[Congressional Record Volume 153, Number 190 (Wednesday, December 12, 2007)]
[Senate]
[Pages S15235-S15246]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for Mr. Dodd (for himself, Mr. Reed, Mr. Schumer, 
        Mr. Menendez, Mr. Akaka, Mr. Brown, Mr. Casey, Mr. Kennedy, Mr. 
        Kerry, Mr. Harkin, Ms. Mikulski, Mrs. Boxer, Mrs. McCaskill, 
        Ms. Klobuchar, Mrs. Feinstein, and Mr. Durbin)):
  S. 2452. A bill to amend the Truth in Lending Act to provide 
protection to consumers with respect to certain high-cost loans, and 
for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. DODD. Mr. President, today we are facing a crisis in the mortgage 
markets on a scale that has not been seen since the Great Depression: 
over 2 million homeowners face foreclosure at a loss of over $160 
billion in hard-earned home equity; the Conference of Mayors recently 
reported, November 26, 2007, that they expect a decline of $1.2 
trillion in property values in 2008 because of the crisis; over one out 
of every 5 subprime loans is currently delinquent according to First 
American Loan Performance, an industry research firm. These high 
default rates have frozen the subprime and jumbo mortgage markets and 
infected the capital markets to the point where central banks around 
the world have had to inject liquidity into the system to avoid the 
crisis from spreading to other segments of the market.
  One of the fundamental causes of this serious crisis is abusive and 
predatory subprime mortgage lending. The Homeownership Preservation and 
Protection Act of 2007, which I am introducing today with a number of 
my colleagues, is designed to protect American homeowners from these 
practices, and prevent this disaster from happening again. The 
legislation will: realign the interests of the mortgage industry with 
borrowers to insure the availability of mortgage capital on fair terms 
both for the creation and sustainability of homeownership; establish 
new lending standards to ensure that loans are affordable and fair, and 
provide for adequate remedies to make sure the standards are met; and 
create

[[Page S15236]]

a transparent set of rules for the mortgage industry so that capital 
can safely return to the market without bad lending practices driving 
out the good.
  The fundamental problem in the subprime market today is that the 
mortgage system has become extremely fragmented, with different 
entities responsible for selling, underwriting, originating, funding, 
and securitizing the loans. Too few of these entities have a stake in 
the long-term success of the mortgage. A recent article in The 
Economist, February 17, 2007, described the process succinctly:

       Banks are traditionally supposed to know a bit about the 
     borrowers on their books. But, in many cases, their loans did 
     not stay on their books long enough for them to care. 
     Mortgages were written for a fee, sold to investment banks 
     for a fee, then packaged and floated for another fee. At each 
     link in the chain, the fees mattered more than the quality of 
     the loans. . . .

  As the GAO concluded, ``Originators [mortgage brokers and lenders] 
had financial incentives to increase loan volume, partially at the 
expense of loan quality,'' October 10, 2007. For example, mortgage 
originators have an incentive to get a borrower to take out a larger 
loan than he or she needs, and at a higher interest rate than that for 
which the borrower would qualify, because the originator gets a higher 
commission for such loans.
  Comptroller of the Currency John Dugan recently described the 
corrosive impact of this system on underwriting standards. In a speech 
to the American Bankers Association October 9, 2007, Mr. Dugan said:

       When a bank makes a loan that it plans to hold, the 
     fundamental standard it uses to underwrite the loan is that 
     most basic of credit standards that . . . the underwriting 
     must be strong enough to create a reasonable expectation that 
     the loan will be repaid. But when a bank makes a loan that it 
     plans to sell, then the credit evaluation shifts in an 
     important way: the underwriting must be strong enough to 
     create a reasonable expectation that the loan can be sold or 
     put another way, the bank will underwrite to whatever 
     standard the market will bear.

  The vast majority of subprime loans were made to be sold, and, hence, 
their underwriting standards simply were not sufficient to ensure a 
reasonable prospect of repayment for too many Americans.
  While the focus of much of the news coverage has been on the impact 
of the crisis on financial institutions and markets, I ask my 
colleagues to keep in mind the affect this is having on individuals who 
are losing their homes, and on their neighbors, who are seeing their 
home equity erode as foreclosures in their neighborhoods increase.
  It is important to keep in mind that only about 10 percent of 
subprime mortgages in the past several years have been made to first 
time home buyers. This market has not been primarily about creating a 
new set of homeowners; a majority of subprime loans have been 
refinances. While maintaining access to subprime credit on fair terms 
is important, too much of the subprime market in the past several years 
has actually put the homes and home equity of American families at 
risk.
  The legislation seeks to set high standards for brokers, lenders, 
appraisers, servicers, and Wall Street and provide for strong remedies 
to restore accountability to the system. Specifically, the legislation 
will establish new protections for all borrowers including a 
prohibition on steering prime borrowers to subprime loans, which the 
Wall Street Journal recently found was widespread in the market. The 
bill establishes a fiduciary duty for mortgage brokers towards 
borrowers. It provides for a duty of good faith and fair dealing toward 
borrowers for all lenders.
  The bill will establish new protections for subprime borrowers and 
borrowers who get exotic mortgages. First and foremost, brokers and 
lenders will have to establish the borrowers' ability to repay the 
loan, including for interest-only and option ARMs. In addition, the 
bill prohibits prepayment penalties and YSPs on these loans, and 
requires that these loans provide a net tangible benefit to the 
borrower.
  The bill will tighten the definition of high cost loans and provide 
increased protections for these borrowers, including a prohibition of 
balloon payments, financing of points and fees, prepayment penalties 
and yield spread premiums, YSPs.
  The bill will provide strong remedies to make sure these standards 
are met. The bill puts more ``cops on the beat'' by allowing state 
attorneys general to enforce the provisions of the law, and it does not 
preempt State law. States should be allowed the flexibility to address 
new abuses as they arise.
  The bill will provide for limited liability for holders of a mortgage 
made in violation of law, whether it is the original lender or a 
subsequent investment trust. Unlike current law, which puts the burden 
on the borrower to find the party responsible for causing the harm, the 
legislation allows the borrower to go directly to the current mortgage 
holder for a cure.
  The bill will also prohibit lenders from influencing appraisers, 
limit the ``junk'' fees mortgage servicers can charge, and require them 
to credit payments promptly, require foreclosure prevention counseling 
or loss mitigation before a foreclosure can take place, and uuthorize 
the hiring of additional FBI agents to fight mortgage fraud.
  In the coming months, the housing crisis is going to get worse. We 
will need to continue to press lenders and servicers to provide real 
relief for homeowners threatened with foreclosure. FHA and the GSEs 
will have to play an expanded role. But as we deal with the cleaning up 
the current crisis, let us keep in mind the need to address the 
underlying problems that have created the crisis, and move to address 
those underlying causes by passing the ``Homeownership Protection and 
Preservation Act.''
  Finally, I want to acknowledge the work of a number of my colleagues 
on this issue. Senators Schumer, Brown, and Casey introduced a bill on 
this topic earlier this year, S. 1299, from which I took some important 
provisions. In addition, Senators Reed and Menendez both made important 
contributions to the deliberations leading up to the introduction of 
this legislation.
  Mr. President, I ask unanimous consent that the text of the bill and 
a detailed summary be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2452

       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 ``Home 
     Ownership Preservation and Protection Act of 2007''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Effective date and regulations.

                      TITLE I--HIGH-COST MORTGAGES

Sec. 101. Definitions relating to high-cost mortgages.
Sec. 102. Additional protections for HOEPA loans.

  TITLE II--PROTECTIONS APPLICABLE TO SUBPRIME AND CERTAIN OTHER LOANS

Sec. 201. Truth in Lending Act amendments.

           TITLE III--PROTECTIONS FOR ALL HOME LOAN BORROWERS

Sec. 301. Mortgage protections.

          TITLE IV--GOOD FAITH AND FAIR DEALING IN APPRAISALS

Sec. 401. Duties of appraisers.

      TITLE V--GOOD FAITH AND FAIR DEALING IN HOME LOAN SERVICING

Sec. 501. Duties of lenders and loan servicers.
Sec. 502. Real estate settlement procedures.
Sec. 503. Effective date.

              TITLE VI--FORECLOSURE PREVENTION COUNSELING

Sec. 601. Foreclosure prevention counseling.

                  TITLE VII--REMEDIES AND ENFORCEMENT

Sec. 701. Material disclosures and violations.
Sec. 702. Right of rescission.
Sec. 703. Civil liability.
Sec. 704. Liability for monetary damages.
Sec. 705. Remedy in lieu of rescission for certain violations.
Sec. 706. Prohibition on mandatory arbitration.
Sec. 707. Lender liability.

               TITLE VIII--OTHER BANKING AGENCY AUTHORITY

Sec. 801. Inclusion of all banking agencies in the regulatory authority 
              under the Federal Trade Commission Act with respect to 
              depository institutions.

                        TITLE IX--MISCELLANEOUS

Sec. 901. Authorizations.

     SEC. 2. DEFINITIONS.

       Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is 
     amended by adding at the end the following:
       ``(cc) Definitions Relating to Home Mortgage Loans.--

[[Page S15237]]

       ``(1) Home mortgage loan.--The term `home mortgage loan' 
     means a consumer credit transaction secured by a home, used 
     or intended to be used as a principal dwelling, regardless of 
     whether it is real or personal property, or whether the loan 
     is used to purchase the home.
       ``(2) Mortgage broker.--The term `mortgage broker' means a 
     person who, for compensation or in anticipation of 
     compensation, arranges or negotiates or attempts to arrange 
     or negotiate home mortgage loans or commitments for such 
     loans, refers applicants or prospective applicants to 
     creditors, or selects or offers to select creditors to whom 
     requests for credit may be made.
       ``(3) Mortgage originator.--The term `mortgage originator' 
     means any creditor or other person, including a mortgage 
     broker, who, for compensation or in anticipation of 
     compensation, engages either directly or indirectly in the 
     acceptance of applications for home mortgage loans, 
     solicitation of home mortgage loans on behalf of consumers, 
     negotiation of terms or conditions of home mortgage loans on 
     behalf of consumers or lenders, or negotiation of sales of 
     existing home mortgage loans to institutional or 
     noninstitutional lenders. It also includes any employee or 
     agent of such person.
       ``(4) Nontraditional mortgage loan.--The term 
     `nontraditional mortgage loan' means a home mortgage loan 
     that allows a consumer to defer payment of principal or 
     interest.
       ``(5) Subprime mortgage loan.--
       ``(A) In general.--The term `subprime mortgage loan' means 
     a home mortgage loan in which the annual percentage rate 
     exceeds the greater of the thresholds determined under 
     subparagraph (B) or (C), as applicable.
       ``(B) Treasury securities rate spread.--A home mortgage 
     loan is a subprime mortgage loan if the difference between 
     the annual percentage rate for the loan and the yield on 
     United States Treasury securities having comparable periods 
     of maturity is equal to or greater than--
       ``(i) 3 percentage points, if the loan is secured by a 
     first lien mortgage or deed of trust; or
       ``(ii) 5 percentage points, if the loan is secured by a 
     subordinate lien mortgage or deed of trust.
       ``(C) Conventional mortgage rate spread.--A home mortgage 
     loan is a subprime mortgage loan if the difference between 
     the annual percentage rate for the loan and the annual yield 
     on conventional mortgages, as published by the Board of 
     Governors of the Federal Reserve System in statistical 
     release H.15 (or any successor publication thereto) is either 
     equal to or greater than--
       ``(i) 1.75 percentage points, if the loan is secured by a 
     first lien mortgage or deed of trust; or
       ``(ii) 3.75 percentage points, if the loan is secured by a 
     subordinate lien mortgage or deed of trust.
       ``(D) Rule of construction.--For purposes of subparagraph 
     (B), the difference between the annual percentage rate of a 
     home mortgage loan and the yield on United States Treasury 
     securities having comparable periods of maturity shall be 
     determined using the same procedures and calculation methods 
     applicable to loans that are subject to the reporting 
     requirements of the Federal Home Mortgage Disclosure Act, 
     whether or not such loan is subject to or reportable under 
     the provisions of that Act.''.

