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

111th CONGRESS
  1st Session
                                H. R. 1728

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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 26, 2009

   Mr. Miller of North Carolina (for himself, Mr. Watt, Mr. Frank of 
Massachusetts, Mr. Kanjorski, Mr. Gutierrez, Ms. Bean, and Mr. Minnick) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
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.
               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.
                     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. Amendment to provision governing correction of errors.
Sec. 305. Regulations.
Sec. 306. 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. Definitions for counseling-related programs.
Sec. 408. Updating and simplification of mortgage information booklet.
                      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. Mortgage servicing studies required.
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, and approved 
                            appraiser education.
Sec. 604. Study required on improvements in appraisal process and 
                            compliance programs.
Sec. 605. Equal Credit Opportunity Act amendment.

        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.
            ``(3) Mortgage originator.--The term `mortgage 
        originator'--
                    ``(A) means any person who--
                            ``(i) takes a residential mortgage loan 
                        application;
                            ``(ii) assists a consumer in obtaining or 
                        applying to obtain a residential mortgage loan; 
                        or
                            ``(iii) offers or negotiates terms of a 
                        residential mortgage loan, for direct or 
                        indirect compensation or gain, or in the 
                        expectation of direct or indirect compensation 
                        or gain;
                    ``(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); and
                    ``(C) does not include any person who is 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.
            ``(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.
            ``(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.
            ``(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 of--
                            ``(i) the comparative costs and benefits of 
                        each residential mortgage loan product offered, 
                        discussed, or referred to by the originator;
                            ``(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;
                    ``(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 the unique identifier of the 
                originator provided by the Nationwide Mortgage 
                Licensing System and Registry on all loan documents.
            ``(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 129B; 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, the Chairman of the 
                State Liaison Committee to the Financial Institutions 
                Examination Council, 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) 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 129B(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 129B(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 129B(c)(3)) to a residential 
                mortgage loan that is not a qualified mortgage; and
                    ``(C) abusive or unfair lending practices that 
                promote disparities among consumers of equal credit 
                worthiness but of different race, ethnicity, gender, or 
                age.
            ``(3) Rules of construction.--No provision of this 
        subsection shall be construed as--
                    ``(A) affecting the mechanism for providing the 
                total amount of direct and indirect compensation 
                permitted to a mortgage originator;
                    ``(B) limiting or affecting the ability of a 
                mortgage originator to sell residential mortgage loans 
                to subsequent purchasers;
                    ``(C) restricting a consumer's ability to finance, 
                including through rate or principal, any origination 
                fees or costs permitted under this subsection, or the 
                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 129A(a)(1)(C)(ii) and do not vary based on 
                the terms of the loan or the consumer's decision about 
                whether to finance such fees or costs; or
                    ``(D) 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 (c) (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 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.''.
    (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) 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.

               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 be based on 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) 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 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 
                        contract's repayment schedule shall be used in 
                        this calculation; 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.
            ``(5) 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) with 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 for a first lien residential 
                                mortgage loan; and
                                    ``(II) by 3.5 or more percentage 
                                points for a subordinate lien 
                                residential mortgage loan;
                            ``(ii) for which the income and financial 
                        resources of the consumer are verified and 
                        documented;
                            ``(iii) for which the residential mortgage 
                        loan underwriting process is based on the 
                        fully-indexed rate, and takes into account all 
                        applicable taxes, insurance, and assessments;
                            ``(iv) 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
                            ``(v) for which the term of the loan is 
                        fixed for a period of not less than or more 
                        than 30 years.
                    ``(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.--The Board--
                    ``(A) shall publish, and update at least weekly, 
                average prime offer rates; and
                    ``(B) may publish multiple rates based on varying 
                types of mortgage transactions.
            ``(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.--The 
                Federal banking agencies may jointly prescribe 
                regulations that revise, add to, or subtract from the 
                criteria that define a qualified mortgage to the extent 
                necessary and appropriate to effectuate the purposes of 
                this subsection, to prevent circumvention or evasion of 
                this subsection, or to facilitate compliance with this 
                subsection.''.

