                5107).
            (7) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means any transaction in which a mortgage, deed 
        of trust, or other consensual security interest is created or 
        retained against a one-to-four family home, individual unit of 
        a condominium or cooperative, or a mobile home to secure credit 
        extended to an individual or individuals primarily for 
        personal, family, or household purposes.
            (8) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, Puerto Rico, and the 
        Virgin Islands.

     TITLE I--ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION

SEC. 101. ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION.

    (a) Establishment; Composition.--There is established the Mortgage 
Origination Commission which shall consist of the following:
            (1) The Comptroller of the Currency, or designee.
            (2) The Chairman of the Board of Directors of the Federal 
        Deposit Insurance Corporation, or designee.
            (3) A Governor of the Board of Governors of the Federal 
        Reserve System designated by the Chairman of the Board.
            (4) The Director, Office of Thrift Supervision, or 
        designee.
            (5) The Chairman of the National Credit Union 
        Administration Board, or designee.
            (6) The Chairman of the State Liaison Committee of the 
        Federal Financial Institutions Examination Council elected 
        pursuant to section 1007 of the Federal Financial Institutions 
        Examination Council Act of 1978 (12 U.S.C. 3306).
            (7) The Director of the Commission.
    (b) Chairman.--The Director of the Commission shall serve as its 
Chairman.
    (c) Meetings; Quorum; Voting.--
            (1) In general.--The Commission shall meet at least 
        semiannually and at the call of the Director of the Commission 
        or a majority of its members when there is business to be 
        conducted.
            (2) Quorum.--A majority of the members of the Commission 
        shall constitute a quorum.
            (3) Decisions.--Decisions of the Commission shall be made 
        by the vote of a majority of its members.
    (d) Administration of the Act.--
            (1) In general.--The Commission shall have the authority to 
        administer and interpret this Act, and to prescribe regulations 
        to carry out this Act.
            (2) Rulemaking.--Rulemaking of the Commission shall be 
        subject to section 553 of the Administrative Procedure Act (5 
        U.S.C. 553).

SEC. 102. DIRECTOR OF THE COMMISSION.

    (a) Appointment.--The Director of the Commission shall be appointed 
by the President, by and with the advice and consent of the Senate, 
from among individuals who are citizens of the United States, have 
recognized and extensive experience in mortgage regulation or mortgage 
markets, and have demonstrated expertise in the legal and regulatory 
requirements and private sector standards governing the United States 
primary and secondary mortgage markets. The Director shall not hold any 
other appointed office during his or her term as Director.
    (b) Term.--The Director shall be appointed for a term of 5 years.
    (c) Vacancy.--A vacancy in the position of the Director shall be 
filled in the manner in which the original appointment was made under 
subsection (a) of this section.
    (d) Service After End of Term.--The Director may serve after the 
expiration of the term for which the Director was appointed until a 
successor Director has been appointed.
    (e) Authority.--The Director is authorized to carry out, and to 
delegate to officers, employees, and agents the authority to carry out, 
the internal administration of the Commission, including entering into 
contracts, appointing and supervising employees, and distributing 
business among members, employees, and administrative units.

SEC. 103. DEPUTY DIRECTOR OF THE COMMISSION.

    (a) Appointment.--The Commission shall have a Deputy Director who 
shall be appointed by the Director of the Commission from among 
individuals who are citizens of the United States, have recognized and 
extensive experience in mortgage regulation or mortgage markets, and 
have demonstrated expertise in the legal and regulatory requirements 
and private sector standards governing the United States primary and 
secondary mortgage markets.
    (b) Functions.--The Deputy Director shall have such functions, 
powers, and duties as the Director shall prescribe. In the event of the 
death, resignation, sickness, or absence of the Director, the Deputy 
Director shall serve as acting Director until the return of the 
Director or the appointment of a successor pursuant to section 102.

SEC. 104. PERSONNEL, SERVICES, AND FACILITIES.

    (a) Use of Regulatory Agency Personnel and Facilities.--In carrying 
out its functions under this Act the Commission may, to the extent 
practicable, utilize the personnel, services, and facilities of the 
Office of the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, the Board of Governors of the Federal Reserve 
System, the Office of Thrift Supervision, and the National Credit Union 
Administration, with their consent, with or without reimbursement.
    (b) Compensation, Authority, and Duties of Officers and Employees; 
Experts and Consultants.--In addition, the Commission may--
            (1) subject to the provisions of title 5, United States 
        Code, relating to the competitive service, classification, and 
        General Schedule pay rates, appoint and fix the compensation of 
        such officers and employees as are necessary to carry the 
        provisions of this Act, and to prescribe the authority and 
        duties of such officers and employees; and
            (2) obtain the services of experts and consultants as are 
        necessary to carry out the provisions of this Act.