     SEC. 3. EFFECTIVE DATE AND REGULATIONS.

       (a) Effective Date.--This Act and the amendments made by 
     this Act shall become effective 6 months after the date of 
     enactment of this Act, and shall apply to all transactions 
     consummated on or after that effective date, except as 
     otherwise specifically provided herein.
       (b) Regulations Required.--Not later than 6 months after 
     the date of enactment of this Act, the Board of Governors of 
     the Federal Reserve System shall issue in final form such 
     regulations as are necessary to carry out this Act and the 
     amendments made by this Act.

                      TITLE I--HIGH-COST MORTGAGES

     SEC. 101. 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, mean a consumer 
     credit transaction that is secured by the principal dwelling 
     of a consumer, other than a reverse mortgage transaction, 
     if--
       ``(i) in the case of a loan secured--

       ``(I) by a first mortgage on such dwelling, the annual 
     percentage rate at consummation of the transaction will 
     exceed by more than 8 percentage points the yield on United 
     States 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 such 
     dwelling, the annual percentage rate at consummation of the 
     transaction will exceed by more than 10 percentage points the 
     yield on United States 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) the total points and fees payable in connection with 
     the loan exceed--

       ``(I) in the case of a loan for $20,000 or more, 5 percent 
     of the total loan amount; or
       ``(II) in the case of a loan for less than $20,000, the 
     lesser of 8 percent of the total loan amount or $1,000.

       ``(B) Introductory rates taken into account.--For purposes 
     of subparagraph (A)(i), the annual percentage rate shall be 
     determined as--
       ``(i) in the case of a fixed-rate loan in which the rate of 
     interest 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 loan 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 by the terms of 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, 
     the interest charged on the loan at the maximum rate that may 
     be charged during the term of the loan.''.
       (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:
       ``(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 ``(1)(B)'' and inserting ``(1)(A)(ii)'';
       (B) by striking subparagraph (B) and inserting the 
     following:
       ``(B) all compensation paid directly or indirectly by a 
     consumer or creditor to a mortgage broker or from any source, 
     including a mortgage broker that originates a loan in the 
     name of the broker in a table funded transaction;'';
       (C) in subparagraph (C)(iii), by striking ``and'' at the 
     end;
       (D) by redesignating subparagraph (D) as subparagraph (G); 
     and
       (E) by inserting after subparagraph (C) the following:
       ``(D) premiums or other charges payable at or before 
     consummation of the loan 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) the maximum prepayment fees and penalties which may 
     be charged or collected under the terms of the loan 
     documents;
       ``(F) all prepayment fees or penalties that are incurred by 
     the customer, 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 loans.--
     Section 103(aa) of the Truth in Lending Act (15 U.S.C. 
     1602(aa)) is amended--
       (A) by redesignating paragraph (5) as paragraph (7); and
       (B) by inserting after paragraph (4) the following:
       ``(5) Calculation of points and fees for open-end loans.--
     In the case of a loan under an open-end credit plan, 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 loan 
     documents, plus the minimum additional fees that 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: ``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 funded 
     transaction involving such a mortgage, and 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(aa) of the Truth in Lending Act (15 
     U.S.C. 1602(aa)) is amended by inserting after paragraph (5), 
     as added by this Act, the following:
       ``(6) Bona fide discount points.--

[[Page S15238]]

       ``(A) In general.--For the purpose of determining the 
     amount of points and fees under this subsection--
       ``(i) not more than 2 bona fide discount points payable by 
     the consumer in connection with the mortgage shall be 
     excluded, but only if the interest rate from which the 
     interest rate on the mortgage 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; and
       ``(ii) unless 2 bona fide discount points have been 
     excluded under subparagraph (A), not more than 1 bona fide 
     discount point payable by the consumer in connection with the 
     mortgage shall be excluded, but only if the interest rate 
     from which the interest rate on the mortgage 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.
       ``(B) Definition.--For purposes of subparagraph (A), 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.
       ``(C) Exception for interest rate reductions inconsistent 
     with industry norms.--Subparagraph (A) shall not apply to 
     discount points used to purchase an interest rate reduction, 
     unless the amount of the interest rate reduction purchased is 
     reasonably consistent with established industry norms and 
     practices for secondary mortgage market transactions.''.

     SEC. 102. ADDITIONAL PROTECTIONS FOR HOEPA LOANS.

       (a) No Prepayment Penalties.--Section 129(c) of the Truth 
     in Lending Act (15 U.S.C. 1639(c)) is amended--
       (1) by striking paragraph (2); and
       (2) in paragraph (1)--
       (A) by striking ``(1) In general.--''; and
       (B) by redesignating subparagraphs (A) and (B) as 
     paragraphs (1) and (2), respectively, and moving the margins 
     2 ems to the left.
       (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 any earlier required scheduled payments, 
     except that this subsection shall not apply when the payment 
     schedule is adjusted to the seasonal or irregular income of 
     the consumer.''.
       (c) Other Prohibitions on High-Cost Mortgages.--Section 129 
     of the Truth in Lending Act (15 U.S.C. 1639) is amended by 
     adding at the end the following:
       ``(m) No Yield Spread Premiums.--No person may provide, and 
     no mortgage originator may receive, directly or indirectly, 
     any compensation for originating a home mortgage loan that is 
     more costly than that for which the consumer qualifies, or 
     that is based on, or varies with, the terms of any home 
     mortgage loan.
       ``(n) Acceleration of Debt.--No high-cost mortgage may 
     contain a provision which permits the creditor, in its sole 
     discretion, to accelerate the indebtedness, other than in any 
     case in which repayment of the loan has been accelerated by 
     default, pursuant to a due-on-sale provision, or for a breach 
     of a material provision of the loan documents unrelated to 
     the payment schedule.
       ``(o) Restriction on Financing Points and Fees.--No 
     creditor may, directly or indirectly, finance, in connection 
     with any high-cost mortgage--
       ``(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; or
       ``(2) any points or fees as defined in section 103(aa)(4).
       ``(p) Prohibition 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 the provisions 
     of this title.
       ``(q) 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 fee is bona fide and 
     reasonable.
       ``(r) Net Tangible Benefit.--In accordance with regulations 
     prescribed by the Board, no originator may make, provide, or 
     arrange a high-cost mortgage loan that involves a refinancing 
     of a prior existing home mortgage loan, unless the new loan 
     will provide a net tangible benefit to the consumer.''.

  TITLE II--PROTECTIONS APPLICABLE TO SUBPRIME AND CERTAIN OTHER LOANS

     SEC. 201. TRUTH IN LENDING ACT AMENDMENTS.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by inserting after section 129 the following new 
     section:

     ``SEC. 129A. PROTECTIONS FOR SUBPRIME AND NONTRADITIONAL HOME 
                   LOANS.

       ``(a) Assessment of Ability To Pay.--
       ``(1) In general.--
       ``(A) In general.--Before entering into or otherwise 
     facilitating a subprime or nontraditional mortgage loan, each 
     mortgage originator shall verify the reasonable ability of 
     the borrower to pay the principal and interest on the loan 
     and any real estate taxes and homeowner insurance fees and 
     premiums.
       ``(B) Considerations.--A determination under subparagraph 
     (A) shall include consideration of--
       ``(i) the income of the borrower;
       ``(ii) the credit history of the borrower;
       ``(iii) the current obligations and employment status of 
     the borrower;
       ``(iv) the debt-to-income ratio of the monthly gross income 
     of the borrower, inclusive of all scheduled or otherwise 
     significant debt payments and total monthly housing payments, 
     including taxes, property and private mortgage insurance, any 
     required homeowner or condominium fees, and any subordinate 
     mortgages, including those that will be made 
     contemporaneously to the same borrower;
       ``(v) the residual income of the borrower; and
       ``(vi) other available financial resources, other than the 
     equity of the borrower in the principal dwelling that secures 
     or would secure the loan.
       ``(2) Variable mortgage rates.--In the case of a subprime 
     or nontraditional mortgage loan, with respect to which the 
     applicable rate of interest may vary, for purposes of 
     paragraph (1), the ability to pay shall be determined based 
     on the monthly payment that could be due from the borrower, 
     using as assumptions--
       ``(A) the fully indexed interest rate;
       ``(B) a repayment schedule which achieves full amortization 
     over the life of the loan, assuming no default by the 
     borrower;
       ``(C) for products that permit negative amortization, the 
     initial loan amount plus any balance increase that may accrue 
     from the negative amortization provision;
       ``(D) that the loan is to be repaid in substantially equal 
     monthly amortizing payments for principal and interest over 
     that period of time which would be permitted after the 
     consumer has made lower payments, as permitted under the 
     terms of the loan, and which includes any additions to 
     principal that will result from such permitted lower 
     payments, with no balloon payment, unless the loan contract 
     requires a more rapid repayment schedule to be used in the 
     calculation; and
       ``(E) the reasonably foreseeable capacity of the borrower 
     to make payments, assuming market changes as to the contract 
     index rate over the period of the loan, using, to make such 
     assessment, a credible market rate determined according to 
     regulations issued by the Board, which regulations shall 
     require reasonable market expectations to be a factor.
       ``(3) Rebuttable presumption.--
       ``(A) In general.--For purposes of this subsection there is 
     a rebuttable presumption that a mortgage was made without 
     regard to repayment ability if, at the time at which the loan 
     was consummated, the total monthly debts of the borrower, 
     including total monthly housing payments, taxes, property, 
     and private mortgage insurance, any required homeowner or 
     condominium fees, and any subordinate mortgages, including 
     those that will be made contemporaneously to the same 
     borrower, exceed 45 percent of the monthly gross income of 
     the borrower.
       ``(B) Rebuttal.--To rebut the presumption of inability to 
     repay under subparagraph (A) the creditor shall, at minimum, 
     determine and consider the residual income of the borrower 
     after payment of current expenses and proposed home loan 
     payments, except that no presumption of ability to make the 
     scheduled payments to repay the obligation shall arise solely 
     from the fact that, at the time at which the loan is 
     consummated, the total monthly debts of the borrower 
     (including amounts owed under the loan) does not exceed 45 
     percent of the monthly gross income of the borrower.
       ``(b) Requirement of Tax and Insurance Escrows.--No 
     subprime or nontraditional mortgage loan may be arranged, 
     approved, or made without requiring escrow of tax and 
     insurance installments calculated in accordance with the 
     requirements of section 10 of the Real Estate Settlement 
     Procedures Act of 1974, and regulations promulgated pursuant 
     thereto, and mortgage insurance premiums, if any.
       ``(c) Prohibition on Prepayment Penalties.--No subprime or 
     nontraditional mortgage loan may contain a provision that 
     requires a consumer to pay a penalty for paying all or part 
     of the principal before the date on which it is due.
       ``(d) Prohibition on Yield-Spread Premiums.--No person may 
     provide, and no mortgage originator may receive, directly or 
     indirectly, any compensation for originating a subprime or 
     nontraditional mortgage loan that is more costly than that 
     for which the consumer qualifies, or that is based on, or 
     varies with, the terms (other than the amount of loan 
     principal) of any home mortgage loan.
       ``(e) Net Tangible Benefit.--

[[Page S15239]]

       ``(1) In general.--In accordance with regulations 
     prescribed by the Board, no originator may make, provide, or 
     arrange a subprime or nontraditional mortgage loan that 
     involves a refinancing of a prior existing home mortgage 
     loan, unless the new loan will provide a net tangible benefit 
     to the consumer.
       ``(2) Certain loans providing no net tangible benefit.--For 
     purposes of paragraph (1), a mortgage loan that involves 
     refinancing of a prior existing mortgage loan shall not be 
     considered to provide a net tangible benefit to the borrower 
     if the costs of the refinanced loan, including points, fees, 
     and other charges, exceed the amount of any newly advanced 
     principal, less the points, fees, and other charges, without 
     any corresponding changes in the terms of the refinanced loan 
     that are advantageous to the borrower.''.