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 (7), 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 provides 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 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 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 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 would have satisfied the requirements of subsections 
        (a) and (b) if the loan had contained such terms as of the 
        origination of the loan and the payment of such additional 
        costs as the obligor may have incurred as a result of the 
        violation and 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) 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, 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.''.

SEC. 205. DEFENSE TO FORECLOSURE.

    Section 129C of the Truth in Lending Act is amended by inserting 
after subsection (d) (as added by section 204) the following new 
subsection:
    ``(e) 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 (c) 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, 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 (e) (as added by section 205) the 
following new subsections:
    ``(f) 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.
            ``(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) Prohibited after initial period on loans with a 
        reset.--A qualified mortgage with a fixed interest rate for an 
        introductory period that adjusts or resets after such period 
        may not contain terms under which a consumer must pay a 
        prepayment penalty for paying all or part of the principal 
        after the beginning of the 3-month period ending on the date of 
        the adjustment or reset.
            ``(4) 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.
    ``(g) 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 and at no additional cost to the 
        consumer, 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.
    ``(h) 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.
    ``(i) Duty of Securitizer To Retain Access to Loans.--Any 
securitizer shall reserve the right and preserve an ability, in any 
document or contract establishing any pool of assets that includes any 
residential mortgage loan--
            ``(1) to identify and obtain access to any such loan in the 
        pool; and
            ``(2) to provide for and obtain a remedy under this title 
        for the obligor under any such loan.
    ``(j) 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.
    ``(k) Annual Contact Information.--At least once annually and 
whenever there is a change in ownership of a residential mortgage loan, 
the servicer with respect to a residential mortgage loan shall provide 
a written notice to the consumer identifying the name 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.
    ``(l) Tenant Protection.--
            ``(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, any 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 notice 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) 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.
            ``(3) Bona fide lease or tenancy.--For purposes of this 
        section, 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; or
                    ``(C) the lease or tenancy requires the receipt of 
                rent that is not substantially less than fair market 
                rent for the property.
            ``(4) Rule of construction.--No provision of this 
        subsection shall be construed as affecting the requirements--
                    ``(A) for termination of any Federal- or State-
                subsidized tenancy; or
                    ``(B) of 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, having 
                        the property vacant prior to sale may 
                        constitute good cause if the property is 
                        unmarketable while occupied, or if such owner 
                        will occupy the unit as a primary residence'';
            (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) 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.''.

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.--Section 129C(d) of the Truth in Lending Act (as 
added by section 204) shall supersede any State law or application 
thereof that provides additional remedies against any assignee, 
securitizer, or securitization vehicle, and the remedies described in 
such section shall constitute the sole 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 such section 129C.
    (b) Rules of Construction.--No provision of this section shall be 
construed as limiting--
            (1) the application of any State law against a creditor for 
        a particular residential mortgage loan regardless of whether 
        such creditor also acts as assignee, securitizer, or 
        securitization vehicle for such mortgage; or
            (2) availability of remedies based upon fraud, 
        misrepresentation, deceptive acts or practices, false 
        advertising, or civil rights laws--
                    (A) against any assignee, securitizer, or 
                securitization vehicle for its own conduct relating to 
                the making of a residential mortgage loan to a 
                consumer; or
                    (B) against any assignee, securitizer, or 
                securitization vehicle in the sale or purchase of 
                residential mortgage loans or securities.
    (c) Definition.--For purposes of subsection (b)(2), acts or 
practices are deceptive if--
            (1) there is a representation, omission, or practice that 
        misleads or is likely to mislead a consumer;
            (2) from the consumer's perspective, the interpretation of 
        the representation, omission, or practice is reasonable under 
        the circumstances; and
            (3) the representation, omission or practice is material so 
        that it is likely to affect the consumer's conduct or decision 
        with regard to a product or service.

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'';
            (3) by striking ``$200'' and inserting ``$400'';
            (4) by striking ``$2,000'' and inserting ``$4,000''; and
            (5) 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:
    ``(j) 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, 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 (l) (as added by section 206) the following new 
subsection:
    ``(m) 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 in section 129B(c)), 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 creditors from directly or 
                indirectly hedging or otherwise transferring the credit 
                risk creditors are required to retain under the 
                regulations with respect to any residential mortgage 
                loan; and
                    ``(C) require creditors to retain at least 5 
                percent of the credit risk on any non-qualified 
                mortgage that is transferred, sold or conveyed.''.

