[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Pages S15470-S15473]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SARBANES (for himself, Mr. Schumer, Ms. Stabenow, Mr. 
        Corzine, Mr. Durbin, Mr. Kerry, Ms. Mikulski, Mrs. Clinton, Mr. 
        Levin, Mr. Leahy, Mr. Akaka, Mr. Kennedy, Mr. Lautenberg, Mr. 
        Dayton, and Mr. Dodd):
  S. 1928. A bill to amend the Truth in Lending Act to protect 
consumers against predatory practices in connection with high cost 
mortgage transactions, to strengthen the civil remedies available to 
consumers under existing law, and for other purposes; to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. SARBANES. Mr. President, in July of 2001, and continuing through 
January of the following year, the Committee on Banking, Housing, and 
Urban Affairs held a series of hearings to shine a bright light on the 
deceptive and destructive practices of predatory mortgage lenders. At 
those hearings, the Committee heard from housing experts, community 
groups, legal advocates, industry representatives and victims of 
predatory lending in an effort to determine how best to address this 
terrible problem. Today, I am introducing legislation, the ``Predatory 
Lending Consumer Protection Act of 2003,'' along with a number of my 
colleagues, that would begin to address the problems that came to light 
in those hearings.
  Homeownership is the American Dream. Indeed, the Committee has 
already passed legislation this year that would authorize a new $200 
million downpayment assistance program to ensure that more people can 
achieve this goal.
  We have taken this step because homeownership is the best opportunity 
for most Americans to put down roots and start creating equity for 
themselves and their families. Homeownership has been the path to 
building wealth for generations of Americans, wealth that can be tapped 
to send children to college, pay for a secure retirement, or simply 
work as a reserve against unexpected emergencies. It has been the key 
to ensuring stable communities, good schools, and safe streets. Common 
sense tells us, and the evidence confirms, that homeowners are more 
engaged citizens and more active in their communities.
  Little wonder, then, that so many Americans, young and old, aspire to 
achieve this dream.
  Unhappily, predatory lenders cynically play on these hopes and dreams 
to cheat people out of their wealth. These lenders target lower income, 
elderly, and, often, uneducated homeowners for their abusive practices. 
Study after study has shown that predatory lenders also target 
minorities, driving a wedge between these families and the hope of a 
productive life in the economic and financial mainstream of America.
  We owe it to these hardworking families to provide protections 
against these unscrupulous players.
  Let me share with you one of the stories we heard at our hearings. 
Mary Ann Podelco, a widowed waitress from West Virginia, used $19,000 
from her husband's life insurance to pay off the balance on her 
mortgage, thus owning her home free and clear. Before her husband's 
death, she had never had a checking account or a credit card. She then 
took out a $11,921 loan for repairs. At the time, her monthly income 
from Social Security was $458, and her loan payments were more than 
half this amount. Ms. Podelco, who has a sixth grade education, 
testified that after her first refinancing, ``I began getting calls 
from people trying to refinance my mortgage all hours of the day and 
night.'' Within 2 years, having been advised to refinance seven times--
each time seeing high points and fees being financed into her new 
loan--she owed $64,000, and lost her home to foreclosure.
  Ms. Podelco's story is all too typical. Unfortunately, most of the 
sharp practices used by unscrupulous lenders and brokers, while 
unethical and clearly abusive, are not illegal. This bill is designed 
to address that problem by tightening the interest rate and fee 
triggers that define high cost loans; the bill improves protections for 
borrowers receiving such loans by prohibiting the financing of 
exorbitant fees, ``packing'' in of unnecessary and costly products, 
such as single premium credit insurance, and limiting prepayment 
penalties. Finally, it protects these consumers' rights to seek redress 
by prohibiting mandatory arbitration, as the Federal Trade Commission 
(FTC) proposed unanimously in 2000.We often hear about the importance 
of improved enforcement as a way to combat this

[[Page S15471]]

problem. As the FTC pointed out, mandatory arbitration prevents 
homeowners from exercising any of their rights to enforce existing law.
  We cannot extol the virtues of homeownership, as we so often do, 
without seeking at the same time to preserve this benefit for so many 
elderly, minority, and unsophisticated Americans who are the targets of 
unscrupulous lenders and brokers. This legislation will help achieve 
this important goal. This bill has been endorsed by the Leadership 
Conference on Civil Rights, the U.S. Conference of Mayors, the National 
Council of La Raza, the National Consumer Law Center, ACORN, National 
Consumer Reinvestment Coalition, Consumer Federation of America, the 
NAACP, the Self-Help Credit Union, the National Association of Local 
Housing Finance Agencies, the National Community Development 
Association, the National Association of Consumer Advocates, and the 
National League of Cities, among others.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1928

       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 ``Predatory Lending Consumer 
     Protection Act of 2003''.