           TITLE III--PROTECTIONS FOR ALL HOME LOAN BORROWERS

     SEC. 301. MORTGAGE PROTECTIONS.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by inserting after section 129A, as added by this 
     Act, the following new section:

     ``SEC. 129B. PROTECTIONS FOR ALL HOME LOANS.

       ``(a) Duties of All Mortgage Originators.--Each mortgage 
     originator shall, with respect to each home mortgage loan 
     and, in addition to requirements under other applicable 
     provisions of Federal or State law--
       ``(1) safeguard and account for any money handled for the 
     borrower;
       ``(2) follow reasonable and lawful instructions from the 
     borrower;
       ``(3) act with reasonable skill, care, and diligence;
       ``(4) act in good faith and with fair dealing in any 
     transaction, practice, or course of business in connection 
     with the originating of any home mortgage loan; and
       ``(5) make reasonable efforts to secure a home mortgage 
     loan that is appropriately advantageous to the borrower, 
     considering all of the circumstances, including the product 
     type, rates, charges, and repayment terms of the loan.
       ``(b) Duties of Mortgage Brokers.--Each mortgage broker 
     shall with respect to each home mortgage loan be deemed to 
     have a fiduciary relationship with the borrower, and, in 
     addition to duties imposed by other applicable provisions of 
     Federal or State law, shall--
       ``(1) act in the best interest of the borrower and in the 
     utmost good faith toward the borrower, and refrain from 
     compromising the rights or interests of the borrower in favor 
     of the rights or interests of another, including a right or 
     interest of the mortgage broker; and
       ``(2) clearly disclose to the borrower, not later than 3 
     days after receipt of the loan application, all material 
     information that might reasonably affect the rights, 
     interests, or ability of the borrower to receive the 
     borrower's intended benefit from the home mortgage loan, 
     including total compensation that the broker would receive 
     from any of the loan options that the broker presents to the 
     borrower.
       ``(c) Prohibition on Steering.--
       ``(1) In general.--In connection with a home mortgage loan, 
     a mortgage originator may not steer, counsel, or direct a 
     consumer to a loan with rates, charges, principal amount, or 
     prepayment terms that are more costly than that for which the 
     consumer qualifies.
       ``(2) Duties to consumers.--If unable to suggest, offer, or 
     recommend to a consumer a home mortgage loan that is not more 
     expensive than that for which the consumer qualifies, a 
     mortgage originator shall disclose to the consumer--
       ``(A) that the creditor does not offer a home mortgage loan 
     that is not more expensive than that for which the consumer 
     qualifies, but that other creditors may offer such a loan; 
     and
       ``(B) the reasons that the products and services offered by 
     the mortgage originator are not available to or reasonably 
     advantageous for the consumer.
       ``(3) Prohibited conduct.--In connection with a home 
     mortgage loan, a mortgage originator may not--
       ``(A) mischaracterize the credit history of a consumer or 
     the home loans available to a consumer;
       ``(B) mischaracterize or suborn mischaracterization of the 
     appraised value of the property securing the extension of 
     credit; and
       ``(C) if unable to suggest, offer, or recommend to a 
     consumer a loan that is not more expensive than that for 
     which the consumer qualifies, discourage a consumer from 
     seeking a home mortgage loan from another creditor or with 
     another mortgage originator.
       ``(d) Required Documentation.--
       ``(1) In general.--With respect to any home mortgage loan, 
     a mortgage originator shall base its determination of the 
     ability of a consumer to pay on--
       ``(A) documentation of all sources of income verified by 
     tax returns, payroll receipts, bank records, or the best and 
     most appropriate form of documentation available, subject to 
     such requirements and exceptions as determined appropriate by 
     the Board; and
       ``(B) the debt-to-income ratio and the residual income of 
     the consumer after payment of current expenses and proposed 
     home loan payments.
       ``(2) Limitation.--A statement provided by a consumer of 
     the income and financial resources of the consumer, without 
     other documentation referred to in paragraph (1), is not 
     sufficient verification for purposes of assessing the ability 
     of the consumer to pay.
       ``(e) Limitations on Yield-Spread Premiums.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     person may provide, and no mortgage originator may receive, 
     directly or indirectly, any compensation for originating a 
     home mortgage loan that is more costly than that for which 
     the consumer qualifies, or that is based on, or varies with, 
     the terms of any home mortgage loan (other than the amount of 
     loan principal).
       ``(2) Limited exception for no-cost loans.--Notwithstanding 
     paragraph (1), in a home mortgage loan, other than a high-
     cost mortgage loan, a subprime mortgage loan, or a 
     nontraditional mortgage loan, a mortgage broker may receive 
     compensation in the form of an increased rate, but only if--
       ``(A) the mortgage broker receives no other compensation, 
     however denominated, directly or indirectly, from the 
     consumer, creditor, or other mortgage originator;
       ``(B) the loan does not include discount points, 
     origination points, or rate reduction points, however 
     denominated, or any payment reduction fee, however 
     denominated;
       ``(C) the loan does not include a prepayment penalty; and
       ``(D) there are no other closing costs associated with the 
     loan, except for fees to government officials or amounts to 
     fund escrow accounts for taxes and insurance.
       ``(f) 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 
     mortgage loan that refinances all or any portion of such 
     existing loan or debt.
       ``(g) Effect of Foreclosure on Preexisting Lease.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, in the case of any foreclosure with respect to a home 
     mortgage loan entered into after the date of enactment of 
     this Act, any successor in interest in such property pursuant 
     to the foreclosure shall assume such interest subject to--
       ``(A) the provision, by the successor in interest, of a 
     notice to vacate to any bona fide tenant at least 90 days 
     before the effective date of the notice to vacate; and
       ``(B) the rights of any bona fide tenant, as of the date of 
     such notice of foreclosure--
       ``(i) 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; or
       ``(ii) without a lease or with a lease terminable at will 
     under State law, subject to the receipt by the tenant of the 
     90-day notice under subparagraph (A).
       ``(2) 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.''.

          TITLE IV--GOOD FAITH AND FAIR DEALING IN APPRAISALS

     SEC. 401. DUTIES OF APPRAISERS.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by inserting after section 129B, as added by this 
     Act, the following new section:

     ``SEC. 129C. DUTIES OF APPRAISERS.

       ``(a) Definitions.--In this section, the following 
     definitions shall apply:
       ``(1) Appraiser.--The term `appraiser' means a person who--
       ``(A) is certified or licensed by the State in which the 
     property to be appraised is located; and
       ``(B) performs each appraisal in conformity with the 
     Uniform Standards of Professional Appraisal Practice and 
     title XI of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989, and the regulations prescribed under 
     such title, as in effect on the date of the appraisal.
       ``(2) Qualifying bond.--The term `qualifying bond' means a 
     bond equal to not less than 1 percent of the aggregate value 
     of all homes appraised by an appraiser of real property in 
     connection with a home mortgage loan in the calendar year 
     preceding the date of the transaction, with respect to 
     which--
       ``(A) the bond shall inure first to the benefit of the 
     homeowners who have claims against the appraiser under this 
     title or any other applicable provision of law, and second to 
     the benefit of originating creditors that complied with their 
     duty of good faith and fair dealing in accordance with this 
     title; and
       ``(B) any assignee or subsequent transferee or trustee 
     shall be a beneficiary of the bond, only if the originating 
     creditor qualified for such treatment.
       ``(b) Standard of Care.--Each appraiser shall, in addition 
     to the duties imposed by otherwise applicable provisions of 
     Federal or State law, with respect to each home mortgage loan 
     in which the appraiser is involved--
       ``(1) act with reasonable skill, care, diligence, and in 
     accordance with the highest standards; and
       ``(2) act in good faith and with fair dealing in any 
     transaction, practice, or course of business associated with 
     the transaction.
       ``(c) Duties of Appraisers.--
       ``(1) Objective appraisals.--All appraisals carried out by 
     an appraiser shall be accurate

[[Page S15240]]

     and reasonable. An appraiser shall have no direct or indirect 
     interest in the property to be appraised, the real estate 
     transaction prompting such appraisal, or the home loan 
     involved in such transaction.
       ``(2) Bond requirement.--No appraiser may charge, seek, or 
     receive compensation for an appraisal unless the appraisal is 
     covered by a qualifying bond.
       ``(3) No target values.--No lender or loan servicer may, 
     with respect to a home mortgage loan, in any way--
       ``(A) seek to influence an appraiser or otherwise to 
     encourage a targeted value in order to facilitate the making 
     or pricing of the home mortgage loan; or
       ``(B) select an appraiser on the basis of an expectation 
     that such appraiser would provide a targeted value in order 
     to facilitate the making or pricing of the home mortgage 
     loan.
       ``(4) Prohibition on certain disclosures.--Neither the 
     appraisal order nor any other communication in any form by an 
     appraiser may include the requested loan amount or any 
     estimate of value for the property to serve as collateral, 
     either express or implied.
       ``(d) Appraisal Report.--In any case in which an appraisal 
     is performed in connection with a home mortgage loan, the 
     lender or loan servicer shall provide a copy of the appraisal 
     report to an applicant for a home mortgage loan, whether 
     credit is granted, denied, or the application was withdrawn. 
     The first copy of this report shall be provided to the 
     applicant without charge.
       ``(e) Remedies.--In addition to other remedies, in any 
     action for a violation of this section, the following shall 
     apply:
       ``(1) Required modification.--If a retrospective appraisal 
     determines that the appraisal upon which the home loan was 
     based exceeded the true market value by 10 percent or more, 
     the holder of the loan shall modify the loan and recast the 
     loan ab initio to a loan amount that is at the same loan-to-
     value which the original loan purported to be. All payments 
     made prior to the recasting of such loan shall be applied to 
     the reduced loan amount.
       ``(2) Agency ability to modify true value tolerance 
     level.--If a consumer has a right of action or a defense 
     against the holder of the home loan when the appraisal upon 
     which the home loan was based exceeds the true market value 
     of the home by 10 percent or more, the regulatory agency 
     which oversees appraisers in the jurisdiction in which the 
     collateral is located has the authority to issue rules which 
     permit the 10 percent tolerance level established in this 
     paragraph to deviate by no more than 2 percent where local 
     conditions warrant.
       ``(3) Collection from appraiser's qualifying bond.--A 
     consumer awarded remedies pursuant to this section shall have 
     the right to collect such remedies from the appraiser's 
     qualifying bond.
       ``(f) Civil Liability.--
       ``(1) In general.--Any appraiser who fails to comply with 
     any requirement of this section with respect to a borrower 
     designated in a home mortgage loan contract, is liable to 
     such borrower in an amount equal to the sum of--
       ``(A) any actual damages sustained by such borrower as a 
     result of the failure;
       ``(B) an amount not less than $5,000; or
       ``(C) in the case of any successful action to enforce the 
     foregoing liability, the costs of the action, together with a 
     reasonable attorney's fee as determined by the court.
       ``(2) Jurisdiction.--Any action by a borrower for a failure 
     to comply with the requirements of this section may be 
     brought in any United States district court, or in any other 
     court of competent jurisdiction, not later than 3 years from 
     the date of the occurrence of such violation. This subsection 
     does not bar a person from asserting a violation of this 
     section in an action to collect the debt owed on a home 
     mortgage loan, or foreclose upon the home securing a home 
     mortgage loan, or to stop a foreclosure upon that home, which 
     was brought more than 3 years after the date of the 
     occurrence of the violation as a matter of defense by 
     recoupment or set-off in such action. An action under this 
     section does not create an independent basis for removal of 
     an action to a United States district court.
       ``(3) State attorney general enforcement.--An action to 
     enforce a violation of this section may also be brought by 
     the appropriate State attorney general in any appropriate 
     United States district court, or any other court of competent 
     jurisdiction, not later than 3 years after the date on which 
     the violation occurs. An action under this section does not 
     create an independent basis for removal of an action to a 
     United States district court.''.