SEC. 214. REQUIRED DISCLOSURES.

    (a) Additional Information.--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 based on the interest rate of the 
        loan.''.
    (b) Timing.--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) Residential mortgage loan disclosures.--In the case 
        of a residential mortgage loan, the information required to be 
        disclosed under subsection (a) with respect to such loan shall 
        be disclosed before the earlier of--
                    ``(A) the time required under the first sentence of 
                paragraph (1); or
                    ``(B) the end of the 3-day period beginning on the 
                date the application for the loan from a consumer is 
                received by the creditor.''.

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) 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.
    (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.
    (e) 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 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).

                     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 8 percentage (10 percentage 
                                points, if the dwelling is personal 
                                property and the transaction is for 
                                less than $50,000) points the yield on 
                                Treasury securities having comparable 
                                periods of maturity on the 15th day of 
                                the month immediately preceding the 
                                month in which the application for the 
                                extension of credit is received by the 
                                creditor; 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 10 percentage 
                                points the yield on Treasury securities 
                                having comparable periods of maturity 
                                on the 15th day of the month 
                                immediately preceding the month in 
                                which the application for the extension 
                                of credit is received by the creditor;
                            ``(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
                            ``(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 broker from any 
                source, including a mortgage originator that originates 
                a loan in the name of the originator 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) High-Cost Mortgage Lender.--Section 103(f) of the Truth in 
Lending Act (15 U.S.C. 1602(f)) is amended by striking the last 
sentence and inserting the following new sentence: ``Any person who 
originates or brokers 2 or more mortgages referred to in subsection 
(aa) in any 12-month period, any person who originates 1 or more such 
mortgages through a mortgage broker in any 12 month period, or, in 
connection with a table funding transaction of such a mortgage, any 
person to whom the obligation is initially assigned at or after 
settlement shall be considered to be a creditor for purposes of this 
title.''.
    (e) Bona Fide Discount Loan Discount Points and Prepayment 
Penalties.--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 (4) 
of the following paragraphs, but not both, may be excluded:
            ``(1) Exclusion of bona fide discount points.--The discount 
        points described in 1 of the following subparagraphs shall be 
        excluded from determining the amounts of points and fees with 
        respect to a high-cost mortgage for purposes of subsection 
        (aa):
                    ``(A) 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 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.
                    ``(B) Unless 2 bona fide discount points have been 
                excluded under subparagraph (A), 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 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.
            ``(2) Definition.--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.
            ``(3) Exception for interest rate reductions inconsistent 
        with industry norms.--Paragraph (1) 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.
            ``(4) Allowance of conventional prepayment penalty.--
        Subsection (aa)(1)(4)(E) shall not apply so as to include a 
        prepayment penalty or fee that is authorized by law other than 
        this title and may be imposed pursuant to the terms of a high-
        cost mortgage (or other consumer credit transaction secured by 
        the consumer's principal dwelling) if--
                    ``(A) the annual percentage rate applicable with 
                respect to such mortgage or transaction (as determined 
                for purposes of subsection (aa)(1)(A)(i))--
                            ``(i) in the case of a first mortgage on 
                        the consumer's principal dwelling, does not 
                        exceed by more than 2 percentage points the 
                        yield on Treasury securities having comparable 
                        periods of maturity on the 15th day of the 
                        month immediately preceding the month in which 
                        the application for the extension of credit is 
                        received by the creditor; or
                            ``(ii) in the case of a subordinate or 
                        junior mortgage on the consumer's principal 
                        dwelling, does not exceed by more than 4 
                        percentage points the yield on such Treasury 
                        securities; and
                    ``(B) the total amount of any prepayment fees or 
                penalties permitted under the terms of the high-cost 
                mortgage or transaction does not exceed 2 percent of 
                the amount prepaid.''.