     SEC. 2. TRUTH IN LENDING ACT DEFINITIONS.

       (a) High Cost Mortgages.--
       (1) In general.--The portion of section 103(aa) of the 
     Truth in Lending Act (15 U.S.C. 1602(aa)) that precedes 
     paragraph (2) is amended to read as follows:
       ``(aa) Mortgage Referred to in This Subsection.--
       ``(1) Definition.--
       ``(A) In general.--A mortgage referred to in this 
     subsection means a consumer credit transaction--
       ``(i) that is secured by the principal dwelling of the 
     consumer, other than a reverse mortgage transaction; and
       ``(ii) the terms of which provide that--

       ``(I) the transaction is secured by a first mortgage on the 
     principal dwelling of the consumer, and the annual percentage 
     rate on the credit, at the consummation of the transaction, 
     will exceed by more than 6 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 transaction is secured by a junior or 
     subordinate mortgage on the principal dwelling of the 
     consumer, and the annual percentage rate on the credit, at 
     the consummation of the transaction, will exceed by more than 
     8 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
       ``(III) the total points and fees payable on the 
     transaction will exceed the greater of 5 percent of the total 
     loan amount, or $1,000, excluding not more than 2 bona fide 
     discount points.

       ``(B) Introductory rates not taken into account.--For 
     purposes of subparagraph (A)(ii), the annual percentage rate 
     of interest shall be determined--
       ``(i) in the case of a fixed-rate loan in which the annual 
     percentage rate will not vary during the term of the loan, as 
     the rate in effect on the date of consummation of the 
     transaction;
       ``(ii) in the case of a loan in which the rate of interest 
     varies according to an index, or is less than the rate of 
     interest which will apply after the end of an initial or 
     introductory period, 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 loan agreement; and
       ``(iii) in the case of any other loan in which the rate may 
     vary at any time during the term of the loan for any reason, 
     by including in the finance charge component of the annual 
     percentage rate--

       ``(I) the interest charged on the loan at the maximum rate 
     that may be charged during the term of the loan; and
       ``(II) any other applicable charges that would otherwise be 
     included in accordance with section 106.''.

       (2) Technical and conforming amendment.--Section 103(aa)(2) 
     of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is 
     amended--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraph (C) as subparagraph (B).
       (b) Points and Fees.--Section 103(aa)(4) of the Truth in 
     Lending Act (15 U.S.C. 1602(aa)(4)) is amended--
       (1) by striking subparagraph (B) and inserting the 
     following:
       ``(B) all compensation paid directly or indirectly by a 
     consumer or a creditor to a mortgage broker;'';
       (2) by redesignating subparagraph (D) as subparagraph (G); 
     and
       (3) by striking subparagraph (C) and inserting the 
     following:
       ``(C) each of the charges listed in section 106(e) (except 
     an escrow for future payment of taxes and insurance);
       ``(D) the cost of all premiums financed by the lender, 
     directly or indirectly, for any credit  life, credit 
     disability, credit unemployment or credit property 
     insurance, or any other life or health insurance, or any 
     payments financed by the lender, directly or indirectly, 
     for any debt cancellation or suspension agreement or 
     contract, except that, for purposes of this subparagraph, 
     insurance premiums or debt cancellation or suspension fees 
     calculated and paid on a monthly basis shall not be 
     considered financed by the lender;
       ``(E) the maximum prepayment penalties that may be charged 
     or collected under the terms of the loan documents;
       ``(F) all prepayment fees or penalties that are charged to 
     the borrower if the loan refinances a previous loan made by 
     the same creditor or an affiliate of that creditor; and''.
       (c) 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 ``Any person who originates 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 or acted as a mortgage broker 
     between originators and consumers on more than 5 mortgages 
     referred to in subsection (aa) within the preceding 12-month 
     period, and any creditor-affiliated party shall be considered 
     to be a creditor for purposes of this title.''.
       (d) Bona Fide Discount Points and Benchmark Rate Defined.--
     Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 
     amended by adding at the end the following:
       ``(cc) Other Interest Rate Related Terms.--
       ``(1) Benchmark rate.--The term `benchmark rate' means an 
     interest rate that the borrower may reduce by paying bona 
     fide discount points, not to exceed the weekly average yield 
     of United States Treasury securities having a maturity of 5 
     years, on the 15th day of the month immediately preceding the 
     month in which the loan is made, plus 5 percentage points.
       ``(2) Bona fide discount points.--The term `bona fide 
     discount points' means loan discount points which are--
       ``(A) knowingly paid by the borrower;
       ``(B) paid for the express purpose of lowering the 
     benchmark rate;
       ``(C) in fact reducing the interest rate or time-price 
     differential applicable to the loan from an interest rate 
     which does not exceed the benchmark rate; and
       ``(D) recouped within the first 4 years of the scheduled 
     loan payments.
       ``(3) Recoupment.--For purposes of paragraph (2)(D), loan 
     discount points shall be considered to be recouped within the 
     first 4 years of the scheduled loan payments if the reduction 
     in the interest rate that is achieved by the payment of the 
     loan discount points reduces the interest charged on the 
     scheduled payments, such that the dollar amount of savings in 
     payments made by the borrower over the first 4 years is equal 
     to or exceeds the dollar amount of loan discount points paid 
     by the borrower.''.

