House Report 111-94 - MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

[House Report 111-94]
[From the U.S. Government Publishing Office]

111th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 111-94

======================================================================

MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT

_______

May 4, 2009.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Frank of Massachusetts, from the Committee on Financial Services,
submitted the following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 1728]

[Including cost estimate of the Congressional Budget Office]

The Committee on Financial Services, to whom was referred the
bill (H.R. 1728) to amend the Truth in Lending Act to reform
consumer mortgage practices and provide accountability for such
practices, to provide certain minimum standards for consumer
mortgage loans, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.

CONTENTS

Page
Amendment........................................................ 2
Purpose and Summary.............................................. 48
Background and Need for Legislation.............................. 50
Hearings......................................................... 60
Committee Consideration.......................................... 61
Committee Votes.................................................. 61
Committee Oversight Findings..................................... 72
Performance Goals and Objectives................................. 72
New Budget Authority, Entitlement Authority, and Tax Expenditures 72
Committee Cost Estimate.......................................... 72
Congressional Budget Office Estimate............................. 73
Federal Mandates Statement....................................... 77
Advisory Committee Statement..................................... 77
Constitutional Authority Statement............................... 77
Applicability to Legislative Branch.............................. 77
Earmark Identification........................................... 77
Section-by-Section Analysis of the Legislation................... 77
Changes in Existing Law Made by the Bill, as Reported............ 99
Dissenting Views................................................. 163

Amendment

The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Mortgage Reform and
Anti-Predatory Lending Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:

Sec. 1. Short title; table of contents.

TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Sec. 101. Definitions.
Sec. 102. Residential mortgage loan origination.
Sec. 103. Prohibition on steering incentives.
Sec. 104. Liability.
Sec. 105. Regulations.
Sec. 106. RESPA and TILA disclosure improvement.

TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Sec. 201. Ability to repay.
Sec. 202. Net tangible benefit for refinancing of residential mortgage
loans.
Sec. 203. Safe harbor and rebuttable presumption.
Sec. 204. Liability.
Sec. 205. Defense to foreclosure.
Sec. 206. Additional standards and requirements.
Sec. 207. Rule of construction.
Sec. 208. Effect on State laws.
Sec. 209. Regulations.
Sec. 210. Amendments to civil liability provisions.
Sec. 211. Lender rights in the context of borrower deception.
Sec. 212. Six-month notice required before reset of hybrid adjustable
rate mortgages.
Sec. 213. Credit risk retention.
Sec. 214. Required disclosures.
Sec. 215. Disclosures required in monthly statements for residential
mortgage loans.
Sec. 216. Legal assistance for foreclosure-related issues.
Sec. 217. Effective date.
Sec. 218. Report by the GAO.
Sec. 219. State Attorney General enforcement authority.
Sec. 220. Tenant protection.

TITLE III--HIGH-COST MORTGAGES

Sec. 301. Definitions relating to high-cost mortgages.
Sec. 302. Amendments to existing requirements for certain mortgages.
Sec. 303. Additional requirements for certain mortgages.
Sec. 304. Regulations.
Sec. 305. Effective date.

TITLE IV--OFFICE OF HOUSING COUNSELING

Sec. 401. Short title.
Sec. 402. Establishment of Office of Housing Counseling.
Sec. 403. Counseling procedures.
Sec. 404. Grants for housing counseling assistance.
Sec. 405. Requirements to use HUD-certified counselors under HUD
programs.
Sec. 406. Study of defaults and foreclosures.
Sec. 407. Definitions for counseling-related programs.
Sec. 408. Updating and simplification of mortgage information booklet.
Sec. 409. Home inspection counseling.

TITLE V--MORTGAGE SERVICING

Sec. 501. Escrow and impound accounts relating to certain consumer
credit transactions.
Sec. 502. Disclosure notice required for consumers who waive escrow
services.
Sec. 503. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 504. Truth in Lending Act amendments.
Sec. 505. Escrows included in repayment analysis.

TITLE VI--APPRAISAL ACTIVITIES

Sec. 601. Property appraisal requirements.
Sec. 602. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.
Sec. 603. Amendments relating to appraisal subcommittee of FIEC,
appraiser independence, and approved appraiser education.
Sec. 604. Study required on improvements in appraisal process and
compliance programs.
Sec. 605. Equal Credit Opportunity Act amendment.
Sec. 606. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees.

TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT
SPONSORED ENTERPRISES REFORM

Sec. 701. Sense of Congress regarding the importance of Government-
sponsored enterprises reform to enhance the protection, limitation, and
regulation of the terms of residential mortgage credit.

TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

SEC. 101. DEFINITIONS.