SEC. 105. FUNDING FOR COMMISSION OPERATIONS.

    (a) Annual Fee.--The Commission is authorized to assess a $25 
annual fee from each mortgage loan originator during the period such 
individual is licensed by a State as a condition to performing the 
functions of a mortgage loan originator.
    (b) Adjusting the Annual Fee.--The Commission may adjust the fee 
assessed pursuant subsection (a) from time to time, as necessary to 
carry out its functions under this Act, up to a maximum of $80 per 
annum.
    (c) Inflation Adjustments.--Ten years after the effective date of 
this Act, and at the end of every 10-year period thereafter, the annual 
fee the Commission is authorized to assess under subsection (a), and 
the maximum fee authorized under subsection (b), shall be adjusted by a 
percentage equal to the percentage by which the Consumer Price Index 
(or its successor) for the month of June preceding the effective date 
(of this Act for the first adjustment, or of the most recent adjustment 
for subsequent adjustments) differs from the Consumer Price Index (or 
its successor) for the month of June in the year of the adjustment.
    (d) Notice of Adjustments.--The Commission shall publish a brief 
notice describing each adjustment pursuant to subsection (b) or (c) in 
the Federal Register concurrently with the effectiveness of such 
adjustment.
    (e) Fee Collection by States.--Each State that licenses individuals 
to performs the functions of mortgage loan originators shall collect 
the annual fee authorized under subsection (a) from each licensee, 
except licensees who provide satisfactory evidence that another State 
collects his or her annual Commission fee, and shall transmit such fees 
to the Commission on an annual basis together with a reasonable 
accounting thereof.
    (f) Fee Collection by Nationwide Mortgage Licensing System and 
Registry.----
            (1) In general.--If the Commission, following consultation 
        with the Nationwide Mortgage Licensing System and Registry, 
        determines that the facilities of the Nationwide Mortgage 
        Licensing System and Registry offers a more convenient and 
        efficient method for collecting the annual fees authorized 
        pursuant to subsection (a) than collection by one or more 
        States pursuant to subsection (e), the Commission may notify 
        such States in writing that the Commission will collect fees 
        for mortgage loan originators licensed by that State through 
        the Nationwide Mortgage Licensing System and Registry, and the 
        Nationwide Mortgage Licensing System and Registry shall collect 
        such fees.
            (2) Transmission.--Each State that receives a notice under 
        paragraph (1) shall promptly transmit to the Commission any 
        fees it has collected under subsection (e), and shall not 
        otherwise be obligated to collect fees on the Commission's 
        behalf under subsection (e) during the effective period of such 
        notice.
            (3) Expenses.--The Nationwide Mortgage Licensing System and 
        Registry shall--
                    (A) develop reasonable methods to allocate its 
                existing and projected expenses to develop, operate, 
                maintain, and upgrade the Nationwide Mortgage Licensing 
                System and Registry between--
                            (i) registered mortgage loan originators 
                        that are employees of depository institutions 
                        or subsidiaries of depository institutions; and
                            (ii) other mortgage loan originators 
                        registered or licensed through the System; and
                    (B) in establishing the amount of fees to be 
                collected to defray the costs to develop, operate, 
                maintain, and upgrade the System, the Nationwide 
                Mortgage Licensing System and Registry shall not charge 
                such mortgage loan originators described in clause (i) 
                or (ii) of subparagraph (A) fees that exceed amounts 
                reasonably necessary to defray the expenses 
                attributable to each such group.
    (g) Startup Funding.--
            (1) In general.--The Secretary of the Treasury shall pay to 
        the Commission a one-time payment of $10,000,000 within 30 days 
        after the effective date of this Act.
            (2) Repayment.--The Commission shall repay the Secretary of 
        the Treasury for such $10,000,000, in full, no later than the 
        10th anniversary of this Act's effective date.
    (h) Commission Expenditure Authority.--
            (1) In general.--The Commission shall have the power to 
        enter into contracts, and determine its necessary expenditures 
        under this Act and the manner in which such expenditures shall 
        be incurred, allowed, and paid out of funds available to the 
        Commission under this section.
            (2) Account.--Funds available to the Commission under this 
        section shall be deposited in an account in the Treasury of the 
        United States, but shall not be construed to be Government 
        funds or appropriated monies, or subject to apportionment for 
        the purposes of chapter 15 of title 31, United States Code, or 
        any other authority.