     SEC. 3. AMENDMENTS TO EXISTING REQUIREMENTS FOR HIGH COST 
                   CONSUMER MORTGAGES.

       (a) Additional Disclosures.--Section 129(a)(1) of the Truth 
     in Lending Act (15 U.S.C. 1639(a)(1)) is amended by adding at 
     the end the following:
       ``(C) `The interest rate on this loan is much higher than 
     most people pay. This means the chance that you will lose 
     your home is much higher if you do not make all payments 
     under the loan.'.
       ``(D) `You may be able to get a loan with a much lower 
     interest rate. Before you sign any papers, you have the right 
     to go see a housing or consumer credit counseling agency, as 
     well as to consult other lenders to find ways to get a 
     cheaper loan.'.
       ``(E) `If you are taking out this loan to repay other 
     loans, look to see how many months it will take to pay for 
     this loan and what the total amount is that you will have to 
     pay before this loan is repaid. Even though the total amount 
     you will have to pay each month for this loan may be less 
     than the total amount you are paying each month for those 
     other loans, you may have to pay on this loan for many more 
     months than those other loans which will cost you more money 
     in the end.' ''.
       (b) Prepayment Penalty Provisions.--Section 129(c) of the 
     Truth in Lending Act (15 U.S.C. 1639(c)) is amended to read 
     as follows:
       ``(c) Prepayment Penalty Provisions.--
       ``(1) No prepayment penalties after end of 24-month 
     period.--A mortgage referred to in section 103(aa) may not 
     contain terms under which a consumer must pay any prepayment 
     penalty for  any payment made after the end of the 24-month 
     period beginning on the date the mortgage is consummated.
       ``(2) No prepayment penalties if more than 3 percent of 
     points and fees were financed.--Subject to subsection (l)(1), 
     a mortgage referred to in section 103(aa) may not contain 
     terms under which a consumer must pay any prepayment penalty 
     for any payment made at or before the end of the 24-month 
     period referred to in paragraph (1) if

[[Page S15472]]