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended
by adding at the end the following new subsection:
``(cc) Definitions Relating to Mortgage Origination and Residential
Mortgage Loans.--
``(1) Commission.--Unless otherwise specified, the term
`Commission' means the Federal Trade Commission.
``(2) Federal banking agencies.--The term `Federal banking
agencies' means the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, and the National Credit Union Administration
Board.
``(3) Mortgage originator.--The term `mortgage originator'--
``(A) means any person who, for direct or indirect
compensation or gain, or in the expectation of direct
or indirect compensation or gain--
``(i) takes a residential mortgage loan
application;
``(ii) assists a consumer in obtaining or
applying to obtain a residential mortgage loan;
or
``(iii) offers or negotiates terms of a
residential mortgage loan;
``(B) includes any person who represents to the
public, through advertising or other means of
communicating or providing information (including the
use of business cards, stationery, brochures, signs,
rate lists, or other promotional items), that such
person can or will provide any of the services or
perform any of the activities described in subparagraph
(A);
``(C) does not include any person who is (i) not
otherwise described in subparagraph (A) or (B) and who
performs purely administrative or clerical tasks on
behalf of a person who is described in any such
subparagraph, or (ii) an employee of a retailer of
manufactured homes who is not described in clause (i)
or (iii) of subparagraph (A);
``(D) does not include a person or entity that only
performs real estate brokerage activities and is
licensed or registered in accordance with applicable
State law, unless such person or entity is compensated
for performing such brokerage activities by a lender, a
mortgage broker, or other mortgage originator or by any
agent of such lender, mortgage broker, or other
mortgage originator; and
``(E) does not include, with respect to a residential
mortgage loan, a person, estate, or trust that provides
mortgage financing for the sale of 1 property in any 36
month period, provided that such loan--
``(i) is fully amortizing;
``(ii) is with respect to a sale for which
the seller determines in good faith and
documents that the buyer has a reasonable
ability to repay the loan;
``(iii) has a fixed rate or an adjustable
rate that is adjustable after 5 or more years,
subject to reasonable annual and lifetime
limitations on interest rate increases; and
``(iv) meets any other criteria the Federal
banking agencies may prescribe.
``(4) Nationwide mortgage licensing system and registry.--The
term `Nationwide Mortgage Licensing System and Registry' has
the same meaning as in the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008.
``(5) Other definitions relating to mortgage originator.--For
purposes of this subsection, a person `assists a consumer in
obtaining or applying to obtain a residential mortgage loan'
by, among other things, advising on residential mortgage loan
terms (including rates, fees, and other costs), preparing
residential mortgage loan packages, or collecting information
on behalf of the consumer with regard to a residential mortgage
loan.
``(6) Residential mortgage loan.--The term `residential
mortgage loan' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or a reverse
mortgage or, for purposes of sections 129B and 129C and section
128(a)(16), (17), and (18), 128(a)(f) and 128(b)(4) and any
regulations promulgated thereunder, an extension of credit
relating to a plan described in section 101(53D) of title 11,
United States Code.
``(7) Secretary.--The term `Secretary', when used in
connection with any transaction or person involved with a
residential mortgage loan, means the Secretary of Housing and
Urban Development.
``(8) Securitization vehicle.--The term `securitization
vehicle' means a trust, corporation, partnership, limited
liability entity, special purpose entity, or other structure
that--
``(A) is the issuer, or is created by the issuer, of
mortgage pass-through certificates, participation
certificates, mortgage-backed securities, or other
similar securities backed by a pool of assets that
includes residential mortgage loans; and
``(B) holds such loans.
``(9) Securitizer.--The term `securitizer' means the person
that transfers, conveys, or assigns, or causes the transfer,
conveyance, or assignment of, residential mortgage loans,
including through a special purpose vehicle, to any
securitization vehicle, excluding any trustee that holds such
loans solely for the benefit of the securitization vehicle.
``(10) Servicer.--The term `servicer' has the same meaning as
in section 6(i)(2) of the Real Estate Settlement Procedures Act
of 1974.''.

SEC. 102. RESIDENTIAL MORTGAGE LOAN ORIGINATION.

(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129A the following
new section:

``Sec. 129B. Residential mortgage loan origination

``(a) Finding and Purpose.--
``(1) Finding.--The Congress finds that economic
stabilization would be enhanced by the protection, limitation,
and regulation of the terms of residential mortgage credit and
the practices related to such credit, while ensuring that
responsible, affordable mortgage credit remains available to
consumers.
``(2) Purpose.--It is the purpose of this section and section
129C to assure that consumers are offered and receive
residential mortgage loans on terms that reasonably reflect
their ability to repay the loans and that are understandable
and not unfair, deceptive or abusive.
``(b) Duty of Care.--
``(1) Standard.--Subject to regulations prescribed under this
subsection, each mortgage originator shall, in addition to the
duties imposed by otherwise applicable provisions of State or
Federal law--
``(A) be qualified and, when required, registered and
licensed as a mortgage originator in accordance with
applicable State or Federal law, including the Secure
and Fair Enforcement for Mortgage Licensing Act of
2008;
``(B) with respect to each consumer seeking or
inquiring about a residential mortgage loan, diligently
work to present the consumer with a range of
residential mortgage loan products for which the
consumer likely qualifies and which are appropriate to
the consumer's existing circumstances, based on
information known by, or obtained in good faith by, the
originator;
``(C) make full, complete, and timely disclosure to
each such consumer of--
``(i) the comparative costs and benefits of
each residential mortgage loan product offered,
discussed, or referred to by the originator;
``(ii) the nature of the originator's
relationship to the consumer (including the
cost of the services to be provided by the
originator and a statement that the mortgage
originator is or is not acting as an agent for
the consumer, as the case may be); and
``(iii) any relevant conflicts of interest
between the originator and the consumer;
``(D) certify to the creditor, with respect to any
transaction involving a residential mortgage loan, that
the mortgage originator has fulfilled all requirements
applicable to the originator under this section with
respect to the transaction; and
``(E) include on all loan documents any unique
identifier of the mortgage originator provided by the
Nationwide Mortgage Licensing System and Registry.
``(2) Clarification of extent of duty to present range of
products and appropriate products.--
``(A) No duty to offer products for which originator
is not authorized to take an application.--Paragraph
(1)(B) shall not be construed as requiring--
``(i) a mortgage originator to present to any
consumer any specific residential mortgage loan
product that is offered by a creditor which
does not accept consumer referrals from, or
consumer applications submitted by or through,
such originator; or
``(ii) a creditor to offer products that the
creditor does not offer to the general public.
``(B) Appropriate loan product.--For purposes of
paragraph (1)(B), a residential mortgage loan shall be
presumed to be appropriate for a consumer if--
``(i) the mortgage originator determines in
good faith, based on then existing information
and without undergoing a full underwriting
process, that the consumer has a reasonable
ability to repay and, in the case of a
refinancing of an existing residential mortgage
loan, receives a net tangible benefit, as
determined in accordance with regulations
prescribed under subsections (a) and (b) of
section 129C; and
``(ii) the loan does not have predatory
characteristics or effects (such as equity
stripping and excessive fees and abusive terms)
as determined in accordance with regulations
prescribed under paragraph (4).
``(3) Rules of construction.--No provision of this subsection
shall be construed as--
``(A) creating an agency or fiduciary relationship
between a mortgage originator and a consumer if the
originator does not hold himself or herself out as such
an agent or fiduciary; or
``(B) restricting a mortgage originator from holding
himself or herself out as an agent or fiduciary of a
consumer subject to any additional duty, requirement,
or limitation applicable to agents or fiduciaries under
any Federal or State law.
``(4) Regulations.--
``(A) In general.--The Federal banking agencies, in
consultation with the Secretary, the Chairman of the
State Liaison Committee to the Financial Institutions
Examination Council, and the Commission, shall jointly
prescribe regulations to--
``(i) further define the duty established
under paragraph (1);
``(ii) implement the requirements of this
subsection;
``(iii) establish the time period within
which any disclosure required under paragraph
(1) shall be made to the consumer; and
``(iv) establish such other requirements for
any mortgage originator as such regulatory
agencies may determine to be appropriate to
meet the purposes of this subsection.
``(B) Complementary and nonduplicative disclosures.--
The agencies referred to in subparagraph (A) shall
endeavor to make the required disclosures to consumers
under this subsection complementary and nonduplicative
with other disclosures for mortgage consumers to the
extent such efforts--
``(i) are practicable; and
``(ii) do not reduce the value of any such
disclosure to recipients of such disclosures.
``(5) Compliance procedures required.--The Federal banking
agencies shall prescribe regulations requiring depository
institutions to establish and maintain procedures reasonably
designed to assure and monitor the compliance of such
depository institutions, the subsidiaries of such institutions,
and the employees of such institutions or subsidiaries with the
requirements of this section and the registration procedures
established under section 1507 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129 the following new items:

``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.

SEC. 103. PROHIBITION ON STEERING INCENTIVES.

Section 129B of the Truth in Lending Act (as added by section 102(a))
is amended by inserting after subsection (b) the following new
subsection:
``(c) Prohibition on Steering Incentives.--
``(1) In general.--For any mortgage loan, the total amount of
direct and indirect compensation from all sources permitted to
a mortgage originator may not vary based on the terms of the
loan (other than the amount of the principal).
``(2) Regulations.--The Federal banking agencies, in
consultation with the Secretary and the Commission, shall
jointly prescribe regulations to prohibit--
``(A) mortgage originators from steering any consumer
to a residential mortgage loan that--
``(i) the consumer lacks a reasonable ability
to repay (in accordance with regulations
prescribed under section 129C(a));
``(ii) in the case of a refinancing of a
residential mortgage loan, does not provide the
consumer with a net tangible benefit (in
accordance with regulations prescribed under
section 129C(b)); or
``(iii) has predatory characteristics or
effects (such as equity stripping, excessive
fees, or abusive terms);
``(B) mortgage originators from steering any consumer
from a residential mortgage loan for which the consumer
is qualified that is a qualified mortgage (as defined
in section 129C(c)(3)) to a residential mortgage loan
that is not a qualified mortgage;
``(C) abusive or unfair lending practices that
promote disparities among consumers of equal credit
worthiness but of different race, ethnicity, gender, or
age; and
``(D) mortgage originators from assessing excessive
points and fees (as such term is described under
section 103(aa)(4) of the Truth in Lending Act (15
U.S.C. 1602(aa)(4))) to a consumer for the origination
of a residential mortgage loan based on such consumer's
decision to finance all or part of the payment through
the rate for such points and fees.
``(3) Rules of construction.--No provision of this subsection
shall be construed as--
``(A) permitting yield spread premiums or other
similar incentive compensation;
``(B) affecting the mechanism for providing the total
amount of direct and indirect compensation permitted to
a mortgage originator;
``(C) limiting or affecting the amount of
compensation received by a creditor upon the sale of a
consummated loan to a subsequent purchaser;
``(D) restricting a consumer's ability to finance,
including through rate or principal, any origination
fees or costs permitted under this subsection, or the
mortgage originator's ability to receive such fees or
costs (including compensation) from any person, so long
as such fees or costs were fully and clearly disclosed
to the consumer earlier in the application process as
required by 129B(b)(1)(C)(i) and do not vary based on
the terms of the loan (other than the amount of the
principal) or the consumer's decision about whether to
finance such fees or costs; or
``(E) prohibiting incentive payments to a mortgage
originator based on the number of residential mortgage
loans originated within a specified period of time.''.

SEC. 104. LIABILITY.

Section 129B of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 103) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.--For purposes of providing a cause of
action for any failure by a mortgage originator to comply with
any requirement imposed under this section and any regulation
prescribed under this section, subsections (a) and (b) of
section 130 shall be applied with respect to any such failure
by substituting `mortgage originator' for `creditor' each place
such term appears in each such subsection.
``(2) Maximum.--The maximum amount of any liability of a
mortgage originator under paragraph (1) to a consumer for any
violation of this section shall not exceed the greater of
actual damages or an amount equal to 3 times the total amount
of direct and indirect compensation or gain accruing to the
mortgage originator in connection with the residential mortgage
loan involved in the violation, plus the costs to the consumer
of the action, including a reasonable attorney's fee.''.

SEC. 105. REGULATIONS.

(a) Discretionary Regulatory Authority.--Section 129B of the Truth in
Lending Act is amended by inserting after subsection (d) (as added by
section 104) the following new subsection:
``(e) Discretionary Regulatory Authority.--
``(1) In general.--The Federal banking agencies shall, by
regulations issued jointly, prohibit or condition terms, acts
or practices relating to residential mortgage loans that the
agencies find to be abusive, unfair, deceptive, predatory,
inconsistent with reasonable underwriting standards, necessary
or proper to effectuate the purposes of this section and
section 129C, to prevent circumvention or evasion thereof, or
to facilitate compliance with such sections, or are not in the
interest of the borrower.
``(2) Application.--The regulations prescribed under
paragraph (1) shall be applicable to all residential mortgage
loans and shall be applied in the same manner as regulations
prescribed under section 105.
``(f) Section 129B and any regulations promulgated thereunder do not
apply to an extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.''.
(b) Effective Date.--The regulations required or authorized to be
prescribed under this title or the amendments made by this title--
(1) shall be prescribed in final form before the end of the
12-month period beginning on the date of the enactment of this
Act; and
(2) shall take effect not later than 18 months after the date
of the enactment of this Act.
(c) Truth in Lending Final Rule.--Notwithstanding any other provision
of this Act, the regulations adopted by the Board concerning Truth in
Lending, 73 Fed. Reg. 44522 (July 30, 2008), shall take effect as
decided by the Board with such exceptions or revisions as the Board
determines necessary.
(d) Technical and Conforming Amendments.--Section 129(l)(2) of the
Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by inserting
``referred to in section 103(aa)'' after ``loans'' each place such term
appears.