      TITLE V--GOOD FAITH AND FAIR DEALING IN HOME LOAN SERVICING

     SEC. 501. DUTIES OF LENDERS AND LOAN SERVICERS.

       The Truth in Lending Act (15 U.S.C. 1601 et seq.) is 
     amended by inserting after section 129C, as added by this 
     Act, the following new section:

     ``SEC. 129D. DUTIES OF LENDERS AND LOAN SERVICERS.

       ``(a) Standard of Care.--
       ``(1) Agency relationship.--In the case of any home loan 
     serviced by a loan servicer on behalf of a lender, the loan 
     servicer shall be deemed an agent of that lender, and shall 
     be subject to all requirements of agents otherwise applicable 
     under Federal or State law.
       ``(2) Fair dealing.--Each lender and loan servicer shall, 
     in addition to the duties imposed by otherwise applicable 
     provisions of Federal or State law, with respect to each home 
     mortgage loan, including any home mortgage loan in default or 
     in which the homeowner has filed for bankruptcy--
       ``(A) act with reasonable skill, care, diligence, and in 
     accordance with the highest standards; and
       ``(B) act in good faith and with fair dealing in any 
     transaction, practice, or course of business associated with 
     the home mortgage loan.
       ``(b) Rules for Assessment of Fee.--
       ``(1) In general.--No home mortgage loan contract may 
     require, nor may any lender or loan servicer assess or 
     receive, any fees or charges other than interest, late fees 
     as specifically authorized in this section, or fees assessed 
     for nonsufficient funds, and charges allowed pursuant to 
     subsection (i)(1)(B), until the home mortgage loan is the 
     subject of a foreclosure proceeding and the debt on such loan 
     has been accelerated.
       ``(2) Fee limitations.--Any permissible fee or charge 
     described under paragraph (1) shall be--
       ``(A) reasonable;
       ``(B) for services actually rendered; and
       ``(C) specifically authorized by the terms of the home 
     mortgage loan contract and State law.
       ``(3) Assessment and disclosure.--
       ``(A) In general.--Any permissible fee or charge described 
     under paragraph (1) shall be--
       ``(i) assessed not later than 30 days after the date on 
     which the fee was accrued; and
       ``(ii) explained clearly and conspicuously in the next 
     monthly accounting statement provided to the borrower 
     designated in the home mortgage loan contract.
       ``(B) Failure to comply.--Failure by a lender or loan 
     servicer to comply with the requirements set forth under 
     subparagraph (A) shall result in the waiver of the fee.
       ``(4) Required statements.--Each month a lender or loan 
     servicer shall provide to each borrower designated in a home 
     mortgage loan contract entered into by such lender or loan 
     servicer a periodic statement that clearly and in plain 
     english explains--
       ``(A) the application of the prior month's payment by the 
     borrower, including the allocation of the payment to 
     interest, principal, escrow, and fees;
       ``(B) the status of the escrow account held on behalf of 
     the borrower, including the payments into and from the escrow 
     account; and
       ``(C) the assessment of fees accruing in the previous 
     month, including the reason that such fee accrued and the 
     date such fee accrued.
       ``(c) Maximum Allowable Late Fees Charged After Loan 
     Closing.--
       ``(1) In general.--No lender or loan servicer may impose a 
     charge or fee for late payment of any amount due on a home 
     mortgage loan--
       ``(A) unless the home mortgage loan contract specifically 
     authorizes the charge or fee;
       ``(B) in an amount in excess of 5 percent of the amount of 
     the payment past due;
       ``(C) before the end of the 15-day period after the date 
     the payment is due, or in the case of a home mortgage loan on 
     which interest on each installment is paid in advance, before 
     the end of the 30-day period after the date the payment is 
     due; or
       ``(D) more than once with respect to a single late payment.
       ``(2) Rule of construction.--For purposes of this 
     subsection, payments on any amount due on a home mortgage 
     loan shall be applied first to current installments, then to 
     delinquent payments, and then to delinquency charges.
       ``(3) Coordination with subsequent late fees.--If a home 
     loan mortgage 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 a late fee or 
     delinquency charge assessed on an earlier payment, no late 
     fee or delinquency charge may be imposed on such payment.
       ``(d) Prompt Crediting of Payments Required.--Each home 
     loan mortgage payment amount received by a lender or a loan 
     servicer shall be accepted and credited on the date received. 
     Such payments shall be credited to interest and principal due 
     on the home mortgage loan before crediting the payment to 
     taxes, insurance, or fees.
       ``(e) Collateral Protection Insurance.--
       ``(1) In general.--A lender or loan servicer may not charge 
     any borrower designated in a home mortgage loan contract for 
     collateral protection insurance, unless--
       ``(A) the home mortgage loan contract requires the borrower 
     to maintain insurance on the collateral and clearly 
     delineates--
       ``(i) the terms and conditions for imposition of and 
     payment of the collateral;
       ``(ii) that such insurance may not protect the interests of 
     the borrower and may be substantially more expensive than 
     insurance that the borrower could purchase independently; and
       ``(iii) that the borrower will be charged for the cost of 
     the insurance;
       ``(B) the lender or loan servicer makes every effort to 
     avoid the necessity of requiring collateral protection 
     insurance, including at least written notice and telephone 
     communications with the borrower and the insurance agent of 
     record regarding the--
       ``(i) obligation of the borrower to maintain property 
     insurance; and
       ``(ii) additional cost to the borrower on a monthly basis 
     if collateral protection insurance is required;

[[Page S15241]]

       ``(C) clear notice is received by the borrower at least 15 
     days in advance of the charge for collateral protection 
     insurance, including--
       ``(i) notice that the--

       ``(I) placement of the insurance is imminent;
       ``(II) costs of the insurance will be paid by the borrower; 
     and
       ``(III) the insurance will not protect the borrower from 
     loss;

       ``(ii) notice of the amount of the new monthly payment; and
       ``(iii) instructions on the steps that the borrower may 
     take to avoid such charge; and
       ``(D) charges for such insurance are bona fide and 
     reasonable.
       ``(2) Prohibition.--In no event is collateral protection 
     insurance permitted when a lender or loan servicer is 
     collecting fees in escrow from the borrower for the payment 
     of property taxes and insurance, unless the borrower has had 
     his or her insurance cancelled for some reason other than 
     non-payment of the premium.
       ``(3) Notice of charge.--After a charge for the purchase of 
     collateral protection insurance has been issued by a lender 
     or loan servicer, notice of the new monthly payment 
     requirements shall be delivered to the borrower at least 15 
     days prior to the first increased payment--
       ``(A) explaining the imposition of the new charges for such 
     insurance; and
       ``(B) providing information on what the borrower can do to 
     obviate the need for such insurance.
       ``(f) Obligations of Lender or Loan Servicer to Handle 
     Escrow Funds.--A lender or loan servicer shall make all 
     payments from the escrow account held for the borrower 
     designated in a home mortgage loan contract for insurance, 
     taxes, and other charges with respect to the property secured 
     by such contract in a timely manner to ensure that no late 
     penalties are assessed and that no other negative 
     consequences result, regardless of whether the loan is 
     delinquent, unless--
       ``(1) there are not sufficient funds in the account of such 
     borrower to cover the payments; and
       ``(2) the lender or loan servicer has a reasonable basis to 
     believe that recovery of the funds will not be possible.
       ``(g) Information Exchange and Dispute Requirements.--
       ``(1) Mandatory response to borrowers' requests.--
       ``(A) In general.--A lender or loan servicer shall respond 
     to any request for information about a home mortgage loan or 
     for resolution of any dispute involving a home mortgage loan 
     submitted by a borrower designated in a home mortgage loan 
     contract entered into by such lender or loan servicer.
       ``(B) Timing or response.--A response required under 
     subparagraph shall occur--
       ``(i) without cost to the requesting borrower; and
       ``(ii) not later than 10 days after the receipt of such 
     request.
       ``(C) Scope of obligation.--The scope of the response 
     requirement set forth in subparagraph (A), includes--
       ``(i) providing--

       ``(I) the status of the borrowers account, including 
     whether the account is current, or if not, the date the 
     account went into default;
       ``(II) the current balance due on the home mortgage loan of 
     the borrower, including the principal due, an explanation of 
     the escrow balance, and whether there are any escrow 
     deficiencies or shortages;
       ``(III) a full payment history of the borrower, which shows 
     in a clear and easily understandable manner all of the 
     activity on the home mortgage loan of the borrower since the 
     origination of the loan, including the escrow account and the 
     application of payments; and
       ``(IV) a copy of the original note and security instrument;