   TITLE II--EVALUATION OF STATE MORTGAGE SUPERVISION AND ENFORCEMENT

SEC. 201. EVALUATION CRITERIA.

    (a) Criteria for Evaluation of State Oversight.--The Commission 
shall develop criteria and a numerical rating system corresponding to 
descriptive categories indicative of a State program's strength or 
weakness to evaluate the effectiveness of--
            (1) systems for licensing, supervision, and enforcement 
        with respect to mortgage loan originators and mortgage 
        companies operating in the State, including but not limited 
        to--
                    (A) implementation of licensing requirements that 
                take into account conduct and disciplinary history; 
                establishment of minimum educational requirements, 
                testing standards, and continuing education; 
                establishment of appropriate license denial, 
                suspension, or revocation procedures;
                    (B) ongoing supervision and periodic examination of 
                the activities of mortgage loan originators and 
                mortgage companies to review their compliance with 
                applicable law, and to address any deficiencies 
                therein; and
                    (C) administrative and judicial enforcement 
                programs to take corrective action against mortgage 
                loan originators and mortgage companies and deter 
                future violations of licensing requirements and 
                applicable law;
            (2) mechanisms to collect, evaluate and respond to 
        complaints against State-licensed mortgage loan originators and 
        mortgage companies; and
            (3) such other matters as the Commission determines 
        appropriate in light of the purposes of this Act.
    (b) Publication of Criteria.--The criteria developed by the 
Commission pursuant to subsection (a)--
            (1) may be formulated through such processes as the 
        Commission in its discretion determines are appropriate in 
        light of the purposes of this Act; and
            (2) shall be made available to the public in accordance 
        with section 203 of this Act.

SEC. 202. PERIODIC ASSESSMENT OF STATE PROGRAMS.

    (a) Evaluation and Reporting.--The Commission shall conduct an 
evaluation of each State's programs for licensing, regulation, and 
enforcement with respect to mortgage loan originators and mortgage 
companies under the criteria developed pursuant to section 201, and 
prepare a report containing a narrative evaluation of the adequacy of 
the State's programs, including a summary numerical rating for each 
class of criteria and an overall composite rating.
    (b) Publication of Reports.--The reports prepared by the Commission 
pursuant to subsection (a) shall be made available to the public in 
accordance with section 203 of this Act.
    (c) Evaluation Frequency.--
            (1) The Commission shall complete its first evaluation and 
        report for every State no later than 4 years after the 
        effective date of this Act, and thereafter shall complete an 
        evaluation and report for each State not less than once every 
        36 months.
            (2) If a State makes significant changes to its programs 
        after the Commission has issued its report, and the State 
        submits a written certification to the Commission describing 
        the reasons why the State believes changes made are material 
        and likely to persuade the Commission to increase one or more 
        of the State's summary numerical ratings, the Commission shall 
        review the submission and determine whether to re-evaluate the 
        State's program, in part or in full, in advance of the State's 
        next scheduled evaluation.
            (3) If the Commission does not commence a re-evaluation 
        within 6 months of a State's submission under paragraph (2), 
        the Commission shall issue a written statement briefly 
        describing the basis for its decision.
            (4) Requests for re-evaluation under paragraph (2) shall be 
        determined by the Commission, without delegation to the 
        Director of the Commission.

SEC. 203. COMMISSION INFORMATION.