SEC. 106. RESPA AND TILA DISCLOSURE IMPROVEMENT.

(a) Compatible Disclosures.--The Secretary of Housing and Urban
Development and the Board of Governors of the Federal Reserve shall,
not later than the expiration of the 6-month period beginning upon the
date of the enactment of this Act, jointly issue for public comment
proposed regulations providing for compatible disclosures for borrowers
to receive at the time of mortgage application and at the time of
closing.
(b) Requirements.--Such disclosures shall--
(1) provide clear and concise information to borrowers on the
terms and costs of residential mortgage transactions and
mortgage transactions covered by the Truth in Lending Act (12
U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.);
(2) satisfy the requirements of section 128 of the Truth in
Lending Act (12 U.S.C. 1638) and section 4 and 5 of the Real
Estate Settlement Procedures Act of 1974; and
(3) comprise early disclosures under the Truth in Lending Act
and the good faith estimate disclosures under the Real Estate
Settlement Procedures Act of 1974 and final Truth in Lending
Act disclosures and the uniform settlement statement
disclosures under Real Estate Settlement Procedures Act of 1974
and provide for standardization to the greatest extent possible
among such disclosures from mortgage origination through the
mortgage settlement.
(4) shall include, with respect to a residential home
mortgage loan, a written statement of--
(A) the principal amount of the loan;
(B) the term of the loan;
(C) whether the loan has a fixed rate of interest or
an adjustable rate of interest;
(D) the annual percentage rate of interest under the
loan as of the time of the disclosure;
(E) if the rate of interest under the loan can adjust
after the disclosure, for each such possible
adjustment--
(i) when such adjustment will or may occur;
and
(ii) the maximum annual percentage rate of
interest to which it can be adjusted;
(F) the total monthly payment under the loan
(including loan principal and interest, property taxes,
and insurance) at the time of the disclosure;
(G) the maximum total estimated monthly maximum
payment pursuant to each such possible adjustment;
(H) the total settlement charges in connection with
the loan and the amount of any downpayment and cash
required at settlement; and
(I) whether or not the loan has a prepayment penalty
or balloon payment and the terms, timing, and amount of
any such penalty or payment.
(c) Suspension of 2008 Respa Rule.--
(1) Requirement.--The Secretary of Housing and Urban
Development shall, during the period beginning on the date of
the enactment of this Act and ending upon issuance of proposed
regulations pursuant to subsection (a), suspend implementation
of any provisions of the final rule referred to in paragraph
(2) that would establish and implement a new standardized good
faith estimate and a new standardized uniform settlement
statement. Any such provisions shall be replaced by the
regulations issued pursuant to subsections (a) and (b).
(2) 2008 rule.--The final rule referred to in this paragraph
is the rule of the Department of Housing and Urban Development
published on November 17, 2008, on pages 68204-68288 of Volume
73 of the Federal Register (Docket No. FR-5180-F-03; relating
to ``Real Estate Settlement Procedures Act (RESPA): Rule to
Simplify and Improve the Process of Obtaining Mortgages and
Reduce Consumer Settlement Costs'').
(d) Implementation.--The regulations required under subsection (a)
shall take effect, and shall provide an implementation date for the new
disclosures required under such regulations, not later than the
expiration of the 12-month period beginning upon the date of the
enactment of this Act.
(e) Failure to Issue Compatible Disclosures.--If the Secretary of
Housing and Urban Development and the Board of Governors of the Federal
Reserve System cannot agree on compatible disclosures pursuant to
subsections (a) and (b), the Secretary and the Board shall submit a
report to the Congress, after the 6-month period referred to in
subsection (a), explaining the reasons for such disagreement. After the
15-day period beginning upon submission of such report, the Secretary
and the Board may separately issue for public comment regulations
providing for disclosures under the Real Estate Settlement Procedures
Act of 1974 and the Truth in Lending Act, respectively. Any final
disclosures as a result of such regulations issued by the Secretary and
the Board shall take effect on the same date, and not later than the
expiration of the 12-month period beginning on the date of the
enactment of this Act. If either the Secretary or the Board fails to
act during such 12-month period, either such agency may act
independently and implement final regulations.

TITLE II--MINIMUM STANDARDS FOR MORTGAGES

SEC. 201. ABILITY TO REPAY.

(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129B (as added by
section 102(a)) the following new section:

``Sec. 129C. Minimum standards for residential mortgage loans

``(a) Ability To Repay.--
``(1) In general.--In accordance with regulations prescribed
jointly by the Federal banking agencies, in consultation with
the Commission, no creditor may make a residential mortgage
loan unless the creditor makes a reasonable and good faith
determination based on verified and documented information
that, at the time the loan is consummated, the consumer has a
reasonable ability to repay the loan, according to its terms,
and all applicable taxes, insurance, and assessments.
``(2) Multiple loans.--If the creditor knows, or has reason
to know, that 1 or more residential mortgage loans secured by
the same dwelling will be made to the same consumer, the
creditor shall make a reasonable and good faith determination,
based on verified and documented information, that the consumer
has a reasonable ability to repay the combined payments of all
loans on the same dwelling according to the terms of those
loans and all applicable taxes, insurance, and assessments.
``(3) Basis for determination.--A determination under this
subsection of a consumer's ability to repay a residential
mortgage loan shall include consideration of the consumer's
credit history, current income, expected income the consumer is
reasonably assured of receiving, current obligations, debt-to-
income ratio, employment status, and other financial resources
other than the consumer's equity in the dwelling or real
property that secures repayment of the loan.
``(4) Nonstandard loans.--
``(A) Variable rate loans that defer repayment of any
principal or interest.--For purposes of determining,
under this subsection, a consumer's ability to repay a
variable rate residential mortgage loan that allows or
requires the consumer to defer the repayment of any
principal or interest, the creditor shall use a fully
amortizing repayment schedule.
``(B) Interest-only loans.--For purposes of
determining, under this subsection, a consumer's
ability to repay a residential mortgage loan that
permits or requires the payment of interest only, the
creditor shall use the payment amount required to
amortize the loan by its final maturity.
``(C) Calculation for negative amortization.--In
making any determination under this subsection, a
creditor shall also take into consideration any balance
increase that may accrue from any negative amortization
provision.
``(D) Calculation process.--For purposes of making
any determination under this subsection, a creditor
shall calculate the monthly payment amount for
principal and interest on any residential mortgage loan
by assuming--
``(i) the loan proceeds are fully disbursed
on the date of the consummation of the loan;
``(ii) the loan is to be repaid in
substantially equal monthly amortizing payments
for principal and interest over the entire term
of the loan with no balloon payment, unless the
loan contract requires more rapid repayment
(including balloon payment), in which case the
contract's repayment schedule shall be used in
this calculation; and
``(iii) the interest rate over the entire
term of the loan is a fixed rate equal to the
fully indexed rate at the time of the loan
closing, without considering the introductory
rate.
``(5) Fully-indexed rate defined.--For purposes of this
subsection, the term `fully indexed rate' means the index rate
prevailing on a residential mortgage loan at the time the loan
is made plus the margin that will apply after the expiration of
any introductory interest rates.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129B (as added by section 102(b)) the following new item:

``129C. Minimum standards for residential mortgage loans.''.

SEC. 202. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE
LOANS.

Section 129C of the Truth in Lending Act (as added by section 201(a))
is amended by inserting after subsection (a) the following new
subsection:
``(b) Net Tangible Benefit for Refinancing of Residential Mortgage
Loans.--
``(1) In general.--In accordance with regulations prescribed
under paragraph (3), no creditor may extend credit in
connection with any residential mortgage loan that involves a
refinancing of a prior existing residential mortgage loan
unless the creditor reasonably and in good faith determines, at
the time the loan is consummated and on the basis of
information known by or obtained in good faith by the creditor,
that the refinanced loan will provide a net tangible benefit to
the consumer.
``(2) Certain loans providing no net tangible benefit.--A
residential mortgage loan that involves a refinancing of a
prior existing residential mortgage loan shall not be
considered to provide a net tangible benefit to the consumer if
the costs of the refinanced loan, including points, fees and
other charges, exceed the amount of any newly advanced
principal without any corresponding changes in the terms of the
refinanced loan that are advantageous to the consumer.
``(3) Net tangible benefit.--The Federal banking agencies
shall jointly prescribe regulations defining the term `net
tangible benefit' for purposes of this subsection.''.

SEC. 203. SAFE HARBOR AND REBUTTABLE PRESUMPTION.

Section 129C of the Truth in Lending Act is amended by inserting
after subsection (b) (as added by section 202) the following new
subsection:
``(c) Presumption of Ability To Repay and Net Tangible Benefit.--
``(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee or securitizer of
such loan, may presume that the loan has met the requirements
of subsections (a) and (b), if the loan is a qualified
mortgage.
``(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Qualified mortgage.--The term `qualified
mortgage' means any residential mortgage loan--
``(i) that does not allow a consumer to defer
repayment of principal or interest, or is not
otherwise deemed a `non-traditional mortgage'
under guidance, advisories, or regulations
prescribed by the Federal Banking Agencies;
``(ii) that does not provide for a repayment
schedule that results in negative amortization
at any time;
``(iii) for which the terms are fully
amortizing and which does not result in a
balloon payment, where a `balloon payment' is a
scheduled payment that is more than twice as
large as the average of earlier scheduled
payments;
``(iv) which has an annual percentage rate
that does not exceed the average prime offer
rate for a comparable transaction, as of the
date the interest rate is set--
``(I) by 1.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that does not exceed the amount of the
maximum limitation on the original
principal obligation of mortgage in
effect for a residence of the
applicable size, as of the date of such
interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2)); and
``(II) by 2.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that exceeds the amount of the maximum
limitation on the original principal
obligation of mortgage in effect for a
residence of the applicable size, as of
the date of such interest rate set,
pursuant to the sixth sentence of
section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C.
1454(a)(2));
``(v) for which the income and financial
resources relied upon to qualify the obligors
on the loan are verified and documented;
``(vi) in the case of a fixed rate loan, for
which the underwriting process is based on a
payment schedule that fully amortizes the loan
over the loan term and takes into account all
applicable taxes, insurance, and assessments;
``(vii) in the case of an adjustable rate
loan, for which the underwriting is based on
the maximum rate permitted under the loan
during the first seven years, and a payment
schedule that fully amortizes the loan over the
loan term and takes into account all applicable
taxes, insurance, and assessments;
``(viii) that does not cause the consumer's
total monthly debts, including amounts under
the loan, to exceed a percentage established by
regulation of the consumer's monthly gross
income or such other maximum percentage of such
income as may be prescribed by regulation under
paragraph (4), and such rules shall also take
into consideration the consumer's income
available to pay regular expenses after payment
of all installment and revolving debt;
``(ix) for which the total points and fees
payable in connection with the loan do not
exceed 2 percent of the total loan amount,
where `points and fees' means points and fees
as defined by Section 103(aa)(4) of the Truth
in Lending Act (15 U.S.C. 1602(aa)(4)); and
``(x) for which the term of the loan does not
exceed 30 years, except as such term may be
extended under paragraph (4).
``(B) Average prime offer rate.--The term `average
prime offer rate' means an annual percentage rate that
is derived from average interest rates, points, and
other loan pricing terms currently offered to consumers
by a representative sample of creditors for mortgage
transactions that have low risk pricing
characteristics.
``(3) Publication of average prime offer rate.--The Board--
``(A) shall publish, and update at least weekly,
average prime offer rates; and
``(B) may publish multiple rates based on varying
types of mortgage transactions.
``(4) Regulations.--
``(A) In general.--The Federal banking agencies shall
jointly prescribe regulations to carry out the purposes
of this subsection.
``(B) Revision of safe harbor criteria.--
``(i) In general.--The Federal banking
agencies may jointly prescribe regulations that
revise, add to, or subtract from the criteria
that define a qualified mortgage upon a finding
that such regulations are necessary and
appropriate to effectuate the purposes of this
section and section 129B, to prevent
circumvention or evasion thereof, or to
facilitate compliance with such sections.
``(ii) Loan definition.--The following
agencies shall prescribe rules defining the
types of loans they insure, guarantee or
administer, as the case may be, that are
Qualified Mortgages for purposes of subsection
(c)(1)(A) upon a finding that such rules are
consistent with the purposes of this section
and section 129B, to prevent circumvention or
evasion thereof, or to facilitate compliance
with such sections--
``(I) The Department of Housing and
Urban Development, with regard to
mortgages insured under title II of the
National Housing Act (12 U.S.C. 1707 et
seq.);
``(II) The Secretary of Veterans
Affairs, with regard to a loan made or
guaranteed by the Secretary of Veterans
Affairs;
``(III) The Secretary of Agriculture,
with regard loans guaranteed by the
Secretary of Agriculture pursuant to 42
U.S.C. 1472(h);
``(IV) The Federal Housing Finance
Agency, with regard to loans meeting
the conforming loan standards of the
Federal National Mortgage Corporation
or the Federal Home Loan Mortgage
Corporation; and
``(V) The Rural Housing Service, with
regard to loans insured by the Rural
Housing Service.''.