       ``(ii) correcting errors relating to the allocation of 
     payments made by the borrower, final balances for purposes of 
     paying off the loan or avoiding foreclosure, and other lender 
     or loan servicer obligations;
       ``(iii) providing the identity, address, and other relevant 
     information about the owner or assignee of the home mortgage 
     loan; and
       ``(iv) providing a telephone number on each regular account 
     statement that gives the borrower access to a live person 
     with the information and authority to answer questions and 
     resolve issues.
       ``(2) No sharing of information.--During the 90-day period 
     beginning on the date of the receipt of a request from a 
     borrower under paragraph (1), a lender or loan servicer may 
     not provide information to any reporting agency regarding any 
     overdue payment, or other default on the home mortgage loan, 
     by such borrower to any consumer reporting agency (as such 
     term is defined in section 603(f) of the Fair Credit 
     Reporting Act).
       ``(3) Maintenance of records.--A lender or loan servicer 
     shall maintain written and electronic records of the handling 
     of any oral request made by a borrower under this subsection.
       ``(h) Mandatory Loss Mitigation.--
       ``(1) In general.--A lender or loan servicer shall not 
     initiate a foreclosure of a home mortgage loan unless that 
     lender or loan servicer has made a good faith review of the 
     financial situation of the borrower designated in such home 
     mortgage loan contract and has offered, whenever feasible, a 
     repayment plan, forbearance, loan modification, or other 
     option to assist the borrower in bringing his or her 
     delinquent account into arrears. In the event that such 
     options are not feasible, the lender or loan servicer shall 
     refer the borrower to a housing counseling agency approved by 
     the Secretary of Housing and Urban Development under section 
     106(d) of the Housing and Urban Development Act of 1968 (12 
     U.S.C. 1701x(d)).
       ``(2) Reports on loss mitigation activities.--
       ``(A) In general.--Each servicer shall report to the Board 
     once every 3 months on the extent and results of its loss 
     mitigation activities.
       ``(B) Form and content.--The Board shall prescribe, by 
     regulation, the form and content of the reports required by 
     this paragraph which shall include--
       ``(i) categories of measures that result in modifications 
     of loan provisions, including payment schedules, loan 
     principle, and loan interest;
       ``(ii) forebearance agreements;
       ``(iii) acceptance of a reduced amount in satisfaction of 
     the loan;
       ``(iv) assumption of the loan;
       ``(v) pre-foreclosure sales; and
       ``(vi) deeds in lieu of foreclosure, and foreclosures.
       ``(C) Basis.--Data required by this paragraph shall be 
     reported on a servicer and lender basis.
       ``(D) Public availability.--The Board shall make data 
     received under this paragraph publicly available, and shall 
     annually report to Congress on servicer loss mitigation 
     activities.
       ``(3) Failure to comply.--Failure by a lender or loan 
     servicer to comply with the requirements under paragraph (1) 
     shall constitute a defense to any foreclosure.
       ``(i) Payoff Statements.--
       ``(1) Prohibition on fees.--
       ``(A) In general.--No lender or loan servicer (or any third 
     party acting on behalf of such lender or loan servicer) may 
     charge a fee for transmitting to any borrower the amount due 
     to pay off the outstanding balance on the home mortgage loan 
     of such borrower.
       ``(B) Exception.--After a lender or loan servicer (or any 
     third party acting on behalf of such lender or loan servicer) 
     has provided the information described in subparagraph (A) 
     without charge on 4 occasions during a calendar year, the 
     lender or loan servicer (or any third party acting on behalf 
     of such lender or loan servicer) may thereafter charge a 
     reasonable fee for providing such information during the 
     remainder of the calendar year.
       ``(2) Timing.--The information described in subparagraph 
     (A) shall be provided to the borrower within a reasonable 
     period of time but in any event not more than 5 business days 
     after the receipt of the request by the lender or loan 
     servicer.
       ``(j) Civil Liability.--
       ``(1) In general.--Any lender or loan servicer who fails to 
     comply with any requirement of this section with respect to a 
     borrower designated in a home mortgage loan contract, is 
     liable to such borrower in an amount equal to the sum of--
       ``(A) any actual damages sustained by such borrower as a 
     result of the failure;
       ``(B) an amount not less than $5,000; or
       ``(C) in the case of any successful action to enforce the 
     foregoing liability the costs of the action, together with a 
     reasonable attorney's fee as determined by the court.
       ``(2) Jurisdiction.--Any action by a borrower for a failure 
     to comply with the requirements of this section may be 
     brought in any United States district court, or in any other 
     court of competent jurisdiction, not later than 3 years from 
     the date of the occurrence of such violation. This subsection 
     does not bar a person from asserting a violation of this 
     section in an action by a lender or loan servicer to collect 
     the debt owed on a home mortgage loan, or foreclose upon the 
     home securing a home mortgage loan, or to stop a foreclosure 
     upon that home, which was brought more than 3 years after the 
     date of the occurrence of the violation as a matter of 
     defense by recoupment or set-off in such action. An action 
     under this section does not create an independent basis for 
     removal of an action to a United States district court.
       ``(3) State attorney general enforcement.--An action to 
     enforce a violation of this section may also be brought by 
     the appropriate State attorney general in any appropriate 
     United States district court, or any other court of competent 
     jurisdiction, not later than 3 years after the date on which 
     the violation occurs. An action under this section does not 
     create an independent basis for removal of an action to a 
     United States district court.
       ``(k) Definitions.--In this section, the following 
     definitions shall apply:
       ``(1) Lender.--The term `lender' has the same meaning as in 
     section 3500.2 of title 24, Code of Federal Regulations, as 
     in effect on the date of enactment of this section.
       ``(2) Loan servicer.--The term `loan servicer' has the same 
     meaning as the term `servicer' in section 6(i)(2) of the Real 
     Estate Settlement Procedures Act of 1974 (12 U.S.C. 
     2605(i)(2)).''.

     SEC. 502. REAL ESTATE SETTLEMENT PROCEDURES.

       Section 6(b)(3) of the Real Estate Settlement Procedures 
     Act of 1974 (12 U.S.C. 2605(b)(3)) is amended by adding at 
     the end the following new subparagraph:
       ``(H) A statement explaining--

[[Page S15242]]

       ``(i) whether the account of the borrower is current, or if 
     the account is not current, an explanation of the reason and 
     date the account went into default;
       ``(ii) the current balance due on the loan, including the 
     principal due, an explanation of the escrow balance, and 
     whether there are any escrow deficiencies or shortages; and
       ``(iii) a full payment history of the borrower which shows 
     in a clear and easily understandable manner, all of the 
     activity on the home mortgage loan since the origination of 
     the loan or the prior transfer of servicing, including the 
     escrow account, and the application of payments.''.

     SEC. 503. EFFECTIVE DATE.

       This title and the amendments made by this title shall 
     become effective 90 days after the date of enactment of this 
     Act, and shall apply to loan servicers and loan servicing 
     activities on and after that effective date.

              TITLE VI--FORECLOSURE PREVENTION COUNSELING

     SEC. 601. FORECLOSURE PREVENTION COUNSELING.

       Section 106(d)(6) of the Housing and Urban Development Act 
     of 1968 (12 U.S.C. 1701x(d)(6)) is amended to read as 
     follows:
       ``(6) Foreclosure prevention counseling.--
       ``(A) Notification at time of settlement of availability of 
     counseling upon delinquency.--
       ``(i) In general.--At the time of settlement of any real 
     estate transaction involving a qualified mortgage, and 
     together with the final signed loan documents, a lender or 
     loan servicer shall provide to each eligible homeowner a 
     plain language statement in conspicuous 16-point type or 
     larger which shall include the following:

       ``(I) Counseling statement.--A counseling statement that 
     reads as follows:

     `If you are more than 30 days late on your mortgage payments, 
     your lender or loan servicer shall notify you of housing 
     counseling agencies approved by the Secretary of Housing and 
     Urban Development that may be able to assist you. Before you 
     miss another mortgage payment, you are strongly encouraged to 
     contact your lender or loan servicer or 1 of these agencies 
     for assistance. If you are more than 60 days late on your 
     mortgage payments, your lender or loan servicer shall send 
     you a second notification containing this information. In 
     addition, if you are more than 60 days late on your mortgage 
     payment, your lender or loan servicer shall notify an 
     approved housing counseling agency so that such agency can 
     contact you regarding any assistance it may be able to 
     provide.
     `You can also choose a housing counseling agency from the 
     list provided with this statement to assist you. By calling 1 
     of these approved housing counseling agencies and signing an 
     authorization form, your agency of choice will notify your 
     lender or loan servicer of your decision.'.

       ``(II) Counseling agency listing.--A listing of at least 5 
     national, State and local housing counseling agencies 
     approved by the Secretary. It is the responsibility of the 
     lender or loan servicer to ensure that--

       ``(aa) if fewer than 5 approved housing counseling agencies 
     serve the area where the eligible homeowner is located, all 
     available housing counseling agencies in that area shall be 
     listed; and
       ``(bb) the list shall include options of housing counseling 
     agencies that provide in-person counseling, as well as 
     telephone counseling.
       ``(ii) Notice.--Any notice required to be sent pursuant to 
     this subparagraph shall be sent by first class mail to the 
     last known address of the eligible homeowner and if 
     different, to the residence which is the subject of the 
     mortgage. The notice shall also be sent by registered or 
     certified mail.
       ``(B) Notification of availability of counseling upon 
     delinquency after 60 days.--
       ``(i) In general.--Before a lender or loan servicer 
     accelerates the maturity of a mortgage obligation, commences 
     legal action, including mortgage foreclosure to recover under 
     the obligation, or takes possession of a security of the 
     mortgage debtor for the mortgage obligation, the lender or 
     loan servicer is required to give notice to an eligible 
     homeowner in conspicuous 16-point type or larger which shall 
     include the following:

       ``(I) Housing counseling information in notice foreclosure 
     statement.--A foreclosure notice that includes the following 
     statement (blank lines to be filled in by the lender or loan 
     servicer, as appropriate):

     `This is an official notice that the mortgage on your home is 
     in default, and the lender intends to foreclose in ___ days. 
     The name, address, and phone number of housing counseling 
     agencies approved by the Secretary of Housing and Urban 
     Development serving your county are listed at the end of this 
     notice.
     `In addition, your lender or loan servicer shall notify such 
     an approved housing counseling agency of your default so that 
     such agency can contact you regarding any assistance it may 
     be able to provide. You have the right to request that your 
     lender or loan servicer not share your information with a 
     housing counseling agency.
     `You can also choose an approved housing counseling agency 
     from the list provided with this notice to assist you. By 
     calling one of these approved housing counseling agencies and 
     signing an authorization form, your agency of choice will 
     notify your lender or loan servicer of your decision.'.

       ``(II) Counseling agency listing.--A listing of at least 5 
     State and local housing counseling agencies approved by the 
     Secretary. It is the responsibility of the lender or loan 
     servicer to ensure that--

       ``(aa) if fewer than 5 approved housing counseling agencies 
     serve the area where the eligible homeowner is located, all 
     available housing counseling agencies in that area shall be 
     listed; and
       ``(bb) the list shall include options of housing counseling 
     agencies that provide in-person counseling, as well as 
     telephone counseling.
       ``(ii) Notice.--Any notice required to be sent pursuant to 
     this subparagraph shall be sent by first class mail to the 
     last known address of the eligible homeowner and if 
     different, to the residence which is the subject of the 
     mortgage. The notice shall also be sent by registered or 
     certified mail
       ``(iii) Timing.--Any notice required to be sent pursuant to 
     this subparagraph shall be sent at such time as the eligible 
     homeowner is at least 60 days contractually delinquent in his 
     or her mortgage payments or is in violation of other 
     provisions of the mortgage.
       ``(iv) Inclusion in all foreclosure mailings.--The 
     foreclosure notice and counseling agency listing required 
     under subclauses (I) and (II) of clause (i) shall be included 
     with all foreclosure mailings sent to an eligible homeowner.
       ``(C) No foreclosure if application for foreclosure 
     prevention services.--A lender or loan servicer shall not 
     initiate or continue a foreclosure--
       ``(i) upon receipt of a written confirmation that an 
     eligible homeowner has engaged a housing counseling agency 
     approved by the Secretary for the purposes of receiving 
     foreclosure prevention services and assistance; and
       ``(ii) for the 45-day period beginning on the date of 
     receipt of such written confirmation.
       ``(D) Duties.--
       ``(i) Duty of lender or servicer to forward information.--

       ``(I) In general.--Each lender or loan servicer shall 
     forward the contact information of each eligible homeowner 
     who has borrowed amounts from such lender or loan servicer 
     for a qualified mortgage to a housing counseling agency 
     approved by the Secretary in the event the mortgage payment 
     of that homeowner is or becomes more than 60 days late so 
     that the housing counseling agency can attempt to reach the 
     homeowner.
       ``(II) Pre-existing relationship.--In the case that an 
     eligible homeowner has a pre-existing relationship with a 
     housing counseling agency approved by the Secretary, or a 
     preference for one agency over another, the homeowner may 
     indicate as such--

       ``(aa) at the time of settlement of the real estate 
     transaction involving a qualified mortgage issued to that 
     homeowner;
       ``(bb) by providing written correspondence to the lender or 
     loan servicer for such qualified mortgage stating which 
     housing counseling agency the homeowner would like to work 
     with in case the homeowner should become delinquent in his or 
     her mortgage payments; or
       ``(cc) by signing an authorization form at the office of 
     such housing counseling agency of choice, which form shall 
     then be sent to the lender or loan servicer.

       ``(III) Rules of construction.--In order to carry out the 
     provisions of this paragraph, lenders and loan servicers may 
     form relationships with housing counseling agencies approved 
     by the Secretary to provide services to eligible homeowners. 
     Notwithstanding the previous sentence, exclusive 
     relationships between any such parties are strictly 
     prohibited.