    (a) Commission To Make Information Publicly Available.--The 
Commission shall make its evaluation criteria developed pursuant to 
section 201(a) and its evaluation reports prepared pursuant to section 
202(a) publicly available by--
            (1) posting such material on the Commission's Internet 
        website; and
            (2) delivering copies free of charge upon each request to 
        an email address and toll-free telephone number maintained by 
        the Commission for such requests.
    (b) Commission's Access to Records.--The Commission shall assign 
the lowest possible summary numerical rating to any State program for 
which the responsible State agencies and officials do not cooperate in 
the Commission's evaluation process under section 202(a) or allow 
complete access to information, records, and personnel the Commission 
deems relevant to its evaluation.
    (c) Confidentiality Retained.--Submission of information to the 
Commission pursuant to subsection (b) does not waive or alter its 
treatment as confidential, privileged, or protected information under 
State or Federal law, and information submitted or obtained--
            (1) is not subject to Federal laws requiring the disclosure 
        of information held by federal officers or agencies; and
            (2) is not subject to discovery through proceedings 
        against, or subpoenas naming, the Commission or its officers or 
        employees.
    (d) Freedom of Information Act.--The Commission shall be deemed an 
``agency responsible for the regulation or supervision of financial 
institutions'' for purposes of section 552(b)(8) of title 5, United 
States Code, and Commission records relating to the evaluation of a 
State pursuant to section 202 of this Act shall, with the exception of 
the public report prepared by the Commission, be deemed related to 
``examination, operating, or condition reports'' for purposes of such 
section.

 TITLE III--SUPERVISION OF MORTGAGE COMPANIES AND MORTGAGE ORIGINATORS

SEC. 301. CLARIFICATION OF TRUTH IN LENDING ACT ENFORCEMENT 
              RESPONSIBILITIES.

    Section 108 of the Truth in Lending Act (15 U.S.C. 1607) is 
amended--
            (1) in subsection (b), by striking each reference to 
        ``subsection (a)'' and inserting ``subsection (a) or (f)''; and
            (2) by adding at the end the following:
    ``(f) Holding Company Affiliates.--Compliance with the requirements 
imposed under this subchapter shall be enforced under section 8 of the 
Federal Deposit Insurance Act (12 U.S.C. 1818) in the case of--
            ``(1) bank holding companies, and subsidiaries (other than 
        depository institutions or subsidiaries of depository 
        institutions) of bank holding companies, by the Board; and
            ``(2) savings and loan holding companies, and subsidiaries 
        (other than depository institutions or subsidiaries of 
        depository institutions) of savings and loan holding companies, 
        by the Director of the Office of Thrift Supervision.
    ``(g) State Enforcement Authority.--(1) State agencies are 
authorized to enforce compliance with the requirements imposed under 
this subchapter with respect to extensions of credit secured by a 
consumer's dwelling (including residential mortgage transactions) 
against mortgage companies and mortgage loan originators regulated or 
licensed by each such State agency.
    ``(2) No State agency shall have the authority under paragraph (1) 
of this subsection to take any action against any person covered under 
subsection (a) of this section, or any subsidiary of such person, or 
any mortgage loan originators employed by the foregoing.
    ``(3) The authority granted to State agencies under paragraph (1) 
of this subsection does not affect the authority conferred under 
subsection (c) or subsection (f) of this section.
    ``(4) For purposes of this subsection, the terms `mortgage company' 
and `mortgage loan originator' have the meanings given the terms by 
section 3 of the Mortgage Origination Commission Act of 2008.''.

SEC. 302. BOARD OF GOVERNORS EXAMINATION AUTHORITY.

    Section 5 of the Bank Holding Company Act (12 U.S.C. 1844) is 
amended--
            (1) in section 5(c)(2)(C)(ii), by striking ``any 
        subsidiary'' and inserting ``except as provided in subparagraph 
        (F), any subsidiary,''; and
            (2) in section 5(c)(2), by adding at the end the following:
                    ``(F) Mortgage company examinations.--(i) The Board 
                may make examinations of each bank holding company, and 
                each subsidiary of such holding company, that is a 
                mortgage company.
                    ``(ii) The Board shall conduct such examinations 
                not less than once every 18 months.
                    ``(iii) For purposes of this subparagraph, the term 
                `mortgage company' has the meaning given the term by 
                section 3 of the Mortgage Origination Commission Act of 
                2008.''.

SEC. 303. OFFICE OF THRIFT SUPERVISION EXAMINATION AUTHORITY.

    Section 10 of the Home Owners Loan Act (12 U.S.C. 1467a) is amended 
by adding at the end the following:
    ``(u) Mortgage Company Examinations.--
            ``(1) The Director may examine each savings and loan 
        holding company, and each subsidiary of such savings and loan 
        holding company, that is a mortgage company.
            ``(2) The Director shall conduct such examinations not less 
        than once every 18 months.
            ``(3) For purposes of this subsection, the term `mortgage 
        company' has the meaning given the term by section 3 of the 
        Mortgage Origination Commission Act of 2008.''.
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