[Congressional Record Volume 153, Number 150 (Thursday, October 4, 2007)]
[Senate]
[Pages S12780-S12781]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED:
  S. 2153. A bill to amend the Truth in Lending Act to enhance 
disclosure of the terms of home mortgage loans, and for other purposes; 
to the Committee on Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I introduce the Mortgage Disclosure 
Improvement Act of 2007. This bill will improve the loan disclosures 
given to homebuyers not only when they apply for a mortgage, but also 
when they refinance their home.
  As we are all too aware, the percentage of loans entering foreclosure 
is at its highest level in 55 years. According to RealtyTrac, there 
were 1.2 million foreclosures reported nationwide last year, up 42 
percent from 2005. Many of these Americans going into foreclosure took 
out exotic adjustable rate and payment option loans which are now 
resetting to new, much higher monthly payments. Many of these consumers 
never understood how these loan products worked or how high their 
payments would be once these loans reset.
  The Mortgage Disclosure Improvement Act of 2007 would for the first 
time require that the maximum payment that a consumer has to make on a 
mortgage be disclosed, not only at application, but also seven days 
before closing. If these disclosures are not made or are made 
inaccurately, then lenders will be subject to statutory damages. In 
addition to requiring lenders to disclose the maximum payment under the 
loan, they will now have to provide consumers who apply for adjustable 
rate or variable payment loans with a warning that the payments will 
change, depending on the interest rate.

[[Page S12781]]

  In addition, this bill would require lenders to give firm disclosure 
regarding the terms of the mortgage not only within three days of 
application for the loan, but also at least seven days before closing. 
Lenders also will now need to include a statement that the consumer is 
not obligated on the mortgage loan just because they have received the 
disclosures. This will give consumers the opportunity to truly shop 
around for the best mortgage terms for the first time ever. They will 
be able to compare the payments and costs associated with a certain 
loan product, and decide not to sign on the dotted line if they do not 
like the basic terms of the loan.
  Finally, the bill clarifies that lenders are subject to statutory 
damages for violations of Truth in Lending disclosure provisions, 
increases the damages for mortgage violations from $2,000 to $5,000 per 
violation, and requires that mortgage disclosures be made within the 
stated time frames.
  The increasing rate of foreclosures across the country is troubling. 
Not only are individual families losing their homes and their financial 
nest eggs, but there is a negative ripple effect across communities and 
the economy. Although improved TILA disclosures are only a small part 
of what Congress needs to do in the upcoming year, I believe that 
giving consumers the information they need regarding the maximum 
payments they might have to pay under the terms of a loan is an 
important and vital part of improving the process. Borrowers need to 
better understand the full financial impact of entering into a 
particular loan early in the loan decision process, and also before 
they actually consummate the loan. I hope my colleagues will join me in 
supporting this bill and other efforts to help improve the mortgage 
financing process.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2153

       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 ``Mortgage Disclosure 
     Improvement Act of 2007''.

     SEC. 2. ENHANCED MORTGAGE LOAN DISCLOSURES.

       Section 128(b)(2) of the Truth in Lending Act (15 U.S.C. 
     1638(b)(2)) is amended--
       (1) by inserting ``(A)'' before ``In the'';
       (2) by striking ``a residential mortgage transaction, as 
     defined in section 103(w)'' and inserting ``any extension of 
     credit that is secured by the dwelling of a consumer'';
       (3) by striking ``shall be made in accordance'' and all 
     that follows through ``extended, or'';
       (4) by striking ``If the'' and all that follows through the 
     end of the paragraph and inserting the following:
       ``(B) In the case of an extension of credit that is secured 
     by the dwelling of a consumer, in addition to the other 
     disclosures required by subsection (a), the disclosures 
     provided under this paragraph shall--
       ``(i) state in conspicuous type size and format, the 
     following: `You are not required to complete this agreement 
     merely because you have received these disclosures or signed 
     a loan application.'; and
       ``(ii) be furnished to the borrower not later than 7 
     business days before the date of consummation of the 
     transaction, and at the time of consummation of the 
     transaction, subject to subparagraph (D).
       ``(C) In the case of an extension of credit that is secured 
     by the dwelling of a consumer, under which the annual rate of 
     interest is variable, or with respect to which the regular 
     payments may otherwise be variable, in addition to the other 
     disclosures required by subsection (a), the disclosures 
     provided under this paragraph shall--
       ``(i) label the payment schedule as follows: `Payment 
     Schedule: Payments Will Vary Based on Interest Rate Changes'; 
     and
       ``(ii) state the maximum amount of the regular required 
     payments on the loan, based on the maximum interest rate 
     allowed, introduced with the following language in 
     conspicuous type size and format: `Your payment can go as 
     high as [___]', the blank to be filled in with the maximum 
     possible payment amount.
       ``(D) In any case in which the disclosure statement 
     provided 7 business days before the date of consummation of 
     the transaction contains an annual percentage rate of 
     interest that is no longer accurate, as determined under 
     section 107(c), the creditor shall furnish an additional, 
     corrected statement to the borrower, not later than 3 
     business days before the date of consummation of the 
     transaction.''.

     SEC. 3. CIVIL LIABILITY.

       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 ``not less than 
     $200 or greater than $2,000'' and inserting ``$5,000, such 
     amount to be adjusted annually based on the consumer price 
     index, to maintain current value''; and
       (2) in the penultimate sentence of the undesignated matter 
     following paragraph (4)--
       (A) by striking ``only for'' and inserting ``for'';
       (B) by striking ``section 125 or'' and inserting ``section 
     122, section 125,'';
       (C) by inserting ``or section 128(b),''after ``128(a),''; 
     and
       (D) by inserting ``or section 128(b)'' before the period.
                                 ______