SEC. 204. LIABILITY.

Section 129C of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 203) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.--
``(A) Rescission.--In addition to any other liability
under this title for a violation by a creditor of
subsection (a) or (b) (for example under section 130)
and subject to the statute of limitations in paragraph
(9), a civil action may be maintained against a
creditor for a violation of subsection (a) or (b) with
respect to a residential mortgage loan for the
rescission of the loan, and such additional costs as
the obligor may have incurred as a result of the
violation and in connection with obtaining a rescission
of the loan, including a reasonable attorney's fee.
``(B) Cure.--A creditor shall not be liable for
rescission under subparagraph (A) with respect to a
residential mortgage loan if, no later than 90 days
after the receipt of notification from the consumer
that the loan violates subsection (a) or (b), the
creditor provides a cure.
``(2) Limited assignee and securitizer liability.--
Notwithstanding sections 125(e) and 131 and except as provided
in paragraph (3), a civil action which may be maintained
against a creditor with respect to a residential mortgage loan
for a violation of subsection (a) or (b) may be maintained
against any assignee or securitizer of such residential
mortgage loan, who has acted in good faith, for the following
liabilities only:
``(A) Rescission of the loan.
``(B) Such additional costs as the obligor may have
incurred as a result of the violation and in connection
with obtaining a rescission of the loan, including a
reasonable attorney's fee.
``(3) Assignee and securitizer exemption.--No assignee or
securitizer of a residential mortgage loan that has exercised
reasonable due diligence in complying with the requirements of
subsections (a) and (b) shall be liable under paragraph (2)
with respect to such loan if, no later than 90 days after the
receipt of notification from the consumer that the loan
violates subsection (a) or (b), the assignee or securitizer
provides a cure so that the loan satisfies the requirements of
subsections (a) and (b).
``(4) Absent parties.--
``(A) Absent creditor.--Notwithstanding the exemption
provided in paragraph (3), if the creditor with respect
to a residential mortgage loan made in violation of
subsection (a) or (b) has ceased to exist as a matter
of law or has filed for bankruptcy protection under
title 11, United States Code, or has had a receiver,
conservator, or liquidating agent appointed, a consumer
may maintain a civil action against an assignee to cure
the residential mortgage loan, plus the costs and
reasonable attorney's fees incurred in obtaining such
remedy.
``(B) Absent creditor and assignee.--Notwithstanding
the exemption provided in paragraph (3), if the
creditor with respect to a residential mortgage loan
made in violation of subsection (a) or (b) and each
assignee of such loan have ceased to exist as a matter
of law or have filed for bankruptcy protection under
title 11, United States Code, or have had receivers,
conservators, or liquidating agents appointed, the
consumer may maintain the civil action referred to in
subparagraph (A) against the securitizer.
``(5) Cure defined.--For purposes of this subsection, the
term `cure' means, with respect to a residential mortgage loan
that violates subsection (a) or (b), the modification or
refinancing, at no cost to the consumer, of the loan to provide
terms that satisfy the requirements of subsections (a) and (b)
and the payment of such additional costs as the obligor may
have incurred in connection with obtaining a cure of the loan,
including a reasonable attorney's fee.
``(6) Disagreement over cure.--If any creditor, assignee, or
securitizer and a consumer fail to reach agreement on a cure
with respect to a residential mortgage loan that violates
subsection (a) or (b), or the consumer fails to accept a cure
proffered by a creditor, assignee, or securitizer--
``(A) the creditor, assignee, or securitizer may
provide the cure; and
``(B) the consumer may challenge the adequacy of the
cure during the 6-month period beginning when the cure
is provided.
If the consumer's challenge, under this paragraph, of a cure is
successful, the creditor, assignee, or securitizer shall be
liable to the consumer for rescission of the loan and such
additional costs under paragraph (2).
``(7) Inability to provide or obtain rescission.--If a
creditor, assignee, or securitizer cannot provide, or a
consumer cannot obtain, rescission under paragraph (1) or (2),
the liability of such creditor, assignee, or securitizer shall
be met by providing the financial equivalent of a rescission,
together with such additional costs as the obligor may have
incurred as a result of the violation and in connection with
obtaining a rescission of the loan, including a reasonable
attorney's fee.
``(8) No class actions against assignee or securitizer under
paragraph (2).--Only individual actions may be brought against
an assignee or securitizer of a residential mortgage loan for a
violation of subsection (a) or (b).
``(9) Statute of limitations.--The liability of a creditor,
assignee, or securitizer under this subsection shall apply in
any original action against a creditor under paragraph (1) or
an assignee or securitizer under paragraph (2) which is brought
before--
``(A) in the case of any residential mortgage loan
other than a loan to which subparagraph (B) applies,
the end of the 3-year period beginning on the date the
loan is consummated; or
``(B) in the case of a residential mortgage loan that
provides for a fixed interest rate for an introductory
period and then resets or adjusts to a variable rate or
that provides for a nonamortizing payment schedule and
then converts to an amortizing payment schedule, the
earlier of--
``(i) the end of the 1-year period beginning
on the date of such reset, adjustment, or
conversion; or
``(ii) the end of the 6-year period beginning
on the date the loan is consummated.
``(10) Pools and investors in pools excluded.--In the case of
residential mortgage loans acquired or aggregated for the
purpose of including such loans in a pool of assets held for
the purpose of issuing or selling instruments representing
interests in such pools including through a securitization
vehicle, the terms `assignee' and `securitizer', as used in
this section, do not include the securitization vehicle, the
pools of such loans or any original or subsequent purchaser of
any interest in the securitization vehicle or any instrument
representing a direct or indirect interest in such pool.
``(e) Obligation of Securitizers, and Preservation of Borrower
Remedies.--
``(1) Obligation to retain access.--Any securitizer of a
residential mortgage loan sold or to be sold as part of a
securitization vehicle shall, in any document or contract
providing for the transfer, conveyance, or the establishment of
such securitization vehicle, reserve the right and preserve the
ability--
``(A) to identify and obtain access to any such loan;
``(B) to acquire any such loan in the event of a
violation of subsections (a) or (b) of this section;
and
``(C) to provide to the consumer any and all remedies
provided for under this title for any violation of this
title.
``(2) Additional damages.--Any creditor, assignee, or
securitizer of a residential mortgage loan that is subject to a
remedy under subsection (d) and has failed to comply with
paragraph (1) shall be subject to additional exemplary or
punitive damages not to exceed the original principal balance
of such loan.
``(3) Contact information notice.--The servicer with respect
to a residential mortgage loan shall provide a written notice
to a consumer identifying the name and contact information of
the creditor or any assignee or securitizer who should be
contacted by the consumer for any reason concerning the
consumer's rights with respect to the loan. Such notice shall
be provided--
``(A) upon request of the consumer;
``(B) whenever there is a change in ownership of a
residential mortgage loan; or
``(C) on a regular basis, not less than annually.
``(f) Rules to Establish Process.--The Board shall promulgate rules
to govern the rescission process established for violations of
subsections (a) and (b) of this section. Such rules shall provide that
notice given to a servicer or holder is sufficient notice regardless of
the identity of the party or the parties liable under this title.''.

