[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1728 Engrossed in House (EH)]

111th CONGRESS
  1st Session
                                H. R. 1728

_______________________________________________________________________

                                 AN ACT


 
To amend the Truth in Lending Act to reform consumer mortgage practices 
   and provide accountability for such practices, to provide certain 
 minimum standards for consumer mortgage loans, 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 Reform 
and Anti-Predatory Lending Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
        TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Sec. 101. Definitions.
Sec. 102. Residential mortgage loan origination.
Sec. 103. Prohibition on steering incentives.
Sec. 104. Liability.
Sec. 105. Regulations.
Sec. 106. RESPA and TILA disclosure improvement.
Sec. 107. Study of shared appreciation mortgages.
               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Sec. 201. Ability to repay.
Sec. 202. Net tangible benefit for refinancing of residential mortgage 
                            loans.
Sec. 203. Safe harbor and rebuttable presumption.
Sec. 204. Liability.
Sec. 205. Defense to foreclosure.
Sec. 206. Additional standards and requirements.
Sec. 207. Rule of construction.
Sec. 208. Effect on State laws.
Sec. 209. Regulations.
Sec. 210. Amendments to civil liability provisions.
Sec. 211. Lender rights in the context of borrower deception.
Sec. 212. Six-month notice required before reset of hybrid adjustable 
                            rate mortgages.
Sec. 213. Credit risk retention.
Sec. 214. Required disclosures.
Sec. 215. Disclosures required in monthly statements for residential 
                            mortgage loans.
Sec. 216. Legal assistance for foreclosure-related issues.
Sec. 217. Effective date.
Sec. 218. Report by the GAO.
Sec. 219. State Attorney General enforcement authority.
Sec. 220. Tenant protection.
                     TITLE III--HIGH-COST MORTGAGES

Sec. 301. Definitions relating to high-cost mortgages.
Sec. 302. Amendments to existing requirements for certain mortgages.
Sec. 303. Additional requirements for certain mortgages.
Sec. 304. Regulations.
Sec. 305. Effective date.
                 TITLE IV--OFFICE OF HOUSING COUNSELING

Sec. 401. Short title.
Sec. 402. Establishment of Office of Housing Counseling.
Sec. 403. Counseling procedures.
Sec. 404. Grants for housing counseling assistance.
Sec. 405. Requirements to use HUD-certified counselors under HUD 
                            programs.
Sec. 406. Study of defaults and foreclosures.
Sec. 407. Default and foreclosure database.
Sec. 408. Definitions for counseling-related programs.
Sec. 409. Accountability and transparency for grant recipients.
Sec. 410. Updating and simplification of mortgage information booklet.
Sec. 411. Home inspection counseling.
Sec. 412. Warnings to homeowners of foreclosure rescue scams.
                      TITLE V--MORTGAGE SERVICING

Sec. 501. Escrow and impound accounts relating to certain consumer 
                            credit transactions.
Sec. 502. Disclosure notice required for consumers who waive escrow 
                            services.
Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 504. Truth in Lending Act amendments.
Sec. 505. Escrows included in repayment analysis.
                     TITLE VI--APPRAISAL ACTIVITIES

Sec. 601. Property appraisal requirements.
Sec. 602. Unfair and deceptive practices and acts relating to certain 
                            consumer credit transactions.
Sec. 603. Amendments relating to Appraisal Subcommittee of FIEC, 
                            Appraiser Independence Monitoring, Approved 
                            Appraiser Education, Appraisal Management 
                            Companies, Appraiser Complaint Hotline, 
                            Automated Valuation Models, and Broker 
                            Price Opinions.
Sec. 604. Study required on improvements in appraisal process and 
                            compliance programs.
Sec. 605. Equal Credit Opportunity Act amendment.
Sec. 606. Real Estate Settlement Procedures Act of 1974 amendment 
                            relating to certain appraisal fees.
  TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT 
                      SPONSORED ENTERPRISES REFORM

Sec. 701. Sense of Congress regarding the importance of Government-
                            sponsored enterprises reform to enhance the 
                            protection, limitation, and regulation of 
                            the terms of residential mortgage credit.
                          TITLE VIII--REPORTS

Sec. 801. GAO study report on government efforts to combat mortgage 
                            foreclosure rescue scams and loan 
                            modification fraud.
               TITLE IX--MULTIFAMILY MORTGAGE RESOLUTION

Sec. 901. Multifamily mortgage resolution program.
      TITLE X--STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES

Sec. 1001. Study of effect of drywall presence on foreclosures.
    TITLE XI--FANNIE MAE GUIDELINES FOR PURCHASE OF CONDOMINIUM AND 
                     COOPERATIVE HOUSING MORTGAGES

Sec. 1101. Guidelines for purchase of condominium and cooperative 
                            housing mortgages.

        TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

SEC. 101. DEFINITIONS.

    Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended 
by adding at the end the following new subsection:
    ``(cc) Definitions Relating to Mortgage Origination and Residential 
Mortgage Loans.--
            ``(1) Commission.--Unless otherwise specified, the term 
        `Commission' means the Federal Trade Commission.
            ``(2) 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 Federal Deposit Insurance 
        Corporation, and the National Credit Union Administration 
        Board. All rule writing by the `Federal banking agencies' as 
        designated by the Mortgage Reform and Anti-Predatory Lending 
        Act will be coordinated through the Financial Institutions 
        Examination Council in consultation with the Chairman of the 
        State Liaison Committee.
            ``(3) Mortgage originator.--The term `mortgage 
        originator'--
                    ``(A) means any person who, for direct or indirect 
                compensation or gain, or in the expectation of direct 
                or indirect compensation or gain--
                            ``(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;
                    ``(B) includes any person who represents to the 
                public, through advertising or other means of 
                communicating or providing information (including the 
                use of business cards, stationery, brochures, signs, 
                rate lists, or other promotional items), that such 
                person can or will provide any of the services or 
                perform any of the activities described in subparagraph 
                (A);
                    ``(C) does not include any person who is (i) not 
                otherwise described in subparagraph (A) or (B) and who 
                performs purely administrative or clerical tasks on 
                behalf of a person who is described in any such 
                subparagraph, or (ii) an employee of a retailer of 
                manufactured homes who is not described in clause (i) 
                or (iii) of subparagraph (A) and who does not advise a 
                consumer on loan terms (including rates, fees, and 
                other costs);
                    ``(D) 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 such person or entity is compensated 
                for performing such brokerage activities by a lender, a 
                mortgage broker, or other mortgage originator or by any 
                agent of such lender, mortgage broker, or other 
                mortgage originator;
                    ``(E) does not include, with respect to a 
                residential mortgage loan, a person, estate, or trust 
                that provides mortgage financing for the sale of 1 
                property in any 36-month period, provided that such 
                loan--
                            ``(i) is fully amortizing;
                            ``(ii) is with respect to a sale for which 
                        the seller determines in good faith and 
                        documents that the buyer has a reasonable 
                        ability to repay the loan;
                            ``(iii) has a fixed rate or an adjustable 
                        rate that is adjustable after 5 or more years, 
                        subject to reasonable annual and lifetime 
                        limitations on interest rate increases; and
                            ``(iv) meets any other criteria the Federal 
                        banking agencies may prescribe; and
                    ``(F) does not include a servicer or servicer 
                employees, agents and contractors, including but not 
                limited to those who offer or negotiate terms of a 
                residential mortgage loan for purposes of 
                renegotiating, modifying, replacing and subordinating 
                principal of existing mortgages where borrowers are 
                behind in their payments, in default or have a 
                reasonable likelihood of being in default or falling 
                behind.
            ``(4) Nationwide mortgage licensing system and registry.--
        The term `Nationwide Mortgage Licensing System and Registry' 
        has the same meaning as in the Secure and Fair Enforcement for 
        Mortgage Licensing Act of 2008.
            ``(5) Other definitions relating to mortgage originator.--
        For purposes of this subsection, a person `assists a consumer 
        in obtaining or applying to obtain a residential mortgage loan' 
        by, among other things, advising on residential mortgage loan 
        terms (including rates, fees, and other costs), preparing 
        residential mortgage loan packages, or collecting information 
        on behalf of the consumer with regard to a residential mortgage 
        loan.
            ``(6) Residential mortgage loan.--The term `residential 
        mortgage loan' means any consumer credit transaction that is 
        secured by a mortgage, deed of trust, or other equivalent 
        consensual security interest on a dwelling or on residential 
        real property that includes a dwelling, other than a consumer 
        credit transaction under an open end credit plan or a reverse 
        mortgage or, for purposes of sections 129B and 129C and section 
        128(a) (16), (17), and (18), and 128(f) and any regulations 
        promulgated thereunder, an extension of credit relating to a 
        plan described in section 101(53D) of title 11, United States 
        Code.
            ``(7) Secretary.--The term `Secretary', when used in 
        connection with any transaction or person involved with a 
        residential mortgage loan, means the Secretary of Housing and 
        Urban Development.
            ``(8) Securitization vehicle.--The term `securitization 
        vehicle' means a trust, corporation, partnership, limited 
        liability entity, special purpose entity, or other structure 
        that--
                    ``(A) is the issuer, or is created by the issuer, 
                of mortgage pass-through certificates, participation 
                certificates, mortgage-backed securities, or other 
                similar securities backed by a pool of assets that 
                includes residential mortgage loans; and
                    ``(B) holds such loans.
            ``(9) Securitizer.--The term `securitizer' means the person 
        that transfers, conveys, or assigns, or causes the transfer, 
        conveyance, or assignment of, residential mortgage loans, 
        including through a special purpose vehicle, to any 
        securitization vehicle, excluding any trustee that holds such 
        loans solely for the benefit of the securitization vehicle.
            ``(10) Servicer.--The term `servicer' has the same meaning 
        as in section 6(i)(2) of the Real Estate Settlement Procedures 
        Act of 1974.''.

SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129A the following 
new section:
``Sec. 129B. Residential mortgage loan origination
    ``(a) Finding and Purpose.--
            ``(1) Finding.--The Congress finds that economic 
        stabilization would be enhanced by the protection, limitation, 
        and regulation of the terms of residential mortgage credit and 
        the practices related to such credit, while ensuring that 
        responsible, affordable mortgage credit remains available to 
        consumers.
            ``(2) Purpose.--It is the purpose of this section and 
        section 129C to assure that consumers are offered and receive 
        residential mortgage loans on terms that reasonably reflect 
        their ability to repay the loans and that are understandable 
        and not unfair, deceptive or abusive.
    ``(b) Duty of Care.--
            ``(1) Standard.--Subject to regulations prescribed under 
        this subsection, each mortgage originator shall, in addition to 
        the duties imposed by otherwise applicable provisions of State 
        or Federal law--
                    ``(A) be qualified and, when required, registered 
                and licensed as a mortgage originator in accordance 
                with applicable State or Federal law, including the 
                Secure and Fair Enforcement for Mortgage Licensing Act 
                of 2008;
                    ``(B) with respect to each consumer seeking or 
                inquiring about a residential mortgage loan, diligently 
                work to present the consumer with a range of 
                residential mortgage loan products for which the 
                consumer likely qualifies and which are appropriate to 
                the consumer's existing circumstances, based on 
                information known by, or obtained in good faith by, the 
                originator;
                    ``(C) make full, complete, and timely disclosure to 
                each such consumer in writing, the receipt and 
                understanding of which shall be acknowledged by the 
                signature of the mortgage originator and the consumer, 
                of--
                            ``(i) the comparative costs and benefits of 
                        each residential mortgage loan product offered, 
                        discussed, or referred to by the originator 
                        (and such comparative costs and benefits for 
                        each such product shall be presented side by 
                        side and the disclosures for each such product 
                        shall have equal prominence);
                            ``(ii) the nature of the originator's 
                        relationship to the consumer (including the 
                        cost of the services to be provided by the 
                        originator and a statement that the mortgage 
                        originator is or is not acting as an agent for 
                        the consumer, as the case may be); and
                            ``(iii) any relevant conflicts of interest 
                        between the originator and the consumer;
                    ``(D) certify to the creditor, with respect to any 
                transaction involving a residential mortgage loan, that 
                the mortgage originator has fulfilled all requirements 
                applicable to the originator under this section with 
                respect to the transaction; and
                    ``(E) include on all loan documents any unique 
                identifier of the mortgage originator provided by the 
                Nationwide Mortgage Licensing System and Registry.
            ``(2) Clarification of extent of duty to present range of 
        products and appropriate products.--
                    ``(A) No duty to offer products for which 
                originator is not authorized to take an application.--
                Paragraph (1)(B) shall not be construed as requiring--
                            ``(i) a mortgage originator to present to 
                        any consumer any specific residential mortgage 
                        loan product that is offered by a creditor 
                        which does not accept consumer referrals from, 
                        or consumer applications submitted by or 
                        through, such originator; or
                            ``(ii) a creditor to offer products that 
                        the creditor does not offer to the general 
                        public.
                    ``(B) Appropriate loan product.--For purposes of 
                paragraph (1)(B), a residential mortgage loan shall be 
                presumed to be appropriate for a consumer if--
                            ``(i) the mortgage originator determines in 
                        good faith, based on then existing information 
                        and without undergoing a full underwriting 
                        process, that the consumer has a reasonable 
                        ability to repay and, in the case of a 
                        refinancing of an existing residential mortgage 
                        loan, receives a net tangible benefit, as 
                        determined in accordance with regulations 
                        prescribed under subsections (a) and (b) of 
                        section 129C; and
                            ``(ii) the loan does not have predatory 
                        characteristics or effects (such as equity 
                        stripping and excessive fees and abusive terms) 
                        as determined in accordance with regulations 
                        prescribed under paragraph (4).
            ``(3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                    ``(A) creating an agency or fiduciary relationship 
                between a mortgage originator and a consumer if the 
                originator does not hold himself or herself out as such 
                an agent or fiduciary; or
                    ``(B) restricting a mortgage originator from 
                holding himself or herself out as an agent or fiduciary 
                of a consumer subject to any additional duty, 
                requirement, or limitation applicable to agents or 
                fiduciaries under any Federal or State law.
            ``(4) Regulations.--
                    ``(A) In general.--The Federal banking agencies, in 
                consultation with the Secretary, and the Commission, 
                shall jointly prescribe regulations to--
                            ``(i) further define the duty established 
                        under paragraph (1);
                            ``(ii) implement the requirements of this 
                        subsection;
                            ``(iii) establish the time period within 
                        which any disclosure required under paragraph 
                        (1) shall be made to the consumer; and
                            ``(iv) establish such other requirements 
                        for any mortgage originator as such regulatory 
                        agencies may determine to be appropriate to 
                        meet the purposes of this subsection.
                    ``(B) Complementary and nonduplicative 
                disclosures.--The agencies referred to in subparagraph 
                (A) shall endeavor to make the required disclosures to 
                consumers under this subsection complementary and 
                nonduplicative with other disclosures for mortgage 
                consumers to the extent such efforts--
                            ``(i) are practicable; and
                            ``(ii) do not reduce the value of any such 
                        disclosure to recipients of such disclosures.
            ``(5) Compliance procedures required.--The Federal banking 
        agencies shall prescribe regulations requiring depository 
        institutions to establish and maintain procedures reasonably 
        designed to assure and monitor the compliance of such 
        depository institutions, the subsidiaries of such institutions, 
        and the employees of such institutions or subsidiaries with the 
        requirements of this section and the registration procedures 
        established under section 1507 of the Secure and Fair 
        Enforcement for Mortgage Licensing Act of 2008.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129 the following new items:

``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.

SEC. 103. PROHIBITION ON STEERING INCENTIVES.

    Section 129B of the Truth in Lending Act (as added by section 
102(a)) is amended by inserting after subsection (b) the following new 
subsection:
    ``(c) Prohibition on Steering Incentives.--
            ``(1) In general.--For any mortgage loan, the total amount 
        of direct and indirect compensation from all sources permitted 
        to a mortgage originator may not vary based on the terms of the 
        loan (other than the amount of the principal).
            ``(2) Restructuring of financing origination fee.--
                    ``(A) In general.--For any mortgage loan, a 
                mortgage originator may not arrange for a consumer to 
                finance through rate any origination fee or cost except 
                bona fide third party settlement charges not retained 
                by the creditor or mortgage originator.
                    ``(B) Exception.--Notwithstanding paragraph 
                subparagraph (A), a mortgage originator may arrange for 
                a consumer to finance through rate an origination fee 
                or cost if--
                            ``(i) the mortgage originator does not 
                        receive any other compensation from the 
                        consumer except the compensation that is 
                        financed through rate; and
                            ``(ii) the mortgage is a qualified 
                        mortgage.
            ``(3) Regulations.--The Federal banking agencies, in 
        consultation with the Secretary and the Commission, shall 
        jointly prescribe regulations to prohibit--
                    ``(A) mortgage originators from steering any 
                consumer to a residential mortgage loan that--
                            ``(i) the consumer lacks a reasonable 
                        ability to repay (in accordance with 
                        regulations prescribed under section 129C(a));
                            ``(ii) in the case of a refinancing of a 
                        residential mortgage loan, does not provide the 
                        consumer with a net tangible benefit (in 
                        accordance with regulations prescribed under 
                        section 129C(b)); or
                            ``(iii) has predatory characteristics or 
                        effects (such as equity stripping, excessive 
                        fees, or abusive terms);
                    ``(B) mortgage originators from steering any 
                consumer from a residential mortgage loan for which the 
                consumer is qualified that is a qualified mortgage (as 
                defined in section 129C(c)(3)) to a residential 
                mortgage loan that is not a qualified mortgage;
                    ``(C) abusive or unfair lending practices that 
                promote disparities among consumers of equal credit 
                worthiness but of different race, ethnicity, gender, or 
                age;
                    ``(D) mortgage originators from assessing excessive 
                points and fees (as such term is described under 
                section 103(aa)(4) of the Truth in Lending Act (15 
                U.S.C. 1602(aa)(4))) to a consumer for the origination 
                of a residential mortgage loan based on such consumer's 
                decision to finance all or part of the payment through 
                the rate for such points and fees; and
                    ``(E) mortgage originators from--
                            ``(i) mischaracterizing the credit history 
                        of a consumer or the residential mortgage loans 
                        available to a consumer;
                            ``(ii) mischaracterizing or suborning the 
                        mischaracterization of the appraised value of 
                        the property securing the extension of credit; 
                        or
                            ``(iii) if unable to suggest, offer, or 
                        recommend to a consumer a loan that is not more 
                        expensive than a loan for which the consumer 
                        qualifies, discouraging a consumer from seeking 
                        a home mortgage loan secured by a consumer's 
                        principal dwelling from another mortgage 
                        originator.
            ``(4) Rules of construction.--No provision of this 
        subsection shall be construed as--
                    ``(A) permitting yield spread premiums or other 
                similar incentive compensation;
                    ``(B) affecting the mechanism for providing the 
                total amount of direct and indirect compensation 
                permitted to a mortgage originator;
                    ``(C) limiting or affecting the amount of 
                compensation received by a creditor upon the sale of a 
                consummated loan to a subsequent purchaser;
                    ``(D) restricting a consumer's ability to finance, 
                including through principal, any origination fees or 
                costs permitted under this subsection, or the mortgage 
                originator's ability to receive such fees or costs 
                (including compensation) from any person, so long as 
                such fees or costs were fully and clearly disclosed to 
                the consumer earlier in the application process as 
                required by 129B(b)(1)(C)(i) and do not vary based on 
                the terms of the loan (other than the amount of the 
                principal) or the consumer's decision about whether to 
                finance such fees or costs; or
                    ``(E) prohibiting incentive payments to a mortgage 
                originator based on the number of residential mortgage 
                loans originated within a specified period of time.''.

SEC. 104. LIABILITY.

    Section 129B of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 103) the following new 
subsection:
    ``(d) Liability for Violations.--
            ``(1) In general.--For purposes of providing a cause of 
        action for any failure by a mortgage originator to comply with 
        any requirement imposed under this section and any regulation 
        prescribed under this section, subsections (a) and (b) of 
        section 130 shall be applied with respect to any such failure 
        by substituting `mortgage originator' for `creditor' each place 
        such term appears in each such subsection.
            ``(2) Maximum.--The maximum amount of any liability of a 
        mortgage originator under paragraph (1) to a consumer for any 
        violation of this section shall not exceed the greater of 
        actual damages or an amount equal to 3 times the total amount 
        of direct and indirect compensation or gain accruing to the 
        mortgage originator in connection with the residential mortgage 
        loan involved in the violation, plus the costs to the consumer 
        of the action, including a reasonable attorney's fee.''.

SEC. 105. REGULATIONS.

    (a) Discretionary Regulatory Authority.--Section 129B of the Truth 
in Lending Act is amended by inserting after subsection (d) (as added 
by section 104) the following new subsection:
    ``(e) Discretionary Regulatory Authority.--
            ``(1) In general.--The Federal banking agencies shall, by 
        regulations issued jointly, prohibit or condition terms, acts 
        or practices relating to residential mortgage loans that the 
        agencies find to be abusive, unfair, deceptive, predatory, 
        inconsistent with reasonable underwriting standards, necessary 
        or proper to ensure that responsible, affordable mortgage 
        credit remains available to consumers in a manner consistent 
        with the purposes of this section and section 129B, necessary 
        or proper to effectuate the purposes of this section and 
        section 129C, to prevent circumvention or evasion thereof, or 
        to facilitate compliance with such sections, or are not in the 
        interest of the borrower.
            ``(2) Application.--The regulations prescribed under 
        paragraph (1) shall be applicable to all residential mortgage 
        loans and shall be applied in the same manner as regulations 
        prescribed under section 105.
    ``(f) Section 129B and any regulations promulgated thereunder do 
not apply to an extension of credit relating to a plan described in 
section 101(53D) of title 11, United States Code.''.
    (b) Effective Date.--The regulations required or authorized to be 
prescribed under this title or the amendments made by this title--
            (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
            (2) shall take effect not later than 18 months after the 
        date of the enactment of this Act.
    (c) Truth in Lending Final Rule.--Notwithstanding any other 
provision of this Act, the regulations adopted by the Board concerning 
Truth in Lending, 73 Fed. Reg. 44522 (July 30, 2008), shall take effect 
as decided by the Board with such exceptions or revisions as the Board 
determines necessary.
    (d) Technical and Conforming Amendments.--Section 129(l)(2) of the 
Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by inserting 
``referred to in section 103(aa)'' after ``loans'' each place such term 
appears.

SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT.

    (a) Compatible Disclosures.--The Secretary of Housing and Urban 
Development and the Board of Governors of the Federal Reserve shall, 
not later than the expiration of the 6-month period beginning upon the 
date of the enactment of this Act, jointly issue for public comment 
proposed regulations providing for compatible disclosures for borrowers 
to receive at the time of mortgage application and at the time of 
closing.
    (b) Requirements.--Such disclosures shall--
            (1) provide clear and concise information to borrowers on 
        the terms and costs of residential mortgage transactions and 
        mortgage transactions covered by the Truth in Lending Act (12 
        U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures 
        Act of 1974 (12 U.S.C. 2601 et seq.);
            (2) satisfy the requirements of section 128 of the Truth in 
        Lending Act (12 U.S.C. 1638) and section 4 and 5 of the Real 
        Estate Settlement Procedures Act of 1974; and
            (3) comprise early disclosures under the Truth in Lending 
        Act and the good faith estimate disclosures under the Real 
        Estate Settlement Procedures Act of 1974 and final Truth in 
        Lending Act disclosures and the uniform settlement statement 
        disclosures under Real Estate Settlement Procedures Act of 1974 
        and provide for standardization to the greatest extent possible 
        among such disclosures from mortgage origination through the 
        mortgage settlement.
            (4) shall include, with respect to a residential home 
        mortgage loan, a written statement of--
                    (A) the principal amount of the loan;
                    (B) the term of the loan;
                    (C) whether the loan has a fixed rate of interest 
                or an adjustable rate of interest;
                    (D) the annual percentage rate of interest under 
                the loan as of the time of the disclosure;
                    (E) if the rate of interest under the loan can 
                adjust after the disclosure, for each such possible 
                adjustment--
                            (i) when such adjustment will or may occur; 
                        and
                            (ii) the maximum annual percentage rate of 
                        interest to which it can be adjusted;
                    (F) the total monthly payment under the loan 
                (including loan principal and interest, property taxes, 
                and insurance) at the time of the disclosure;
                    (G) the maximum total estimated monthly maximum 
                payment pursuant to each such possible adjustment;
                    (H) the total settlement charges in connection with 
                the loan and the amount of any downpayment and cash 
                required at settlement; and
                    (I) whether or not the loan has a prepayment 
                penalty or balloon payment and the terms, timing, and 
                amount of any such penalty or payment.
    (c) Suspension of 2008 RESPA Rule.--
            (1) Requirement.--The Secretary of Housing and Urban 
        Development shall, during the period beginning on the date of 
        the enactment of this Act and ending upon issuance of proposed 
        regulations pursuant to subsection (a), suspend implementation 
        of any provisions of the final rule referred to in paragraph 
        (2) that would establish and implement a new standardized good 
        faith estimate and a new standardized uniform settlement 
        statement. Any such provisions shall be replaced by the 
        regulations issued pursuant to subsections (a) and (b).
            (2) 2008 rule.--The final rule referred to in this 
        paragraph is the rule of the Department of Housing and Urban 
        Development published on November 17, 2008, on pages 68204-
        68288 of Volume 73 of the Federal Register (Docket No. FR-5180-
        F-03; relating to ``Real Estate Settlement Procedures Act 
        (RESPA): Rule to Simplify and Improve the Process of Obtaining 
        Mortgages and Reduce Consumer Settlement Costs'').
    (d) Implementation.--The regulations required under subsection (a) 
shall take effect, and shall provide an implementation date for the new 
disclosures required under such regulations, not later than the 
expiration of the 12-month period beginning upon the date of the 
enactment of this Act.
    (e) Failure To Issue Compatible Disclosures.--If the Secretary of 
Housing and Urban Development and the Board of Governors of the Federal 
Reserve System cannot agree on compatible disclosures pursuant to 
subsections (a) and (b), the Secretary and the Board shall submit a 
report to the Congress, after the 6-month period referred to in 
subsection (a), explaining the reasons for such disagreement. After the 
15-day period beginning upon submission of such report, the Secretary 
and the Board may separately issue for public comment regulations 
providing for disclosures under the Real Estate Settlement Procedures 
Act of 1974 and the Truth in Lending Act, respectively. Any final 
disclosures as a result of such regulations issued by the Secretary and 
the Board shall take effect on the same date, and not later than the 
expiration of the 12-month period beginning on the date of the 
enactment of this Act. If either the Secretary or the Board fails to 
act during such 12-month period, either such agency may act 
independently and implement final regulations.
    (f) Standardized Disclosure Forms.--
            (1) In general.--Any regulations proposed or issued 
        pursuant to the requirements of this section shall include 
        model disclosure forms.
            (2) Option for mandatory use.--In issuing proposed 
        regulations under subsection (a), the Secretary of Housing and 
        Urban Development and the Board of Governors of the Federal 
        Reserve System shall include regulations for the mandatory use 
        of standardized disclosure forms if they jointly determine that 
        it would substantially benefit the consumer.