     the creditor financed points or fees in connection with the 
     consumer credit transaction in an amount equal to or greater 
     than 3 percent of the total amount of credit extended in the 
     transaction.
       ``(3) Limited prepayment penalty for early repayment under 
     certain circumstances.--Subject to paragraph (2), the terms 
     of a mortgage referred to in section 103(aa) may contain 
     terms under which a consumer must pay a prepayment penalty 
     for any payment made at or before the end of the 24-month 
     period referred to in paragraph (1) to the extent that the 
     sum of the total amount of points or fees financed by the 
     creditor, if any, in connection with the consumer credit 
     transaction and the total amount payable as a prepayment 
     penalty does not exceed the amount which is equal to 3 
     percent of the total amount of credit extended in the 
     transaction.
       ``(4) Construction.--For purposes of this subsection, any 
     method of computing a refund of unearned scheduled interest 
     is a prepayment penalty if it is less favorable to the 
     consumer than the actuarial method (as that term is defined 
     in section 933(d) of the Housing and Community Development 
     Act of 1992).
       ``(5) Prepayment penalty defined.--The term `prepayment 
     penalty' means any monetary penalty imposed on a consumer for 
     paying all or part of the principal with respect to a 
     consumer credit transaction before the date on which the 
     principal is due.''.
       (c) All Balloon Payments Prohibited.--Section 129(e) of the 
     Truth in Lending Act (15 U.S.C. 1639(e)) is amended by 
     striking ``having a term of less than 5 years''.
       (d) Assessment of Ability To Repay.--Section 129(h) of the 
     Truth in Lending Act (15 U.S.C. 1639(h)) is amended--
       (1) by striking ``Consumer.--A creditor'' and inserting 
     ``Consumer.--
       ``(1) Prohibition on patterns and practices.--A creditor''; 
     and
       (2) by adding at the end the following:
       ``(2) Case-by-case assessments of consumer ability to pay 
     required.--
       ``(A) In general.--In addition to the prohibition in 
     paragraph (1) on engaging in certain patterns and practices, 
     a creditor may not extend any credit in connection with any 
     mortgage referred to in section 103(aa) unless the creditor 
     has determined, at the time such credit is extended, that 1 
     or more of the resident obligors, when considered 
     individually and collectively, will be able to make the 
     scheduled payments under the terms of the transaction based 
     on a consideration of the current and expected income, 
     current obligations, employment status, and other financial 
     resources of any such obligor, without taking into account 
     any equity of any such obligor in the dwelling which is the 
     security for the credit.
       ``(B) Regulations.--The Board shall prescribe, by 
     regulation, the appropriate format for determining the 
     ability of a consumer to make payments and the criteria to be 
     considered in making that determination.
       ``(C) Resident obligor.--For purposes of this paragraph, 
     the term `resident obligor' means an obligor for whom the 
     dwelling securing the extension of credit is, or upon the 
     consummation of the transaction will be, the principal 
     residence.
       ``(3) Verification.--The requirements of paragraphs (1) and 
     (2) shall not be deemed to have been met unless any 
     information relied upon by the creditor for purposes of any 
     such paragraph has been verified by the creditor 
     independently of information provided by any resident 
     obligor.''.
       (e) Requirements Relating to Home Improvement Contracts.--
     Section 129(i) of the Truth in Lending Act (15 U.S.C. 
     1639(i)) is amended--
       (1) by striking ``Improvement Contracts.--A creditor'' and 
     inserting ``Improvement Contracts.--
       ``(1) In general.--A creditor''; and
       (2) by adding at the end the following:
       ``(2) Affirmative claims and defenses.--Notwithstanding any 
     other provision of law, any assignee or holder, in any 
     capacity, of a mortgage referred to in section 103(aa) which 
     was made, arranged, or assigned by a person financing home 
     improvements to the dwelling of a consumer shall be subject 
     to all affirmative claims and defenses which the consumer may 
     have against the seller, home improvement contractor, broker, 
     or creditor with respect to such mortgage or home 
     improvements.''.
       (f) Clarification of Rescission Rights.--Section 129(j) of 
     the Truth in Lending Act (15 U.S.C. 1639(j)) is amended to 
     read as follows:
       ``(j) Consequence of Failure To Comply.--
       ``(1) In general.--The consummation of a consumer credit 
     transaction resulting in a mortgage referred to in section 
     103(aa) shall be treated as a failure to deliver the material 
     disclosures required under this title for the purpose of 
     section 125, if--
       ``(A) the mortgage contains a provision prohibited by this 
     section or does not contain a provision required by this 
     section; or
       ``(B) a creditor or other person fails to comply with the 
     provisions of this section, whether by an act or omission, 
     with regard to such mortgage at any time.
       ``(2) Rule of application.--In any application of section 
     125 to a mortgage described in section 103(aa) under 
     circumstances described in paragraph (1), paragraphs (2) and 
     (4) of section 125(e) shall not apply or be taken into 
     account.''.

     SEC. 4. ADDITIONAL REQUIREMENTS FOR HIGH COST CONSUMER 
                   MORTGAGES.