SEC. 205. DEFENSE TO FORECLOSURE.

Section 129C of the Truth in Lending Act is amended by inserting
after subsection (f) (as added by section 204) the following new
subsections:
``(g) Defense to Foreclosure.--Notwithstanding any other provision of
law--
``(1) when the holder of a residential mortgage loan or
anyone acting for such holder initiates a judicial or
nonjudicial foreclosure--
``(A) a consumer who has the right to rescind under
this section with respect to such loan against the
creditor or any assignee or securitizer may assert such
right as a defense to foreclosure or counterclaim to
such foreclosure against the holder, or
``(B) if the foreclosure proceeding begins after the
end of the period during which a consumer may bring an
action for rescission under subsection (d) and the
consumer would have had a valid basis for such an
action if it had been brought before the end of such
period, the consumer may seek actual damages incurred
by reason of the violation which gave rise to the right
of rescission, together with costs of the action,
including a reasonable attorney's fee against the
creditor or any assignee or securitizer; and
``(2) such holder or anyone acting for such holder or any
other applicable third party may sell, transfer, convey, or
assign a residential mortgage loan to a creditor, any assignee,
or any securitizer, or their designees, to effect a rescission
or cure.''.

SEC. 206. ADDITIONAL STANDARDS AND REQUIREMENTS.

