[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5941 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 5941

To reduce fraud and abusive practices in the origination of residential 
   mortgages by establishing a clearinghouse of mortgage application 
                              information.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 2010

  Mr. Towns introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To reduce fraud and abusive practices in the origination of residential 
   mortgages by establishing a clearinghouse of mortgage application 
                              information.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Anti-Redlining and Anti-Mortgage 
Fraud Act of 2010''.

SEC. 2. RESIDENTIAL MORTGAGE APPLICATION RECORDATION REQUIREMENT.

    (a) Recordation Requirement.--It shall be unlawful for any person 
or entity to extend credit (including in connection with a lease-
purchase transaction), or to provide funds or collect any payments in 
connection with such an extension of credit, that is secured by a 
single-family residence unless the originator has recorded the 
applicant's application for such extension of credit with the 
clearinghouse established under subsection (b). The Secretary of the 
Treasury shall, by regulation, require originators to record each 
application to enter into a transaction covered by this subsection with 
the clearinghouse established under subsection (b), at the time that 
application is first received by the originator.
    (b) Mortgage Application Recordation System.--
            (1) Establishment.--The Secretary of the Treasury, acting 
        through the Director of FinCEN, shall establish a system in 
        accordance with this subsection to record applications for 
        extensions of credit that are subject to the requirement under 
        subsection (a), which shall include the establishment of a 
        clearinghouse (in this section referred to as the 
        ``clearinghouse'') for recording all such applications.
            (2) Clearinghouse operator.--The clearinghouse shall be 
        established and managed by a private sector entity selected, in 
        accordance with standards established by the Secretary, from 
        applicants that--
                    (A) demonstrate the capacity to operate the 
                clearinghouse in accordance with this section and 
                provide technology sufficient to carry out all 
                functions and activities of the clearinghouse;
                    (B) meet such standards, as the Secretary shall 
                establish, to ensure that the clearinghouse operator is 
                independent of ownership of, by, or with, and 
                affiliation of any kind with, any entity that is 
                engaged in the business of originating, funding, 
                guaranteeing, purchasing, selling, securitizing, or 
                assuming any risk related to residential mortgages 
                other than from the operation of the clearinghouse; and
                    (C) are small business concerns, as such term is 
                defined pursuant to section 3 of the Small Business Act 
                (15 U.S.C. 632).
            (3) Costs.--
                    (A) Responsibility.--All costs of the establishment 
                and operation of the clearinghouse shall be borne by 
                the clearinghouse operator.
                    (B) Fees.--
                            (i) Authority.--The clearinghouse operator 
                        may assess and collect fees to cover the costs 
                        of the establishment and operation of the 
                        clearinghouse established under this 
                        subsection.
                            (ii) Limitation.--Such fees may be assessed 
                        and collected only in such manner as may 
                        reasonably be expected to result in an 
                        aggregate amount of fees collected that does 
                        not exceed the aggregate amount of the costs 
                        for establishment and operation of the 
                        clearinghouse, plus a market rate of return on 
                        the investment in establishing and operating 
                        costs of the clearinghouse, as determined by 
                        the Secretary.
                            (iii) Persons subject to fees.--Fees under 
                        this subparagraph shall be assessed against and 
                        collected from originators, for each 
                        application for an extension of credit that is 
                        required to be recorded with the clearinghouse.
                    (C) Guarantee.--The Secretary may guarantee 
                repayment of principal and interest on a loan to the 
                clearinghouse operator in an amount sufficient to cover 
                the costs of establishing, and operating, the 
                clearinghouse established under this section and there 
                is authorized to be appropriated such sums as may be 
                necessary for costs (as such term is defined in section 
                502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 
                661a)) of such guarantee.
    (c) Collection of Information.--For each application for an 
extension of credit recorded with the clearinghouse, the clearinghouse 
shall, through an internet-based electronic system--
            (1) provide a unique identifier that shall be permanently 
        assigned to the application; and
            (2) collect and maintain--
                    (A) the name, social security number, and address 
                of each applicant and co-applicant;
                    (B) the address of the property or properties that 
                provide security for the extension of credit for which 
                the application is filed;
                    (C) the identity of the legal entity receiving the 
                application and the identity of the agent or employee 
                of that entity actually taking the application;
                    (D) the identity of any entity or individual that 
                enters any information into the clearinghouse system 
                with respect to an application;
                    (E) identification of whether property securing the 
                extension of credit is a principal residence, an 
                additional residence, or an investment property;