SEC. 107. STUDY OF SHARED APPRECIATION MORTGAGES.

    (a) Study.--The Secretary of Housing and Urban Development, in 
consultation with the Secretary of the Treasury and other relevant 
agencies, shall conduct a comprehensive study to determine prudent 
statutory and regulatory requirements sufficient to provide for the 
widespread use of shared appreciation mortgages to strengthen local 
housing markets, provide new opportunities for affordable 
homeownership, and enable homeowners at-risk of foreclosure to 
refinance or modify their mortgages.
    (b) Report.--Not later than the expiration of the 6-month period 
beginning on the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall submit a report to the Congress on 
the results of the study, which shall include recommendations for the 
regulatory and legislative requirements referred to in subsection (a).

               TITLE II--MINIMUM STANDARDS FOR MORTGAGES

SEC. 201. ABILITY TO REPAY.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129B (as added by 
section 102(a)) the following new section:
``Sec. 129C. Minimum standards for residential mortgage loans
    ``(a) Ability To Repay.--
            ``(1) In general.--In accordance with regulations 
        prescribed jointly by the Federal banking agencies, in 
        consultation with the Commission, no creditor may make a 
        residential mortgage loan unless the creditor makes a 
        reasonable and good faith determination based on verified and 
        documented information that, at the time the loan is 
        consummated, the consumer has a reasonable ability to repay the 
        loan, according to its terms, and all applicable taxes, 
        insurance, and assessments.
            ``(2) Multiple loans.--If the creditor knows, or has reason 
        to know, that 1 or more residential mortgage loans secured by 
        the same dwelling will be made to the same consumer, the 
        creditor shall make a reasonable and good faith determination, 
        based on verified and documented information, that the consumer 
        has a reasonable ability to repay the combined payments of all 
        loans on the same dwelling according to the terms of those 
        loans and all applicable taxes, insurance, and assessments.
            ``(3) Basis for determination.--A determination under this 
        subsection of a consumer's ability to repay a residential 
        mortgage loan shall include consideration of the consumer's 
        credit history, current income, expected income the consumer is 
        reasonably assured of receiving, current obligations, debt-to-
        income ratio, employment status, and other financial resources 
        other than the consumer's equity in the dwelling or real 
        property that secures repayment of the loan.
            ``(4) Income verification.--In order to safeguard against 
        fraudulent reporting, any consideration of a consumer's income 
        history in making a determination under this subsection shall 
        include the verification of such income by the use of--
                    ``(A) Internal Revenue Service transcripts of tax 
                returns provided by a third party; or
                    ``(B) such other similar method that quickly and 
                effectively verifies income documentation by a third 
                party as the Federal banking agencies may jointly 
                prescribe.
            ``(5) Nonstandard loans.--
                    ``(A) Variable rate loans that defer repayment of 
                any principal or interest.--For purposes of 
                determining, under this subsection, a consumer's 
                ability to repay a variable rate residential mortgage 
                loan that allows or requires the consumer to defer the 
                repayment of any principal or interest, the creditor 
                shall use a fully amortizing repayment schedule.
                    ``(B) Interest-only loans.--For purposes of 
                determining, under this subsection, a consumer's 
                ability to repay a residential mortgage loan that 
                permits or requires the payment of interest only, the 
                creditor shall use the payment amount required to 
                amortize the loan by its final maturity.
                    ``(C) Calculation for negative amortization.--In 
                making any determination under this subsection, a 
                creditor shall also take into consideration any balance 
                increase that may accrue from any negative amortization 
                provision.
                    ``(D) Calculation process.--For purposes of making 
                any determination under this subsection, a creditor 
                shall calculate the monthly payment amount for 
                principal and interest on any residential mortgage loan 
                by assuming--
                            ``(i) the loan proceeds are fully disbursed 
                        on the date of the consummation of the loan;
                            ``(ii) the loan is to be repaid in 
                        substantially equal monthly amortizing payments 
                        for principal and interest over the entire term 
                        of the loan with no balloon payment, unless the 
                        loan contract requires more rapid repayment 
                        (including balloon payment), in which case the 
                        calculation shall be made (I) in accordance 
                        with regulations prescribed by the Federal 
                        banking agencies, with respect to any loan 
                        which has an annual percentage rate that does 
                        not exceed the average prime offer rate for a 
                        comparable transaction, as of the date the 
                        interest rate is set, by 1.5 or more percentage 
                        points for a first lien residential mortgage 
                        loan; and by 3.5 or more percentage points for 
                        a subordinate lien residential mortgage loan; 
                        or (II) using the contract's repayment 
                        schedule, with respect to a loan which has an 
                        annual percentage rate, as of the date the 
                        interest rate is set, that is at least 1.5 
                        percentage points above the average prime offer 
                        rate for a first lien residential mortgage 
                        loan; and 3.5 percentage points above the 
                        average prime offer rate for a subordinate lien 
                        residential mortgage loan; and
                            ``(iii) the interest rate over the entire 
                        term of the loan is a fixed rate equal to the 
                        fully indexed rate at the time of the loan 
                        closing, without considering the introductory 
                        rate.
                    ``(E) Refinance of hybrid loans with current 
                lender.--In considering any application for refinancing 
                an existing hybrid loan by the creditor into a standard 
                loan to be made by the same creditor in any case in 
                which the sole net-tangible benefit to the mortgagor 
                would be a reduction in monthly payment and the 
                mortgagor has not been delinquent on any payment on the 
                existing hybrid loan, the creditor may--
                            ``(i) consider the mortgagor's good 
                        standing on the existing mortgage;
                            ``(ii) consider if the extension of new 
                        credit would prevent a likely default should 
                        the original mortgage reset and give such 
                        concerns a higher priority as an acceptable 
                        underwriting practice; and
                            ``(iii) offer rate discounts and other 
                        favorable terms to such mortgagor that would be 
                        available to new customers with high credit 
                        ratings based on such underwriting practice.
            ``(6) Fully-indexed rate defined.--For purposes of this 
        subsection, the term `fully indexed rate' means the index rate 
        prevailing on a residential mortgage loan at the time the loan 
        is made plus the margin that will apply after the expiration of 
        any introductory interest rates.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129B (as added by section 102(b)) the following new item:

``129C. Minimum standards for residential mortgage loans.''.

SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE 
              LOANS.

    Section 129C of the Truth in Lending Act (as added by section 
201(a)) is amended by inserting after subsection (a) the following new 
subsection:
    ``(b) Net Tangible Benefit for Refinancing of Residential Mortgage 
Loans.--
            ``(1) In general.--In accordance with regulations 
        prescribed under paragraph (3), no creditor may extend credit 
        in connection with any residential mortgage loan that involves 
        a refinancing of a prior existing residential mortgage loan 
        unless the creditor reasonably and in good faith determines, at 
        the time the loan is consummated and on the basis of 
        information known by or obtained in good faith by the creditor, 
        that the refinanced loan will provide a net tangible benefit to 
        the consumer.
            ``(2) Certain loans providing no net tangible benefit.--A 
        residential mortgage loan that involves a refinancing of a 
        prior existing residential mortgage loan shall not be 
        considered to provide a net tangible benefit to the consumer if 
        the costs of the refinanced loan, including points, fees and 
        other charges, exceed the amount of any newly advanced 
        principal without any corresponding changes in the terms of the 
        refinanced loan that are advantageous to the consumer.
            ``(3) Net tangible benefit.--The Federal banking agencies 
        shall jointly prescribe regulations defining the term `net 
        tangible benefit' for purposes of this subsection.''.

SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

    Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (b) (as added by section 202) the following new 
subsection:
    ``(c) Presumption of Ability To Repay and Net Tangible Benefit.--
            ``(1) In general.--Any creditor with respect to any 
        residential mortgage loan, and any assignee or securitizer of 
        such loan, may presume that the loan has met the requirements 
        of subsections (a) and (b), if the loan is a qualified 
        mortgage.
            ``(2) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Qualified mortgage.--The term `qualified 
                mortgage' means any residential mortgage loan--
                            ``(i) that does not allow a consumer to 
                        defer repayment of principal or interest, or is 
                        not otherwise deemed a `non-traditional 
                        mortgage' under guidance, advisories, or 
                        regulations prescribed by the Federal Banking 
                        Agencies;
                            ``(ii) that does not provide for a 
                        repayment schedule that results in negative 
                        amortization at any time;
                            ``(iii) for which the terms are fully 
                        amortizing and which does not result in a 
                        balloon payment, where a `balloon payment' is a 
                        scheduled payment that is more than twice as 
                        large as the average of earlier scheduled 
                        payments;
                            ``(iv) which has an annual percentage rate 
                        that does not exceed the average prime offer 
                        rate for a comparable transaction, as of the 
                        date the interest rate is set--
                                    ``(I) by 1.5 or more percentage 
                                points, in the case of a first lien 
                                residential mortgage loan having a 
                                original principal obligation amount 
                                that is equal to or less than the 
                                amount of the maximum limitation on the 
                                original principal obligation of 
                                mortgage in effect for a residence of 
                                the applicable size, as of the date of 
                                such interest rate set, pursuant to the 
                                sixth sentence of section 305(a)(2) the 
                                Federal Home Loan Mortgage Corporation 
                                Act (12 U.S.C. 1454(a)(2));
                                    ``(II) by 2.5 or more percentage 
                                points, in the case of a first lien 
                                residential mortgage loan having a 
                                original principal obligation amount 
                                that is more than the amount of the 
                                maximum limitation on the original 
                                principal obligation of mortgage in 
                                effect for a residence of the 
                                applicable size, as of the date of such 
                                interest rate set, pursuant to the 
                                sixth sentence of section 305(a)(2) the 
                                Federal Home Loan Mortgage Corporation 
                                Act (12 U.S.C. 1454(a)(2)); and
                                    ``(III) by 3.5 or more percentage 
                                points, in the case of a subordinate 
                                lien residential mortgage loan;
                            ``(v) for which the income and financial 
                        resources relied upon to qualify the obligors 
                        on the loan are verified and documented;
                            ``(vi) in the case of a fixed rate loan, 
                        for which the underwriting process is based on 
                        a payment schedule that fully amortizes the 
                        loan over the loan term and takes into account 
                        all applicable taxes, insurance, and 
                        assessments;
                            ``(vii) in the case of an adjustable rate 
                        loan, for which the underwriting is based on 
                        the maximum rate permitted under the loan 
                        during the first seven years, and a payment 
                        schedule that fully amortizes the loan over the 
                        loan term and takes into account all applicable 
                        taxes, insurance, and assessments;
                            ``(viii) that does not cause the consumer's 
                        total monthly debts, including amounts under 
                        the loan, to exceed a percentage established by 
                        regulation of the consumer's monthly gross 
                        income or such other maximum percentage of such 
                        income as may be prescribed by regulation under 
                        paragraph (4), and such rules shall also take 
                        into consideration the consumer's income 
                        available to pay regular expenses after payment 
                        of all installment and revolving debt;
                            ``(ix) for which the total points and fees 
                        payable in connection with the loan do not 
                        exceed 2 percent of the total loan amount, 
                        where `points and fees' means points and fees 
                        as defined by Section 103(aa)(4) of the Truth 
                        in Lending Act (15 U.S.C. 1602(aa)(4)); and
                            ``(x) for which the term of the loan does 
                        not exceed 30 years, except as such term may be 
                        extended under paragraph (4).
                    ``(B) Average prime offer rate.--The term `average 
                prime offer rate' means an annual percentage rate that 
                is derived from average interest rates, points, and 
                other loan pricing terms currently offered to consumers 
                by a representative sample of creditors for mortgage 
                transactions that have low risk pricing 
                characteristics.
            ``(3) Publication of average prime offer rate and apr 
        thresholds.--The Board--
                    ``(A) shall publish, and update at least weekly, 
                average prime offer rates;
                    ``(B) may publish multiple rates based on varying 
                types of mortgage transactions; and
                    ``(C) shall adjust the thresholds of 1.50 
                percentage points in paragraph (2)(A)(iv)(I), 2.50 
                percentage points in paragraph (2)(A)(iv)(II), and 3.50 
                percentage points in paragraph (2)(A)(v)(III), as 
                necessary to reflect significant changes in market 
                conditions and to effectuate the purposes of the 
                Mortgage Reform and Anti-Predatory Lending Act.
            ``(4) Regulations.--
                    ``(A) In general.--The Federal banking agencies 
                shall jointly prescribe regulations to carry out the 
                purposes of this subsection.
                    ``(B) Revision of safe harbor criteria.--
                            ``(i) In general.--The Federal banking 
                        agencies may jointly prescribe regulations that 
                        revise, add to, or subtract from the criteria 
                        that define a qualified mortgage upon a finding 
                        that such regulations are necessary or proper 
                        to ensure that responsible, affordable mortgage 
                        credit remains available to consumers in a 
                        manner consistent with the purposes of this 
                        section, necessary and appropriate to 
                        effectuate the purposes of this section and 
                        section 129B, to prevent circumvention or 
                        evasion thereof, or to facilitate compliance 
                        with such sections.
                            ``(ii) Loan definition.--The following 
                        agencies shall, in consultation with the 
                        Federal banking agencies, prescribe rules 
                        defining the types of loans they insure, 
                        guarantee or administer, as the case may be, 
                        that are Qualified Mortgages for purposes of 
                        subsection (c)(1)(A) upon a finding that such 
                        rules are consistent with the purposes of this 
                        section and section 129B, to prevent 
                        circumvention or evasion thereof, or to 
                        facilitate compliance with such sections--
                                    ``(I) The Department of Housing and 
                                Urban Development, with regard to 
                                mortgages insured under title II of the 
                                National Housing Act (12 U.S.C. 1707 et 
                                seq.);
                                    ``(II) The Secretary of Veterans 
                                Affairs, with regard to a loan made or 
                                guaranteed by the Secretary of Veterans 
                                Affairs;
                                    ``(III) The Secretary of 
                                Agriculture, with regard loans 
                                guaranteed by the Secretary of 
                                Agriculture pursuant to 42 U.S.C. 
                                1472(h);
                                    ``(IV) The Federal Housing Finance 
                                Agency, with regard to loans meeting 
                                the conforming loan standards of the 
                                Federal National Mortgage Corporation 
                                or the Federal Home Loan Mortgage 
                                Corporation; and
                                    ``(V) The Rural Housing Service, 
                                with regard to loans insured by the 
                                Rural Housing Service.''.

SEC. 204. LIABILITY.

    Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (c) (as added by section 203) the following new 
subsection:
    ``(d) Liability for Violations.--
            ``(1) In general.--
                    ``(A) Rescission.--In addition to any other 
                liability under this title for a violation by a 
                creditor of subsection (a) or (b) (for example under 
                section 130) and subject to the statute of limitations 
                in paragraph (9), a civil action may be maintained 
                against a creditor for a violation of subsection (a) or 
                (b) with respect to a residential mortgage loan for the 
                rescission of the loan, and such additional costs as 
                the obligor may have incurred as a result of the 
                violation and in connection with obtaining a rescission 
                of the loan, including a reasonable attorney's fee.
                    ``(B) Cure.--A creditor shall not be liable for 
                rescission under subparagraph (A) with respect to a 
                residential mortgage loan if, no later than 90 days 
                after the receipt of notification from the consumer 
                that the loan violates subsection (a) or (b), the 
                creditor, acting in good faith, a cure.
            ``(2) Limited assignee and securitizer liability.--
        Notwithstanding sections 125(e) and 131 and except as provided 
        in paragraph (3), a civil action which may be maintained 
        against a creditor with respect to a residential mortgage loan 
        for a violation of subsection (a) or (b) may be maintained 
        against any assignee or securitizer of such residential 
        mortgage loan, who has acted in good faith, for the following 
        liabilities only:
                    ``(A) Rescission of the loan.
                    ``(B) Such additional costs as the obligor may have 
                incurred as a result of the violation and in connection 
                with obtaining a rescission of the loan, including a 
                reasonable attorney's fee.
            ``(3) Assignee and securitizer exemption.--No assignee or 
        securitizer of a residential mortgage loan that has exercised 
        reasonable due diligence in complying with the requirements of 
        subsections (a) and (b), consistent with reasonable due 
        diligence practices prescribed by the Federal banking agencies, 
        shall be liable under paragraph (2) with respect to such loan 
        if, no later than 90 days after the receipt of notification 
        from the consumer that the loan violates subsection (a) or (b), 
        the assignee or securitizer provides a cure so that the loan 
        satisfies the requirements of subsections (a) and (b).
            ``(4) Absent parties.--
                    ``(A) Absent creditor.--Notwithstanding the 
                exemption provided in paragraph (3), if the creditor 
                with respect to a residential mortgage loan made in 
                violation of subsection (a) or (b) has ceased to exist 
                as a matter of law or has filed for bankruptcy 
                protection under title 11, United States Code, or has 
                had a receiver, conservator, or liquidating agent 
                appointed, a consumer may maintain a civil action 
                against an assignee to cure the residential mortgage 
                loan, plus the costs and reasonable attorney's fees 
                incurred in obtaining such remedy.
                    ``(B) Absent creditor and assignee.--
                Notwithstanding the exemption provided in paragraph 
                (3), if the creditor with respect to a residential 
                mortgage loan made in violation of subsection (a) or 
                (b) and each assignee of such loan have ceased to exist 
                as a matter of law or have filed for bankruptcy 
                protection under title 11, United States Code, or have 
                had receivers, conservators, or liquidating agents 
                appointed, the consumer may maintain the civil action 
                referred to in subparagraph (A) against the 
                securitizer.
            ``(5) Cure defined.--For purposes of this subsection, the 
        term `cure' means, with respect to a residential mortgage loan 
        that violates subsection (a) or (b), the modification or 
        refinancing, at no cost to the consumer, of the loan to provide 
        terms that satisfy the requirements of subsections (a) and (b) 
        and the payment of such additional costs as the obligor may 
        have incurred in connection with obtaining a cure of the loan, 
        including a reasonable attorney's fee.
            ``(6) Disagreement over cure.--If any creditor, assignee, 
        or securitizer and a consumer fail to reach agreement on a cure 
        with respect to a residential mortgage loan that violates 
        subsection (a) or (b), or the consumer fails to accept a cure 
        proffered by a creditor, assignee, or securitizer--
                    ``(A) the creditor, assignee, or securitizer may 
                provide the cure; and
                    ``(B) the consumer may challenge the adequacy of 
                the cure during the 6-month period beginning when the 
                cure is provided.
        If the consumer's challenge, under this paragraph, of a cure is 
        successful, the creditor, assignee, or securitizer shall be 
        liable to the consumer for rescission of the loan and such 
        additional costs under paragraph (2).
            ``(7) Inability to provide or obtain rescission.--If a 
        creditor, assignee, or securitizer cannot provide, or a 
        consumer cannot obtain, rescission under paragraph (1) or (2), 
        the liability of such creditor, assignee, or securitizer shall 
        be met by providing the financial equivalent of a rescission, 
        together with such additional costs as the obligor may have 
        incurred as a result of the violation and in connection with 
        obtaining a rescission of the loan, including a reasonable 
        attorney's fee.
            ``(8) No class actions against assignee or securitizer 
        under paragraph (2).--Only individual actions may be brought 
        against an assignee or securitizer of a residential mortgage 
        loan for a violation of subsection (a) or (b).
            ``(9) Statute of limitations.--The liability of a creditor, 
        assignee, or securitizer under this subsection shall apply in 
        any original action against a creditor under paragraph (1) or 
        an assignee or securitizer under paragraph (2) which is brought 
        before--
                    ``(A) in the case of any residential mortgage loan 
                other than a loan to which subparagraph (B) applies, 
                the end of the 3-year period beginning on the date the 
                loan is consummated; or
                    ``(B) in the case of a residential mortgage loan 
                that provides for a fixed interest rate for an 
                introductory period and then resets or adjusts to a 
                variable rate or that provides for a nonamortizing 
                payment schedule and then converts to an amortizing 
                payment schedule, the earlier of--
                            ``(i) the end of the 1-year period 
                        beginning on the date of such reset, 
                        adjustment, or conversion; or
                            ``(ii) the end of the 6-year period 
                        beginning on the date the loan is consummated.
            ``(10) Trustees, pools, and investors in pools excluded.--
        In the case of residential mortgage loans acquired or 
        aggregated for the purpose of including such loans in a pool of 
        assets held for the purpose of issuing or selling instruments 
        representing interests in such pools including through a 
        securitization vehicle, the terms `assignee' and `securitizer', 
        as used in this section, do not include the securitization 
        vehicle, any trustee that holds such loans solely for the 
        benefit of the securitization vehicle, the pools of such loans 
        or any original or subsequent purchaser of any interest in the 
        securitization vehicle or any instrument representing a direct 
        or indirect interest in such pool.
    ``(e) Obligation of Securitizers, and Preservation of Borrower 
Remedies.--
            ``(1) Obligation to retain access.--Any securitizer of a 
        residential mortgage loan sold or to be sold as part of a 
        securitization vehicle shall, in any document or contract 
        providing for the transfer, conveyance, or the establishment of 
        such securitization vehicle, reserve the right and preserve the 
        ability--
                    ``(A) to identify and obtain access to any such 
                loan;
                    ``(B) to acquire any such loan in the event of a 
                violation of subsection (a) or (b) of this section; and
                    ``(C) to provide to the consumer any and all 
                remedies provided for under this title for any 
                violation of this title.
            ``(2) Additional damages.--Any creditor, assignee, or 
        securitizer of a residential mortgage loan that is subject to a 
        remedy under subsection (d) and has failed to comply with 
        paragraph (1) shall be subject to additional exemplary or 
        punitive damages not to exceed the original principal balance 
        of such loan.
            ``(3) Contact information notice.--The servicer with 
        respect to a residential mortgage loan shall provide a written 
        notice to a consumer identifying the name and contact 
        information of the creditor or any assignee or securitizer who 
        should be contacted by the consumer for any reason concerning 
        the consumer's rights with respect to the loan. Such notice 
        shall be provided--
                    ``(A) upon request of the consumer;
                    ``(B) whenever there is a change in ownership of a 
                residential mortgage loan; or
                    ``(C) on a regular basis, not less than annually.
    ``(f) Rules To Establish Process.--The Board shall promulgate rules 
to govern the rescission process established for violations of 
subsections (a) and (b) of this section. Such rules shall provide that 
notice given to a servicer or holder is sufficient notice regardless of 
the identity of the party or the parties liable under this title.''.

SEC. 205. DEFENSE TO FORECLOSURE.

    Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (f) (as added by section 204) the following new 
subsections:
    ``(g) Defense to Foreclosure.--Notwithstanding any other provision 
of law--
            ``(1) when the holder of a residential mortgage loan or 
        anyone acting for such holder initiates a judicial or 
        nonjudicial foreclosure--
                    ``(A) a consumer who has the right to rescind under 
                this section with respect to such loan against the 
                creditor or any assignee or securitizer may assert such 
                right as a defense to foreclosure or counterclaim to 
                such foreclosure against the holder, or
                    ``(B) if the foreclosure proceeding begins after 
                the end of the period during which a consumer may bring 
                an action for rescission under subsection (d) and the 
                consumer would have had a valid basis for such an 
                action if it had been brought before the end of such 
                period, the consumer may seek actual damages incurred 
                by reason of the violation which gave rise to the right 
                of rescission, together with costs of the action, 
                including a reasonable attorney's fee against the 
                creditor or any assignee or securitizer; and
            ``(2) such holder or anyone acting for such holder or any 
        other applicable third party may sell, transfer, convey, or 
        assign a residential mortgage loan to a creditor, any assignee, 
        or any securitizer, or their designees, subject to the rights 
        of the consumer described in this subsection, to effect a 
        rescission or cure.''.

SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS.

    (a) In General.--Section 129C of the Truth in Lending Act is 
amended by inserting after subsection (g) (as added by section 205) the 
following new subsections:
    ``(h) Prohibition on Certain Prepayment Penalties.--
            ``(1) Prohibited on certain loans.--A residential mortgage 
        loan that is not a `qualified mortgage' may not contain terms 
        under which a consumer must pay a prepayment penalty for paying 
        all or part of the principal after the loan is consummated. For 
        purposes of this subsection, a `qualified mortgage' may not 
        include a residential mortgage loan that has an adjustable 
        rate.
            ``(2) Phased-out penalties on qualified mortgages.--A 
        qualified mortgage (as defined in subsection (c)) may not 
        contain terms under which a consumer must pay a prepayment 
        penalty for paying all or part of the principal after the loan 
        is consummated in excess of the following limitations:
                    ``(A) During the 1-year period beginning on the 
                date the loan is consummated, the prepayment penalty 
                shall not exceed an amount equal to 3 percent of the 
                outstanding balance on the loan.
                    ``(B) During the 1-year period beginning after the 
                period described in subparagraph (A), the prepayment 
                penalty shall not exceed an amount equal to 2 percent 
                of the outstanding balance on the loan.
                    ``(C) During the 1-year period beginning after the 
                1-year period described in subparagraph (B), the 
                prepayment penalty shall not exceed an amount equal to 
                1 percent of the outstanding balance on the loan.
                    ``(D) After the end of the 3-year period beginning 
                on the date the loan is consummated, no prepayment 
                penalty may be imposed on a qualified mortgage.
            ``(3) Option for no prepayment penalty required.--A 
        creditor may not offer a consumer a residential mortgage loan 
        product that has a prepayment penalty for paying all or part of 
        the principal after the loan is consummated as a term of the 
        loan without offering the consumer a residential mortgage loan 
        product that does not have a prepayment penalty as a term of 
        the loan.
    ``(i) Single Premium Credit Insurance Prohibited.--No creditor may 
finance, directly or indirectly, in connection with any residential 
mortgage loan or with any extension of credit under an open end 
consumer credit plan secured by the principal dwelling of the consumer 
(other than a reverse mortgage), any credit life, credit disability, 
credit unemployment or credit property insurance, or any other 
accident, loss-of-income, life or health insurance, or any payments 
directly or indirectly for any debt cancellation or suspension 
agreement or contract, except that--
            ``(1) insurance premiums or debt cancellation or suspension 
        fees calculated and paid in full on a monthly basis shall not 
        be considered financed by the creditor; and
            ``(2) this subsection shall not apply to credit 
        unemployment insurance for which the unemployment insurance 
        premiums are reasonable, the creditor receives no direct or 
        indirect compensation in connection with the unemployment 
        insurance premiums, and the unemployment insurance premiums are 
        paid pursuant to another insurance contract and not paid to an 
        affiliate of the creditor.
    ``(j) Arbitration.--
            ``(1) In general.--No residential mortgage loan and no 
        extension of credit under an open end consumer credit plan 
        secured by the principal dwelling of the consumer, other than a 
        reverse mortgage, may include terms which require arbitration 
        or any other nonjudicial procedure as the method for resolving 
        any controversy or settling any claims arising out of the 
        transaction.
            ``(2) Post-controversy agreements.--Subject to paragraph 
        (3), paragraph (1) shall not be construed as limiting the right 
        of the consumer and the creditor, any assignee, or any 
        securitizer to agree to arbitration or any other nonjudicial 
        procedure as the method for resolving any controversy at any 
        time after a dispute or claim under the transaction arises.
            ``(3) No waiver of statutory cause of action.--No provision 
        of any residential mortgage loan or of any extension of credit 
        under an open end consumer credit plan secured by the principal 
        dwelling of the consumer (other than a reverse mortgage), and 
        no other agreement between the consumer and the creditor 
        relating to the residential mortgage loan or extension of 
        credit referred to in paragraph (1), shall be applied or 
        interpreted so as to bar a consumer from bringing an action in 
        an appropriate district court of the United States, or any 
        other court of competent jurisdiction, pursuant to section 130 
        or any other provision of law, for damages or other relief in 
        connection with any alleged violation of this section, any 
        other provision of this title, or any other Federal law.
    ``(k) Mortgages With Negative Amortization.--No creditor may extend 
credit to a borrower in connection with a consumer credit transaction 
under an open or closed end consumer credit plan secured by a dwelling 
or residential real property that includes a dwelling, other than a 
reverse mortgage, that provides or permits a payment plan that may, at 
any time over the term of the extension of credit, result in negative 
amortization unless, before such transaction is consummated--
            ``(1) the creditor provides the consumer with a statement 
        that--
                    ``(A) the pending transaction will or may, as the 
                case may be, result in negative amortization;
                    ``(B) describes negative amortization in such 
                manner as the Federal banking agencies shall prescribe;
                    ``(C) negative amortization increases the 
                outstanding principal balance of the account; and
                    ``(D) negative amortization reduces the consumer's 
                equity in the dwelling or real property; and
            ``(2) in the case of a first-time borrower with respect to 
        a residential mortgage loan that is not a qualified mortgage, 
        the first-time borrower provides the creditor with sufficient 
        documentation to demonstrate that the consumer received 
        homeownership counseling from organizations or counselors 
        certified by the Secretary of Housing and Urban Development as 
        competent to provide such counseling.''.
    (b) Conforming Amendment Relating to Enforcement.--Section 108(a) 
of the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting 
after paragraph (6) the following new paragraph:
            ``(7) sections 21B and 21C of the Securities Exchange Act 
        of 1934, in the case of a broker or dealer, other than a 
        depository institution, by the Securities and Exchange 
        Commission.''.
    (c) Protection Against Loss of Anti-Deficiency Protection.--Section 
129C of the Truth in Lending Act is amended by inserting after 
subsection (k) (as added by subsection (a) of this section) the 
following new subsection (and designated succeeding subsections 
accordingly):
    ``(l) Protection Against Loss of Anti-Deficiency Protection.--
            ``(1) Definition.--For purposes of this subsection, the 
        term `anti-deficiency law' means the law of any State which 
        provides that, in the event of foreclosure on the residential 
        property of a consumer securing a mortgage, the consumer is not 
        liable, in accordance with the terms and limitations of such 
        State law, for any deficiency between the sale price obtained 
        on such property through foreclosure and the outstanding 
        balance of the mortgage.
            ``(2) Notice at time of consummation.--In the case of any 
        residential mortgage loan that is, or upon consummation will 
        be, subject to protection under an anti-deficiency law, the 
        creditor or mortgage originator shall provide a written notice 
        to the consumer describing the protection provided by the anti-
        deficiency law and the significance for the consumer of the 
        loss of such protection before such loan is consummated.
            ``(3) Notice before refinancing that would cause loss of 
        protection.--In the case of any residential mortgage loan that 
        is subject to protection under an anti-deficiency law, if a 
        creditor or mortgage originator provides an application to a 
        consumer, or receives an application from a consumer, for any 
        type of refinancing for such loan that would cause the loan to 
        lose the protection of such anti-deficiency law, the creditor 
        or mortgage originator shall provide a written notice to the 
        consumer describing the protection provided by the anti-
        deficiency law and the significance for the consumer of the 
        loss of such protection before any agreement for any such 
        refinancing is consummated.''.
    (d) Policy Regarding Acceptance of Partial Payment.--Section 129C 
of the Truth in Lending Act is amended by inserting after subsection 
(l) the following new subsection (and redesignating subsequent 
subsections of such section accordingly):
    ``(m) Policy Regarding Acceptance of Partial Payment.--In the case 
of any residential mortgage loan, a creditor shall disclose prior to 
settlement or, in the case of a person becoming a creditor with respect 
to an existing residential mortgage loan, at the time such person 
becomes a creditor--
            ``(1) the creditor's policy regarding the acceptance of 
        partial payments; and
            ``(2) if partial payments are accepted, how such payments 
        will be applied to such mortgage and if such payments will be 
        placed in escrow.''.

SEC. 207. RULE OF CONSTRUCTION.

    Except as otherwise expressly provided in section 129B or 129C of 
the Truth in Lending Act (as added by this Act), no provision of such 
section 129B or 129C shall be construed as superseding, repealing, or 
affecting any duty, right, obligation, privilege, or remedy of any 
person under any other provision of the Truth in Lending Act or any 
other provision of Federal or State law.

SEC. 208. EFFECT ON STATE LAWS.

    (a) In General.--Except as provided in subsection (b), section 
129C(d) of the Truth in Lending Act (as added by section 204) shall 
supersede any State law to the extent that it provides additional 
remedies against any assignee, securitizer, or securitization vehicle 
for a violation of subsection (a) or (b) of section 129C of such Act or 
any other State law the terms of which address the specific subject 
matter of subsection (a) (determination of ability to repay) or (b) 
(requirement of a net tangible benefit) of section 129C of such Act, 
and the remedies described in section 129C(d) shall constitute the sole 
remedies against any assignee, securitizer, or securitization vehicle 
for such violations.
    (b) Rules of Construction.--No provision of this section shall be 
construed as limiting--
            (1) the application of any State law, or the availability 
        of remedies under such law, against a creditor for a particular 
        residential mortgage loan regardless of whether such creditor 
        also acts as an assignee, securitizer, or securitization 
        vehicle for such loan;
            (2) the application of any State law, or the availability 
        of remedies under such law, against an assignee, securitizer, 
        or securitization vehicle under State law, other than a 
        provision of such law the terms of which address the specific 
        subject matter of subsection (a) (determination of ability to 
        repay) or (b) (requirement of a net tangible benefit) of 
        section 129C of such Act;
            (3)(A) the application of any State law, or the 
        availability of remedies under such law, against an assignee, 
        securitizer or securitization vehicle for its participation in 
        or direction of the credit or underwriting decisions of a 
        creditor relating to the making of a residential mortgage loan; 
        or
            (B) the ability of a consumer to assert any rights against 
        or obtain any remedies from an assignee, securitizer or 
        securitization vehicle with respect to a residential mortgage 
        loan as a defense to foreclosure under section 129C(g);
            (4) the availability of any equitable remedies, including 
        injunctive relief, under State law; or
            (5) notwithstanding paragraph (2), the availability of any 
        remedies under State law against any assignee, securitizer or 
        securitization vehicle that--
                    (A) are in addition to those remedies provided for 
                in section 129C; and
                    (B) were in effect on the date of enactment of this 
                Act.

SEC. 209. REGULATIONS.

    Regulations required or authorized to be prescribed under this 
title or the amendments made by this title--
            (1) shall be prescribed in final form before the end of the 
        12-month period beginning on the date of the enactment of this 
        Act; and
            (2) shall take effect not later than 18 months after the 
        date of the enactment of this Act.

SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

    (a) Increase in Amount of Civil Money Penalties for Certain 
Violations.--Section 130(a)(2) of the Truth in Lending Act (15 U.S.C. 
1640(a)(2)) is amended--
            (1) by striking ``$100'' and inserting ``$200'';
            (2) by striking ``$1,000'' and inserting ``$2,000''; and
            (3) by striking ``$500,000'' and inserting ``$1,000,000''.
    (b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 
amended--
            (1) in the first sentence, by striking ``Any action'' and 
        inserting ``Except as provided in the subsequent sentence, any 
        action''; and
            (2) by inserting after the first sentence the following new 
        sentence: ``Any action under this section with respect to any 
        violation of section 129 may be brought in any United States 
        district court, or in any other court of competent 
        jurisdiction, before the end of the 3-year period beginning on 
        the date of the occurrence of the violation.''.

SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

    Section 130 of the Truth in Lending Act is amended by adding at the 
end the following new subsection:
    ``(k) Exemption From Liability and Rescission in Case of Borrower 
Fraud or Deception.--In addition to any other remedy available by law 
or contract, no creditor, assignee, or securitizer shall be liable to 
an obligor under this section, nor shall it be subject to the right of 
rescission of any obligor under 129B, if such obligor, or co-obligor, 
knowingly, or willfully and with actual knowledge furnished material 
information known to be false for the purpose of obtaining such 
residential mortgage loan.''.

SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE 
              RATE MORTGAGES.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 128 the following 
new section:
``Sec. 128A. Reset of hybrid adjustable rate mortgages
    ``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of 
this section, the term `hybrid adjustable rate mortgage' means a 
consumer credit transaction secured by the consumer's principal 
residence with a fixed interest rate for an introductory period that 
adjusts or resets to a variable interest rate after such period.
    ``(b) Notice of Reset and Alternatives.--During the 1-month period 
that ends 6 months before the date on which the interest rate in effect 
during the introductory period of a hybrid adjustable rate mortgage 
adjusts or resets to a variable interest rate or, in the case of such 
an adjustment or resetting that occurs within the first 6 months after 
consummation of such loan, at consummation, the creditor or servicer of 
such loan shall provide a written notice, separate and distinct from 
all other correspondence to the consumer, that includes the following:
            ``(1) Any index or formula used in making adjustments to or 
        resetting the interest rate and a source of information about 
        the index or formula.
            ``(2) An explanation of how the new interest rate and 
        payment would be determined, including an explanation of how 
        the index was adjusted, such as by the addition of a margin.
            ``(3) A good faith estimate, based on accepted industry 
        standards, of the creditor or servicer of the amount of the 
        monthly payment that will apply after the date of the 
        adjustment or reset, and the assumptions on which this estimate 
        is based.
            ``(4) A list of alternatives consumers may pursue before 
        the date of adjustment or reset, and descriptions of the 
        actions consumers must take to pursue these alternatives, 
        including--
                    ``(A) refinancing;
                    ``(B) renegotiation of loan terms;
                    ``(C) payment forbearances; and
                    ``(D) pre-foreclosure sales.
            ``(5) The names, addresses, telephone numbers, and Internet 
        addresses of counseling agencies or programs reasonably 
        available to the consumer that have been certified or approved 
        and made publicly available by the Secretary of Housing and 
        Urban Development or a State housing finance authority (as 
        defined in section 1301 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989).
            ``(6) The address, telephone number, and Internet address 
        for the State housing finance authority (as so defined) for the 
        State in which the consumer resides.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 128 the following new item:

``128A. Reset of hybrid adjustable rate mortgages.''.

SEC. 213. CREDIT RISK RETENTION.

    Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (k) (as added by section 206) the following new 
subsection:
    ``(l) Credit Risk Retention.--
            ``(1) In general.--The Federal banking agencies shall 
        prescribe regulations jointly to require any creditor that 
        makes a residential mortgage loan that is not a qualified 
        mortgage (as defined under section 129C(c)(2)(A)), to retain an 
        economic interest in a material portion of the credit risk for 
        any such loan that the creditor transfers, sells or conveys to 
        a third party.
            ``(2) Standards for regulations.--Regulations prescribed 
        under paragraph (1) shall--
                    ``(A) apply only to residential mortgage loans that 
                are not qualified mortgages (as so defined);
                    ``(B) prohibit a creditor from directly or 
                indirectly hedging or otherwise transferring the credit 
                risk such creditor is required to retain under the 
                regulations with respect to any residential mortgage 
                loan;
                    ``(C) require a creditor to retain at least 5 
                percent of the credit risk on any non-qualified 
                mortgage that is transferred, sold or conveyed by such 
                creditor; and
                    ``(D) specify the permissible forms of the required 
                risk retention (for example, first loss position or pro 
                rata vertical slice) and the minimum duration of the 
                required risk retention.
            ``(3) Exceptions and adjustments.--
                    ``(A) In general.--The Federal banking agencies 
                shall have authority to jointly provide exceptions or 
                adjustments to the requirements of this subsection, 
                including exceptions or adjustments relating to the 5 
                percent risk retention threshold and the hedging 
                prohibition.
                    ``(B) Applicable standards.--Any exceptions or 
                adjustments granted by the Federal banking agencies 
                shall--
                            ``(i) be consistent with the purpose of 
                        this subsection to help ensure high quality 
                        underwriting standards for creditors that make 
                        residential mortgage loans that are not 
                        qualified mortgages; and
                            ``(ii) facilitate appropriate risk 
                        management practices by such creditors, improve 
                        access of consumers to mortgage credit on 
                        reasonable terms, or otherwise serve the public 
                        interest.
            ``(4) Alternative risk retention for securitizers.--The 
        Federal banking agencies may jointly, in their discretion, 
        apply the risk retention requirements of this subsection to 
        securitizers of residential mortgages (or particular types of 
        residential mortgages) that are not qualified mortgages in 
        addition to or in substitution for any or all of the 
        requirements that apply to creditors that make such mortgages 
        if the agencies jointly determine that applying the 
        requirements to such securitizers would--
                    ``(A) be consistent with the purpose of this 
                subsection to help ensure high quality underwriting 
                standards for creditors of residential mortgage loans 
                that are not qualified mortgages; and
                    ``(B) facilitate appropriate risk management 
                practices by such creditors, improve access of 
                consumers to mortgage credit on reasonable terms, or 
                otherwise serve the public interest.
    ``(m) Section 129C and any regulations promulgated thereunder do 
not apply to an extension of credit relating to a plan described in 
section 101(53D) of title 11, United States Code.''.

SEC. 214. REQUIRED DISCLOSURES.

    Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is 
amended by adding at the end the following new paragraphs:
            ``(16) In the case of a variable rate residential mortgage 
        loan for which an escrow or impound account will be established 
        for the payment of all applicable taxes, insurance, and 
        assessments--
                    ``(A) the amount of initial monthly payment due 
                under the loan for the payment of principal and 
                interest, and the amount of such initial monthly 
                payment including the monthly payment deposited in the 
                account for the payment of all applicable taxes, 
                insurance, and assessments; and
                    ``(B) the amount of the fully indexed monthly 
                payment due under the loan for the payment of principal 
                and interest, and the amount of such fully indexed 
                monthly payment including the monthly payment deposited 
                in the account for the payment of all applicable taxes, 
                insurance, and assessments.
            ``(17) In the case of a residential mortgage loan, the 
        aggregate amount of settlement charges for all settlement 
        services provided in connection with the loan, the amount of 
        charges that are included in the loan and the amount of such 
        charges the borrower must pay at closing, the approximate 
        amount of the wholesale rate of funds in connection with the 
        loan, and the aggregate amount of other fees or required 
        payments in connection with the loan.
            ``(18) In the case of a residential mortgage loan, the 
        aggregate amount of fees paid to the mortgage originator in 
        connection with the loan, the amount of such fees paid directly 
        by the consumer, and any additional amount received by the 
        originator from the creditor.
            ``(19) In the case of a residential mortgage loan, the 
        total amount of interest that the consumer will pay over the 
        life of the loan as a percentage of the principal of the loan. 
        Such amount shall be computed assuming the consumer makes each 
        monthly payment in full and on-time, and does not make any 
        over-payments.''.

SEC. 215. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL 
              MORTGAGE LOANS.

    Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended 
by adding at the end the following new subsection:
    ``(f) Periodic Statements for Residential Mortgage Loans.--
            ``(1) In general.--The creditor, assignee, or servicer with 
        respect to any residential mortgage loan shall transmit to the 
        obligor, for each billing cycle, a statement setting forth each 
        of the following items, to the extent applicable, in a 
        conspicuous and prominent manner:
                    ``(A) The amount of the principal obligation under 
                the mortgage.
                    ``(B) The current interest rate in effect for the 
                loan.
                    ``(C) The date on which the interest rate may next 
                reset or adjust.
                    ``(D) The amount of any prepayment fee to be 
                charged, if any.
                    ``(E) A description of any late payment fees.
                    ``(F) A telephone number and electronic mail 
                address that may be used by the obligor to obtain 
                information regarding the mortgage.
                    ``(G) The names, addresses, telephone numbers, and 
                Internet addresses of counseling agencies or programs 
                reasonably available to the consumer that have been 
                certified or approved and made publicly available by 
                the Secretary of Housing and Urban Development or a 
                State housing finance authority (as defined in section 
                1301 of the Financial Institutions Reform, Recovery, 
                and Enforcement Act of 1989).
                    ``(H) Such other information as the Board may 
                prescribe in regulations.
            ``(2) Development and use of standard form.--The Federal 
        banking agencies shall jointly develop and prescribe a standard 
        form for the disclosure required under this subsection, taking 
        into account that the statements required may be transmitted in 
        writing or electronically.''.

SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

    (a) Establishment.--The Secretary of Housing and Urban Development 
(hereafter in this section referred to as the ``Secretary'' shall 
establish a program for making grants for providing a full range of 
foreclosure legal assistance to low- and moderate-income homeowners and 
tenants related to home ownership preservation, home foreclosure 
prevention, and tenancy associated with home foreclosure.
    (b) Competitive Allocation.--The Secretary shall allocate amounts 
made available for grants under this section to State and local legal 
organizations on the basis of a competitive process. For purposes of 
this subsection ``State and local legal organizations'' are those State 
and local organizations whose primary business or mission is to provide 
legal assistance.
    (c) Priority to Certain Areas.--In allocating amounts in accordance 
with subsection (b), the Secretary shall give priority consideration to 
State and local legal organizations that are operating in the 100 
metropolitan statistical areas (as that term is defined by the Director 
of the Office of Management and Budget) with the highest home 
foreclosure rates.
    (d) Legal Assistance.--
            (1) In general.--Any State or local legal organization that 
        receives financial assistance pursuant to this section may use 
        such amounts only to assist--
                    (A) homeowners of owner-occupied homes with 
                mortgages in default, in danger of default, or subject 
                to or at risk of foreclosure; and
                    (B) tenants at risk of or subject to eviction as a 
                result of foreclosure of the property in which such 
                tenant resides.
            (2) Commence use within 90 days.--Any State or local legal 
        organization that receives financial assistance pursuant to 
        this section shall begin using any financial assistance 
        received under this section within 90 days after receipt of the 
        assistance.
            (3) Prohibition on class actions.--No funds provided to a 
        State or local legal organization under this section may be 
        used to support any class action litigation.
            (4) Limitation on legal assistance.--Legal assistance 
        funded with amounts provided under this section shall be 
        limited to mortgage-related default, eviction, or foreclosure 
        proceedings, without regard to whether such foreclosure is 
        judicial or nonjudicial.
            (5) Effective date.--Notwithstanding section 217, this 
        subsection shall take effect on the date of the enactment of 
        this Act.
    (e) Limitation on Distribution of Assistance.--
            (1) In general.--None of the amounts made available under 
        this section shall be distributed to--
                    (A) any organization which has been convicted for a 
                violation under Federal law relating to an election for 
                Federal office; or
                    (B) any organization which employs applicable 
                individuals.
            (2) Definition of applicable individuals.--In this 
        subsection, the term ``applicable individual'' means an 
        individual who--
                    (A) is--
                            (i) employed by the organization in a 
                        permanent or temporary capacity;
                            (ii) contracted or retained by the 
                        organization; or
                            (iii) acting on behalf of, or with the 
                        express or apparent authority of, the 
                        organization; and
                    (B) has been convicted for a violation under 
                Federal law relating to an election for Federal office.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary $35,000,000 for each of fiscal years 2009 
through 2012 for grants under this section.

SEC. 217. EFFECTIVE DATE.

    The amendments made by this title shall apply to transactions 
consummated on or after the effective date of the regulations specified 
in section 209.

SEC. 218. REPORT BY THE GAO.