       (a) Single Premium Credit Insurance.--Section 129 of the 
     Truth in Lending Act (15 U.S.C. 1639) is amended--
       (1) by redesignating subsections (k) and (l) as subsections 
     (s) and (t), respectively; and
       (2) by inserting after subsection (j), the following:
       ``(k) Single Premium Credit Insurance.--
       ``(1) In general.--The terms of a mortgage referred to in 
     section 103(aa) may not require, and no creditor or other 
     person may require or allow in connection with any such 
     mortgage, whether paid directly by the consumer or financed 
     by the consumer through such mortgage--
       ``(A) the advance collection of a premium, on a single 
     premium basis, for any credit life, credit disability, credit 
     unemployment, or credit property insurance, and any analogous 
     product; or
       ``(B) the advance collection of a fee for any debt 
     cancellation or suspension agreement or contract.
       ``(2) Rule of construction.--Paragraph (1) shall not be 
     construed as affecting the right of a creditor to collect 
     premium payments on insurance or debt cancellation or 
     suspension fees referred to in paragraph (1) that are 
     calculated and paid on a regular monthly basis, if the 
     insurance transaction is conducted separately from the 
     mortgage transaction, the insurance may be canceled by the 
     consumer at any time, and the insurance policy is 
     automatically canceled upon repayment or other termination of 
     the mortgage referred to in paragraph (1).''.
       (b) Restriction on Financing Points and Fees.--Section 129 
     of the Truth in Lending Act (15 U.S.C. 1639) is amended by 
     inserting after subsection (k) (as added by subsection (a) of 
     this section) the following:
       ``(l) Restriction on Financing Points and Fees.--
       ``(1) Limit on amount of points and fees that may be 
     financed.--Subject to paragraphs (2) and (3) of subsection 
     (c), no creditor may, in connection with the formation or 
     consummation of a mortgage referred to in section 103(aa), 
     finance, directly or indirectly, any portion of the points, 
     fees, or other charges payable to the creditor or any third 
     party in an amount in excess of the greater of 3 percent of 
     the total loan amount or $600.
       ``(2) Prohibition on financing certain points, fees, or 
     charges.--No creditor may, in connection with the formation 
     or consummation of a mortgage referred to in section 103(aa), 
     finance, directly or indirectly, any of the following fees or 
     other charges payable to the creditor or any third party:
       ``(A) Any prepayment fee or penalty required to be paid by 
     the consumer in connection with a loan or other extension of 
     credit which is being refinanced by such mortgage if the 
     creditor, with respect to such mortgage, or any affiliate of 
     the creditor, is the creditor with respect to the loan or 
     other extension of credit being refinanced.
       ``(B) Any points, fees, or other charges required to be 
     paid by the consumer in connection with such mortgage if--
       ``(i) the mortgage is being entered into in order to 
     refinance an existing mortgage of the consumer that is 
     referred to in section 103(aa); and
       ``(ii) if the creditor, with respect to such new mortgage, 
     or any affiliate of the creditor, is the creditor with 
     respect to the existing mortgage which is being 
     refinanced.''.
       (c) Creditor Call Provision.--Section 129 of the Truth in 
     Lending Act (15 U.S.C. 1639) is amended by inserting after 
     subsection (l) (as added by subsection (b) of this section) 
     the following:
       ``(m) Creditor Call Provision.--
       ``(1) In general.--A mortgage referred to in section 
     103(aa) may not include terms under which the indebtedness 
     may be accelerated by the creditor, in the sole discretion of 
     the creditor.
       ``(2) Exception.--Paragraph (1) shall not apply when 
     repayment of the loan has been accelerated as a result of a 
     bona fide default.''.
       (d) Prohibition on Actions Encouraging Default.--Section 
     129 of the Truth in Lending Act (15 U.S.C. 1639) is amended 
     by inserting after subsection (m) (as added by subsection (c) 
     of this section) the following:
       ``(n) Prohibition on Actions Encouraging Default.--No 
     creditor may make any statement, take any action, or fail to 
     take any action before or in connection with the formation or 
     consummation of any mortgage referred to in section 103(aa) 
     to refinance all or any portion of an existing loan or other 
     extension of credit, if the statement, action, or failure to 
     act has the effect of encouraging or recommending the 
     consumer to default on the existing loan or other extension 
     of credit at any time before, or in connection with, the 
     closing or any scheduled closing on such mortgage.''.
       (e) Modification or Deferral Fees.--Section 129 of the 
     Truth in Lending Act (15 U.S.C. 1639) is amended by inserting 
     after subsection (n) (as added by subsection (d) of this 
     section) the following:
       ``(o) Modification or Deferral Fees.--
       ``(1) In general.--Except as provided in paragraph (2), a 
     creditor may not charge any consumer with respect to a 
     mortgage referred to in section 103(aa) any fee or other 
     charge--
       ``(A) to modify, renew, extend, or amend such mortgage, or 
     any provision of the terms of the mortgage; or
       ``(B) to defer any payment otherwise due under the terms of 
     the mortgage.
       ``(2) Exception for modifications for the benefit of the 
     consumer.--Paragraph (1) shall not apply with respect to any 
     fee imposed in connection with any action described in 
     subparagraph (A) or (B) if--