       ``(ii) Agency representation of homeowner.--When a housing 
     counseling agency provides a lender or loan servicer with a 
     signed authorization form to represent an eligible homeowner, 
     the lender or servicer shall respond to requests from that 
     agency for information within 3 days, and to any workout 
     proposals of that agency within 7 days. A lender or loan 
     servicer may not refuse to work with a housing counselor from 
     a housing counseling agency approved by the Secretary, if a 
     signed authorization form an eligible homeowner has been 
     received by that lender or loan servicer (faxed, scanned, and 
     other electronically reproduced authorizations of such 
     authorization form shall also be acceptable).
       ``(iii) Required disclosures to homeowner.--Each eligible 
     homeowner shall be informed at the time of settlement of the 
     real estate transaction involving a qualified mortgage issued 
     to that homeowner that under this paragraph a housing 
     counseling agency may provide easier access to assistance in 
     case the homeowner becomes delinquent on his or her mortgage 
     payments and that no information that would make it possible 
     to identify the homeowner will be given to any other entity 
     for any reason without the prior approval of the homeowner.
       ``(iv) Required resolutions.--A lender or loan servicer 
     shall be required to consider all loss mitigation resolutions 
     for each case of foreclosure initiated by the lender or loan 
     servicer, including the modification of a qualified mortgage 
     to a more permanent, affordable interest rate.
       ``(v) Required disclosures to housing counseling 
     agencies.--A lender or loan servicer shall disclose to any 
     housing counseling agency approved by the Secretary and 
     authorized to represent an eligible homeowner the name of the 
     originator of the loans as stated in the Pooling and 
     Servicing

[[Page S15243]]

     Agreement, and the name of the pool Trustee.
       ``(E) Reimbursements for housing counseling services.--
       ``(i) In general.--A lender or loan servicer of a qualified 
     mortgage made to an eligible homeowner shall reimburse the 
     housing counseling agency that is authorized to represent the 
     homeowner upon the rendering of services by such agency to 
     the homeowner under this paragraph.
       ``(ii) Reimbursement.--A lender or loan servicer shall seek 
     reimbursement for the payment of housing counseling services 
     as described under clause (i) from the Trust, if any, 
     designated in the lender or servicer's Pooling and Servicing 
     Agreement.
       ``(F) Availability of waiver.--
       ``(i) In general.--An eligible homeowner may choose not to 
     receive information regarding State and local housing 
     counseling agencies approved by the Secretary, or to have 
     their information shared with State and local housing 
     counseling agencies, or both, at any time after default. An 
     eligible homeowner may also submit a signed letter to their 
     lender or loan servicer at any time after default to waive 
     their right to receive information regarding State and local 
     housing counseling agencies.
       ``(ii) Limitation on waiver.--The waiver described under 
     clause (i) shall only apply to the receipt of information 
     regarding housing counseling agencies located in the area 
     where the homeowner is located or the sharing of the 
     homeowner's personal information with such agencies. The 
     waiver described under clause (i) shall not apply to the 
     right of the homeowner to seek foreclosure prevention 
     counseling, nor does it relieve the lender or loan servicer 
     of the requirement to notify the homeowner of the 
     availability of counseling as described in this section.
       ``(G) Definitions.--In this paragraph, the following 
     definitions shall apply:
       ``(i) Lender.--The term `lender' has the same meaning as in 
     section 3500.2 of title 24, Code of Federal Regulations.
       ``(ii) Loan servicer.--The term `loan servicer' has the 
     same meaning as the term `servicer' as that term is defined 
     in section 6(i)(2) of the Real Estate Settlement Procedures 
     Act (12 U.S.C. 2605(i)(2)).''.

                  TITLE VII--REMEDIES AND ENFORCEMENT

     SEC. 701. MATERIAL DISCLOSURES AND VIOLATIONS.

       (a) Material Disclosures.--Section 103(u) of the Truth in 
     Lending Act (15 U.S.C. 1602(u)) is amended by--
       (1) striking ``material disclosures'' and inserting 
     ``material disclosures or violations''; and
       (2) striking ``and the disclosures required by section 
     129(a)'' and inserting ``and the provisions of sections 129, 
     129A, and 129B.''.
       (b) Consequences of Failure To Comply.--Section 129(j) of 
     the Truth in Lending Act (15 U.S.C. 1639(j)) is amended by 
     striking ``contains a provision prohibited by'' and inserting 
     ``violates a provision of''.

     SEC. 702. RIGHT OF RESCISSION.

       (a) Time Limit for Exercise of Right.--Section 125(f) of 
     the Truth in Lending Act (15 U.S.C. 1635(f)) is amended by 
     striking ``An obligor's right of rescission shall expire 
     three years after the date of consummation'' and inserting 
     ``An obligor's right of rescission shall extend to 6 years 
     from the date of consummation''.
       (b) Assertion of Right.--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 new sentence: ``This 
     subsection shall not bar a person from asserting a right to 
     rescission under section 125 in an action to collect the debt 
     or as a defense to a judicial foreclosure or to stop a 
     nonjudicial foreclosure after the expiration of the time 
     period set forth in section 125(f), but not exceed 10 years 
     from the date of the consummation of the transaction.''.

     SEC. 703. CIVIL LIABILITY.

       (a) In General.--Section 130 of the Truth in Lending Act 
     (15 U.S.C. 1640) is amended by--
       (1) striking ``creditor'' and inserting ``creditor or 
     mortgage broker'' in each place that term appears;
       (2) striking ``Creditor'' and inserting ``Creditor or 
     Mortgage Broker'' in each place that term appears; and
       (3) striking ``creditor's'' and inserting ``creditor's or 
     mortgage broker's'' in each place that term appears.
       (b) Statute of Limitations Extended for Section 129, 129A, 
     or 129B Violations.--Section 130(e) of the Truth in Lending 
     Act (15 U.S.C. 1640(e)), as amended by section 702(b), is 
     further amended--
       (1) in the first sentence, by striking ``Any action'' and 
     inserting ``Except as otherwise provided in this subsection, 
     any action'';
       (2) by inserting after the first sentence the following new 
     sentence: ``Any action under this section with respect to any 
     violation of section 129, 129A, or 129B may be brought in any 
     United States district court, or in any other court of 
     competent jurisdiction, within 3 years from the date of the 
     occurrence of the violation.''; and
       (3) in the fifth sentence (as so redesignated) by striking 
     ``violation of section 129'' and inserting ``violation of 
     section 129, 129A, or 129B''.
       (c) Enforcement by State Attorneys General.--An action to 
     enforce a violation of section 129, 129A, or 129B of the 
     Truth in Lending Act, as amended and added by this Act, may 
     also be brought by the appropriate State attorney general in 
     any appropriate United States district court, or any other 
     court of competent jurisdiction, not later than 3 years after 
     the date on which the violation occurs. An action under this 
     subsection does not create an independent basis for removal 
     of an action to a United States district court.
       (d) Other Changes to Civil Liability.--
       (1) Amount of award.--Section 130(a)(2) of the Truth in 
     Lending Act (15 U.S.C. 1640(a)(2)) is amended--
       (A) in subparagraph (A)(iii), by--
       (i) striking ``$200'' and inserting ``$500'';
       (ii) striking ``$2,000'' and inserting ``$5,000''; and
       (iii) adding before the semicolon at the end the following: 
     ``, such amount to adjusted annually based on the consumer 
     price index, to maintain current value.''; and
       (B) in subparagraph (B), by striking ``500,000'' and 
     inserting ``$5,000,000''.
       (2) Failure to comply with section 129a.--Section 130(a)(4) 
     of the Truth in Lending Act (15 U.S.C. 1640(a)(4)) is amended 
     by inserting ``or 129A'' after ``129''.

     SEC. 704. LIABILITY FOR MONETARY DAMAGES.

       Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is 
     amended by--
       (1) by redesignating subsection (f) as subsection (g); and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Liability of Assignees for Monetary Damages for 
     Violations of Sections 129A and 129B.--
       ``(1) Subprime or nontraditional loans.--
       ``(A) Individual actions.--Notwithstanding subsections (a) 
     and (e), any person who purchases, holds, or is otherwise 
     assigned a mortgage or similar security interest in 
     connection with a subprime or nontraditional home mortgage 
     loan, other than a loan described under section 103(aa), 
     shall be liable in an individual action for remedies 
     available under section 130 for violations of sections 129A 
     and 129B that the consumer could assert against the creditor 
     or mortgage originator originating that mortgage.
       ``(B) Class actions.--Notwithstanding subsections (a) and 
     (e), any person who purchases, holds, or is otherwise 
     assigned a mortgage or similar security interest in 
     connection with a subprime or nontraditional home mortgage 
     loan, other than a loan described under section 103(aa), 
     shall be liable in a class action for remedies available 
     under section 130 for violations of section 129A that the 
     consumer could assert against the creditor or mortgage 
     originator originating that mortgage, unless such person 
     demonstrates, by a preponderance of the evidence, that a 
     reasonable person exercising ordinary and independent due 
     diligence could not determine that the home mortgage loan was 
     not in compliance with the requirements of section 129A.
       ``(2) Other loans.--Notwithstanding subsections (a) and 
     (e), any person who purchases, holds, or is otherwise 
     assigned a mortgage or similar security interest in 
     connection with home mortgage loan other than a loan 
     described under section 103(aa), a subprime, or a 
     nontraditional loan, shall be liable only in an individual 
     action for remedies available under section 130 for 
     violations of section 129B that the consumer could assert 
     against the creditor or mortgage originator originating that 
     mortgage, provided that such liability is limited to the 
     amount of all remaining indebtedness and the total amount 
     paid in connection with the transaction plus amounts required 
     to recover costs, including reasonable attorneys' fees.''.

     SEC. 705. REMEDY IN LIEU OF RESCISSION FOR CERTAIN 
                   VIOLATIONS.

       Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is 
     further amended by adding at the end the following new 
     subsection:
       ``(h) Remedy in Lieu of Rescission for Certain 
     Violations.--At the election of a consumer entitled to 
     rescind for violations of sections 129, 129A, or 129B, any 
     person (including a creditor) who holds, purchases, or is 
     otherwise assigned a mortgage or similar security interest in 
     connection with home mortgage loan--
       ``(1) may be required to make such adjustments to the 
     balance of the obligation as are required under section 125; 
     and
       ``(2) shall modify or refinance the loan, at no cost to the 
     consumer, the resulting balance of which shall provide terms 
     that would have satisfied the requirements of sections 129, 
     129A, or 129B at the origination of the loan and to pay costs 
     and reasonable attorneys fees.''.

     SEC. 706. PROHIBITION ON MANDATORY ARBITRATION.

       Section 131 of the Truth in Lending Act (15 U.S.C. 1641) is 
     further amended by adding at the end the following new 
     subsection:
       ``(i) Rule of Construction.--No provision in a home 
     mortgage loan shall be construed to bar a consumer from 
     access to any judicial procedure, forum, or remedy through 
     any court of competent jurisdiction under any provision of 
     Federal or State law.''.

     SEC. 707. LENDER LIABILITY.

       Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is 
     amended by adding at the end the following new subsection:
       ``(i) Lender Liability.--
       ``(1) Transitive liability for subprime loan.--In any case 
     in which a mortgage broker sells or delivers a high-cost 
     mortgage, a subprime mortgage, or a nontraditional mortgage, 
     a creditor shall be liable for the acts, omissions, and 
     representations made by the mortgage broker in connection 
     with such home mortgage loan.

[[Page S15244]]

       ``(2) Transitive liability for other loans.--In the case of 
     any other home mortgage loan not described under paragraph 
     (1) in which a mortgage broker has received a yield spread 
     premium or other compensation from a creditor, the creditor 
     shall be liable for the acts, omissions, and representations 
     made by the mortgage broker in connection with such home 
     mortgage loan.''.

               TITLE VIII--OTHER BANKING AGENCY AUTHORITY

     SEC. 801. INCLUSION OF ALL BANKING AGENCIES IN THE REGULATORY 
                   AUTHORITY UNDER THE FEDERAL TRADE COMMISSION 
                   ACT WITH RESPECT TO DEPOSITORY INSTITUTIONS.