    (a) Report Required.--The Comptroller General shall conduct a study 
to determine the effects the enactment of this Act will have on the 
availability and affordability of credit for consumers, small 
businesses, homebuyers, and mortgage lending, including the effect--
            (1) on the mortgage market for mortgages that are not 
        within the safe harbor provided in the amendments made by this 
        title;
            (2) on the ability of prospective homebuyers to obtain 
        financing;
            (3) on the ability of homeowners facing resets or 
        adjustments to refinance--for example, do they have fewer 
        refinancing options due to the unavailability of certain loan 
        products that were available before the enactment of this Act;
            (4) on minorities' ability to access affordable credit 
        compared with other prospective borrowers;
            (5) on home sales and construction;
            (6) of extending the rescission right, if any, on 
        adjustable rate loans and its impact on litigation;
            (7) of State foreclosure laws and, if any, an investor's 
        ability to transfer a property after foreclosure;
            (8) of expanding the existing provisions of the Home 
        Ownership and Equity Protection Act of 1994;
            (9) of prohibiting prepayment penalties on high-cost 
        mortgages; and
            (10) of establishing counseling services under the 
        Department of Housing and Urban Development and offered through 
        the Office of Housing Counseling.
    (b) Report.--Before the end of the 1-year period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report to the Congress containing the findings and conclusions of the 
Comptroller General with respect to the study conducted pursuant to 
subsection (a).
    (c) Examination Related to Certain Credit Risk Retention 
Provisions.--The report required by subsection (b) shall also include 
an analysis by the Comptroller General of the effect on the capital 
reserves and funding of lenders of credit risk retention provisions for 
non-qualified mortgages, including an analysis of the exceptions and 
adjustments authorized in section 129C(l)(3)(A) of the Truth in Lending 
Act and a recommendation on whether a uniform standard is needed.
    (d) Analysis of Credit Risk Retention Provisions.--The report 
required by subsection (b) shall also include--
            (1) an analysis by the Comptroller General of whether the 
        credit risk retention provisions have significantly reduced 
        risks to the larger credit market of the repackaging and 
        selling of securitized loans on a secondary market; and
            (2) recommendations to the Congress on adjustments that 
        should be made, or additional measures that should be 
        undertaken.

SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

    Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is 
amended by striking ``section 129 may also'' and inserting ``section 
129, 129B, or 129C of this Act, section 220 of the Mortgage Reform and 
Anti-Predatory Lending Act, or any amendment made by section 220 of the 
Mortgage Reform and Anti-Predatory Lending Act may also''.

SEC. 220. TENANT PROTECTION.

    (a) Tenant Protection Generally.--
            (1) In general.--In the case of any foreclosure on any 
        dwelling or residential real property, after the date of the 
        enactment of the Mortgage Reform and Anti-Predatory Lending 
        Act, the immediate successor in interest in such property 
        pursuant to the foreclosure shall assume such interest subject 
        to--
                    (A) except as provided in paragraph (2), the rights 
                of any bona fide tenant, as of the date of foreclosure 
                under any bona fide lease entered into before the date 
                of foreclosure, to occupy the premises until the end of 
                the remaining term of the lease; and
                    (B) the rights of any bona fide tenant, as of the 
                date of foreclosure, without a lease or with a lease 
                terminable at will under State law, subject to the 
                provision by the immediate successor in interest and 
                the receipt by the tenant in the unit, of a notice to 
                vacate at least 90 days before the effective date of 
                such notice.
            (2) Exception for subsequent owner-occupant.--
        Notwithstanding paragraph (1), if the immediate successor in 
        interest of any dwelling or residential real property that is 
        otherwise subject to paragraph (1) is a purchaser who will 
        occupy a unit of the dwelling or residential real property as a 
        primary residence, or such successor in interest sells the 
        dwelling or residential real property to a purchaser who will 
        occupy a unit of the dwelling or residential real property, as 
        a primary residence--
                    (A) such purchaser may terminate a lease relating 
                to such unit on the effective date of a notice to 
                vacate; and
                    (B)(i) such notice to vacate shall be provided by 
                the purchaser to the tenant in such unit at least 90 
                days before the effective date of such notice; and (ii) 
                with respect to a single-family residence for which the 
                borrower rented the unit in violation of the mortgage 
                contract, such notice to vacate shall be provided by 
                the purchaser to the tenant in such unit at least 30 
                days before the effective date of such notice, and 
                shall include a copy of the mortgage contract 
                prohibiting the rental of the unit.
            (3) Bona fide lease or tenancy.--For purposes of this 
        subsection, a lease or tenancy shall be considered bona fide 
        only if--
                    (A) the mortgagor under the contract is not the 
                tenant;
                    (B) the lease or tenancy was the result of an arms-
                length transaction; and
                    (C) the lease or tenancy requires the receipt of 
                rent that is not substantially less than fair market 
                rent for the property or the unit's rent is reduced or 
                subsidized due to a Federal, State, or local subsidy.
            (4) Rule of construction.--Except for the specific 
        provisions of this subsection, no provision of this subsection 
        shall be construed as affecting the requirements for 
        termination of any Federal- or State-subsidized tenancy. The 
        provisions of this subsection shall not be construed to limit 
        any State or local law that provides longer time periods or 
        other additional protections for tenants.
    (b) Corresponding Provision Relating to Effect of Foreclosures on 
Section 8 Tenancies.--Paragraph (7) of section 8(o) of the United 
States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended--
            (1) in subparagraph (C), by inserting before the semicolon 
        at the end the following: ``, and in the case of an owner who 
        is an immediate successor in interest pursuant to foreclosure--
                            ``(i) during the initial term of the 
                        tenant's lease, having the property vacant 
                        prior to sale shall not constitute good cause; 
                        and
                            ``(ii) in subsequent lease terms of the 
                        tenant's lease, who will occupy the unit as a 
                        primary residence, who sells the property to a 
                        purchaser who will occupy a unit of the 
                        property as a primary residence, or if the unit 
                        is unmarketable while occupied, such owner may 
                        terminate a lease relating to such unit for 
                        good cause on the effective date of the notice 
                        to vacate, where such notice is provided by the 
                        owner to the tenant in such unit at least 90 
                        days before the effective date of such 
                        notice;''.
            (2) in subparagraph (E), by striking ``and'' at the end;
            (3) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (4) by inserting after subparagraph (E) the following:
                    ``(F) shall provide that in the case of any 
                foreclosure on any residential real property in which a 
                recipient of assistance under this subsection resides, 
                the immediate successor in interest in such property 
                pursuant to the foreclosure shall assume such interest 
                subject to the lease between the prior owner and the 
                tenant and to the housing assistance payments contract 
                between the prior owner and the public housing agency 
                for the occupied unit; if a public housing agency is 
                unable to make payments under the contract to the 
                immediate successor in interest after foreclosure, due 
                to action or inaction by the successor in interest, 
                including the rejection of payments or the failure of 
                the successor to maintain the unit in compliance with 
                paragraph (8) or an inability to identify the 
                successor, the agency may use funds that would have 
                been used to pay the rental amount on behalf of the 
                family--
                            ``(i) to pay for utilities that are the 
                        responsibility of the owner under the lease or 
                        applicable law, after taking reasonable steps 
                        to notify the owner that it intends to make 
                        payments to a utility provider in lieu of 
                        payments to the owner, except prior 
                        notification shall not be required in any case 
                        in which the unit will be or has been rendered 
                        uninhabitable due to the termination or threat 
                        of termination of service, in which case the 
                        public housing agency shall notify the owner 
                        within a reasonable time after making such 
                        payment; or
                            ``(ii) for the family's reasonable moving 
                        costs, including security deposit costs;
                except that this subparagraph and the provisions 
                related to foreclosure in subparagraph (C) shall not 
                affect any State or local law that provides longer time 
                periods or other additional protections for tenants.''.
    (c) Landlord Notice to Tenants.--Notwithstanding the law of any 
State or the terms of any consumer residential lease, each person who 
owns a dwelling or residential real property--
            (1) which is leased to a bona fide tenant (including a 
        tenancy terminable at will), or which the landlord offers to 
        lease to a prospective tenant; and
            (2) which, pursuant to the terms of a valid loan to such 
        person which is secured by such dwelling or property, is or 
        becomes subject to foreclosure or with respect to which the 
        person is in default,
shall promptly notify any such tenant or prospective tenant of the 
circumstances prevailing with respect to such property and the effect 
of any such default or foreclosure. The requirements of this subsection 
shall have no effect on any State or local law that provides additional 
notice or other additional protections for tenants.
    (d) Effective Date.--Notwithstanding section 217, this section and 
the amendments made by this section shall take effect on the date of 
the enactment of this Act.

                     TITLE III--HIGH-COST MORTGAGES

SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

    (a) High-Cost Mortgage Defined.--Section 103(aa) of the Truth in 
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that 
precedes paragraph (2) and inserting the following:
    ``(aa) High-Cost Mortgage.--
            ``(1) Definition.--
                    ``(A) In general.--The term `high-cost mortgage', 
                and a mortgage referred to in this subsection, means a 
                consumer credit transaction that is secured by the 
                consumer's principal dwelling, other than a reverse 
                mortgage transaction, if--
                            ``(i) in the case of a credit transaction 
                        secured--
                                    ``(I) by a first mortgage on the 
                                consumer's principal dwelling, the 
                                annual percentage rate at consummation 
                                of the transaction will exceed by more 
                                than 6.5 percentage points (8.5 
                                percentage points, if the dwelling is 
                                personal property and the transaction 
                                is for less than $50,000) the average 
                                prime offer rate, as defined in section 
                                129C(c)(2)(B), for a comparable 
                                transaction; or
                                    ``(II) by a subordinate or junior 
                                mortgage on the consumer's principal 
                                dwelling, the annual percentage rate at 
                                consummation of the transaction will 
                                exceed by more than 8.5 percentage 
                                points the average prime offer rate, as 
                                defined in section 129C(c)(2)(B), for a 
                                comparable transaction;
                            ``(ii) the total points and fees payable in 
                        connection with the transaction exceed--
                                    ``(I) in the case of a transaction 
                                for $20,000 or more, 5 percent of the 
                                total transaction amount; or
                                    ``(II) in the case of a transaction 
                                for less than $20,000, the lesser of 8 
                                percent of the total transaction amount 
                                or $1,000 (or such other dollar amount 
                                as the Board shall prescribe by 
                                regulation); or
                            ``(iii) the credit transaction documents 
                        permit the creditor to charge or collect 
                        prepayment fees or penalties more than 36 
                        months after the transaction closing or such 
                        fees or penalties exceed, in the aggregate, 
                        more than 2 percent of the amount prepaid.
                    ``(B) Introductory rates taken into account.--For 
                purposes of subparagraph (A)(i), the annual percentage 
                rate of interest shall be determined based on the 
                following interest rate:
                            ``(i) In the case of a fixed-rate 
                        transaction in which the annual percentage rate 
                        will not vary during the term of the loan, the 
                        interest rate in effect on the date of 
                        consummation of the transaction.
                            ``(ii) In the case of a transaction in 
                        which the rate of interest varies solely in 
                        accordance with an index, the interest rate 
                        determined by adding the index rate in effect 
                        on the date of consummation of the transaction 
                        to the maximum margin permitted at any time 
                        during the transaction agreement.
                            ``(iii) In the case of any other 
                        transaction in which the rate may vary at any 
                        time during the term of the loan for any 
                        reason, the interest charged on the transaction 
                        at the maximum rate that may be charged during 
                        the term of the transaction.''.
    (b) Adjustment of Percentage Points.--Section 103(aa)(2) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking 
subparagraph (B) and inserting the following new subparagraph:
                    ``(B) An increase or decrease under subparagraph 
                (A)--
                            ``(i) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(I) being less than 6 percentage 
                        points or greater than 10 percentage points; 
                        and
                            ``(ii) may not result in the number of 
                        percentage points referred to in paragraph 
                        (1)(A)(i)(II) being less than 8 percentage 
                        points or greater than 12 percentage points.''.
    (c) Points and Fees Defined.--
            (1) In general.--Section 103(aa)(4) of the Truth in Lending 
        Act (15 U.S.C. 1602(aa)(4)) is amended--
                    (A) by striking subparagraph (B) and inserting the 
                following:
                    ``(B) all compensation paid directly or indirectly 
                by a consumer or creditor to a mortgage originator from 
                any source, including a mortgage originator that 
                originates a loan in the name of the creditor in a 
                table-funded transaction;'';
                    (B) in subparagraph (C)(ii), by inserting ``except 
                where applied to the charges set forth in section 
                106(e)(1) where a creditor may receive indirect 
                compensation solely as a result of obtaining 
                distributions of profits from an affiliated entity 
                based on its ownership interest in compliance with 
                section 8(c)(4) of the Real Estate Settlement 
                Procedures Act of 1974'' before the semicolon at the 
                end;
                    (C) in subparagraph (C)(iii), by striking ``; and'' 
                and inserting ``, except as provided for in clause 
                (ii);'';
                    (D) by redesignating subparagraph (D) as 
                subparagraph (G); and
                    (E) by inserting after subparagraph (C) the 
                following new subparagraphs:
                    ``(D) premiums or other charges payable at or 
                before closing for any credit life, credit disability, 
                credit unemployment, or credit property insurance, or 
                any other accident, loss-of-income, life or health 
                insurance, or any payments directly or indirectly for 
                any debt cancellation or suspension agreement or 
                contract, except that insurance premiums or debt 
                cancellation or suspension fees calculated and paid in 
                full on a monthly basis shall not be considered 
                financed by the creditor;
                    ``(E) except as provided in subsection (cc), the 
                maximum prepayment fees and penalties which may be 
                charged or collected under the terms of the credit 
                transaction;
                    ``(F) all prepayment fees or penalties that are 
                incurred by the consumer if the loan refinances a 
                previous loan made or currently held by the same 
                creditor or an affiliate of the creditor; and''.
            (2) Calculation of points and fees for open-end consumer 
        credit plans.--Section 103(aa) of the Truth in Lending Act (15 
        U.S.C. 1602(aa)) is amended--
                    (A) by redesignating paragraph (5) as paragraph 
                (6); and
                    (B) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) Calculation of points and fees for open-end consumer 
        credit plans.--In the case of open-end consumer credit plans, 
        points and fees shall be calculated, for purposes of this 
        section and section 129, by adding the total points and fees 
        known at or before closing, including the maximum prepayment 
        penalties which may be charged or collected under the terms of 
        the credit transaction, plus the minimum additional fees the 
        consumer would be required to pay to draw down an amount equal 
        to the total credit line.''.
    (d) Bona Fide Discount Loan Discount Points.--Section 103 of the 
Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after 
subsection (cc) (as added by section 101) the following new subsection:
    ``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the 
purposes of determining the amount of points and fees for purposes of 
subsection (aa), either the amounts described in paragraph (1) or (2) 
of the following paragraphs, but not both, shall be excluded:
            ``(1) Up to and including 2 bona fide discount points 
        payable by the consumer in connection with the mortgage, but 
        only if the interest rate from which the mortgage's interest 
        rate will be discounted does not exceed by more than 1 
        percentage point--
                    ``(A) the required net yield for a 90-day standard 
                mandatory delivery commitment for a reasonably 
                comparable loan from either the Federal National 
                Mortgage Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater; or
                    ``(B) if secured by a personal property loan, the 
                average rate on a loan in connection with which 
                insurance is provided under title I of the National 
                Housing Act (12 U.S.C. 1702 et seq.).
            ``(2) Unless 2 bona fide discount points have been excluded 
        under paragraph (1), up to and including 1 bona fide discount 
        point payable by the consumer in connection with the mortgage, 
        but only if the interest rate from which the mortgage's 
        interest rate will be discounted does not exceed by more than 2 
        percentage points--
                    ``(A) the required net yield for a 90-day standard 
                mandatory delivery commitment for a reasonably 
                comparable loan from either the Federal National 
                Mortgage Association or the Federal Home Loan Mortgage 
                Corporation, whichever is greater; or
                    ``(B) if secured by a personal property loan, the 
                average rate on a loan in connection with which 
                insurance is provided under title I of the National 
                Housing Act (12 U.S.C. 1702 et seq.).
            ``(3) For purposes of paragraph (1), the term `bona fide 
        discount points' means loan discount points which are knowingly 
        paid by the consumer for the purpose of reducing, and which in 
        fact result in a bona fide reduction of, the interest rate or 
        time-price differential applicable to the mortgage.
            ``(4) Paragraphs (1) and (2) shall not apply to discount 
        points used to purchase an interest rate reduction unless the 
        amount of the interest rate reduction purchased is reasonably 
        consistent with established industry norms and practices for 
        secondary mortgage market transactions.''.

SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.

    (a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth 
in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
    (b) No Balloon Payments.--Section 129(e) of the Truth in Lending 
Act (15 U.S.C. 1639(e)) is amended to read as follows:
    ``(e) No Balloon Payments.--No high-cost mortgage may contain a 
scheduled payment that is more than twice as large as the average of 
earlier scheduled payments. This subsection shall not apply when the 
payment schedule is adjusted to the seasonal or irregular income of the 
consumer.''.

SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

    (a) Additional Requirements for Certain Mortgages.--Section 129 of 
the Truth in Lending Act (15 U.S.C. 1639) is amended--
            (1) by redesignating subsections (j), (k) and (l) as 
        subsections (n), (o) and (p) respectively; and
            (2) by inserting after subsection (i) the following new 
        subsections:
    ``(j) Recommended Default.--No creditor shall recommend or 
encourage default on an existing loan or other debt prior to and in 
connection with the closing or planned closing of a high-cost mortgage 
that refinances all or any portion of such existing loan or debt.
    ``(k) Late Fees.--
            ``(1) In general.--No creditor may impose a late payment 
        charge or fee in connection with a high-cost mortgage--
                    ``(A) in an amount in excess of 4 percent of the 
                amount of the payment past due;
                    ``(B) unless the loan documents specifically 
                authorize the charge or fee;
                    ``(C) before the end of the 15-day period beginning 
                on the date the payment is due, or in the case of a 
                loan on which interest on each installment is paid in 
                advance, before the end of the 30-day period beginning 
                on the date the payment is due; or
                    ``(D) more than once with respect to a single late 
                payment.
            ``(2) Coordination with subsequent late fees.--If a payment 
        is otherwise a full payment for the applicable period and is 
        paid on its due date or within an applicable grace period, and 
        the only delinquency or insufficiency of payment is 
        attributable to any late fee or delinquency charge assessed on 
        any earlier payment, no late fee or delinquency charge may be 
        imposed on such payment.
            ``(3) Failure to make installment payment.--If, in the case 
        of a loan agreement the terms of which provide that any payment 
        shall first be applied to any past due principal balance, the 
        consumer fails to make an installment payment and the consumer 
        subsequently resumes making installment payments but has not 
        paid all past due installments, the creditor may impose a 
        separate late payment charge or fee for any principal due 
        (without deduction due to late fees or related fees) until the 
        default is cured.
    ``(l) Acceleration of Debt.--No high-cost mortgage may contain a 
provision which permits the creditor to accelerate the indebtedness, 
except when repayment of the loan has been accelerated by default in 
payment, or pursuant to a due-on-sale provision, or pursuant to a 
material violation of some other provision of the loan document 
unrelated to payment schedule.
    ``(m) Restriction on Financing Points and Fees.--No creditor may 
directly or indirectly finance, in connection with any high-cost 
mortgage, any of the following:
            ``(1) Any prepayment fee or penalty payable by the consumer 
        in a refinancing transaction if the creditor or an affiliate of 
        the creditor is the noteholder of the note being refinanced.
            ``(2) Any points or fees.''.
    (b) Prohibitions on Evasions.--Section 129 of the Truth in Lending 
Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as 
so redesignated by subsection (a)(1)) the following new subsection:
    ``(q) Prohibitions on Evasions, Structuring of Transactions, and 
Reciprocal Arrangements.--A creditor may not take any action in 
connection with a high-cost mortgage--
            ``(1) to structure a loan transaction as an open-end credit 
        plan or another form of loan for the purpose and with the 
        intent of evading the provisions of this title; or
            ``(2) to divide any loan transaction into separate parts 
        for the purpose and with the intent of evading provisions of 
        this title.''.
    (c) Modification or Deferral Fees.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(q) (as added by subsection (b) of this section) the following new 
subsection:
    ``(r) Modification and Deferral Fees Prohibited.--
            ``(1) Creditors.--A creditor may not charge a consumer any 
        fee to modify, renew, extend, or amend a high-cost mortgage, or 
        to defer any payment due under the terms of such mortgage, 
        unless the modification, renewal, extension or amendment 
        results in a lower annual percentage rate on the mortgage for 
        the consumer and then only if the amount of the fee is 
        comparable to fees imposed for similar transactions in 
        connection with consumer credit transactions that are secured 
        by a consumer's principal dwelling and are not high-cost 
        mortgages.
            ``(2) Third parties.--A third-party may not charge a 
        consumer any fee to--
                    ``(A) modify, renew, extend, or amend a high-cost 
                mortgage, or defer any payment due under the terms of 
                such mortgage;
                    ``(B) negotiate with a creditor on behalf of a 
                consumer, the modification, renewal, extension, or 
                amendment of a high-cost mortgage; or
                    ``(C) negotiate with a creditor on behalf of a 
                consumer, the deferral of any payment due under the 
                terms of such mortgage,
        unless the modification renewal, extension or amendment results 
        in a significantly lower annual percentage rate on the 
        mortgage, or a significant reduction in the amount of the 
        outstanding principal on the mortgage, for the consumer and 
        then only if the amount of the fee is comparable to fees 
        imposed for similar transactions in connection with consumer 
        credit transactions that are secured by a consumer's principal 
        dwelling and are not high-cost mortgages.
            ``(3) Enforcement.--Section 130 shall be applied for 
        purposes of paragraph (2) by--
                    ``(A) substituting `third party' for `creditor'each 
                place such term appears; and
                    ``(B) substituting `any fee charged by a third 
                party' for `finance charge' each place such term 
                appears.''.
    (d) Payoff Statement.--Section 129 of the Truth in Lending Act (15 
U.S.C. 1639) is amended by inserting after subsection (r) (as added by 
subsection (c) of this section) the following new subsection:
    ``(s) Payoff Statement.--
            ``(1) Fees.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), no creditor or servicer may charge a 
                fee for informing or transmitting to any person the 
                balance due to pay off the outstanding balance on a 
                high-cost mortgage.
                    ``(B) Transaction fee.--When payoff information 
                referred to in subparagraph (A) is provided by 
                facsimile transmission or by a courier service, a 
                creditor or servicer may charge a processing fee to 
                cover the cost of such transmission or service in an 
                amount not to exceed an amount that is comparable to 
                fees imposed for similar services provided in 
                connection with consumer credit transactions that are 
                secured by the consumer's principal dwelling and are 
                not high-cost mortgages.
                    ``(C) Fee disclosure.--Prior to charging a 
                transaction fee as provided in subparagraph (B), a 
                creditor or servicer shall disclose that payoff 
                balances are available for free pursuant to 
                subparagraph (A).
                    ``(D) Multiple requests.--If a creditor or servicer 
                has provided payoff information referred to in 
                subparagraph (A) without charge, other than the 
                transaction fee allowed by subparagraph (B), on 4 
                occasions during a calendar year, the creditor or 
                servicer may thereafter charge a reasonable fee for 
                providing such information during the remainder of the 
                calendar year.
            ``(2) Prompt delivery.--Payoff balances shall be provided 
        within 5 business days after receiving a request by a consumer 
        or a person authorized by the consumer to obtain such 
        information.
            ``(3) Services considered assignee.--For the purposes of 
        this subsection, a servicer shall be considered an assignee 
        under the Truth in Lending Act.''.
    (e) Pre-Loan Counseling Required.--Section 129 of the Truth in 
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection 
(s) (as added by subsection (d) of this section) the following new 
subsection:
    ``(t) Pre-Loan Counseling.--
            ``(1) In general.--A creditor may not extend credit to a 
        consumer under a high-cost mortgage without first receiving 
        certification from a counselor that is approved by the 
        Secretary of Housing and Urban Development, or at the 
        discretion of the Secretary, a State housing finance authority, 
        that the consumer has received counseling on the advisability 
        of the mortgage. Such counselor shall not be employed by the 
        creditor or an affiliate of the creditor or be affiliated with 
        the creditor.
            ``(2) Disclosures required prior to counseling.--No 
        counselor may certify that a consumer has received counseling 
        on the advisability of the high-cost mortgage unless the 
        counselor can verify that the consumer has received each 
        statement required (in connection with such loan) by this 
        section or the Real Estate Settlement Procedures Act of 1974 
        with respect to the transaction.
            ``(3) Regulations.--The Board may prescribe such 
        regulations as the Board determines to be appropriate to carry 
        out the requirements of paragraph (1).''.
    (f) Flipping Prohibited.--Section 129 of the Truth in Lending Act 
(15 U.S.C. 1639) is amended by inserting after subsection (t) (as added 
by subsection (e)) the following new subsection:
    ``(u) Flipping.--
            ``(1) In general.--No creditor may knowingly or 
        intentionally engage in the unfair act or practice of flipping 
        in connection with a high-cost mortgage.
            ``(2) Flipping defined.--For purposes of this subsection, 
        the term `flipping' means the making of a loan or extension of 
        credit in the form a high-cost mortgage to a consumer which 
        refinances an existing mortgage when the new loan or extension 
        of credit does not have reasonable, net tangible benefit (as 
        determined in accordance with regulations prescribed under 
        section 129C(b)) to the consumer considering all of the 
        circumstances, including the terms of both the new and the 
        refinanced loans or credit, the cost of the new loan or credit, 
        and the consumer's circumstances.
    ``(v) Corrections and Unintentional Violations.--A creditor or 
assignee in a high cost loan who, when acting in good faith, fails to 
comply with any requirement under this section will not be deemed to 
have violated such requirement if the creditor or assignee establishes 
that either--
            ``(1) within 30 days of the loan closing and prior to the 
        institution of any action, the consumer is notified of or 
        discovers the violation, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                    ``(A) make the loan satisfy the requirements of 
                this chapter; or
                    ``(B) in the case of a high-cost mortgage, change 
                the terms of the loan in a manner beneficial to the 
                consumer so that the loan will no longer be a high-cost 
                mortgage; or
            ``(2) within 60 days of the creditor's discovery or receipt 
        of notification of an unintentional violation or bona fide 
        error as described in subsection (c) and prior to the 
        institution of any action, the consumer is notified of the 
        compliance failure, appropriate restitution is made, and 
        whatever adjustments are necessary are made to the loan to 
        either, at the choice of the consumer--
                    ``(A) make the loan satisfy the requirements of 
                this chapter; or
                    ``(B) in the case of a high-cost mortgage, change 
                the terms of the loan in a manner beneficial so that 
                the loan will no longer be a high-cost mortgage.''.