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 amended--
            (1) by striking ``and'' after the semicolon at the end of 
        subparagraph (C);
            (2) by redesignating subparagraph (D) as subparagraph (E); 
        and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) the amount of the principal obligation of the 
                mortgage exceeds the maximum principal obligation 
                limitation (for the applicable size residence) under 
                section 203(b)(2) of the National Housing Act for the 
                area in which the residence subject to the mortgage is 
                located; and''.
    (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.''.
    (c) No Lending Without Due Regard to Ability To Repay.--Section 
129(h) of the Truth in Lending Act (15 U.S.C. 1639(h)) is amended--
            (1) by striking ``Payment Ability of Consumer.--A creditor 
        shall not'' and inserting ``Payment Ability of Consumer.--
            ``(1) Pattern or practice.--
                    ``(A) In general.--A creditor shall not'';
            (2) by inserting after subparagraph (A) (as so designated 
        by paragraph (1) of this subsection) the following new 
        subparagraph:
                    ``(B) Presumption of violation.--There shall be a 
                presumption that a creditor has violated this 
                subsection if the creditor engages in a pattern or 
                practice of making high-cost mortgages without 
                verifying or documenting the repayment ability of 
                consumers with respect to such mortgages.''; and
            (3) by adding at the end the following new paragraph:
            ``(2) Prohibition on extending credit without regard to 
        payment ability of consumer.--
                    ``(A) In general.--A creditor may not extend credit 
                to a consumer under a high-cost mortgage unless a 
                reasonable creditor would believe at the time the 
                mortgage is closed that the consumer or consumers that 
                are residing or will reside in the residence subject to 
                the mortgage will be able to make the scheduled 
                payments associated with the mortgage, based upon a 
                consideration of current and expected income, current 
                obligations, employment status, and other financial 
                resources, other than equity in the residence.
                    ``(B) Presumption of ability.--For purposes of this 
                subsection, there shall be a rebuttable presumption 
                that a consumer is able to make the scheduled payments 
                to repay the obligation if, at the time the high-cost 
                mortgage is consummated, the consumer's total monthly 
                debts, including amounts under the mortgage, do not 
                exceed 50 percent of his or her monthly gross income as 
                verified by tax returns, payroll receipts, or other 
                third-party income verification.''.

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, in its sole discretion, to 
accelerate the indebtedness. This provision shall not apply when 
repayment of the loan has been accelerated by default, pursuant to a 
due-on-sale provision, or pursuant to a material violation of some 
other provision of the loan documents unrelated to the 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.--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.''.
    (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.''.
    (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 Secretary of Housing and Urban 
        Development may prescribe such regulations as the Secretary 
        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 129B(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.''.

SEC. 304. AMENDMENT TO PROVISION GOVERNING CORRECTION OF ERRORS.

    Section 130(b) of the Truth in Lending Act (15 U.S.C. 1640(b)) is 
amended to read as follows:
    ``(b) Correction of Errors.--A creditor has no liability under this 
section or section 108 or 112 for any failure to comply with any 
requirement imposed under this chapter or chapter 5, if--
            ``(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. 305. 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. 306. 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)) consummated 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 Office 
        of the Secretary, 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 
        the Secretary. Such position shall be a career-reserved 
        position in the Senior Executive Service.
            ``(3) Functions.--
                    ``(A) In general.--The Director shall have ultimate 
                responsibility within the Department, except for the 
                Secretary, 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) carrying out section 5 of the Real 
                        Estate Settlement Procedures Act of 1974 (12 
                        U.S.C. 2604) for home buying information 
                        booklets prepared pursuant to such section;
                            ``(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.
            ``(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 all 
                aspects of the mortgage and real estate industry, 
                including consumers.
                    ``(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)); and
                            ``(xii) section 508 of the Housing and 
                        Urban Development Act of 1970 (12 U.S.C. 1701z-
                        7).
                    ``(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 
        conjunction 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;
                            ``(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.
            ``(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, 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.
            ``(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, and other potentially vulnerable consumers), regarding 
        home mortgages, mortgage refinancing, home equity loans, and 
        home repair loans.''.
    (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 States, units of 
        general local governments, and nonprofit organizations 
        providing homeownership or rental counseling (as such terms are 
        defined in subsection (g)(1)).
            ``(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.
            ``(C) Distribution.--Assistance made available under this 
        paragraph shall be distributed in a manner that encourages 
        efficient and successful counseling programs.
            ``(D) 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 Secretary 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. 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. 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.''.

SEC. 408. 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; and
                    ``(C) 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.''.