       (a) In General.--Section 18(f) of the Federal Trade 
     Commission Act (15 U.S.C. 57a(f)(1)) is amended--
       (1) in paragraph (1)--
       (A) in the first sentence--
       (i) by striking ``banks or savings and loan institutions 
     described in paragraph (3), each agency specified in 
     paragraph (2) or (3) of this subsection shall establish'' and 
     inserting ``depository institutions and Federal credit 
     unions, the Federal banking agencies and the National Credit 
     Union Administration Board shall each establish''; and
       (ii) by striking ``banks or savings and loan institutions 
     described in paragraph (3), subject to its jurisdiction'' and 
     inserting ``depository institutions or Federal credit unions 
     subject to the jurisdiction of such agency or Board'';
       (B) in the second sentence, by striking ``The Board of 
     Governors of the Federal Reserve System (with respect to 
     banks) and the Federal Home Loan Bank Board (with respect to 
     savings and loan institutions described in paragraph (3))'' 
     and inserting ``Each Federal banking agency (with respect to 
     the depository institutions each such agency supervises)'';
       (C) in the third sentence--
       (i) by striking ``each such Board'' and inserting ``each 
     such banking agency and the National Credit Union 
     Administration Board'';
       (ii) by striking ``banks or savings and loan institutions 
     described in paragraph (3)'' each place such term appears and 
     inserting ``depository institutions subject to the 
     jurisdiction of such agency'';
       (iii) by striking ``(A) any such Board'' and inserting 
     ``(A) any such Federal banking agency or the National Credit 
     Union Administration Board''; and
       (iv) by striking ``with respect to banks, savings and loan 
     institutions'' and inserting ``with respect to depository 
     institutions''; and
       (D) by adding at the end the following: ``For purposes of 
     this subsection, the terms `Federal banking agency' and 
     `depository institution' have the same meaning as in section 
     3 of the Federal Deposit Insurance Act.'';
       (2) in paragraph (3), by inserting ``by the Director of the 
     Office of Thrift Supervision'' before the period at the end;
       (3) in paragraph (4), by inserting ``by the National Credit 
     Union Administration'' before the period at the end; and
       (4) by amending paragraph (5) to read as follows:
       ``(5) For the purpose of the exercise by the Federal 
     banking agencies described in paragraphs (2) and (3) and the 
     National Credit Union Administration Board described in 
     paragraph (4) of its powers under any Act referred to in 
     those paragraphs, a violation of any regulation prescribed 
     under this subsection shall be considered a violation of a 
     requirement imposed under that Act. In addition to its powers 
     under any provision of law specifically referred to in 
     paragraphs (2) through (4), each of the agencies or the Board 
     referred to in those paragraphs may exercise, for the purpose 
     of enforcing compliance with any regulation prescribed under 
     this subsection, any other authority conferred on it by 
     law.''.
       (b) Preemption.--Such section 18(f) is further amended by 
     striking paragraph (6) and inserting the following:
       ``(6) Notwithstanding anything in this subsection or any 
     other provision of law, including the National Bank Act (12 
     U.S.C. 38 et seq.) and the Home Owners' Loan Act (12 U.S.C. 
     1461 et seq.), regulations promulgated under this subsection 
     shall be considered supplemental to State laws governing 
     unfair and deceptive acts and practices and may not be 
     construed to preempt any provision of State law that provides 
     equal or greater protections.''.
       (c) Technical Amendment.--Such section 18(f) is further 
     amended in paragraph (2)(C), by inserting ``than'' after 
     ``(other''.

                        TITLE IX--MISCELLANEOUS

     SEC. 901. AUTHORIZATIONS.

       For fiscal years 2008, 2009, 2010, 2011, and 2012, there 
     are authorized to be appropriated to the Attorney General of 
     the United States, a total of--
       (1) $31,250,000 to support the employment of 30 additional 
     agents of the Federal Bureau of Investigation and 2 
     additional dedicated prosecutors at the Department of Justice 
     to coordinate prosecution of mortgage fraud efforts with the 
     offices of the United States Attorneys; and
       (2) $750,000 to support the operations of interagency task 
     forces of the Federal Bureau of Investigation in the areas 
     with the 15 highest concentrations of mortgage fraud.
                                  ____


    ``Homeownership Preservation and Protection Act of 2007''--Key 
                               Provisions


                      Title I: High Cost Mortgages

       Definition of ``High Cost'' Mortgage. The legislation 
     tightens the definition of a ``high cost mortgage'' for which 
     certain consumer protections are triggered. The new 
     definition, which amends the ``Home Ownership Equity 
     Protection Act,'' (HOEPA) is as follows: first mortgages with 
     APRs that exceed Treasury securities by eight (8) percentage 
     points (with a range from 6 to 10 percent); second mortgages 
     with APRs that exceed Treasury securities by ten (10) 
     percentage points (with a range of 8 to 12 percent); or 
     mortgages where total points and fees payable by the borrower 
     are five percent (5 percent) of the total loan amount, or, 
     for smaller loans of less than $20,000, the lesser of eight 
     (8) percentage or $1,000. The bill revises the definition of 
     points and fees to include yield spread premiums and other 
     charges. It allows for up to two bona fide discount points 
     outside of the 5 percent trigger.
     The following key protections are triggered for high cost 
         mortgages
       No financing of points and fees. The bill prohibits a 
     creditor from directly or indirectly financing any portion of 
     the points, fees or prepayment penalties. These limitations 
     and prohibitions are designed to discourage lenders from 
     ``flipping'' the mortgage in order to extract additional 
     excessive fees.
       Prohibition on prepayment penalties. The bill prohibits the 
     lender from imposing prepayment penalties for high cost 
     loans.
       Prohibition of Yield Spread Premiums (YSPs). The bill 
     prohibits YSPs for placing a borrower in a high cost loan 
     that is more costly than that for which the borrower 
     qualifies. Mortgage brokers, who have originated about 70 
     percent of subprime mortgages, receive higher compensation 
     through YSPs for steering borrowers to these higher cost 
     loans. This bill will eliminate the incentive to ``upsell'' 
     these borrowers.
       Net Tangible Benefit. The originator must determine that a 
     high-cost refinance loan provides a net tangible benefit to 
     the borrower.
       Prohibition on balloon payments. The bill prohibits the use 
     of balloon payments.
       Limitation on single premium credit insurance. The bill 
     would prohibit the upfront payment or financing of credit 
     life, credit disability or credit unemployment insurance on a 
     single premium basis. However, borrowers are free to purchase 
     such insurance with the regular mortgage payment on a 
     periodic basis, provided that it is a separate transaction 
     that can be canceled at any time.


            Title II--Subprime and Non-Traditional Mortgages

       Definition of ``Subprime Mortgage'' and ``Nontraditional 
     Mortgage'': The legislation creates a new designation in the 
     law for subprime and nontraditional mortgages.
       Subprime mortgages. Mortgages that have interest rates that 
     are 3 percentage points higher than Treasury securities of 
     comparable maturities for first mortgages and 5 percentage 
     points for second mortgages. This definition tracks the 
     Federal Reserve Board's definition of subprime lending for 
     the purposes of the Home Mortgage Disclosure Act (HMDA) 
     reporting. In addition, the legislation includes an 
     alternative measure that is designed to prevent capturing too 
     many mortgages when the yield curve is unusually flat.
       Nontraditional mortgages. These are mortgages that allow 
     deferral of the payment of interest or principal. Interest-
     only and payment-option ARMs are the current examples of 
     nontraditional mortgages we see most often.
     Requirements for making subprime or nontraditional mortgages
       Ability to repay. A mortgage originator must establish that 
     a borrower has the ability to repay the loan based on the 
     fully-indexed rate, assuming full amortization. In making 
     this determination, the originator must consider the 
     borrower's income, credit history, debt-to-income (DTI) 
     ratio, employment status, residual income, and other 
     financial resources.
       Require Escrows for Taxes and Insurance. While nearly all 
     prime mortgages include escrows for taxes and insurance, very 
     few subprime loans include such escrows. The legislation 
     would require these escrows for all subprime and 
     nontraditional loans.
       Nearly all prime loans include escrows for taxes and 
     insurance. Yet, few subprime mortgages include these escrows. 
     Currently, unscrupulous mortgage originators entice 
     unsophisticated borrowers into taking out abusive loans with 
     promises of lower monthly payments, in part by comparing 
     their current payments, which often include escrows, with 
     proposed loans that do not include escrows in the monthly 
     payments and, therefore, appear lower. Then, when insurance 
     or tax payments are due, the borrowers, who often do not have 
     the resources to pay the taxes, are forced to seek new loans 
     to cover the required payments, generating a whole new set of 
     fees. Lack of escrows, in other words, becomes a tool for 
     ``flipping'' borrowers into yet another, high-cost loan.
       Debt-to-Income Ratio. If a borrower's DTI ratio is greater 
     than 45 percent, a mortgage is assumed to be unaffordable 
     unless the originator can show, at a minimum, sufficient 
     residual income to afford the loan.
       The ability to repay standard is largely based on guidance 
     published by the federal regulators in late 2006 and early 
     2007 and applied to the sub prime and nontraditional mortgage 
     markets.

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     The following protections apply to borrowers who take out 
         subprime or nontraditional mortgages
       No Prepayment Penalties. The legislation will prohibit all 
     prepayment penalties for subprime and nontraditional loans.
       Prepayment penalties unfairly trap subprime borrowers in 
     expensive subprime mortgages. These penalties make it cost-
     prohibitive to refinance into better loans, or strip out 
     equity when the penalty is paid. Studies done by the Center 
     for Responsible Lending (CRL) show that interest rates on 
     subprime loans are no lower for loans with prepayment 
     penalties--the ostensible rationale for these fees--than for 
     loans without these penalties, even after holding credit 
     scores, LTVs, and other factors constant. Moreover, the CRL 
     study shows that the odds of having a loan with a prepayment 
     penalty increases significantly for borrowers who live in 
     minority neighborhoods.
       No Yield-Spread Premiums (YSPs). The legislation will 
     prohibit YSPs for subprime and nontraditional loans.
       YSPs are payments made by lenders to mortgage brokers, 
     usually without the borrower's knowledge. In exchange for the 
     YSP, the lender charges the borrower a higher interest rate 
     than that for which he could have qualified. The industry 
     justifies YSPs as a way for the borrower to pay the broker's 
     fee and other closing costs without paying cash at the 
     closing table. However, numerous studies have shown that YSPs 
     result in higher costs for consumers. For example, a study 
     done by HUD (while Senator Martinez was Secretary) concluded 
     that half ($7.5 billion) of the $15 billion paid in YSPs at 
     the time of this study ``is not passed through . . . to 
     reduce closing costs.''. More recent research by HUD 
     indicates that fees tend to rise even as interest rates do--
     exactly the opposite of what the industry says should 
     happen--and that this effect is more pronounced for minority 
     borrowers. Research sponsored by Freddie Mac also came to the 
     conclusion that borrowers who pay YSPs along with direct fees 
     pay more for loans, all other things being equal.
       Net Tangible Benefit. The originator must determine that a 
     high-cost refinance loan provides a net tangible benefit to 
     the borrower.
     Remedies
       Individual borrowers who get loans in violation of these 
     provisions will be able to rescind (i.e. ``unwind'') the 
     loans. Alternatively, at the choice of the borrower, the 
     creditor or holder of the loan may cure the loan by making 
     the borrower whole.
       Actual damages.
       Statutory damages up to $5,000 per loan, regardless of the 
     number of violations per loan (up from $2,000 per loan in 
     current law), plus the sum of finance charges and fees.
       Makes mortgage brokers liable for violations of TILA
       No class actions for assignees who perform due diligence to 
     ensure they are not buying loans in violation of the law.
       As in current law, creditors are subject to class actions 
     for making loans in violation of the law with damages capped 
     at the lesser of 1 percent of net worth or $5 million 
     (current law caps class damages at the lesser of 1 percent of 
     net worth or $500,000).
       A key goal of the legislation is to realign the interests 
     of the mortgage production system with the interest of the 
     borrower. In recent years, as many observers have noted, the 
     incentives in the system have worked against the interests of 
     borrowers and resulted in larger loans, at higher rates, with 
     weaker underwriting, and without regard to the ability of the 
     borrower to repay the loans. As The Economist put it:
       Mortgages were written for a fee, sold to investment banks 
     for a fee, then packaged and floated for another fee. At each 
     link in the chain, the fees mattered more than the quality of 
     the loans . . .
       To insure that the quality of the loans does matter, a 
     reasonable amount of responsibility for making good loans 
     must travel with the mortgage. The legislation allows for 
     individual actions by borrowers who have been given illegal 
     loans to make themselves whole. There will be no class 
     liability for assignees who exercise due diligence to avoid 
     funding and buying these loans.
       Moreover, it is crucial that the burden of curing an 
     illegal loan rest not with the victims, such as Dorothy King, 
     the elderly woman who testified before the Senate Committee 
     on Banking, Housing, and Urban Affairs in February, 2007. The 
     subprime borrower is often more vulnerable, less 
     sophisticated, lower income, and less likely to have access 
     to better lenders. For the subprime borrower, or most any 
     borrower, their home is their chief asset. If the borrower 
     faces the loss of her only real asset through a foreclosure, 
     for instance, as a result of a violation of the law, it is 
     simply not fair to put the burden on her to find a party that 
     can make her whole, spending months in the courts while she 
     faces the loss of her home. The sensible and fair thing to do 
     is to allow her to go to the only party that can give her 
     relief--the note holder. The note holder, which is typically 
     a large institutional entity such as a pension fund, 
     insurance company, hedge fund or the like, is in a far better 
     position to recover from another party who may have caused 
     the problem. In the long run, this process will bring more 
     discipline to the mortgage marketplace, the very kind 
     of discipline that has been missing over the past several 
     years.