SEC. 304. REGULATIONS.

    (a) In General.--The Board of Governors of the Federal Reserve 
System shall publish regulations implementing this title and the 
amendments made by this title in final form before the end of the 6-
month period beginning on the date of the enactment of this Act.
    (b) Consumer Mortgage Education.--
            (1) Regulations.--The Board of Governors of the Federal 
        Reserve System may prescribe regulations requiring or 
        encouraging creditors to provide consumer mortgage education to 
        prospective customers or direct such customers to qualified 
        consumer mortgage education or counseling programs in the 
        vicinity of the residence of the consumer.
            (2) Coordination with state law.--No requirement 
        established by the Board of Governors of the Federal Reserve 
        System pursuant to paragraph (1) shall be construed as 
        affecting or superseding any requirement under the law of any 
        State with respect to consumer mortgage counseling or 
        education.

SEC. 305. EFFECTIVE DATE.

    The amendments made by this title shall take effect at the end of 
the 6-month period beginning on the date of the enactment of this Act 
and shall apply to mortgages referred to in section 103(aa) of the 
Truth in Lending Act (15 U.S.C. 1602(aa)) for which an application is 
received by the creditor after the end of such period.

                 TITLE IV--OFFICE OF HOUSING COUNSELING

SEC. 401. SHORT TITLE.

    This title may be cited as the ``Expand and Preserve Home Ownership 
Through Counseling Act''.

SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

    Section 4 of the Department of Housing and Urban Development Act 
(42 U.S.C. 3533) is amended by adding at the end the following new 
subsection:
    ``(g) Office of Housing Counseling.--
            ``(1) Establishment.--There is established, in the 
        Department, the Office of Housing Counseling.
            ``(2) Director.--There is established the position of 
        Director of Housing Counseling. The Director shall be the head 
        of the Office of Housing Counseling and shall be appointed by, 
        and shall report to, the Secretary. Such position shall be a 
        career-reserved position in the Senior Executive Service.
            ``(3) Functions.--
                    ``(A) In general.--The Director shall have primary 
                responsibility within the Department for all activities 
                and matters relating to homeownership counseling and 
                rental housing counseling, including--
                            ``(i) research, grant administration, 
                        public outreach, and policy development 
                        relating to such counseling; and
                            ``(ii) establishment, coordination, and 
                        administration of all regulations, 
                        requirements, standards, and performance 
                        measures under programs and laws administered 
                        by the Department that relate to housing 
                        counseling, homeownership counseling (including 
                        maintenance of homes), mortgage-related 
                        counseling (including home equity conversion 
                        mortgages and credit protection options to 
                        avoid foreclosure), and rental housing 
                        counseling, including the requirements, 
                        standards, and performance measures relating to 
                        housing counseling.
                    ``(B) Specific functions.--The Director shall carry 
                out the functions assigned to the Director and the 
                Office under this section and any other provisions of 
                law. Such functions shall include establishing rules 
                necessary for--
                            ``(i) the counseling procedures under 
                        section 106(g)(1) of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 
                        1701x(h)(1));
                            ``(ii) carrying out all other functions of 
                        the Secretary under section 106(g) of the 
                        Housing and Urban Development Act of 1968, 
                        including the establishment, operation, and 
                        publication of the availability of the toll-
                        free telephone number under paragraph (2) of 
                        such section;
                            ``(iii) contributing to the preparation and 
                        distribution of home buying information 
                        booklets pursuant to section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604);
                            ``(iv) carrying out the certification 
                        program under section 106(e) of the Housing and 
                        Urban Development Act of 1968 (12 U.S.C. 
                        1701x(e));
                            ``(v) carrying out the assistance program 
                        under section 106(a)(4) of the Housing and 
                        Urban Development Act of 1968, including 
                        criteria for selection of applications to 
                        receive assistance;
                            ``(vi) carrying out any functions regarding 
                        abusive, deceptive, or unscrupulous lending 
                        practices relating to residential mortgage 
                        loans that the Secretary considers appropriate, 
                        which shall include conducting the study under 
                        section 6 of the Expand and Preserve Home 
                        Ownership Through Counseling Act;
                            ``(vii) providing for operation of the 
                        advisory committee established under paragraph 
                        (4) of this subsection;
                            ``(viii) collaborating with community-based 
                        organizations with expertise in the field of 
                        housing counseling; and
                            ``(ix) providing for the building of 
                        capacity to provide housing counseling services 
                        in areas that lack sufficient services, 
                        including underdeveloped areas that lack basic 
                        water and sewer systems, electricity services, 
                        and safe, sanitary housing.
            ``(4) Advisory committee.--
                    ``(A) In general.--The Secretary shall appoint an 
                advisory committee to provide advice regarding the 
                carrying out of the functions of the Director.
                    ``(B) Members.--Such advisory committee shall 
                consist of not more than 12 individuals, and the 
                membership of the committee shall equally represent the 
                mortgage and real estate industry, including consumers 
                and housing counseling agencies certified by the 
                Secretary.
                    ``(C) Terms.--Except as provided in subparagraph 
                (D), each member of the advisory committee shall be 
                appointed for a term of 3 years. Members may be 
                reappointed at the discretion of the Secretary.
                    ``(D) Terms of initial appointees.--As designated 
                by the Secretary at the time of appointment, of the 
                members first appointed to the advisory committee, 4 
                shall be appointed for a term of 1 year and 4 shall be 
                appointed for a term of 2 years.
                    ``(E) Prohibition of pay; travel expenses.--Members 
                of the advisory committee shall serve without pay, but 
                shall receive travel expenses, including per diem in 
                lieu of subsistence, in accordance with applicable 
                provisions under subchapter I of chapter 57 of title 5, 
                United States Code.
                    ``(F) Advisory role only.--The advisory committee 
                shall have no role in reviewing or awarding housing 
                counseling grants.
            ``(5) Scope of homeownership counseling.--In carrying out 
        the responsibilities of the Director, the Director shall ensure 
        that homeownership counseling provided by, in connection with, 
        or pursuant to any function, activity, or program of the 
        Department addresses the entire process of homeownership, 
        including the decision to purchase a home, the selection and 
        purchase of a home, issues arising during or affecting the 
        period of ownership of a home (including refinancing, default 
        and foreclosure, and other financial decisions), and the sale 
        or other disposition of a home.''.

SEC. 403. COUNSELING PROCEDURES.

    (a) In General.--Section 106 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the 
following new subsection:
    ``(g) Procedures and Activities.--
            ``(1) Counseling procedures.--
                    ``(A) In general.--The Secretary shall establish, 
                coordinate, and monitor the administration by the 
                Department of Housing and Urban Development of the 
                counseling procedures for homeownership counseling and 
                rental housing counseling provided in connection with 
                any program of the Department, including all 
                requirements, standards, and performance measures that 
                relate to homeownership and rental housing counseling.
                    ``(B) Homeownership counseling.--For purposes of 
                this subsection and as used in the provisions referred 
                to in this subparagraph, the term `homeownership 
                counseling' means counseling related to homeownership 
                and residential mortgage loans. Such term includes 
                counseling related to homeownership and residential 
                mortgage loans that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 8(y)(1)(D) (42 
                                U.S.C. 1437f(y)(1)(D));
                                    ``(III) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(IV) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(V) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(VI) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B));
                                    ``(VII) sections 302(b)(6) and 
                                303(b)(7) (42 U.S.C. 1437aaa-1(b)(6), 
                                1437aaa-2(b)(7)); and
                                    ``(VIII) section 304(c)(4) (42 
                                U.S.C. 1437aaa-3(c)(4));
                            ``(iii) section 302(a)(4) of the American 
                        Homeownership and Economic Opportunity Act of 
                        2000 (42 U.S.C. 1437f note);
                            ``(iv) sections 233(b)(2) and 258(b) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12773(b)(2), 12808(b));
                            ``(v) this section and section 101(e) of 
                        the Housing and Urban Development Act of 1968 
                        (12 U.S.C. 1701x, 1701w(e));
                            ``(vi) section 220(d)(2)(G) of the Low-
                        Income Housing Preservation and Resident 
                        Homeownership Act of 1990 (12 U.S.C. 
                        4110(d)(2)(G));
                            ``(vii) sections 422(b)(6), 423(b)(7), 
                        424(c)(4), 442(b)(6), and 443(b)(6) of the 
                        Cranston-Gonzalez National Affordable Housing 
                        Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 
                        12874(c)(4), 12892(b)(6), and 12893(b)(6));
                            ``(viii) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(ix) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A));
                            ``(x) in the National Housing Act--
                                    ``(I) in section 203 (12 U.S.C. 
                                1709), the penultimate undesignated 
                                paragraph of paragraph (2) of 
                                subsection (b), subsection (c)(2)(A), 
                                and subsection (r)(4);
                                    ``(II) subsections (a) and (c)(3) 
                                of section 237 (12 U.S.C. 1715z-2); and
                                    ``(III) subsections (d)(2)(B) and 
                                (m)(1) of section 255 (12 U.S.C. 1715z-
                                20);
                            ``(xi) section 502(h)(4)(B) of the Housing 
                        Act of 1949 (42 U.S.C. 1472(h)(4)(B));
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7); and
                            ``(xiii) section 106 of the Energy Policy 
                        Act of 1992 (42 U.S.C. 12712 note).
                    ``(C) Rental housing counseling.--For purposes of 
                this subsection, the term `rental housing counseling' 
                means counseling related to rental of residential 
                property, which may include counseling regarding future 
                homeownership opportunities and providing referrals for 
                renters and prospective renters to entities providing 
                counseling and shall include counseling related to such 
                topics that is provided pursuant to--
                            ``(i) section 105(a)(20) of the Housing and 
                        Community Development Act of 1974 (42 U.S.C. 
                        5305(a)(20));
                            ``(ii) in the United States Housing Act of 
                        1937--
                                    ``(I) section 9(e) (42 U.S.C. 
                                1437g(e));
                                    ``(II) section 18(a)(4)(D) (42 
                                U.S.C. 1437p(a)(4)(D));
                                    ``(III) section 23(c)(4) (42 U.S.C. 
                                1437u(c)(4));
                                    ``(IV) section 32(e)(4) (42 U.S.C. 
                                1437z-4(e)(4));
                                    ``(V) section 33(d)(2)(B) (42 
                                U.S.C. 1437z-5(d)(2)(B)); and
                                    ``(VI) section 302(b)(6) (42 U.S.C. 
                                1437aaa-1(b)(6));
                            ``(iii) section 233(b)(2) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12773(b)(2));
                            ``(iv) section 106 of the Housing and Urban 
                        Development Act of 1968 (12 U.S.C. 1701x);
                            ``(v) section 422(b)(6) of the Cranston-
                        Gonzalez National Affordable Housing Act (42 
                        U.S.C. 12872(b)(6));
                            ``(vi) section 491(b)(1)(F)(iii) of the 
                        McKinney-Vento Homeless Assistance Act (42 
                        U.S.C. 11408(b)(1)(F)(iii));
                            ``(vii) sections 202(3) and 810(b)(2)(A) of 
                        the Native American Housing and Self-
                        Determination Act of 1996 (25 U.S.C. 4132(3), 
                        4229(b)(2)(A)); and
                            ``(viii) the rental assistance program 
                        under section 8 of the United States Housing 
                        Act of 1937 (42 U.S.C. 1437f).
            ``(2) Standards for materials.--The Secretary, in 
        consultation with the advisory committee established under 
        subsection (g)(4) of the Department of Housing and Urban 
        Development Act, shall establish standards for materials and 
        forms to be used, as appropriate, by organizations providing 
        homeownership counseling services, including any recipients of 
        assistance pursuant to subsection (a)(4).
            ``(3) Mortgage software systems.--
                    ``(A) Certification.--The Secretary shall provide 
                for the certification of various computer software 
                programs for consumers to use in evaluating different 
                residential mortgage loan proposals. The Secretary 
                shall require, for such certification, that the 
                mortgage software systems take into account--
                            ``(i) the consumer's financial situation 
                        and the cost of maintaining a home, including 
                        insurance, taxes, and utilities;
                            ``(ii) the amount of time the consumer 
                        expects to remain in the home or expected time 
                        to maturity of the loan; and
                            ``(iii) such other factors as the Secretary 
                        considers appropriate to assist the consumer in 
                        evaluating whether to pay points, to lock in an 
                        interest rate, to select an adjustable or fixed 
                        rate loan, to select a conventional or 
                        government-insured or guaranteed loan and to 
                        make other choices during the loan application 
                        process.
                If the Secretary determines that available existing 
                software is inadequate to assist consumers during the 
                residential mortgage loan application process, the 
                Secretary shall arrange for the development by private 
                sector software companies of new mortgage software 
                systems that meet the Secretary's specifications.
                    ``(B) Use and initial availability.--Such certified 
                computer software programs shall be used to supplement, 
                not replace, housing counseling. The Secretary shall 
                provide that such programs are initially used only in 
                connection with the assistance of housing counselors 
                certified pursuant to subsection (e).
                    ``(C) Availability.--After a period of initial 
                availability under subparagraph (B) as the Secretary 
                considers appropriate, the Secretary shall take 
                reasonable steps to make mortgage software systems 
                certified pursuant to this paragraph widely available 
                through the Internet and at public locations, including 
                public libraries, senior-citizen centers, public 
                housing sites, offices of public housing agencies that 
                administer rental housing assistance vouchers, and 
                housing counseling centers.
                    ``(D) Budget compliance.--This paragraph shall be 
                effective only to the extent that amounts to carry out 
                this paragraph are made available in advance in 
                appropriations Acts.
            ``(4) National public service multimedia campaigns to 
        promote housing counseling.--
                    ``(A) In general.--The Director of Housing 
                Counseling shall develop, implement, and conduct 
                national public service multimedia campaigns designed 
                to make persons facing mortgage foreclosure, persons 
                considering a subprime mortgage loan to purchase a 
                home, elderly persons, persons who face language 
                barriers, low-income persons, minorities, and other 
                potentially vulnerable consumers aware that it is 
                advisable, before seeking or maintaining a residential 
                mortgage loan, to obtain homeownership counseling from 
                an unbiased and reliable sources and that such 
                homeownership counseling is available, including 
                through programs sponsored by the Secretary of Housing 
                and Urban Development.
                    ``(B) Contact information.--Each segment of the 
                multimedia campaign under subparagraph (A) shall 
                publicize the toll-free telephone number and website of 
                the Department of Housing and Urban Development through 
                which persons seeking housing counseling can locate a 
                housing counseling agency in their State that is 
                certified by the Secretary of Housing and Urban 
                Development and can provide advice on buying a home, 
                renting, defaults, foreclosures, credit issues, and 
                reverse mortgages.
                    ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated to the Secretary, not to 
                exceed $3,000,000 for fiscal years 2009, 2010, and 
                2011, for the development, implementation, and conduct 
                of national public service multimedia campaigns under 
                this paragraph.
                    ``(D) Foreclosure rescue education programs.--
                            ``(i) In general.--Ten percent of any funds 
                        appropriated pursuant to the authorization 
                        under subparagraph (C) shall be used by the 
                        Director of Housing Counseling to conduct an 
                        education program in areas that have a high 
                        density of foreclosure. Such program shall 
                        involve direct mailings to persons living in 
                        such areas describing--
                                    ``(I) tips on avoiding foreclosure 
                                rescue scams;
                                    ``(II) tips on avoiding predatory 
                                lending mortgage agreements;
                                    ``(III) tips on avoiding for-profit 
                                foreclosure counseling services; and
                                    ``(IV) local counseling resources 
                                that are approved by the Department of 
                                Housing and Urban Development.
                            ``(ii) Program emphasis.--In conducting the 
                        education program described under clause (i), 
                        the Director of Housing Counseling shall also 
                        place an emphasis on serving communities that 
                        have a high percentage of retirement 
                        communities or a high percentage of low-income 
                        minority communities.
                            ``(iii) Terms defined.--For purposes of 
                        this subparagraph:
                                    ``(I) High density of 
                                foreclosures.--An area has a `high 
                                density of foreclosures' if such area 
                                is one of the metropolitan statistical 
                                areas (as that term is defined by the 
                                Director of the Office of Management 
                                and Budget) with the highest home 
                                foreclosure rates.
                                    ``(II) High percentage of 
                                retirement communities.--An area has a 
                                `high percentage of retirement 
                                communities' if such area is one of the 
                                metropolitan statistical areas (as that 
                                term is defined by the Director of the 
                                Office of Management and Budget) with 
                                the highest percentage of residents 
                                aged 65 or older.
                                    ``(III) High percentage of low-
                                income minority communities.--An area 
                                has a `high percentage of low-income 
                                minority communities' if such area 
                                contains a higher-than-normal 
                                percentage of residents who are both 
                                minorities and low-income, as defined 
                                by the Director of Housing Counseling.
            ``(5) Education programs.--The Secretary shall provide 
        advice and technical assistance to States, units of general 
        local government, and nonprofit organizations regarding the 
        establishment and operation of, including assistance with the 
        development of content and materials for, educational programs 
        to inform and educate consumers, particularly those most 
        vulnerable with respect to residential mortgage loans (such as 
        elderly persons, persons facing language barriers, low-income 
        persons, minorities, and other potentially vulnerable 
        consumers), regarding home mortgages, mortgage refinancing, 
        home equity loans, home repair loans, and where appropriate by 
        region, any requirements and costs associated with obtaining 
        flood or other disaster-specific insurance coverage.''.
    (b) Conforming Amendments to Grant Program for Homeownership 
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and 
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is 
amended--
            (1) in subclause (III), by striking ``and'' at the end;
            (2) in subclause (IV) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after subclause (IV) the following new 
        subclause:
                                    ``(V) notify the housing or 
                                mortgage applicant of the availability 
                                of mortgage software systems provided 
                                pursuant to subsection (g)(3).''.

SEC. 404. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

    Section 106(a) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new 
paragraph:
    ``(4) Homeownership and Rental Counseling Assistance.--
            ``(A) In general.--The Secretary shall make financial 
        assistance available under this paragraph to HUD-approved 
        housing counseling agencies and State housing finance agencies.
            ``(B) Qualified entities.--The Secretary shall establish 
        standards and guidelines for eligibility of organizations 
        (including governmental and nonprofit organizations) to receive 
        assistance under this paragraph, in accordance with 
        subparagraph (D).
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs and that ensures 
        adequate distribution of amounts for rural areas having 
        traditionally low levels of access to such counseling services, 
        including areas with insufficient access to the Internet. In 
        distributing such assistance, the Secretary may give priority 
        consideration to entities serving areas with the highest home 
        foreclosure rates.
            ``(D) Limitation on distribution of assistance.--
                    ``(i) In general.--None of the amounts made 
                available under this paragraph shall be distributed 
                to--
                            ``(I) any organization which has been 
                        convicted for a violation under Federal law 
                        relating to an election for Federal office; or
                            ``(II) any organization which employs 
                        applicable individuals.
                    ``(ii) Definition of applicable individuals.--In 
                this subparagraph, the term `applicable individual' 
                means an individual who--
                            ``(I) is--
                                    ``(aa) employed by the organization 
                                in a permanent or temporary capacity;
                                    ``(bb) contracted or retained by 
                                the organization; or
                                    ``(cc) acting on behalf of, or with 
                                the express or apparent authority of, 
                                the organization; and
                            ``(II) has been convicted for a violation 
                        under Federal law relating to an election for 
                        Federal office.
            ``(E) Grantmaking process.--In making assistance available 
        under this paragraph, the Secretary shall consider appropriate 
        ways of streamlining and improving the processes for grant 
        application, review, approval, and award.
            ``(F) Authorization of appropriations.--There are 
        authorized to be appropriated $45,000,000 for each of fiscal 
        years 2009 through 2012 for--
                    ``(i) the operations of the Office of Housing 
                Counseling of the Department of Housing and Urban 
                Development;
                    ``(ii) the responsibilities of the Director of 
                Housing Counseling under paragraphs (2) through (5) of 
                subsection (g); and
                    ``(iii) assistance pursuant to this paragraph for 
                entities providing homeownership and rental 
                counseling.''.

SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD 
              PROGRAMS.

    Section 106(e) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(e)) is amended--
            (1) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) Requirement for assistance.--An organization may not 
        receive assistance for counseling activities under subsection 
        (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or 
        under section 101(e), unless the organization, or the 
        individuals through which the organization provides such 
        counseling, has been certified by the Secretary under this 
        subsection as competent to provide such counseling.'';
            (2) in paragraph (2)--
                    (A) by inserting ``and for certifying 
                organizations'' before the period at the end of the 
                first sentence; and
                    (B) in the second sentence by striking ``for 
                certification'' and inserting ``, for certification of 
                an organization, that each individual through which the 
                organization provides counseling shall demonstrate, 
                and, for certification of an individual,'';
            (3) in paragraph (3), by inserting ``organizations and'' 
        before ``individuals'';
            (4) by redesignating paragraph (3) as paragraph (5); and
            (5) by inserting after paragraph (2) the following new 
        paragraphs:
            ``(3) Requirement under hud programs.--Any homeownership 
        counseling or rental housing counseling (as such terms are 
        defined in subsection (g)(1)) required under, or provided in 
        connection with, any program administered by the Department of 
        Housing and Urban Development shall be provided only by 
        organizations or counselors certified by the Secretary under 
        this subsection as competent to provide such counseling.
            ``(4) Outreach.--The Secretary shall take such actions as 
        the Secretary considers appropriate to ensure that individuals 
        and organizations providing homeownership or rental housing 
        counseling are aware of the certification requirements and 
        standards of this subsection and of the training and 
        certification programs under subsection (f).''.

SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES.

    The Secretary of Housing and Urban Development shall conduct an 
extensive study of the root causes of default and foreclosure of home 
loans, using as much empirical data as are available. The study shall 
also examine the role of escrow accounts in helping prime and nonprime 
borrowers to avoid defaults and foreclosures, and the role of computer 
registries of mortgages, including those used for trading mortgage 
loans. Not later than 12 months after the date of the enactment of this 
Act, the Secretary shall submit to the Congress a preliminary report 
regarding the study. Not later than 24 months after such date of 
enactment, the Secretary shall submit a final report regarding the 
results of the study, which shall include any recommended legislation 
relating to the study, and recommendations for best practices and for a 
process to identify populations that need counseling the most.

SEC. 407. DEFAULT AND FORECLOSURE DATABASE.

    (a) Establishment.--The Secretary of Housing and Urban Development, 
in consultation with the Federal agencies responsible for regulation of 
banking and financial institutions involved in residential mortgage 
lending and servicing, shall establish and maintain a database of 
information on foreclosures and defaults on mortgage loans for one- to 
four-unit residential properties and shall make such information 
publicly available.
    (b) Census Tract Data.--Information in the database shall be 
collected, aggregated, and made available on a census tract basis.
    (c) Requirements.--Information collected and made available through 
the database shall include--
            (1) the number and percentage of such mortgage loans that 
        are delinquent by more than 30 days;
            (2) the number and percentage of such mortgage loans that 
        are delinquent by more than 90 days;
            (3) the number and percentage of such properties that are 
        real estate-owned;
            (4) number and percentage of such mortgage loans that are 
        in the foreclosure process;
            (5) the number and percentage of such mortgage loans that 
        have an outstanding principal obligation amount that is greater 
        than the value of the property for which the loan was made; and
            (6) such other information as the Secretary considers 
        appropriate.

SEC. 408. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

    Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following new subsection:
    ``(h) Definitions.--For purposes of this section:
            ``(1) Nonprofit organization.--The term `nonprofit 
        organization' has the meaning given such term in section 104(5) 
        of the Cranston-Gonzalez National Affordable Housing Act (42 
        U.S.C. 12704(5)), except that subparagraph (D) of such section 
        shall not apply for purposes of this section.
            ``(2) State.--The term `State' means each of the several 
        States, the Commonwealth of Puerto Rico, the District of 
        Columbia, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, the Trust Territories 
        of the Pacific, or any other possession of the United States.
            ``(3) Unit of general local government.--The term `unit of 
        general local government' means any city, county, parish, town, 
        township, borough, village, or other general purpose political 
        subdivision of a State.
            ``(4) HUD-approved counseling agency.--The term `HUD-
        approved counseling agency' means a private or public nonprofit 
        organization that is--
                    ``(A) exempt from taxation under section 501(c) of 
                the Internal Revenue Code of 1986; and
                    ``(B) certified by the Secretary to provide housing 
                counseling services.
            ``(5) State housing finance agency.--The term `State 
        housing finance agency' means any public body, agency, or 
        instrumentality specifically created under State statute that 
        is authorised to finance activities designed to provide housing 
        and related facilities throughout an entire State through land 
        acquisition, construction, or rehabilitation.''.