                    (F) identification of whether the extension of 
                credit was secured by a first or subsequent lien on 
                property and whether it was made for purchase, 
                refinance, a home equity loan or line of credit, 
                construction finance, home equity conversion, or lease-
                purchase, or such other category as the Secretary may 
                provide;
                    (G) the name of each lender to which the 
                application is submitted;
                    (H) the name of each lender that accepts the 
                application;
                    (I) the date and type of transaction that results 
                from the approval of the application or the date of 
                termination of the application; and
                    (J) such other information as the Secretary may, by 
                regulation, require that is consistent with the fraud 
                prevention and detection purposes of the clearinghouse.
    (d) Use and Protection of Information.--
            (1) In general.--All information collected by the 
        clearinghouse shall be the property of the Secretary and access 
        to and use of the information shall be limited as prescribed in 
        this section and regulations issued under this section by the 
        Secretary.
            (2) Disclosures to applicants.--The Secretary shall require 
        each originator accepting applications for extensions of credit 
        subject to the requirement under subsection (a) to provide to 
        each applicant, at the time of application, a written 
        disclosure, in such form and containing such information as the 
        Secretary shall require, sufficient to inform the applicant of 
        the existence and purpose of the clearinghouse, the information 
        regarding the application to be collected by the clearinghouse, 
        who has access to such information collected by the 
        clearinghouse, and the manner in which the information may be 
        used.
            (3) Access.--Access to information collected by the 
        clearinghouse shall be limited as follows:
                    (A) An individual or entity that accepts 
                applications for extensions of credit shall have access 
                solely to information that was submitted to the 
                clearinghouse by that individual or entity.
                    (B) An entity that considers an extension of credit 
                based upon an application shall have access solely to 
                information associated with applications submitted to 
                such entity and to other currently or recently active 
                applications involving the same applicants or co-
                applicants or the same property or properties.
                    (C) A prospective purchaser or guarantor of any 
                instrument related to an extension of credit for which 
                application information was collected by the 
                clearinghouse shall have access to the same information 
                as the entity that extended the credit.
                    (D) The Secretary and any other Federal and State 
                regulatory or law enforcement agencies shall have 
                access to all data collected by the clearinghouse to 
                the extent and in the manner prescribed by the 
                Secretary for the purpose of investigating fraudulent, 
                discriminatory, or predatory activities and other 
                activities that are potential violations of Federal or 
                State law.
            (4) Protection of information.--The Secretary shall, by 
        regulation pursuant to subsection (e), provide for the 
        operation of the clearinghouse and establish guidelines and 
        procedures necessary to ensure that the clearinghouse operates 
        in a secure manner that protects the information collected from 
        unauthorized access or misuse by any individual or entity.
    (e) Definitions.--For purposes of this section, the following 
definitions shall apply:
            (1) Application.--The term ``application'' means, any 
        writing whether or not in paper or electronic form and whether 
        or not signed by the applicant, that--
                    (A) is prepared or received by an originator;
                    (B) is submitted or is intended to be submitted for 
                consideration by any creditor for an extension of 
                credit to be secured by a single-family residence; and
                    (C) identifies the applicant and the security 
                property.
            (2) Credit; extension of credit.--The terms ``credit'' and 
        ``extension of credit'' mean the provision of time for payment 
        pursuant to contractual terms, including lease-purchase 
        contracts, home equity lines of credit, and home equity 
        conversion transactions.
            (3) FinCEN.--The term ``FinCEN'' means the Financial Crimes 
        Enforcement Network of the Department of the Treasury.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury, acting through the Director of FinCEN.
            (5) Single family residence.--The term ``single-family 
        residence'' means residential real property that contains one 
        to four dwelling units, or individual units of condominiums or 
        cooperatives.
            (6) Originator.--The term ``originator'' means any entity 
        that is in the business of receiving applications for 
        extensions of credit.
    (f) Regulations.--The Secretary shall issue any regulations 
necessary to carry out this section.
    (g) Effective Date.--The provisions of this section shall take 
effect with respect to extensions of credit entered into on and after 
January 1, 2011.
    (h) Conforming Amendment.--Paragraph (2) of section 310 of title 
31, United States Code, is amended--
            (1) by redesignating subparagraph (J) as subparagraph (K); 
        and
            (2) by inserting after subparagraph (I) the following new 
        subparagraph:
            ``(J) Carry out the responsibilities of the Secretary under 
        section 2 of the Anti-Redlining and Anti-Mortgage Fraud Act of 
        2010 (relating to residential mortgage application recordation 
        requirement and establishment of a clearinghouse for such 
        recording).''.
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