                      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) or (c), 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, 
at the time of 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 consumer's debt-to-income ratio at the time the 
        home mortgage is established taking into account income from 
        all sources including the consumer's employment exceeds 50 
        percent;
            ``(4) the transaction is secured by a first mortgage or 
        lien on the consumer's principal dwelling and the annual 
        percentage rate on the credit, at the time of consummation of 
        the transaction, will exceed by more than 3.0 percentage points 
        the yield on Treasury securities having comparable periods of 
        maturity on the 15th day of the month immediately preceding the 
        month in which the application of the extension of credit is 
        received by the creditor;
            ``(5) a consumer obtains a mortgage referred to in section 
        103(aa);
            ``(6) the original principal amount of such loan at the 
        time of consummation of the transaction is--
                    ``(A) 90 percent or more of the sale price, if the 
                property involved is purchased with the proceeds of the 
                loan; or
                    ``(B) 90 percent or more of the appraised value of 
                the property securing the loan;
            ``(7) the combined principal amount of all loans secured by 
        the real property exceeds 95 percent of the appraised value of 
        the property securing the loans at the time of consummation of 
        the last mortgage transaction;
            ``(8) the consumer was the subject of a proceeding under 
        title 11, United States Code, at any time during the 7-year 
        period preceding the date of the transaction (as determined on 
        the basis of the date of entry of the order for relief or the 
        date of adjudication, as the case may be, with respect to such 
        proceeding and included in a consumer report on the consumer 
        under the Fair Credit Reporting Act); or
            ``(9) so required by the Board 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 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) 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.
    ``(e) 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.
    ``(f) 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.
    ``(g) 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:
    ``(h) 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, 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.''.
    (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 clauses 
                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.
    ``(n) Prompt Crediting of Payments Required.--
            ``(1) In general.--All amounts received by a lender or a 
        servicer on a home loan at the address where the borrower has 
        been instructed to make payments shall be accepted and 
        credited, or treated as credited, on the business day received, 
        to the extent that the borrower has made the full contractual 
        payment and has provided sufficient information to credit the 
        account.
            ``(2) Scheduled method.--If a servicer uses the scheduled 
        method of accounting, any regularly scheduled payment made 
        prior to the scheduled due date shall be credited no later than 
        the due date.
            ``(3) Notice of noncredit.--If any payment is received by a 
        lender or a servicer on a home loan and not credited, or 
        treated as credited, the borrower shall be notified within 10 
        business days by mail at the borrower's last known address of 
        the disposition of the payment, the reason the payment was not 
        credited, or treated as credited to the account, and any 
        actions necessary by the borrower to make the loan current.''.
    (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 ``10 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 30 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) Requests for Payoff Amounts.--Section 6(e) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended by 
inserting after paragraph (4) (as added by subsection (c) of this 
section) the following new paragraph:
            ``(5) Requests for payoff amounts.--A creditor or servicer 
        shall send a payoff balance within 7 business days of the 
        receipt of a written request for such balance from or on behalf 
        of the borrower.''.
    (e) 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. MORTGAGE SERVICING STUDIES REQUIRED.

    (a) Mortgage Servicing Practices.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Federal banking agencies, and the 
        Federal Trade Commission, shall conduct a comprehensive study 
        on mortgage servicing practices and their potential for fraud 
        and abuse.
            (2) Issues to be included.--In addition to other issues the 
        Secretary of Housing and Urban Development, the Federal banking 
        agencies, and the Federal Trade Commission may determine to be 
        appropriate and possibly pertinent to the study conducted under 
        paragraph (1), the study shall include the following issues:
                    (A) A survey of the industry in order to examine 
                the issue of the timely or effective posting of 
                payments by servicers.
                    (B) The employment of daily interest when payments 
                are made after a due date.
                    (C) The charging of late fees on the entire 
                outstanding principal.
                    (D) The charging of interest on servicing fees.
                    (E) The utilization of collection practices that 
                failed to comply with the Fair Debt Collection 
                Practices Act.
                    (F) The charging of prepayment penalties when not 
                authorized by either the note or law.
                    (G) The employment of unconscionable forbearance 
                agreements.
                    (H) Foreclosure abuses.
            (3) Report.--Before the end of the 12-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection to the 
        Committee on Financial Services of the House of Representatives 
        and the Committee on Banking, Housing, and Urban Affairs of the 
        Senate.
    (b) Mortgage Servicing Improvements.--
            (1) Study.--The Secretary of Housing and Urban Development, 
        in consultation with the Federal banking agencies, and the 
        Federal Trade Commission, shall conduct a comprehensive study 
        on means to improve the best practices of the mortgage 
        servicing industry, and Federal and State laws governing such 
        industry.
            (2) Report.--Before the end of the 18-month period 
        beginning on the date of the enactment of this Act, the 
        Secretary of Housing and Urban Development shall submit a 
        report on the study conducted under this subsection 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 as the Secretary, in consultation with 
        the Board and the Commission, may determine to be appropriate.

SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

    (a) In General.--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.

    Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
by inserting after subsection (u) (as added by section 303(f)) the 
following new subsection:
    ``(v) Property Appraisal Requirements.--
            ``(1) In general.--A creditor may not extend credit in the 
        form of a mortgage referred to in section 103(aa) to any 
        consumer without first obtaining a written appraisal of the 
        property to be mortgaged prepared in accordance with the 
        requirements of this subsection.
            ``(2) Appraisal requirements.--
                    ``(A) Physical property visit.--An appraisal of 
                property to be secured by a mortgage referred to in 
                section 103(aa) does not meet the requirement of this 
                subsection unless it is performed by a qualified 
                appraiser who conducts a physical property visit of the 
                interior of the mortgaged property.
                    ``(B) Second appraisal under certain 
                circumstances.--
                            ``(i) In general.--If the purpose of a 
                        mortgage referred to in section 103(aa) 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.
                            ``(ii) No cost to consumer.--The cost of 
                        any second appraisal required under clause (i) 
                        may not be charged to the consumer.
                    ``(C) Qualified appraiser defined.--For purposes of 
                this subsection, the term `qualified appraiser' means a 
                person who--
                            ``(i) is certified or licensed by the State 
                        in which the property to be appraised is 
                        located; and
                            ``(ii) 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.
            ``(3) Free copy of appraisal.--A creditor shall provide 1 
        copy of each appraisal conducted in accordance with this 
        subsection in connection with a mortgage referred to in section 
        103(aa) to the consumer without charge, and at least 3 days 
        prior to the transaction closing date.
            ``(4) Consumer notification.--At the time of the initial 
        mortgage application, the consumer 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 
        consumer may choose to have a separate appraisal conducted at 
        their own expense.
            ``(5) 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 subsection 
        shall be liable to the consumer for the sum of $2,000.''.

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 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) failing to timely compensate an appraiser for a 
        completed appraisal regardless of whether the transaction 
        closes.
    ``(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, 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) 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 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), and 
        (c).
    ``(e) 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, AND APPROVED APPRAISER EDUCATION.