SEC. 409. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.

    Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x), as amended by the preceding provisions of this title, is 
further amended by adding at the end the following:
    ``(i) Accountability for Recipients of Covered Assistance.--
            ``(1) Tracking of funds.--The Secretary shall--
                    ``(A) develop and maintain a system to ensure that 
                any organization or entity that receives any covered 
                assistance uses all amounts of covered assistance in 
                accordance with this section or section 216 of the 
                Mortgage Reform and Anti-Predatory Lending Act, as 
                applicable, the regulations issued under this section 
                or such section 216, as applicable, and any 
                requirements or conditions under which such amounts 
                were provided; and
                    ``(B) require any organization or entity, as a 
                condition of receipt of any covered assistance, to 
                agree to comply with such requirements regarding 
                covered assistance as the Secretary shall establish, 
                which shall include--
                            ``(i) appropriate periodic financial and 
                        grant activity reporting, record retention, and 
                        audit requirements for the duration of the 
                        covered assistance to the organization or 
                        entity to ensure compliance with the 
                        limitations and requirements of this section or 
                        section 216 of the Mortgage Reform and Anti-
                        Predatory Lending Act, as applicable, the 
                        regulations under this section or such section 
                        216, as applicable, and any requirements or 
                        conditions under which such amounts were 
                        provided; and
                            ``(ii) any other requirements that the 
                        Secretary determines are necessary to ensure 
                        appropriate administration and compliance.
            ``(2) Misuse of funds.--If any organization or entity that 
        receives any covered assistance is determined by the Secretary 
        to have used any covered assistance in a manner that is 
        materially in violation of this section or section 216 of the 
        Mortgage Reform and Anti-Predatory Lending Act, as applicable, 
        the regulations issued under this section or such section 216, 
        as applicable, or any requirements or conditions under which 
        such assistance was provided--
                    ``(A) the Secretary shall require that, within 12 
                months after the determination of such misuse, the 
                organization or entity shall reimburse the Secretary 
                for such misused amounts and return to the Secretary 
                any such amounts that remain unused or uncommitted for 
                use; and
                    ``(B) such organization or entity shall be 
                ineligible, at any time after such determination, to 
                apply for or receive any further covered assistance.
        The remedies under this paragraph are in addition to any other 
        remedies that may be available under law.
            ``(3) Covered assistance.--For purposes of this subsection, 
        the term `covered assistance' means any grant or other 
        financial assistance provided under--
                    ``(A) this section; or
                    ``(B) section 216 of the Mortgage Reform and Anti-
                Predatory Lending Act.''.

SEC. 410. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

    Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2604) is amended--
            (1) in the section heading, by striking ``special'' and 
        inserting ``home buying'';
            (2) by striking subsections (a) and (b) and inserting the 
        following new subsections:
    ``(a) Preparation and Distribution.--The Secretary shall prepare, 
at least once every 5 years, a booklet to help consumers applying for 
federally related mortgage loans to understand the nature and costs of 
real estate settlement services. The Secretary shall prepare the 
booklet in various languages and cultural styles, as the Secretary 
determines to be appropriate, so that the booklet is understandable and 
accessible to homebuyers of different ethnic and cultural backgrounds. 
The Secretary shall distribute such booklets to all lenders that make 
federally related mortgage loans. The Secretary shall also distribute 
to such lenders lists, organized by location, of homeownership 
counselors certified under section 106(e) of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying with 
the requirement under subsection (c) of this section.
    ``(b) Contents.--Each booklet shall be in such form and detail as 
the Secretary shall prescribe and, in addition to such other 
information as the Secretary may provide, shall include in plain and 
understandable language the following information:
            ``(1) A description and explanation of the nature and 
        purpose of the costs incident to a real estate settlement or a 
        federally related mortgage loan. The description and 
        explanation shall provide general information about the 
        mortgage process as well as specific information concerning, at 
        a minimum--
                    ``(A) balloon payments;
                    ``(B) prepayment penalties;
                    ``(C) the advantages of prepayment; and
                    ``(D) the trade-off between closing costs and the 
                interest rate over the life of the loan.
            ``(2) An explanation and sample of the uniform settlement 
        statement required by section 4.
            ``(3) A list and explanation of lending practices, 
        including those prohibited by the Truth in Lending Act or other 
        applicable Federal law, and of other unfair practices and 
        unreasonable or unnecessary charges to be avoided by the 
        prospective buyer with respect to a real estate settlement.
            ``(4) A list and explanation of questions a consumer 
        obtaining a federally related mortgage loan should ask 
        regarding the loan, including whether the consumer will have 
        the ability to repay the loan, whether the consumer 
        sufficiently shopped for the loan, whether the loan terms 
        include prepayment penalties or balloon payments, and whether 
        the loan will benefit the borrower.
            ``(5) An explanation of the right of rescission as to 
        certain transactions provided by sections 125 and 129 of the 
        Truth in Lending Act.
            ``(6) A brief explanation of the nature of a variable rate 
        mortgage and a reference to the booklet entitled `Consumer 
        Handbook on Adjustable Rate Mortgages', published by the Board 
        of Governors of the Federal Reserve System pursuant to section 
        226.19(b)(1) of title 12, Code of Federal Regulations, or to 
        any suitable substitute of such booklet that such Board of 
        Governors may subsequently adopt pursuant to such section.
            ``(7) A brief explanation of the nature of a home equity 
        line of credit and a reference to the pamphlet required to be 
        provided under section 127A of the Truth in Lending Act.
            ``(8) Information about homeownership counseling services 
        made available pursuant to section 106(a)(4) of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a 
        recommendation that the consumer use such services, and 
        notification that a list of certified providers of 
        homeownership counseling in the area, and their contact 
        information, is available.
            ``(9) An explanation of the nature and purpose of escrow 
        accounts when used in connection with loans secured by 
        residential real estate and the requirements under section 10 
        of this Act regarding such accounts.
            ``(10) An explanation of the choices available to buyers of 
        residential real estate in selecting persons to provide 
        necessary services incidental to a real estate settlement.
            ``(11) An explanation of a consumer's responsibilities, 
        liabilities, and obligations in a mortgage transaction.
            ``(12) An explanation of the nature and purpose of real 
        estate appraisals, including the difference between an 
        appraisal and a home inspection.
            ``(13) Notice that the Office of Housing of the Department 
        of Housing and Urban Development has made publicly available a 
        brochure regarding loan fraud and a World Wide Web address and 
        toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into 
consideration differences in real estate settlement procedures that may 
exist among the several States and territories of the United States and 
among separate political subdivisions within the same State and 
territory.'';
            (3) in subsection (c), by inserting at the end the 
        following new sentence: ``Each lender shall also include with 
        the booklet a reasonably complete or updated list of 
        homeownership counselors who are certified pursuant to section 
        106(e) of the Housing and Urban Development Act of 1968 (12 
        U.S.C. 1701x(e)) and located in the area of the lender.''; and
            (4) in subsection (d), by inserting after the period at the 
        end of the first sentence the following: ``The lender shall 
        provide the HUD-issued booklet in the version that is most 
        appropriate for the person receiving it.''.

SEC. 411. HOME INSPECTION COUNSELING.

    (a) Public Outreach.--
            (1) In general.--The Secretary of Housing and Urban 
        Development (in this section referred to as the ``Secretary'') 
        shall take such actions as may be necessary to inform potential 
        homebuyers of the availability and importance of obtaining an 
        independent home inspection. Such actions shall include--
                    (A) publication of the HUD/FHA form HUD 92564-CN 
                entitled ``For Your Protection: Get a Home 
                Inspection'', in both English and Spanish languages;
                    (B) publication of the HUD/FHA booklet entitled 
                ``For Your Protection: Get a Home Inspection'', in both 
                English and Spanish languages;
                    (C) development and publication of a HUD booklet 
                entitled ``For Your Protection--Get a Home Inspection'' 
                that does not reference FHA-insured homes, in both 
                English and Spanish languages; and
                    (D) publication of the HUD document entitled ``Ten 
                Important Questions To Ask Your Home Inspector'', in 
                both English and Spanish languages.
            (2) Availability.--The Secretary shall make the materials 
        specified in paragraph (1) available for electronic access and, 
        where appropriate, inform potential homebuyers of such 
        availability through home purchase counseling public service 
        announcements and toll-free telephone hotlines of the 
        Department of Housing and Urban Development. The Secretary 
        shall give special emphasis to reaching first-time and low-
        income homebuyers with these materials and efforts.
            (3) Updating.--The Secretary may periodically update and 
        revise such materials, as the Secretary determines to be 
        appropriate.
    (b) Requirement for FHA-Approved Lenders.--Each mortgagee approved 
for participation in the mortgage insurance programs under title II of 
the National Housing Act shall provide prospective homebuyers, at first 
contact, whether upon pre-qualification, pre-approval, or initial 
application, the materials specified in subparagraphs (A), (B), and (D) 
of subsection (a)(1).
    (c) Requirements for HUD-Approved Counseling Agencies.--Each 
counseling agency certified pursuant by the Secretary to provide 
housing counseling services shall provide each of their clients, as 
part of the home purchase counseling process, the materials specified 
in subparagraphs (C) and (D) of subsection (a)(1).
    (d) Training.--Training provided the Department of Housing and 
Urban Development for housing counseling agencies, whether such 
training is provided directly by the Department or otherwise, shall 
include--
            (1) providing information on counseling potential 
        homebuyers of the availability and importance of getting an 
        independent home inspection;
            (2) providing information about the home inspection 
        process, including the reasons for specific inspections such as 
        radon and lead-based paint testing;
            (3) providing information about advising potential 
        homebuyers on how to locate and select a qualified home 
        inspector; and
            (4) review of home inspection public outreach materials of 
        the Department.

SEC. 412. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.

    (a) Assistance to NRC.--Notwithstanding any other provision of law, 
of any amounts made available for any fiscal year pursuant to section 
106(a)(4)(F) of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x(a)(4)(F)) (as added by section 404 of this Act), 10 
percent shall be used only for assistance to the Neighborhood 
Reinvestment Corporation for activities, in consultation with servicers 
of residential mortgage loans, to provide notice to borrowers under 
such loans who are delinquent with respect to payments due under such 
loans that makes such borrowers aware of the dangers of fraudulent 
activities associated with foreclosure.
    (b) Notice.--The Neighborhood Reinvestment Corporation, in 
consultation with servicers of residential mortgage loans, shall use 
the amounts provided pursuant to subsection (a) to carry out activities 
to inform borrowers under residential mortgage loans--
            (1) that the foreclosure process is complex and can be 
        confusing;
            (2) that the borrower may be approached during the 
        foreclosure process by persons regarding saving their home and 
        they should use caution in any such dealings;
            (3) that there are Federal Government and nonprofit 
        agencies that may provide information about the foreclosure 
        process, including the Department of Housing and Urban 
        Development;
            (4) that they should contact their lender immediately, 
        contact the Department of Housing and Urban Development to find 
        a housing counseling agency certified by the Department to 
        assist in avoiding foreclosure, or visit the Department's 
        website regarding tips for avoiding foreclosure; and
            (5) of the telephone number of the loan servicer or 
        successor, the telephone number of the Department of Housing 
        and Urban Development housing counseling line, and the Uniform 
        Resource Locators (URLs) for the Department of Housing and 
        Urban Development websites for housing counseling and for tips 
        for avoiding foreclosure.

                      TITLE V--MORTGAGE SERVICING

SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
              CREDIT TRANSACTIONS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129C (as added by 
section 201) the following new section:

``SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER 
              CREDIT TRANSACTIONS.

    ``(a) In General.--Except as provided in subsection (b), (c), or 
(d) , a creditor, in connection with the formation or consummation of a 
consumer credit transaction secured by a first lien on the principal 
dwelling of the consumer, other than a consumer credit transaction 
under an open end credit plan or a reverse mortgage, shall establish, 
before the consummation of such transaction, an escrow or impound 
account for the payment of taxes and hazard insurance, and, if 
applicable, flood insurance, mortgage insurance, ground rents, and any 
other required periodic payments or premiums with respect to the 
property or the loan terms, as provided in, and in accordance with, 
this section.
    ``(b) When Required.--No impound, trust, or other type of account 
for the payment of property taxes, insurance premiums, or other 
purposes relating to the property may be required as a condition of a 
real property sale contract or a loan secured by a first deed of trust 
or mortgage on the principal dwelling of the consumer, other than a 
consumer credit transaction under an open end credit plan or a reverse 
mortgage, except when--
            ``(1) any such impound, trust, or other type of escrow or 
        impound account for such purposes is required by Federal or 
        State law;
            ``(2) a loan is made, guaranteed, or insured by a State or 
        Federal governmental lending or insuring agency;
            ``(3) the transaction is secured by a first mortgage or 
        lien on the consumer's principal dwelling having an original 
        principal obligation amount that--
                    ``(A) does not exceed the amount of the maximum 
                limitation on the original principal obligation of 
                mortgage in effect for a residence of the applicable 
                size, as of the date such interest rate set, pursuant 
                to the sixth sentence of section 305(a)(2) the Federal 
                Home Loan Mortgage Corporation Act (12 U.S.C. 
                1454(a)(2)), and the annual percentage rate will exceed 
                the average prime offer rate for a comparable 
                transaction by 1.5 or more percentage points; or
                    ``(B) exceeds the amount of the maximum limitation 
                on the original principal obligation of mortgage in 
                effect for a residence of the applicable size, as of 
                the date such interest rate set, pursuant to the sixth 
                sentence of section 305(a)(2) the Federal Home Loan 
                Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and 
                the annual percentage rate will exceed the average 
                prime offer rate for a comparable transaction by 2.5 or 
                more percentage points; or
            ``(4) so required pursuant to regulation.
    ``(c) Duration of Mandatory Escrow or Impound Account.--An escrow 
or impound account established pursuant to subsection (b), shall remain 
in existence for a minimum period of 5 years, beginning with the date 
of the consummation of the loan, and until such borrower has sufficient 
equity in the dwelling securing the consumer credit transaction so as 
to no longer be required to maintain private mortgage insurance, or 
such other period as may be provided in regulations to address 
situations such as borrower delinquency, unless the underlying mortgage 
establishing the account is terminated.
    ``(d) Limited Exemptions for Loans Secured by Shares in a 
Cooperative and for Certain Condominium Units.--Escrow accounts need 
not be established for loans secured by shares in a cooperative. 
Insurance premiums need not be included in escrow accounts for loans 
secured by condominium units, where the condominium association has an 
obligation to the condominium unit owners to maintain a master policy 
insuring condominium units.
    ``(e) Clarification on Escrow Accounts for Loans Not Meeting 
Statutory Test.--For mortgages not covered by the requirements of 
subsection (b), no provision of this section shall be construed as 
precluding the establishment of an impound, trust, or other type of 
account for the payment of property taxes, insurance premiums, or other 
purposes relating to the property--
            ``(1) on terms mutually agreeable to the parties to the 
        loan;
            ``(2) at the discretion of the lender or servicer, as 
        provided by the contract between the lender or servicer and the 
        borrower; or
            ``(3) pursuant to the requirements for the escrowing of 
        flood insurance payments for regulated lending institutions in 
        section 102(d) of the Flood Disaster Protection Act of 1973.
    ``(f) Administration of Mandatory Escrow or Impound Accounts.--
            ``(1) In general.--Except as may otherwise be provided for 
        in this title or in regulations prescribed by the Board, escrow 
        or impound accounts established pursuant to subsection (b) 
        shall be established in a federally insured depository 
        institution.
            ``(2) Administration.--Except as provided in this section 
        or regulations prescribed under this section, an escrow or 
        impound account subject to this section shall be administered 
        in accordance with--
                    ``(A) the Real Estate Settlement Procedures Act of 
                1974 and regulations prescribed under such Act;
                    ``(B) the Flood Disaster Protection Act of 1973 and 
                regulations prescribed under such Act; and
                    ``(C) the law of the State, if applicable, where 
                the real property securing the consumer credit 
                transaction is located.
            ``(3) Applicability of payment of interest.--If prescribed 
        by applicable State or Federal law, each creditor shall pay 
        interest to the consumer on the amount held in any impound, 
        trust, or escrow account that is subject to this section in the 
        manner as prescribed by that applicable State or Federal law.
            ``(4) Penalty coordination with respa.--Any action or 
        omission on the part of any person which constitutes a 
        violation of the Real Estate Settlement Procedures Act of 1974 
        or any regulation prescribed under such Act for which the 
        person has paid any fine, civil money penalty, or other damages 
        shall not give rise to any additional fine, civil money 
        penalty, or other damages under this section, unless the action 
        or omission also constitutes a direct violation of this 
        section.
    ``(g) Disclosures Relating to Mandatory Escrow or Impound 
Account.--In the case of any impound, trust, or escrow account that is 
subject to this section, the creditor shall disclose by written notice 
to the consumer at least 3 business days before the consummation of the 
consumer credit transaction giving rise to such account or in 
accordance with timeframes established in prescribed regulations the 
following information:
            ``(1) The fact that an escrow or impound account will be 
        established at consummation of the transaction.
            ``(2) The amount required at closing to initially fund the 
        escrow or impound account.
            ``(3) The amount, in the initial year after the 
        consummation of the transaction, of the estimated taxes and 
        hazard insurance, including flood insurance, if applicable, and 
        any other required periodic payments or premiums that reflects, 
        as appropriate, either the taxable assessed value of the real 
        property securing the transaction, including the value of any 
        improvements on the property or to be constructed on the 
        property (whether or not such construction will be financed 
        from the proceeds of the transaction) or the replacement costs 
        of the property.
            ``(4) The estimated monthly amount payable to be escrowed 
        for taxes, hazard insurance (including flood insurance, if 
        applicable) and any other required periodic payments or 
        premiums.
            ``(5) The fact that, if the consumer chooses to terminate 
        the account at the appropriate time in the future, the consumer 
        will become responsible for the payment of all taxes, hazard 
        insurance, and flood insurance, if applicable, as well as any 
        other required periodic payments or premiums on the property 
        unless a new escrow or impound account is established.
            ``(6) Such other information as the Federal banking 
        agencies jointly determine necessary for the protection of the 
        consumer.
    ``(h) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Flood insurance.--The term `flood insurance' means 
        flood insurance coverage provided under the national flood 
        insurance program pursuant to the National Flood Insurance Act 
        of 1968.
            ``(2) Hazard insurance.--The term `hazard insurance' shall 
        have the same meaning as provided for `hazard insurance', 
        `casualty insurance', `homeowner's insurance', or other similar 
        term under the law of the State where the real property 
        securing the consumer credit transaction is located.''.
    (b) Implementation.--
            (1) Regulations.--The Board of Governors of the Federal 
        Reserve System, the Comptroller of the Currency, the Director 
        of the Office of Thrift Supervision, the Federal Deposit 
        Insurance Corporation, the National Credit Union Administration 
        Board, (hereafter in this Act referred to as the ``Federal 
        banking agencies'') and the Federal Trade Commission shall 
        prescribe, in final form, such regulations as determined to be 
        necessary to implement the amendments made by subsection (a) 
        before the end of the 180-day period beginning on the date of 
        the enactment of this Act.
            (2) Effective date.--The amendments made by subsection (a) 
        shall only apply to covered mortgage loans consummated after 
        the end of the 1-year period beginning on the date of the 
        publication of final regulations in the Federal Register.
    (c) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129C (as added by section 201) the following new item:

``129D. Escrow or impound accounts relating to certain consumer credit 
                            transactions.''.

SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW 
              SERVICES.

    (a) In General.--Section 129D of the Truth in Lending Act (as added 
by section 501) is amended by adding at the end the following new 
subsection:
    ``(i) Disclosure Notice Required for Consumers Who Waive Escrow 
Services.--
            ``(1) In general.--If--
                    ``(A) an impound, trust, or other type of account 
                for the payment of property taxes, insurance premiums, 
                or other purposes relating to real property securing a 
                consumer credit transaction is not established in 
                connection with the transaction; or
                    ``(B) a consumer chooses, and provides written 
                notice to the creditor or servicer of such choice, at 
                any time after such an account is established in 
                connection with any such transaction and in accordance 
                with any statute, regulation, or contractual agreement, 
                to close such account,
        the creditor or servicer shall provide a timely and clearly 
        written disclosure to the consumer that advises the consumer of 
        the responsibilities of the consumer and implications for the 
        consumer in the absence of any such account.
            ``(2) Disclosure requirements.--Any disclosure provided to 
        a consumer under paragraph (1) shall include the following:
                    ``(A) Information concerning any applicable fees or 
                costs associated with either the non-establishment of 
                any such account at the time of the transaction, or any 
                subsequent closure of any such account.
                    ``(B) A clear and prominent notice that the 
                consumer is responsible for personally and directly 
                paying the non-escrowed items, in addition to paying 
                the mortgage loan payment, in the absence of any such 
                account, and the fact that the costs for taxes, 
                insurance, and related fees can be substantial.
                    ``(C) A clear explanation of the consequences of 
                any failure to pay non-escrowed items, including the 
                possible requirement for the forced placement of 
                insurance by the creditor or servicer and the 
                potentially higher cost (including any potential 
                commission payments to the servicer) or reduced 
                coverage for the consumer in the event of any such 
                creditor-placed insurance.
                    ``(D) Such other information as the Federal banking 
                agencies jointly determine necessary for the protection 
                of the consumer.''.
    (b) Implementation.--
            (1) Regulations.--The Federal banking agencies and the 
        Federal Trade Commission shall prescribe, in final form, such 
        regulations as such agencies determine to be necessary to 
        implement the amendments made by subsection (a) before the end 
        of the 180-day period beginning on the date of the enactment of 
        this Act.
            (2) Effective date.--The amendments made by subsection (a) 
        shall only apply in accordance with the regulations established 
        in paragraph (1) and beginning on the date occurring 180-days 
        after the date of the publication of final regulations in the 
        Federal Register.

SEC. 503. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.

    (a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end 
the following new subsections:
    ``(k) Servicer Prohibitions.--
            ``(1) In general.--A servicer of a federally related 
        mortgage shall not--
                    ``(A) obtain force-placed hazard insurance unless 
                there is a reasonable basis to believe the borrower has 
                failed to comply with the loan contract's requirements 
                to maintain property insurance;
                    ``(B) charge fees for responding to valid qualified 
                written requests (as defined in regulations which the 
                Secretary shall prescribe) under this section;
                    ``(C) fail to take timely action to respond to a 
                borrower's requests to correct errors relating to 
                allocation of payments, final balances for purposes of 
                paying off the loan, or avoiding foreclosure, or other 
                standard servicer's duties;
                    ``(D) fail to respond within 10 business days to a 
                request from a borrower to provide the identity, 
                address, and other relevant contact information about 
                the owner assignee of the loan; or
                    ``(E) fail to comply with any other obligation 
                found by the Secretary, by regulation, to be 
                appropriate to carry out the consumer protection 
                purposes of this Act.
            ``(2) Force-placed insurance defined.--For purposes of this 
        subsection and subsections (l) and (m), the term `force-placed 
        insurance' means hazard insurance coverage obtained by a 
        servicer of a federally related mortgage when the borrower has 
        failed to maintain or renew hazard insurance on such property 
        as required of the borrower under the terms of the mortgage.
    ``(l) Requirements for Force-Placed Insurance.--A servicer of a 
federally related mortgage shall not be construed as having a 
reasonable basis for obtaining force-placed insurance unless the 
requirements of this subsection have been met.
            ``(1) Written notices to borrower.--A servicer may not 
        impose any charge on any borrower for force-placed insurance 
        with respect to any property securing a federally related 
        mortgage unless--
                    ``(A) the servicer has sent, by first-class mail, a 
                written notice to the borrower containing--
                            ``(i) a reminder of the borrower's 
                        obligation to maintain hazard insurance on the 
                        property securing the federally related 
                        mortgage;
                            ``(ii) a statement that the servicer does 
                        not have evidence of insurance coverage of such 
                        property;
                            ``(iii) a clear and conspicuous statement 
                        of the procedures by which the borrower may 
                        demonstrate that the borrower already has 
                        insurance coverage; and
                            ``(iv) a statement that the servicer may 
                        obtain such coverage at the borrower's expense 
                        if the borrower does not provide such 
                        demonstration of the borrower's existing 
                        coverage in a timely manner;
                    ``(B) the servicer has sent, by first-class mail, a 
                second written notice, at least 30 days after the 
                mailing of the notice under subparagraph (A) that 
                contains all the information described in each clause 
                of such subparagraph; and
                    ``(C) the servicer has not received from the 
                borrower any demonstration of hazard insurance coverage 
                for the property securing the mortgage by the end of 
                the 15-day period beginning on the date the notice 
                under subparagraph (B) was sent by the servicer.
            ``(2) Sufficiency of demonstration.--A servicer of a 
        federally related mortgage shall accept any reasonable form of 
        written confirmation from a borrower of existing insurance 
        coverage, which shall include the existing insurance policy 
        number along with the identity of, and contact information for, 
        the insurance company or agent.
            ``(3) Termination of force-placed insurance.--Within 15 
        days of the receipt by a servicer of confirmation of a 
        borrower's existing insurance coverage, the servicer shall--
                    ``(A) terminate the force-placed insurance; and
                    ``(B) refund to the consumer all force-placed 
                insurance premiums paid by the borrower during any 
                period during which the borrower's insurance coverage 
                and the force-placed insurance coverage were each in 
                effect, and any related fees charged to the consumer's 
                account with respect to the force-placed insurance 
                during such period.
            ``(4) Clarification with respect to flood disaster 
        protection act.--No provision of this section shall be 
        construed as prohibiting a servicer from providing simultaneous 
        or concurrent notice of a lack of flood insurance pursuant to 
        section 102(e) of the Flood Disaster Protection Act of 1973.
    ``(m) Limitations on Force-Placed Insurance Charges.--All charges 
for force-placed insurance premiums shall be bona fide and reasonable 
in amount.''.
    (b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
            (1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000'' 
        each place such term appears and inserting ``$2,000''; and
            (2) in paragraph (2)(B)(i), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
    (c) Decrease in Response Times.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
            (1) in paragraph (1)(A), by striking ``20 days'' and 
        inserting ``5 days'';
            (2) in paragraph (2), by striking ``60 days'' and inserting 
        ``30 days''; and
            (3) by adding at the end the following new paragraph:
            ``(4) Limited extension of response time.--The 30-day 
        period described in paragraph (2) may be extended for not more 
        than 15 days if, before the end of such 30-day period, the 
        servicer notifies the borrower of the extension and the reasons 
        for the delay in responding.''.
    (d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g)) 
is amended by adding at the end the following new sentence: ``Any 
balance in any such account that is within the servicer's control at 
the time the loan is paid off shall be promptly returned to the 
borrower within 20 business days or credited to a similar account for a 
new mortgage loan to the borrower with the same lender.''.