[[Page S15473]]

       ``(A) the action provides a material benefit to the 
     consumer; and
       ``(B) the amount of the fee or charge does not exceed--
       ``(i) an amount equal to 0.5 percent of the total loan 
     amount; or
       ``(ii) in any case in which the total loan amount of the 
     mortgage does not exceed $60,000, an amount in excess of 
     $300.''.
       (f) Consumer Counseling Requirements.--Section 129 of the 
     Truth in Lending Act (15 U.S.C. 1639) is amended by inserting 
     after subsection (o) (as added by subsection (e) of this 
     section) the following:
       ``(p) Consumer Counseling Requirement.--
       ``(1) In general.--A creditor may not extend any credit in 
     the form of a mortgage referred to in section 103(aa) to any 
     consumer, unless the creditor has provided to the consumer, 
     at such time before the consummation of the mortgage and in 
     such manner as the Board shall provide by regulation--
       ``(A) all warnings and disclosures regarding the risks of 
     the mortgage to the consumer;
       ``(B) a separate written statement recommending that the 
     consumer take advantage of available home ownership or credit 
     counseling services before agreeing to the terms of any 
     mortgage referred to in section 103(aa); and
       ``(C) a written statement containing the names, addresses, 
     and telephone numbers of counseling agencies or programs 
     reasonably available to the consumer that have been certified 
     or approved by the Secretary of Housing and Urban 
     Development, a State housing finance authority (as defined in 
     section 1301 of the Financial Institutions Reform, Recovery, 
     and Enforcement Act of 1989), or the agency referred to in 
     subsection (a) or (c) of section 108 with jurisdiction over 
     the creditor as qualified to provide counseling on--
       ``(i) the advisability of a high cost loan transaction; and
       ``(ii) the appropriateness of a high cost loan for the 
     consumer.
       ``(2) Complete and updated lists required.--Any failure to 
     provide as complete or updated a list under paragraph (1)(C) 
     as is reasonably possible shall constitute a violation of 
     this section.''.
       (g) Arbitration.--Section 129 of the Truth in Lending Act 
     (15 U.S.C. 1639) is amended by inserting after subsection (p) 
     (as added by subsection (f) of this section) the following:
       ``(q) Arbitration.--
       ``(1) In general.--A mortgage referred to in section 
     103(aa) may not 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 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 mortgage referred to in section 103(aa) or any 
     agreement between the consumer and the creditor 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.''.
       (h) Prohibition on Evasions.--Section 129 of the Truth in 
     Lending Act (15 U.S.C. 1639) is amended by inserting after 
     subsection (q) (as added by subsection (g) of this section) 
     the following:
       ``(r) Prohibitions on Evasions, Structuring of 
     Transactions, and Reciprocal Arrangements.--
       ``(1) In general.--A creditor may not take any action--
       ``(A) for the purpose or with the intent to circumvent or 
     evade any requirement of this title, including entering into 
     a reciprocal arrangement with any other creditor or affiliate 
     of another creditor or dividing a transaction into separate 
     parts, for the purpose of evading or circumventing any such 
     requirement; or
       ``(B) with regard to any other loan or extension of credit 
     for the purpose or with the intent to evade the requirements 
     of this title, including structuring or restructuring a 
     consumer credit transaction as another form of loan, such as 
     a business loan.
       ``(2) Other actions.--In addition to the actions prohibited 
     under paragraph (1), a creditor may not take any action which 
     the Board determines, by regulation, constitutes a bad faith 
     effort to evade or circumvent any requirement of this section 
     with regard to a consumer credit transaction.
       ``(3) Regulations.--The Board shall prescribe such 
     regulations as the Board determines to be appropriate to 
     prevent circumvention or evasion of the requirements of this 
     section or to facilitate compliance with the requirements of 
     this section.''.