    (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);
                    (B) by striking the period at the end of paragraph 
                (4) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(5) protect the consumer from improper appraisal 
        practices and the predations of unlicensed appraisers.''.
            (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''.
    (b) Annual Report of Appraisal Subcommittee.--Section 1103(a)(4) of 
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 
(12 U.S.C. 3332(a)(4)) is amended at the end by inserting: ``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.''.
    (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 and government 
        agencies, and hold regular meetings.''.
    (e) Field 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''; and
            (2) by adding at the end the following new subsection:
    ``(b) Field Appraisals and Appraisal Reviews.--All field appraisals 
performed at a property within a State shall be prepared by appraisers 
licensed in the State where the property is located. All Uniform 
Standards of Professional Appraisal Practice-compliant appraisal 
reviews shall be performed by an appraiser who is duly licensed by a 
State appraisal board.''.
    (f) 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 (3); and
            (3) by inserting after paragraph (1) the following new 
        paragraph:
            ``(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; and''.
    (g) Registry Fees Modified.--Section 1109(a)(3) of the Financial 
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 
3338(a)(3)) (as modified by section 203(e) of this Act) is amended by--
            (1) striking ``$25'' and inserting ``$40'';
            (2) striking ``$50'' and inserting ``$80''; and
            (3) inserting after the period at the end the following new 
        sentences: ``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.''
    (h) 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; and
            (3) by adding at the end the following new paragraphs:
            ``(5) make grants to State appraiser regulatory agencies to 
        help defray those costs relating to enforcement activities; and
            ``(6) to report to all State appraiser certifying and 
        licensing agencies when a license or certification is 
        surrendered, revoked, or suspended.''.
    (i) 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.''.
    (j) Monitoring of State Appraiser Certifying and Licensing 
Agencies.--Section 1118(a) of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3347(a)) is amended--
            (1) by inserting ``funding, staffing,'' after 
        ``practices,'' each place such term appears;
            (2) by inserting before the period at the end of the first 
        sentence the following: ``, whether a State agency processes 
        complaints and completes exams in a reasonable time period, and 
        whether a State agency reports claims and disciplinary actions 
        on a timely basis to the national registry maintained by the 
        Appraisal Subcommittee''; and
            (3) by inserting at the end the following new sentence: 
        ``The Appraisal Subcommittee shall have the authority to impose 
        interim sanctions and suspensions.''.
    (k) 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.''.
    (l) 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 adding at the end the 
following new sentence: ``No provision of this subsection shall be 
construed as prohibiting consideration of designations conferred by 
recognized national professional appraisal organizations, such as 
sponsoring organizations of The Appraisal Foundation.''.
    (m) 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.--
            ``(1) Prohibitions on interested parties in a real estate 
        transaction.--No mortgage lender, mortgage broker, mortgage 
        banker, real estate broker, appraisal management company, 
        employee of an appraisal management company, or any other 
        person with an interest in a real estate transaction involving 
        an appraisal shall improperly influence, or attempt to 
        improperly influence, through coercion, extortion, collusion, 
        compensation, instruction, inducement, intimidation, non-
        payment for services rendered, or bribery, the development, 
        reporting, result, or review of a real estate appraisal sought 
        in connection with a mortgage loan.
            ``(2) Exceptions.--The requirements of paragraph (1) 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, 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:
                    ``(A) Consider additional, appropriate property 
                information, including the consideration of additional 
                comparable properties to make or support an appraisal.
                    ``(B) Provide further detail, substantiation, or 
                explanation for the appraiser's value conclusion.
                    ``(C) Correct errors in the appraisal report.
            ``(3) Prohibitions on conflicts of interest.--No certified 
        or licensed appraiser conducting an appraisal may have a direct 
        or indirect interest, financial or otherwise, in the property 
        or transaction involving the appraisal.
            ``(4) 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 with an interest in a real estate 
        transaction involving an appraisal who has a reasonable basis 
        to believe an appraiser 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.
            ``(5) Regulations.--The Federal financial institutions 
        regulatory agencies (as defined in section 1003(1) of the 
        Federal Financial Institutions Examination Council Act of 1978) 
        shall prescribe such regulations as may be necessary to carry 
        out the provisions of this subsection.
            ``(6) Penalties.--Any person who violates any provision of 
        this section shall be subject to civil penalties under section 
        8(i)(2) of the Federal Deposit Insurance Act or section 
        206(k)(2) of the Federal Credit Union Act, as appropriate.
            ``(7) Proceeding.--A proceeding with respect to a violation 
        of this section shall be an administrative proceeding which may 
        be conducted by a Federal financial institutions regulatory 
        agency in accordance with the procedures set forth in 
        subchapter II of chapter 5 of title 5, United States Code.''.
    (n) 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.''.
    (o) 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 de minimis loan levels 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.
    (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.

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 all appraisal reports and valuations 
        developed in connection with the applicant's application for a 
        loan that is or would have been secured by a lien on 
        residential real property.
            ``(2) Procedures..--Appraisal reports shall be furnished 
        under this subsection upon written request by the applicant, 
        made within a reasonable period of time of the application and 
        before any closing on the loan.
            ``(3) Reimbursement.--The creditor may require an applicant 
        to pay a reasonable fee for the provision of copies of 
        appraisal reports under this subsection.
            ``(4) Notification to consumers.--The creditor shall notify 
        (pursuant to regulations prescribed by the Board) an applicant 
        in writing of the right to receive a copy of each appraisal 
        report, under this subsection.''.
                                 <all>