SEC. 504. TRUTH IN LENDING ACT AMENDMENTS.

    (a) Requirements for Prompt Crediting of Home Loan Payments.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is 
amended by inserting after section 129E (as added by section 602) the 
following new section (and by amending the table of contents 
accordingly):

``SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.

    ``(a) In General.--In connection with a consumer credit transaction 
secured by a consumer's principal dwelling, no servicer shall fail to 
credit a payment to the consumer's loan account as of the date of 
receipt, except when a delay in crediting does not result in any charge 
to the consumer or in the reporting of negative information to a 
consumer reporting agency, except as required in subsection (b).
    ``(b) Exception.--If a servicer specifies in writing requirements 
for the consumer to follow in making payments, but accepts a payment 
that does not conform to the requirements, the servicer shall credit 
the payment as of 5 days after receipt.''.
    (b) Requests for Payoff Amounts.--Chapter 2 of such Act is further 
amended by inserting after section 129F (as added by subsection (a)) 
the following new section (and by amending the table of contents 
accordingly):

``SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

    ``A creditor or servicer of a home loan shall send an accurate 
payoff balance within a reasonable time, but in no case more than 7 
business days, after the receipt of a written request for such balance 
from or on behalf of the borrower.''.

SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

    Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is 
amended by adding at the end the following new paragraph:
            ``(4) Repayment analysis required to include escrow 
        payments.--
                    ``(A) In general.--In the case of any consumer 
                credit transaction secured by a first mortgage or lien 
                on the principal dwelling of the consumer, other than a 
                consumer credit transaction under an open end credit 
                plan or a reverse mortgage, for which an impound, 
                trust, or other type of account has been or will be 
                established in connection with the transaction for the 
                payment of property taxes, hazard and flood (if any) 
                insurance premiums, or other periodic payments or 
                premiums with respect to the property, the information 
                required to be provided under subsection (a) with 
                respect to the number, amount, and due dates or period 
                of payments scheduled to repay the total of payments 
                shall take into account the amount of any monthly 
                payment to such account for each such repayment in 
                accordance with section 10(a)(2) of the Real Estate 
                Settlement Procedures Act of 1974.
                    ``(B) Assessment value.--The amount taken into 
                account under subparagraph (A) for the payment of 
                property taxes, hazard and flood (if any) insurance 
                premiums, or other periodic payments or premiums with 
                respect to the property shall reflect the taxable 
                assessed value of the real property securing the 
                transaction after the consummation of the transaction, 
                including the value of any improvements on the property 
                or to be constructed on the property (whether or not 
                such construction will be financed from the proceeds of 
                the transaction), if known, and the replacement costs 
                of the property for hazard insurance, in the initial 
                year after the transaction.''.

                     TITLE VI--APPRAISAL ACTIVITIES

SEC. 601. PROPERTY APPRAISAL REQUIREMENTS.

    Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is 
amended by inserting after 129G (as added by section 504) the following 
new section:

``SEC. 129H PROPERTY APPRAISAL REQUIREMENTS.

    ``(a) In General.--A creditor may not extend credit in the form of 
a subprime mortgage to any consumer without first obtaining a written 
appraisal of the property to be mortgaged prepared in accordance with 
the requirements of this section.
    ``(b) Appraisal Requirements.--
            ``(1) Physical property visit.--An appraisal of property to 
        be secured by a subprime mortgage does not meet the requirement 
        of this section unless it is performed by a qualified appraiser 
        who conducts a physical property visit of the interior of the 
        mortgaged property.
            ``(2) Second appraisal under certain circumstances.--
                    ``(A) In general.--If the purpose of a subprime 
                mortgage is to finance the purchase or acquisition of 
                the mortgaged property from a person within 180 days of 
                the purchase or acquisition of such property by that 
                person at a price that was lower than the current sale 
                price of the property, the creditor shall obtain a 
                second appraisal from a different qualified appraiser. 
                The second appraisal shall include an analysis of the 
                difference in sale prices, changes in market 
                conditions, and any improvements made to the property 
                between the date of the previous sale and the current 
                sale.
                    ``(B) No cost to applicant.--The cost of any second 
                appraisal required under subparagraph (A) may not be 
                charged to the applicant.
            ``(3) Qualified appraiser defined.--For purposes of this 
        section, the term `qualified appraiser' means a person who--
                    ``(A) is, at a minimum, certified or licensed by 
                the State in which the property to be appraised is 
                located; and
                    ``(B) performs each appraisal in conformity with 
                the Uniform Standards of Professional Appraisal 
                Practice and title XI of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989, and the 
                regulations prescribed under such title, as in effect 
                on the date of the appraisal.
    ``(c) Free Copy of Appraisal.--A creditor shall provide 1 copy of 
each appraisal conducted in accordance with this section in connection 
with a subprime mortgage to the applicant without charge, and at least 
3 days prior to the transaction closing date.
    ``(d) Consumer Notification.--At the time of the initial mortgage 
application, the applicant shall be provided with a statement by the 
creditor that any appraisal prepared for the mortgage is for the sole 
use of the creditor, and that the applicant may choose to have a 
separate appraisal conducted at their own expense.
    ``(e) Violations.--In addition to any other liability to any person 
under this title, a creditor found to have willfully failed to obtain 
an appraisal as required in this section shall be liable to the 
applicant or borrower for the sum of $2,000.
    ``(f) Subprime Mortgage Defined.--For purposes of this section, the 
term `subprime mortgage' means a residential mortgage loan secured by a 
principal dwelling with an annual percentage rate that exceeds the 
average prime offer rate for a comparable transaction, as of the date 
the interest rate is set--
            ``(1) by 1.5 or more percentage points, in the case of a 
        first lien residential mortgage loan having an original 
        principal obligation amount that does not exceed the amount of 
        the maximum limitation on the original principal obligation of 
        mortgage in effect for a residence of the applicable size, as 
        of the date of such interest rate set, pursuant to the sixth 
        sentence of section 305(a)(2) the Federal Home Loan Mortgage 
        Corporation Act (12 U.S.C. 1454(a)(2));
            ``(2) by 2.5 or more percentage points, in the case of a 
        first lien residential mortgage loan having an original 
        principal obligation amount that exceeds the amount of the 
        maximum limitation on the original principal obligation of 
        mortgage in effect for a residence of the applicable size, as 
        of the date of such interest rate set, pursuant to the sixth 
        sentence of section 305(a)(2) the Federal Home Loan Mortgage 
        Corporation Act (12 U.S.C. 1454(a)(2)); and
            ``(3) by 3.5 or more percentage points for a subordinate 
        lien residential mortgage loan.''.

SEC. 602. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN 
              CONSUMER CREDIT TRANSACTIONS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129D (as added by 
section 501(a)) the following new section:

``SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO 
              CERTAIN CONSUMER CREDIT TRANSACTIONS.

    ``(a) In General.--It shall be unlawful, in extending credit or in 
providing any services for a consumer credit transaction secured by the 
principal dwelling of the consumer, to engage in any unfair or 
deceptive act or practice as described in or pursuant to regulations 
prescribed under this section.
    ``(b) Appraisal Independence.--For purposes of subsection (a), 
unfair and deceptive practices shall include--
            ``(1) any appraisal of a property offered as security for 
        repayment of the consumer credit transaction that is conducted 
        in connection with such transaction in which a person with an 
        interest in the underlying transaction compensates, coerces, 
        extorts, colludes, instructs, induces, bribes, or intimidates a 
        person conducting or involved in an appraisal, or attempts, to 
        compensate, coerce, extort, collude, instruct, induce, bribe, 
        or intimidate such a person, for the purpose of causing the 
        appraised value assigned, under the appraisal, to the property 
        to be based on any factor other than the independent judgment 
        of the appraiser;
            ``(2) mischaracterizing, or suborning any 
        mischaracterization of, the appraised value of the property 
        securing the extension of the credit;
            ``(3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the making or 
        pricing of the transaction; and
            ``(4) withholding or threatening to withhold timely payment 
        for an appraisal report or for appraisal services rendered.
    ``(c) Exceptions.--The requirements of subsection (b) shall not be 
construed as prohibiting a mortgage lender, mortgage broker, mortgage 
banker, real estate broker, appraisal management company, employee of 
an appraisal management company, consumer, or any other person with an 
interest in a real estate transaction from asking an appraiser to 
provide 1 or more of the following services:
            ``(1) Consider additional, appropriate property 
        information, including the consideration of additional 
        comparable properties to make or support an appraisal.
            ``(2) Provide further detail, substantiation, or 
        explanation for the appraiser's value conclusion.
            ``(3) Correct errors in the appraisal report.
    ``(d) Prohibitions on Conflicts of Interest.--No certified or 
licensed appraiser conducting, and no appraisal management company 
procuring or facilitating, an appraisal in connection with a consumer 
credit transaction secured by the principal dwelling of a consumer may 
have a direct or indirect interest, financial or otherwise, in the 
property or transaction involving the appraisal.
    ``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker, 
mortgage banker, real estate broker, appraisal management company, 
employee of an appraisal management company, or any other person 
involved in a real estate transaction involving an appraisal in 
connection with a consumer credit transaction secured by the principal 
dwelling of a consumer who has a reasonable basis to believe an 
appraiser is failing to comply with the Uniform Standards of 
Professional Appraisal Practice, is violating applicable laws, or is 
otherwise engaging in unethical or unprofessional conduct, shall refer 
the matter to the applicable State appraiser certifying and licensing 
agency.
    ``(f) No Extension of Credit.--In connection with a consumer credit 
transaction secured by a consumer's principal dwelling, a creditor who 
knows, at or before loan consummation, of a violation of the appraisal 
independence standards established in subsections (b) or (d) shall not 
extend credit based on such appraisal unless the creditor documents 
that the creditor has acted with reasonable diligence to determine that 
the appraisal does not materially misstate or misrepresent the value of 
such dwelling.
    ``(g) Rulemaking Proceedings.--The Board, the Comptroller of the 
Currency, the Director of the Office of Thrift Supervision, the Federal 
Deposit Insurance Corporation, the National Credit Union Administration 
Board, and the Federal Trade Commission--
            ``(1) shall, for purposes of this section, jointly 
        prescribe regulations no later than 180 days after the date of 
        the enactment of this section, and where such regulations have 
        an effective date of no later than 1 year after the date of the 
        enactment of this section, defining with specificity acts or 
        practices which are unfair or deceptive in the provision of 
        mortgage lending services for a consumer credit transaction 
        secured by the principal dwelling of the consumer or mortgage 
        brokerage services for such a transaction and defining any 
        terms in this section or such regulations; and
            ``(2) may jointly issue interpretive guidelines and general 
        statements of policy with respect to unfair or deceptive acts 
        or practices in the provision of mortgage lending services for 
        a consumer credit transaction secured by the principal dwelling 
        of the consumer and mortgage brokerage services for such a 
        transaction, within the meaning of subsections (a), (b), (c), 
        (d), (e), and (f).
    ``(h) Penalties.--
            ``(1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who violates 
        this section shall forfeit and pay a civil penalty of not more 
        than $10,000 for each day any such violation continues.
            ``(2) Subsequent violations.--In the case of any person on 
        whom a civil penalty has been imposed under paragraph (1), 
        paragraph (1) shall be applied by substituting `$20,000' for 
        `$10,000' with respect to all subsequent violations.
            ``(3) Assessment.--The agency referred to in subsection (a) 
        or (c) of section 108 with respect to any person described in 
        paragraph (1) shall assess any penalty under this subsection to 
        which such person is subject.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 129D (as added by section 501(c)) the following new item:

``129E. Unfair and deceptive practices and acts relating to certain 
                            consumer credit transactions.''.

SEC. 603. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC, 
              APPRAISER INDEPENDENCE MONITORING, APPROVED APPRAISER 
              EDUCATION, APPRAISAL MANAGEMENT COMPANIES, APPRAISER 
              COMPLAINT HOTLINE, AUTOMATED VALUATION MODELS, AND BROKER 
              PRICE OPINIONS.

    (a) Consumer Protection Mission.--
            (1) Purposes.--Section 1101 of the Financial Institutions 
        Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331) 
        is amended by inserting ``and to provide the Appraisal 
        Subcommittee with a consumer protection mandate'' before the 
        period at the end.
            (2) Functions of appraisal subcommittee.--Section 1103(a) 
        of the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 (12 U.S.C. 3332(a)) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (3); and
                    (B) by amending paragraph (4) to read as follows:
            ``(4) monitor the efforts of, and requirements established 
        by, States and the Federal financial institutions regulatory 
        agencies to protect consumers from improper appraisal practices 
        and the predations of unlicensed appraisers in consumer credit 
        transactions that are secured by a consumer's principal 
        dwelling; and''.
            (3) Threshold levels.--Section 1112(b) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3341(b)) is amended by inserting before the period the 
        following: ``, and that such threshold level provides 
        reasonable protection for consumers who purchase 1-4 unit 
        single-family residences. In determining whether a threshold 
        level provides reasonable protection for consumers, each 
        Federal financial institutions regulatory agency shall consult 
        with consumer groups and convene a public hearing''.
    (b) Annual Report of Appraisal Subcommittee.--Section 1103(a) of 
the Financial Institutions Reform, Recovery, and Enforcement Act of 
1989 (12 U.S.C. 3332(a)) is amended at the end by inserting the 
following new paragraph:
            ``(5) transmit an annual report to the Congress not later 
        than January 31 of each year that describes the manner in which 
        each function assigned to the Appraisal Subcommittee has been 
        carried out during the preceding year. The report shall also 
        detail the activities of the Appraisal Subcommittee, including 
        the results of all audits of State appraiser regulatory 
        agencies, and provide an accounting of disapproved actions and 
        warnings taken in the previous year, including a description of 
        the conditions causing the disapproval and actions taken to 
        achieve compliance.''.
    (c) Open Meetings.--Section 1104(b) of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is 
amended by inserting ``in public session after notice in the Federal 
Register'' after ``shall meet''.
    (d) Regulations.--Section 1106 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is 
amended--
            (1) by inserting ``prescribe regulations after notice and 
        opportunity for comment,'' after ``hold hearings''; and
            (2) at the end by inserting ``Any regulations prescribed by 
        the Appraisal Subcommittee shall (unless otherwise provided in 
        this title) be limited to the following functions: temporary 
        practice, national registry, information sharing, and 
        enforcement. For purposes of prescribing regulations, the 
        Appraisal Subcommittee shall establish an advisory committee of 
        industry participants, including appraisers, lenders, consumer 
        advocates, and government agencies, and hold meetings as 
        necessary to support the development of regulations.''.
    (e) Appraisals and Appraisal Reviews.--Section 1113 of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3342) is amended--
            (1) by striking ``In determining'' and inserting ``(a) In 
        General.--In determining'';
            (2) in subsection (a) (as designated by paragraph (1)), by 
        inserting before the period the following: ``, where a complex 
        1-to-4 unit single family residential appraisal means an 
        appraisal for which the property to be appraised, the form of 
        ownership, the property characteristics, or the market 
        conditions are atypical''; and
            (3) by adding at the end the following new subsection:
    ``(b) Appraisals and Appraisal Reviews.--All appraisals performed 
at a property within a State shall be prepared by appraisers licensed 
or certified in the State where the property is located. All appraisal 
reviews, including appraisal reviews by a lender, appraisal management 
company, or other third party organization, shall be performed by an 
appraiser who is duly licensed or certified by a State appraisal 
board.''.
    (f) Appraisal Management Services.--
            (1) Supervision of third party providers of appraisal 
        management services.--Section 1103(a) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3332(a)) (as previously amended by this section) is 
        further amended--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) monitor the requirements established by States--
                    ``(A) for the certification and licensing of 
                individuals who are qualified to perform appraisals in 
                connection with federally related transactions, 
                including a code of professional responsibility; and
                    ``(B) for the registration and supervision of the 
                operations and activities of an appraisal management 
                company;''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(7) maintain a national registry of appraisal management 
        companies that either are registered with and subject to 
        supervision of a State appraiser certifying and licensing 
        agency or are operating subsidiaries of a Federally regulated 
        financial institution.''.
            (2) Appraisal management company minimum qualifications.--
        Title XI of the Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by 
        adding at the end the following new section (and amending the 
        table of contents accordingly):