     SEC. 5. AMENDMENTS RELATING TO RIGHT OF RESCISSION.

       (a) Timing of Waiver by Consumer.--Section 125(a) of the 
     Truth in Lending Act (15 U.S.C. 1635(a)) is amended--
       (1) by striking ``(a) Except as otherwise provided'' and 
     inserting ``(a) Right Established.--
       ``(1) In general.--Except as otherwise provided''; and
       (2) by adding at the end the following:
       ``(2) Timing of election of waiver by consumer.--No 
     election by a consumer to waive the right established under 
     paragraph (1) to rescind a transaction shall be effective 
     if--
       ``(A) the waiver was required by the creditor as a 
     condition for the transaction;
       ``(B) the creditor advised or encouraged the consumer to 
     waive such right of the consumer; or
       ``(C) the creditor had any discussion with the consumer 
     about a waiver of such right during the period beginning when 
     the consumer provides written acknowledgement of the receipt 
     of the disclosures and the delivery of forms and information 
     required to be provided to the consumer under paragraph (1) 
     and ending at such time as the Board determines, by 
     regulation, to be appropriate.''.
       (b) Noncompliance With Requirements as Recoupment in 
     Foreclosure Proceeding.--Section 130(e) of the Truth in 
     Lending Act (15 U.S.C. 1640(e)) is amended by inserting after 
     the second sentence the following: ``This subsection also 
     does not bar a person from asserting a rescission under 
     section 125, in an action to collect the debt as a defense to 
     a judicial or nonjudicial foreclosure after the expiration of 
     the time periods for affirmative actions set forth in this 
     section and section 125.''.

     SEC. 6. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

       (a) Increase in Amount of Civil Money Penalties for Certain 
     Violations.--Section 130(a) of the Truth in Lending Act (15 
     U.S.C. 1640(a)) is amended--
       (1) in paragraph (2)(A)(iii), by striking ``$2,000'' and 
     inserting ``$10,000''; and
       (2) in paragraph (2)(B), by striking ``lesser of $500,000 
     or 1 percentum of the net worth of the creditor'' and 
     inserting ``the greater of--
       ``(i) the amount determined by multiplying the maximum 
     amount of liability under subparagraph (A) for such failure 
     to comply in an individual action by the number of members in 
     the certified class; or
       ``(ii) the amount equal to 2 percent of the net worth of 
     the creditor.''.
       (b) Statute of Limitations Extended for Section 129 
     Violations.--Section 130(e) of the Truth in Lending Act (15 
     U.S.C. 1640(e)) (as amended by section 5(b) of this Act) 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: 
     ``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. 7. AMENDMENT TO FAIR CREDIT REPORTING ACT.

       Section 623 of the Fair Credit Reporting Act (15 U.S.C. 
     1681s-2) is amended by adding at the end the following:
       ``(e) Duty of Creditors With Respect to High Cost 
     Mortgages.--
       ``(1) In general.--Each creditor who enters into a consumer 
     credit transaction which is a mortgage referred to in section 
     103(aa), and each successor to such creditor with respect to 
     such transaction, shall report the complete payment history, 
     favorable and unfavorable, of the obligor with respect to 
     such transaction to a consumer reporting agency that compiles 
     and maintains files on consumers on a nationwide basis at 
     least quarterly, or more frequently as required by regulation 
     or in guidelines established by participants in the secondary 
     mortgage market, while such transaction is in effect.
       ``(2) Definitions.--For purposes of paragraph (1), the term 
     `credit' and `creditor' have the same meanings as in section 
     103 of the Truth in Lending Act (15 U.S.C. 1602).''.

     SEC. 8. REGULATIONS.

       The Board of Governors of the Federal Reserve System shall 
     publish regulations implementing this Act and the amendments 
     made by this Act in final form before the end of the 6-month 
     period beginning on the date of enactment of this Act.
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