                        Title III--All Mortgages

     All home loan borrowers get the following rights and 
         protections:
       All mortgage originators--lenders and brokers--owe a duty 
     of good faith and fair dealing to borrowers. The duty of good 
     faith and fair dealing is widespread in state law with regard 
     to the execution of contracts. It would apply that duty to 
     the making of a mortgage contract, which is a new, but 
     reasonable application.
       All mortgage originators have to make reasonable efforts to 
     make an advantageous loan to the borrower, considering that 
     borrower's circumstances. For example, this requirement would 
     prohibit a broker or lender from giving an adjustable rate 
     mortgage with a high likelihood of escalating costs to an 
     elderly person on a fixed income.
       Mortgage brokers owe a fiduciary duty to their customers. 
     The bill designates mortgage brokers as fiduciaries of 
     borrowers. This means that brokers represent the borrower in 
     the transaction.
       Today, brokers typically sell their services by telling 
     borrowers that they will do the shopping for the borrowers. 
     Indeed, the National Association of Mortgage Brokers (NAMB) 
     made the claim on their web site (until they were questioned 
     about it at a Senate Banking Committee hearing) that brokers 
     serve as ``mentors'' to borrowers to help them through the 
     complex process of getting a loan. An industry publication, 
     Inside B & C Lending, described mortgage brokers as being 
     particularly adept at convincing borrowers that they were 
     ``trusted advisors'' to the borrowers. The bill would simply 
     make the brokers live up to the role they often claim for 
     themselves--that of a fiduciary.
       Prohibit steering. Mortgage originators are prohibited from 
     steering borrowers to more costly loans than that for which 
     the borrower qualifies. This provision is designed to 
     counteract the widespread problem of prime quality borrowers 
     being steered into subprime loans. This provision would 
     require originators to notify borrowers that they qualify for 
     higher quality loans, even if the originator does not offer 
     those prime loans.
       Over the past several years, there have been estimates that 
     from 20 to 50 percent of subprime borrowers could have 
     qualified for prime loans. The Wall Street Journal 
     (``Subprime Debacle Traps Even Very Credit-Worthy,'' December 
     3, 2007) reported on a study it commissioned that found in 
     2006 that 61 percent of subprime loans went to ``people with 
     credit scores high enough to often qualify for conventional 
     loans with far better terms.'' HMDA data repeatedly shows 
     that minorities are given higher cost loans in 
     disproportionate numbers.
       Limitations on Yield-Spread Premiums. Allows YSPs only in 
     the case of no-cost loans. (YSPs for high-cost, subprime, and 
     nontraditional mortgages would be prohibited). Where YSPs are 
     paid, brokers may not receive any other compensation from any 
     other source and prepayment penalties are prohibited.
       As discussed above, mortgage brokers argue that YSPs are a 
     way for cash-constrained borrowers to cover closing costs, 
     including the broker fee. However, independent research has 
     consistently shown that mortgage brokers keep at least half 
     or more of the YSPs for themselves. For example, HUD research 
     showed that no more than half of all YSPs went to offset 
     closing costs. Other research commissioned by Freddie Mac, 
     showed that borrowers who paid a combination of direct fees 
     and YSPs paid significantly more in fees than borrowers who 
     got no-cost loans where a broker's compensation came 
     completely from the YSP. Research also indicates that there 
     is a significant racial component to YSPs. Racial minorities 
     pay even more in fees than similarly situated white 
     borrowers.
       Limit Low- and No-Documentation Loans. The legislation 
     requires adequate documentation for mortgage loans. However, 
     it gives the Federal Reserve the authority to make exceptions 
     as deemed appropriate, presumably for prime loans.
     Remedies
       Individual borrowers who get loans in violation of these 
     provisions will be able to rescind (i.e. ``unwind'') the 
     loans. Alternatively, at the choice of the borrower, the 
     creditor or holder of the loan may cure the loan by making 
     the borrower whole.
       Actual damages.
       Statutory damages up to $5,000 per loan, regardless of the 
     number of violations per loan (up from $2,000 per loan in 
     current law).
       Makes mortgage brokers liable under TILA for violations of 
     TILA.
       No class liability for assignees.


          Title IV--Good Faith and Fair Dealing In Appraisals

     Requirements for Appraisers
       Appraisers owe a duty of good faith and fair dealing to 
     borrowers.
       No lender may encourage or influence an appraiser to 
     ``hit'' a certain value in connection with making a home 
     loan. In addition, a lender may not seek to influence an 
     appraiser's work, nor select an appraiser on the basis of an 
     expectation that he or she will appraise a property at a high 
     enough value to facilitate a home loan.
       A crucial cause of the current mortgage meltdown has been 
     inflated appraisals. Many ethical appraisers complain that 
     lenders will only use appraisers who consistently value 
     properties at the levels necessary to allow the loan to 
     close. Appraisers who do not cooperate simply do not get 
     hired. This is particularly detrimental to the homeowner 
     because it leads the homeowner to believe he

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     or she has equity where little or none may exist.
       Appraisers must obtain bonds equal to one percent of the 
     value of the homes appraised.
     Remedies available to borrowers
       Lenders must adjust outstanding mortgages where appraisals 
     exceeded true market value by 10 percent or more.
       When an appraisal exceeds market value by 10 percent (plus 
     or minus 2 percent) or more, a borrower has a cause of action 
     against the lender. A consumer who is awarded remedies under 
     this section shall collect from the appraiser's bond.
       Actual and statutory damages up to $5,000.


      Title V--Good Faith and Fair Dealing in Home Loan Servicing

     Requirements for mortgage servicers
       Mortgage Servicers owe a duty of good faith and fair 
     dealing to borrowers. James Montgomery, former Chairman of 
     Great Western Financial Corporation, and a former director of 
     Freddie Mac, said recently, ``Servicers make money on 
     foreclosure,'' (American Banker, December 4, 2007). This 
     standard would prevent servicers from unfairly profiting from 
     their servicing responsibilities.
       Prompt crediting of payments. Servicers must credit all 
     payments on the day received. Payments must first be credited 
     to principal and interest due on the note.
       Servicers can employ a scheme called ``pyramiding,'' by 
     which they hold a payment until it is late, use a portion of 
     the payment to cover the late fee, thereby causing the 
     remaining payment to be insufficient. When the next month's 
     payment is made, it is insufficient to cover the previous 
     shortfall and the new payment, generating another penalty 
     fee. The legislation will require both prompt posting of 
     payments and crediting of payments to principal and interest 
     before being charged to late fees or other charges.
       All fees must be reasonable and for services actually 
     provided, and only if allowed by the mortgage contract. In 
     addition, an adequate notice and statement is required.
       No force-placing of insurance without clear notice to the 
     borrower.
       Currently, some servicers claim that the borrower does not 
     have insurance on the property and ``force-places'' such 
     insurance on the loan. Sometimes, that insurance is purchased 
     from an affiliate; oftentimes the servicer is given a 
     significant commission for doing so. Many times, as was the 
     case with the Fairbanks Capital case settled by the FTC in 
     2003, the borrowers already had insurance, but were charged 
     for the additional insurance in any case. As with the 
     pyramiding problems, these extra charges could often result 
     in the borrower being put into default.
       Prior to initiating foreclosure. a servicer must attempt to 
     implement loss mitigation.
       Even in the dire circumstances existing in the mortgage 
     market today, and despite the nearly universal calls for 
     action from regulators, government officials, and consumer 
     advocates, mortgage servicers have been extremely slow to 
     offer meaningful alternatives to foreclosure for most 
     borrowers. In fact, according to Moody's, only 1 percent of 
     subprime ARM borrowers have received any loan modifications 
     during the current crisis. Furthermore, a new study shows how 
     servicers use the foreclosure process to make additional fees 
     from the troubled borrowers, even borrowers in bankruptcy. 
     These conclusions are consistent with practices uncovered by 
     the FTC in its 2003 investigation of mortgage servicing 
     practices of Fairbanks Capital, one of the largest subprime 
     mortgage servicers at the time. This provision will insure 
     that adequate loss mitigation is offered to the borrower 
     prior to foreclosure.
       Require servicers to report their loss mitigation 
     activities.
       In order to see which servicers are meeting their 
     requirements under this provision, the legislation will 
     require public reporting of loss mitigation activities. The 
     lack of responsiveness in the current crisis indicates how 
     important public accountability is to maximize the number of 
     homes saved.
     Remedies
       Actual and statutory damages (up to $5,000).


              Title VI--Foreclosure Prevention Counseling

       Require that borrowers be notified of availability of 
     foreclosure prevention counseling both at closing and upon 
     default.
       Require servicers, with the consent of the borrower, to 
     forward the borrower's name to a HUD-authorized foreclosure 
     counselor upon default.
       It is widely agreed that reluctance by delinquent borrowers 
     to respond to communications from the lender or servicer 
     reduces the effectiveness of loss mitigation. The legislation 
     will help expedite contact with the borrower by having it 
     come from a 3rd party counselor.
       The servicer must reimburse the counselor for its work.
       Once a borrower is working with an approved housing 
     counselor, the servicer may not initiate foreclosure for 45 
     days to give the parties an opportunity to work out a 
     mutually agreeable solution.


                           Title VI--Remedies

       Description of remedies are listed in each relevant title.


      Title VIII--Give the FDIC and OCC UDAP Rulemaking Authority.

       Currently, only the Federal Reserve may issue a regulation 
     establishing standards for determining unfair or deceptive 
     acts or practices (UDAP) for banks. The Office of Thrift 
     Supervision has the authority to do this for thrifts, and has 
     indicated its intention of issuing such a rule. This 
     provision would give other banking regulators the same 
     authority. These regulators have requested this authority, 
     and have indicated that they are willing to act.


                            Other Provisions

       The Federal Reserve Board will be responsible for writing 
     regulations to implement this Act.
       The Act takes effect 6 months after date of enactment.
       The legislation provides protections for renters in 
     foreclosed homes.
       The legislation authorizes additional appropriations to the 
     FBI to fight mortgage fraud.
                                 ______