``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

    ``(a) In General.--The Appraiser Qualifications Board of the 
Appraisal Foundation shall establish minimum qualifications to be 
applied by a State in the registration of appraisal management 
companies. Such qualifications shall include a requirement that such 
companies--
            ``(1) register with and be subject to supervision by a 
        State appraiser certifying and licensing agency in each State 
        in which such company operates;
            ``(2) verify that only licensed or certified appraisers are 
        used for federally related transactions;
            ``(3) require that appraisals coordinated by an appraisal 
        management company comply with the Uniform Standards of 
        Professional Appraisal Practice; and
            ``(4) require that appraisals are conducted independently 
        and free from inappropriate influence and coercion pursuant to 
        the appraisal independence standards established under section 
        129E of the Truth in Lending Act.
    ``(b) Exception for Federally Regulated Financial Institutions.--
The requirements of subsection (a) shall not apply to an appraisal 
management company that is a subsidiary owned and controlled by a 
financial institution and regulated by a federal financial institution 
regulatory agency. In such case, the appropriate federal financial 
institutions regulatory agency shall, at a minimum, develop regulations 
affecting the operations of the appraisal management company to--
            ``(1) verify that only licensed or certified appraisers are 
        used for federally related transactions;
            ``(2) require that appraisals coordinated by an institution 
        or subsidiary providing appraisal management services comply 
        with the Uniform Standards of Professional Appraisal Practice; 
        and
            ``(3) require that appraisals are conducted independently 
        and free from inappropriate influence and coercion pursuant to 
        the appraisal independence standards established under section 
        129E of the Truth in Lending Act.
    ``(c) Registration Limitations.--An appraisal management company 
shall not be registered by a State if such company, in whole or in 
part, directly or indirectly, is owned by any person who has had an 
appraiser license or certificate refused, denied, cancelled, 
surrendered in lieu of revocation, or revoked in any State. 
Additionally, each person that owns more than 10 percent of an 
appraisal management company shall be of good moral character, as 
determined by the State appraiser certifying and licensing agency, and 
shall submit to a background investigation carried out by the State 
appraiser certifying and licensing agency.
    ``(d) Regulations.--The Appraisal Subcommittee shall promulgate 
regulations to implement the minimum qualifications developed by the 
Appraiser Qualifications Board under this section, as such 
qualifications relate to the State appraiser certifying and licensing 
agencies. The Appraisal Subcommittee shall also promulgate regulations 
for the reporting of the activities of appraisal management companies 
in determining the payment of the annual registry fee.
    ``(e) Effective Date.--
            ``(1) In general.--No appraisal management company may 
        perform services related to a federally related transaction in 
        a State after the date that is 36 months after the date of the 
        enactment of this section unless such company is registered 
        with such State or subject to oversight by a federal financial 
        institutions regulatory agency.
            ``(2) Extension of effective date.--Subject to the approval 
        of the Council, the Appraisal Subcommittee may extend by an 
        additional 12 months the requirements for the registration and 
        supervision of appraisal management companies if it makes a 
        written finding that a State has made substantial progress in 
        establishing a State appraisal management company registration 
        and supervision system that appears to conform with the 
        provisions of this title.''.
            (3) State appraiser certifying and licensing agency 
        authority.--Section 1117 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is 
        amended by adding at the end the following: ``The duties of 
        such agency may additionally include the registration and 
        supervision of appraisal management companies.''.
            (4) Appraisal management company definition.--Section 1121 
        of the Financial Institutions Reform, Recovery, and Enforcement 
        Act of 1989 (12 U.S.C. 3350) is amended by adding at the end 
        the following:
            ``(11) Appraisal management company.--The term `appraisal 
        management company' means, in connection with valuing 
        properties collateralizing mortgage loans or mortgages 
        incorporated into a securitization, any external third party 
        authorized either by a creditor of a consumer credit 
        transaction secured by a consumer's principal dwelling or by an 
        underwriter of or other principal in the secondary mortgage 
        markets, that oversees a network or panel of more than 15 
        certified or licensed appraisers in a State or 25 or more 
        nationally within a given year--
                    ``(A) to recruit, select, and retain appraisers;
                    ``(B) to contract with licensed and certified 
                appraisers to perform appraisal assignments;
                    ``(C) to manage the process of having an appraisal 
                performed, including providing administrative duties 
                such as receiving appraisal orders and appraisal 
                reports, submitting completed appraisal reports to 
                creditors and underwriters, collecting fees from 
                creditors and underwriters for services provided, and 
                reimbursing appraisers for services performed; or
                    ``(D) to review and verify the work of 
                appraisers.''.
    (g) State Agency Reporting Requirement.--Section 1109(a) of the 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3338(a)) is amended--
            (1) by striking ``and'' after the semicolon in paragraph 
        (1);
            (2) by redesignating paragraph (2) as paragraph (4); and
            (3) by inserting after paragraph (1) the following new 
        paragraphs:
            ``(2) transmit reports on sanctions, disciplinary actions, 
        license and certification revocations, and license and 
        certification suspensions on a timely basis to the national 
        registry of the Appraisal Subcommittee;
            ``(3) transmit reports on a timely basis of supervisory 
        activities involving appraisal management companies or other 
        third-party providers of appraisals and appraisal management 
        services, including investigations initiated and disciplinary 
        actions taken; and''.
    (h) Registry Fees Modified.--
            (1) In general.--Section 1109(a) of the Financial 
        Institutions Reform, Recovery, and Enforcement Act of 1989 (12 
        U.S.C. 3338(a)) is amended--
                    (A) by amending paragraph (4) (as modified by 
                section 603(g) of this Act) to read as follows:
            ``(4) collect--
                    ``(A) from such individuals who perform or seek to 
                perform appraisals in federally related transactions, 
                an annual registry fee of not more than $40, such fees 
                to be transmitted by the State agencies to the Council 
                on an annual basis; and
                    ``(B) from an appraisal management company that 
                either has registered with a State appraiser certifying 
                and licensing agency in accordance with this title or 
                operates as a subsidiary of a federally regulated 
                financial institution, an annual registry fee of--
                            ``(i) in the case of such a company that 
                        has been in existence for more than a year, $25 
                        multiplied by the number of appraisers working 
                        for or contracting with such company in such 
                        State during the previous year, but where such 
                        $25 amount may be adjusted, up to a maximum of 
                        $50, at the discretion of the Appraisal 
                        Subcommittee, if necessary to carry out the 
                        Subcommittee's functions under this title; and
                            ``(ii) in the case of such a company that 
                        has not been in existence for more than a year, 
                        $25 multiplied by an appropriate number to be 
                        determined by the Appraisal Subcommittee, and 
                        where such number will be used for determining 
                        the fee of all such companies that were not in 
                        existence for more than a year, but where such 
                        $25 amount may be adjusted, up to a maximum of 
                        $50, at the discretion of the Appraisal 
                        Subcommittee, if necessary to carry out the 
                        Subcommittee's functions under this title.''; 
                        and
                    (B) by amending the matter following paragraph (4), 
                as redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee 
may adjust the dollar amount of registry fees under paragraph (4)(A), 
up to a maximum of $80 per annum, as necessary to carry out its 
functions under this title. The Appraisal Subcommittee shall consider 
at least once every 5 years whether to adjust the dollar amount of the 
registry fees to account for inflation. In implementing any change in 
registry fees, the Appraisal Subcommittee shall provide flexibility to 
the States for multi-year certifications and licenses already in place, 
as well as a transition period to implement the changes in registry 
fees. In establishing the amount of the annual registry fee for an 
appraisal management company, the Appraisal Subcommittee shall have the 
discretion to impose a minimum annual registry fee for an appraisal 
management company to protect against the under reporting of the number 
of appraisers working for or contracted by the appraisal management 
company.''.
            (2) Incremental revenues.--Incremental revenues collected 
        pursuant to the increases required by this subsection shall be 
        placed in a separate account at the United States Treasury, 
        entitled the ``Appraisal Subcommittee Account''.
    (i) Grants and Reports.--Section 1109(b) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3348(b)) is amended--
            (1) by striking ``and'' after the semicolon in paragraph 
        (3);
            (2) by striking the period at the end of paragraph (4) and 
        inserting a semicolon;
            (3) by adding at the end the following new paragraphs:
            ``(5) to make grants to State appraiser certifying and 
        licensing agencies to support the efforts of such agencies to 
        comply with this title, including--
                    ``(A) the complaint process, complaint 
                investigations, and appraiser enforcement activities of 
                such agencies; and
                    ``(B) the submission of data on State licensed and 
                certified appraisers and appraisal management companies 
                to the National appraisal registry, including 
                information affirming that the appraiser or appraisal 
                management company meets the required qualification 
                criteria and formal and informal disciplinary actions; 
                and
            ``(6) to report to all State appraiser certifying and 
        licensing agencies when a license or certification is 
        surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent 
of the fiscal year total of incremental increase in fees collected and 
deposited in the ``Appraisal Subcommittee Account'' pursuant to 
subsection (h).
    (j) Criteria.--Section 1116 of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
            (1) in subsection (c), by inserting ``whose criteria for 
        the licensing of a real estate appraiser currently meet or 
        exceed the minimum criteria issued by the Appraisal 
        Qualifications Board of The Appraisal Foundation for the 
        licensing of real estate appraisers'' before the period at the 
        end; and
            (2) by striking subsection (e) and inserting the following 
        new subsection:
    ``(e) Minimum Qualification Requirements.--Any requirements 
established for individuals in the position of `Trainee Appraiser' and 
`Supervisory Appraiser' shall meet or exceed the minimum qualification 
requirements of the Appraiser Qualifications Board of The Appraisal 
Foundation. The Appraisal Subcommittee shall have the authority to 
enforce these requirements.''.
    (k) Monitoring of State Appraiser Certifying and Licensing 
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) In General.--The Appraisal Subcommittee shall monitor each 
State appraiser certifying and licensing agency for the purposes of 
determining whether such agency--
            ``(1) has policies, practices, funding, staffing, and 
        procedures that are consistent with this title;
            ``(2) processes complaints and completes investigations in 
        a reasonable time period;
            ``(3) appropriately disciplines sanctioned appraisers and 
        appraisal management companies;
            ``(4) maintains an effective regulatory program; and
            ``(5) reports complaints and disciplinary actions on a 
        timely basis to the national registries on appraisers and 
        appraisal management companies maintained by the Appraisal 
        Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State 
licensed or certified appraiser or a registered appraisal management 
company from a national registry on an interim basis pending State 
agency action on licensing, certification, registration, and 
disciplinary proceedings. The Appraisal Subcommittee and all agencies, 
instrumentalities, and Federally recognized entities under this title 
shall not recognize appraiser certifications and licenses from States 
whose appraisal policies, practices, funding, staffing, or procedures 
are found to be inconsistent with this title. The Appraisal 
Subcommittee shall have the authority to impose sanctions, as described 
in this section, against a State agency that fails to have an effective 
appraiser regulatory program. In determining whether such a program is 
effective, the Appraisal Subcommittee shall include an analyses of the 
licensing and certification of appraisers, the registration of 
appraisal management companies, the issuance of temporary licenses and 
certifications for appraisers, the receiving and tracking of submitted 
complaints against appraisers and appraisal management companies, the 
investigation of complaints, and enforcement actions against appraisers 
and appraisal management companies. The Appraisal Subcommittee shall 
have the authority to impose interim actions and suspensions against a 
State agency as an alternative to, or in advance of, the derecognition 
of a State agency.''.
            (2) in subsection (b)(2), by inserting after ``authority'' 
        the following: ``or sufficient funding''.
    (l) Reciprocity.--Subsection (b) of section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351(b)) is amended to read as follows:
    ``(b) Reciprocity.--A State appraiser certifying or licensing 
agency shall issue a reciprocal certification or license for an 
individual from another State when--
            ``(1) the appraiser licensing and certification program of 
        such other State is in compliance with the provisions of this 
        title; and
            ``(2) the appraiser holds a valid certification from a 
        State whose requirements for certification or licensing meet or 
        exceed the licensure standards established by the State where 
        an individual seeks appraisal licensure.''.
    (m) Consideration of Professional Appraisal Designations.--Section 
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not 
exclude'' and all that follows through the end of the subsection and 
inserting the following: ``may include education achieved, experience, 
sample appraisals, and references from prior clients. Membership in a 
nationally recognized professional appraisal organization may be a 
criteria considered, though lack of membership therein shall not be the 
sole bar against consideration for an assignment under these 
criteria.''.
    (n) Appraiser Independence.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351) is amended by adding at the end the following new subsection:
    ``(g) Appraiser Independence Monitoring.--The Appraisal 
Subcommittee shall monitor each State appraiser certifying and 
licensing agency for the purpose of determining whether such agency's 
policies, practices, and procedures are consistent with the purposes of 
maintaining appraiser independence and whether such State has adopted 
and maintains effective laws, regulations, and policies aimed at 
maintaining appraiser independence.''.
    (o) Appraiser Education.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351) is amended by inserting after subsection (g) (as added by 
subsection (l) of this section) the following new subsection:
    ``(h) Approved Education.--The Appraisal Subcommittee shall 
encourage the States to accept courses approved by the Appraiser 
Qualification Board's Course Approval Program.''.
    (p) Appraisal Complaint Hotline.--Section 1122 of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3351), as amended by this section, is further amended by adding at the 
end the following new subsection:
    ``(i) Appraisal Complaint National Hotline.--If, 1 year after the 
date of the enactment of this subsection, the Appraisal Subcommittee 
determines that no national hotline exists to receive complaints of 
non-compliance with appraisal independence standards and Uniform 
Standards of Professional Appraisal Practice, including complaints from 
appraisers, individuals, or other entities concerning the improper 
influencing or attempted improper influencing of appraisers or the 
appraisal process, the Appraisal Subcommittee shall establish and 
operate such a national hotline, which shall include a toll-free 
telephone number and an email address. If the Appraisal Subcommittee 
operates such a national hotline, the Appraisal Subcommittee shall 
refer complaints for further action to appropriate governmental bodies, 
including a State appraiser certifying and licensing agency, a 
financial institution regulator, or other appropriate legal 
authorities. For complaints referred to State appraiser certifying and 
licensing agencies or to Federal regulators, the Appraisal Subcommittee 
shall have the authority to follow up such complaint referrals in order 
to determine the status of the resolution of the complaint.''.
    (q) Automated Valuation Models.--Title XI of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3331 et seq.), as amended by this section, is further amended by adding 
at the end the following new section (and amending the table of 
contents accordingly):

``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN 
              MORTGAGES.

    ``(a) In General.--Automated valuation models shall adhere to 
quality control standards designed to--
            ``(1) ensure a high level of confidence in the estimates 
        produced by automated valuation models;
            ``(2) protect against the manipulation of data;
            ``(3) seek to avoid conflicts of interest; and
            ``(4) require random sample testing and reviews, where such 
        testing and reviews are performed by an appraiser who is 
        licensed or certified in the State where the testing and 
        reviews take place.
    ``(b) Adoption of Regulations.--The Appraisal Subcommittee and its 
member agencies, in consultation with the Appraisal Standards Board of 
the Appraisal Foundation and other interested parties, shall promulgate 
regulations to implement the quality control standards required under 
this section.
    ``(c) Enforcement.--Compliance with regulations issued under this 
subsection shall be enforced by--
            ``(1) with respect to a financial institution, or 
        subsidiary owned and controlled by a financial institution and 
        regulated by a Federal financial institution regulatory agency, 
        the Federal financial institution regulatory agency that acts 
        as the primary Federal supervisor of such financial institution 
        or subsidiary; and
            ``(2) with respect to other persons, the Appraisal 
        Subcommittee.
    ``(d) Automated Valuation Model Defined.--For purposes of this 
section, the term `automated valuation model' means any computerized 
model used by mortgage originators and secondary market issuers to 
determine the collateral worth of a mortgage secured by a consumer's 
principal dwelling.''.
    (r) Broker Price Opinions.--Title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.), 
as amended by this section, is further amended by adding at the end the 
following new section (and amending the table of contents accordingly):

``SEC. 1126. BROKER PRICE OPINIONS.

    ``(a) General Prohibition.--In conjunction with the purchase of a 
consumer's principal dwelling, broker price opinions may not be used as 
the primary basis to determine the value of a piece of property for the 
purpose of a loan origination of a residential mortgage loan secured by 
such piece of property.
    ``(b) Broker Price Opinion Defined.--For purposes of this section, 
the term `broker price opinion' means an estimate prepared by a real 
estate broker, agent, or sales person that details the probable selling 
price of a particular piece of real estate property and provides a 
varying level of detail about the property's condition, market, and 
neighborhood, and information on comparable sales, but does not include 
an automated valuation model, as defined in section 1125(c).''.
    (s) Amendments to Appraisal Subcommittee.--Section 1011 of the 
Federal Financial Institutions Examination Council Act of 1978 (12 
U.S.C. 3310) is amended--
            (1) in the first sentence, by adding before the period the 
        following: ``and the Federal Housing Finance Agency''; and
            (2) by inserting at the end the following: ``At all times 
        at least one member of the Appraisal Subcommittee shall have 
        demonstrated knowledge and competence through licensure, 
        certification, or professional designation within the appraisal 
        profession.''.
    (t) Technical Corrections.--
            (1) Section 1119(a)(2) of the Financial Institutions 
        Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
        3348(a)(2)) is amended by striking ``council,'' and inserting 
        ``Council,''.
            (2) Section 1121(6) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is 
        amended by striking ``Corporations,'' and inserting 
        ``Corporation,''.
            (3) Section 1121(8) of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is 
        amended by striking ``council'' and inserting ``Council''.
            (4) Section 1122 of the Financial Institutions Reform, 
        Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is 
        amended--
                    (A) in subsection (a)(1) by moving the left margin 
                of subparagraphs (A), (B), and (C) 2 ems to the right; 
                and
                    (B) in subsection (c)--
                            (i) by striking ``Federal Financial 
                        Institutions Examination Council'' and 
                        inserting ``Financial Institutions Examination 
                        Council''; and
                            (ii) by striking ``the council's 
                        functions'' and inserting ``the Council's 
                        functions''.

SEC. 604. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND 
              COMPLIANCE PROGRAMS.

    (a) Study.--The Comptroller General shall conduct a comprehensive 
study on possible improvements in the appraisal process generally, and 
specifically on the consistency in and the effectiveness of, and 
possible improvements in, State compliance efforts and programs in 
accordance with title XI of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989. In addition, this study shall 
examine the existing exemptions to the use of certified appraisers 
issued by Federal financial institutions regulatory agencies. The study 
shall also review the threshold level established by Federal regulators 
for compliance under title XI and whether there is a need to revise 
them to reflect the addition of consumer protection to the purposes and 
functions of the Appraisal Subcommittee. The study shall additionally 
examine the quality of different types of mortgage collateral 
valuations produced by broker price opinions, automated valuation 
models, licensed appraisals, and certified appraisals, among others, 
and the quality of appraisals provided through different distribution 
channels, including appraisal management companies, independent 
appraisal operations within a mortgage originator, and fee-for-service 
appraisals. The study shall also include an analysis and statistical 
breakdown of enforcement actions taken during the last 10 years against 
different types of appraisers, including certified, licensed, 
supervisory, and trainee appraisers. Furthermore, the study shall 
examine the benefits and costs, as well as the advantages and 
disadvantages, of establishing a national repository to collect data 
related to real estate property collateral valuations performed in the 
United States.
    (b) Report.--Before the end of the 18-month period beginning on the 
date of the enactment of this Act, the Comptroller General shall submit 
a report on the study under subsection (a) to the Committee on 
Financial Services of the House of Representatives and the Committee on 
Banking, Housing, and Urban Affairs of the Senate, together with such 
recommendations for administrative or legislative action, at the 
Federal or State level, as the Comptroller General may determine to be 
appropriate.
    (c) Additional Study Required.--The Comptroller General shall 
conduct an additional study to determine the effects that the changes 
to the seller-guide appraisal requirements of Fannie Mae and Freddie 
Mac contained in the Home Valuation Code of Conduct have on small 
business, like mortgage brokers and independent appraisers, and 
consumers, including the effect on the--
            (1) quality and costs of appraisals;
            (2) length of time for obtaining appraisals;
            (3) impact on consumer protection, especially regarding 
        maintaining appraisal independence, abating appraisal 
        inflation, and mitigating acts of appraisal fraud;
            (4) structure of the appraisal industry, especially 
        regarding appraisal management companies, fee-for-service 
        appraisers, and the regulation of appraisal management 
        companies by the states; and
            (5) impact on mortgage brokers and other small business 
        professionals in the financial services industry.
    (d) Additional Report.--Before the end of the 6-month period 
beginning on the date of the enactment of this Act, the Comptroller 
General shall submit an additional report to the Committee on Financial 
Services of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate containing the findings and 
conclusions of the Comptroller General with respect to the study 
conducted pursuant to subsection (c). Such additional report shall take 
into consideration the Small Business Administration's views on how 
small businesses are affected by the Home Valuation Code of Conduct.

SEC. 605. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

    Subsection (e) of section 701 of the Equal Credit Opportunity Act ( 
U.S.C. 1691) is amended to read as follows:
    ``(e) Copies Furnished to Applicants.--
            ``(1) In general.--Each creditor shall furnish to an 
        applicant a copy of any and all written appraisals and 
        valuations developed in connection with the applicant's 
        application for a loan that is secured or would have been 
        secured by a first lien on a dwelling promptly upon completion, 
        but in no case later than 3 days prior to the closing of the 
        loan, whether the creditor grants or denies the applicant's 
        request for credit or the application is incomplete or 
        withdrawn.
            ``(2) Waiver.--The applicant may waive the 3 day 
        requirement provided for in paragraph (1), except where 
        otherwise required in law.
            ``(3) Reimbursement.--The applicant may be required to pay 
        a reasonable fee to reimburse the creditor for the cost of the 
        appraisal, except where otherwise required in law.
            ``(4) Free copy.--Notwithstanding paragraph (3), the 
        creditor shall provide a copy of each written appraisal or 
        valuation at no additional cost to the applicant.
            ``(5) Notification to applicants.--At the time of 
        application, the creditor shall notify an applicant in writing 
        of the right to receive a copy of each written appraisal and 
        valuation under this subsection.
            ``(6) Regulations.--The Board shall prescribe regulations 
        to implement this subsection within 1 year of the date of the 
        enactment of this subsection.
            ``(7) Valuation defined.--For purposes of this subsection, 
        the term `valuation' shall include any estimate of the value of 
        a dwelling developed in connection with a creditor's decision 
        to provide credit, including those values developed pursuant to 
        a policy of a government sponsored enterprise or by an 
        automated valuation model, a broker price opinion, or other 
        methodology or mechanism.''.

SEC. 606. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT 
              RELATING TO CERTAIN APPRAISAL FEES.

    Section 4 of the Real Estate Settlement Procedures Act of 1974 is 
amended by adding at the end the following new subsection:
    ``(c) The standard form described in subsection (a) shall include, 
in the case of an appraisal coordinated by an appraisal management 
company (as such term is defined in section 1121(11) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3350(11))), a clear disclosure of--
            ``(1) the fee paid directly to the appraiser by such 
        company; and
            ``(2) the administration fee charged by such company.''.

  TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT 
                      SPONSORED ENTERPRISES REFORM

SEC. 701. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
              SPONSORED ENTERPRISES REFORM TO ENHANCE THE PROTECTION, 
              LIMITATION, AND REGULATION OF THE TERMS OF RESIDENTIAL 
              MORTGAGE CREDIT.

    (a) Findings.--The Congress finds as follows:
            (1) The Government-sponsored enterprises, Federal National 
        Mortgage Association (Fannie Mae) and the Federal Home Loan 
        Mortgage Corporation (Freddie Mac), were chartered by Congress 
        to ensure a reliable and affordable supply of mortgage funding, 
        but enjoy a dual legal status as privately owned corporations 
        with Government mandated affordable housing goals.
            (2) In 1996, the Department of Housing and Urban 
        Development required that 42 percent of Fannie Mae's and 
        Freddie Mac's mortgage financing should go to borrowers with 
        income levels below the median for a given area.
            (3) In 2004, the Department of Housing and Urban 
        Development revised those goals, increasing them to 56 percent 
        of their overall mortgage purchases by 2008, and additionally 
        mandated that 12 percent of all mortgage purchases by Fannie 
        Mae and Freddie Mac be ``special affordable'' loans made to 
        borrowers with incomes less than 60 percent of an area's median 
        income, a target that ultimately increased to 28 percent for 
        2008.
            (4) To help fulfill those mandated affordable housing 
        goals, in 1995 the Department of Housing and Urban Development 
        authorized Fannie Mae and Freddie Mac to purchase subprime 
        securities that included loans made to low-income borrowers.
            (5) After this authorization to purchase subprime 
        securities, subprime and near-prime loans increased from 9 
        percent of securitized mortgages in 2001 to 40 percent in 2006, 
        while the market share of conventional mortgages dropped from 
        78.8 percent in 2003 to 50.1 percent by 2007 with a 
        corresponding increase in subprime and Alt-A loans from 10.1 
        percent to 32.7 percent over the same period.
            (6) In 2004 alone, Fannie Mae and Freddie Mac purchased 
        $175,000,000,000 in subprime mortgage securities, which 
        accounted for 44 percent of the market that year, and from 2005 
        through 2007, Fannie Mae and Freddie Mac purchased 
        approximately $1,000,000,000,000 in subprime and Alt-A loans, 
        while Fannie Mae's acquisitions of mortgages with less than 10 
        percent down payments almost tripled.
            (7) According to data from the Federal Housing Finance 
        Agency (FHFA) for the fourth quarter of 2008, Fannie Mae and 
        Freddie Mac own or guarantee 75 percent of all newly originated 
        mortgages, and Fannie Mae and Freddie Mac currently own 13.3 
        percent of outstanding mortgage debt in the United States and 
        have issued mortgage-backed securities for 31.0 percent of the 
        residential debt market, a combined total of 44.3 percent of 
        outstanding mortgage debt in the United States.
            (8) On September 7, 2008, the FHFA placed Fannie Mae and 
        Freddie Mac into conservatorship, with the Treasury Department 
        subsequently agreeing to purchase at least $200,000,000,000 of 
        preferred stock from each enterprise in exchange for warrants 
        for the purchase of 79.9 percent of each enterprise's common 
        stock.
            (9) The conservatorship for Fannie Mae and Freddie Mac has 
        potentially exposed taxpayers to upwards of $5,300,000,000,000 
        worth of risk.
            (10) The hybrid public-private status of Fannie Mae and 
        Freddie Mac is untenable and must be resolved to assure that 
        consumers are offered and receive residential mortgage loans on 
        terms that reasonably reflect their ability to repay the loans 
        and that are understandable and not unfair, deceptive, or 
        abusive.
    (b) Sense of the Congress.--It is the sense of the Congress that 
efforts to enhance by the protection, limitation, and regulation of the 
terms of residential mortgage credit and the practices related to such 
credit would be incomplete without enactment of meaningful structural 
reforms of Fannie Mae and Freddie Mac.

                          TITLE VIII--REPORTS

SEC. 801. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE 
              FORECLOSURE RESCUE SCAMS AND LOAN MODIFICATION FRAUD.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study of the current inter-agency efforts of the Secretary of 
the Treasury, the Secretary of Housing and Urban Development, the 
Attorney General, and the Federal Trade Commission to crackdown on 
mortgage foreclosure rescue scams and loan modification fraud in order 
to advise the Congress to the risks and vulnerabilities of emerging 
schemes in the loan modification arena.
    (b) Report.--
            (1) In general.--The Comptroller General shall submit a 
        report to the Congress on the study conducted under subsection 
        (a) containing such recommendations for legislative and 
        administrative actions as the Comptroller General may determine 
        to be appropriate in addition to the recommendations required 
        under paragraph (2).
            (2) Specific topics.--The report made under paragraph (1) 
        shall include--
                    (A) an evaluation of the effectiveness of the 
                inter-agency task force current efforts to combat 
                mortgage foreclosure rescue scams and loan modification 
                fraud scams;
                    (B) specific recommendations on agency or 
                legislative action that are essential to properly 
                protect homeowners from mortgage foreclosure rescue 
                scams and loan modification fraud scams; and
                    (C) the adequacy of financial resources that the 
                Federal Government is allocating to--
                            (i) crackdown on loan modification and 
                        foreclosure rescue scams; and
                            (ii) the education of homeowners about 
                        fraudulent scams relating to loan modification 
                        and foreclosure rescues.

               TITLE IX--MULTIFAMILY MORTGAGE RESOLUTION

SEC. 901. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.

    (a) Establishment.--Subject to subsection (e), the Secretary of the 
Treasury, in consultation with the Secretary of Housing and Urban 
Development, shall develop a program to stabilize multifamily 
properties which are delinquent, at risk of default or disinvestment, 
or in foreclosure.
    (b) Focus of Program.--The program developed under this section 
shall be used to ensure the protection of current and future tenants of 
at risk multifamily properties, where feasible, by--
            (1) creating sustainable financing of such properties that 
        is based on--
                    (A) the current rental income generated by such 
                properties; and
                    (B) the preservation of adequate operating 
                reserves;
            (2) maintaining the level of Federal, State, and city 
        subsidies in effect as of the date of enactment of this Act; 
        and
            (3) facilitating the transfer, when necessary, of such 
        properties to responsible new owners.
    (c) Coordination.--The Secretary of the Treasury shall in carrying 
out the program developed under this section coordinate with the 
Secretary of Housing and Urban Development, the Federal Deposit 
Insurance Corporation, the Board of Governors of the Federal Reserve 
System, the Federal Housing Finance Agency, and any other Federal 
Government agency that the Secretary considers appropriate.
    (d) Definition.--For purposes of this section, the term 
``multifamily properties'' means a residential structure that consists 
of 5 or more dwelling units.
    (e) Authority.--This section shall not limit the ability of the 
Secretary of the Treasury to use any existing authority to carry out 
the program under this section.

      TITLE X--STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES

SEC. 1001. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.

    (a) Study.--The Secretary of Housing and Urban Development, in 
consultation with the Secretary of the Treasury, shall conduct a study 
of the effect on residential mortgage loan foreclosures of--
            (1) the presence in residential structures subject to such 
        mortgage loans of drywall that was imported from China during 
        the period beginning with 2004 and ending at the end of 2007; 
        and
            (2) the availability of property insurance for residential 
        structures in which such drywall is present.
    (b) Report.--Not later than the expiration of the 120-day period 
beginning on the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall submit to the Congress a report on 
the study conducted under subsection (a) containing its findings, 
conclusions, and recommendations.

    TITLE XI--FANNIE MAE GUIDELINES FOR PURCHASE OF CONDOMINIUM AND 
                     COOPERATIVE HOUSING MORTGAGES

SEC. 1101. GUIDELINES FOR PURCHASE OF CONDOMINIUM AND COOPERATIVE 
              HOUSING MORTGAGES.

    The Federal National Mortgage Association and the Federal Home Loan 
Mortgage Corporation shall take actions as are appropriate to establish 
and revise fee schedules, occupancy and pre-sale guidelines, and other 
relevant underwriting standards for the purchase of condominium and 
cooperative housing, consistent with appropriate levels of credit risk. 
In setting such fees, guidelines, and standards, each association may 
consider factors such as the relative health of the local or regional 
housing market in which such housing is located, and whether the 
housing is in a new or existing development.

            Passed the House of Representatives May 7, 2009.

            Attest:

                                                                 Clerk.
111th CONGRESS

  1st Session

                               H. R. 1728

_______________________________________________________________________

                                 AN ACT

To amend the Truth in Lending Act to reform consumer mortgage practices 
   and provide accountability for such practices, to provide certain 
 minimum standards for consumer mortgage loans, and for other purposes.