(a) In General.--Section 129C of the Truth in Lending Act is amended
by inserting after subsection (g) (as added by section 205) the
following new subsections:
``(h) Prohibition on Certain Prepayment Penalties.--
``(1) Prohibited on certain loans.--A residential mortgage
loan that is not a `qualified mortgage' may not contain terms
under which a consumer must pay a prepayment penalty for paying
all or part of the principal after the loan is consummated. For
purposes of this subsection, a `qualified mortgage' may not
include a residential mortgage loan that has an adjustable
rate.
``(2) Phased-out penalties on qualified mortgages.--A
qualified mortgage (as defined in subsection (c)) may not
contain terms under which a consumer must pay a prepayment
penalty for paying all or part of the principal after the loan
is consummated in excess of the following limitations:
``(A) During the 1-year period beginning on the date
the loan is consummated, the prepayment penalty shall
not exceed an amount equal to 3 percent of the
outstanding balance on the loan.
``(B) During the 1-year period beginning after the
period described in subparagraph (A), the prepayment
penalty shall not exceed an amount equal to 2 percent
of the outstanding balance on the loan.
``(C) During the 1-year period beginning after the 1-
year period described in subparagraph (B), the
prepayment penalty shall not exceed an amount equal to
1 percent of the outstanding balance on the loan.
``(D) After the end of the 3-year period beginning on
the date the loan is consummated, no prepayment penalty
may be imposed on a qualified mortgage.
``(3) Prohibited after initial period on loans with a
reset.--A qualified mortgage with a fixed interest rate for an
introductory period that adjusts or resets after such period
may not contain terms under which a consumer must pay a
prepayment penalty for paying all or part of the principal
after the beginning of the 3-month period ending on the date of
the adjustment or reset.
``(4) Option for no prepayment penalty required.--A creditor
may not offer a consumer a residential mortgage loan product
that has a prepayment penalty for paying all or part of the
principal after the loan is consummated as a term of the loan
without offering the consumer a residential mortgage loan
product that does not have a prepayment penalty as a term of
the loan.
``(i) Single Premium Credit Insurance Prohibited.--No creditor may
finance, directly or indirectly, in connection with any residential
mortgage loan or with any extension of credit under an open end
consumer credit plan secured by the principal dwelling of the consumer
(other than a reverse mortgage), any credit life, credit disability,
credit unemployment or credit property insurance, or any other
accident, loss-of-income, life or health insurance, or any payments
directly or indirectly for any debt cancellation or suspension
agreement or contract, except that--
``(1) insurance premiums or debt cancellation or suspension
fees calculated and paid in full on a monthly basis shall not
be considered financed by the creditor; and
``(2) this subsection shall not apply to credit unemployment
insurance for which the unemployment insurance premiums are
reasonable, the creditor receives no direct or indirect
compensation in connection with the unemployment insurance
premiums, and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to an
affiliate of the creditor.
``(j) Arbitration.--
``(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit plan
secured by the principal dwelling of the consumer, other than a
reverse mortgage, may include terms which require arbitration
or any other nonjudicial procedure as the method for resolving
any controversy or settling any claims arising out of the
transaction.
``(2) Post-controversy agreements.--Subject to paragraph (3),
paragraph (1) shall not be construed as limiting the right of
the consumer and the creditor, any assignee, or any securitizer
to agree to arbitration or any other nonjudicial procedure as
the method for resolving any controversy at any time after a
dispute or claim under the transaction arises.
``(3) No waiver of statutory cause of action.--No provision
of any residential mortgage loan or of any extension of credit
under an open end consumer credit plan secured by the principal
dwelling of the consumer (other than a reverse mortgage), and
no other agreement between the consumer and the creditor
relating to the residential mortgage loan or extension of
credit referred to in paragraph (1), shall be applied or
interpreted so as to bar a consumer from bringing an action in
an appropriate district court of the United States, or any
other court of competent jurisdiction, pursuant to section 130
or any other provision of law, for damages or other relief in
connection with any alleged violation of this section, any
other provision of this title, or any other Federal law.
``(k) Mortgages With Negative Amortization.--No creditor may extend
credit to a borrower in connection with a consumer credit transaction
under an open or closed end consumer credit plan secured by a dwelling
or residential real property that includes a dwelling, other than a
reverse mortgage, that provides or permits a payment plan that may, at
any time over the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
``(1) the creditor provides the consumer with a statement
that--
``(A) the pending transaction will or may, as the
case may be, result in negative amortization;
``(B) describes negative amortization in such manner
as the Federal banking agencies shall prescribe;
``(C) negative amortization increases the outstanding
principal balance of the account; and
``(D) negative amortization reduces the consumer's
equity in the dwelling or real property; and
``(2) in the case of a first-time borrower with respect to a
residential mortgage loan that is not a qualified mortgage, the
first-time borrower provides the creditor with sufficient
documentation to demonstrate that the consumer received
homeownership counseling from organizations or counselors
certified by the Secretary of Housing and Urban Development as
competent to provide such counseling.''.
(b) Conforming Amendment Relating to Enforcement.--Section 108(a) of
the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting
after paragraph (6) the following new paragraph:
``(7) sections 21B and 21C of the Securities Exchange Act of
1934, in the case of a broker or dealer, other than a
depository institution, by the Securities and Exchange
Commission.''.

SEC. 207. RULE OF CONSTRUCTION.

Except as otherwise expressly provided in section 129B or 129C of the
Truth in Lending Act (as added by this Act), no provision of such
section 129B or 129C shall be construed as superseding, repealing, or
affecting any duty, right, obligation, privilege, or remedy of any
person under any other provision of the Truth in Lending Act or any
other provision of Federal or State law.

SEC. 208. EFFECT ON STATE LAWS.

(a) In General.--Except as provided in subsection (b), section
129C(d) of the Truth in Lending Act (as added by section 204) shall
supersede any State law to the extent that it provides additional
remedies against any assignee, securitizer, or securitization vehicle
for a violation of subsection (a) or (b) of section 129C of such Act or
any other State law the terms of which address the specific subject
matter of subsection (a) (determination of ability to repay) or (b)
(requirement of a net tangible benefit) of section 129C of such Act,
and the remedies described in section 129C(d) shall constitute the sole
remedies against any assignee, securitizer, or securitization vehicle
for such violations.
(b) Rules of Construction.--No provision of this section shall be
construed as limiting--
(1) the application of any State law, or the availability of
remedies under such law, against a creditor for a particular
residential mortgage loan regardless of whether such creditor
also acts as an assignee, securitizer, or securitization
vehicle for such loan;
(2) the application of any State law, or the availability of
remedies under such law, against an assignee, securitizer, or
securitization vehicle under State law, other than a provision
of such law the terms of which address the specific subject
matter of subsection (a) (determination of ability to repay) or
(b) (requirement of a net tangible benefit) of section 129C of
such Act;
(3)(A) the application of any State law, or the availability
of remedies under such law, against an assignee, securitizer or
securitization vehicle for its participation in or direction of
the credit or underwriting decisions of a creditor relating to
the making of a residential mortgage loan; or
(B) the ability of a consumer to assert any rights against or
obtain any remedies from an assignee, securitizer or
securitization vehicle with respect to a residential mortgage
loan as a defense to foreclosure under section 129C(g); or
(4) the availability of any equitable remedies, including
injunctive relief, under State law.

SEC. 209. REGULATIONS.

Regulations required or authorized to be prescribed under this title
or the amendments made by this title--
(1) shall be prescribed in final form before the end of the
12-month period beginning on the date of the enactment of this
Act; and
(2) shall take effect not later than 18 months after the date
of the enactment of this Act.

SEC. 210. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a)(2) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)) is amended--
(1) by striking ``$100'' and inserting ``$200'';
(2) by striking ``$1,000'' and inserting ``$2,000''; and
(3) by striking ``$500,000'' and inserting ``$1,000,000''.
(b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended--
(1) in the first sentence, by striking ``Any action'' and
inserting ``Except as provided in the subsequent sentence, any
action''; and
(2) by inserting after the first sentence the following new
sentence: ``Any action under this section with respect to any
violation of section 129 may be brought in any United States
district court, or in any other court of competent
jurisdiction, before the end of the 3-year period beginning on
the date of the occurrence of the violation.''.

SEC. 211. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.

Section 130 of the Truth in Lending Act is amended by adding at the
end the following new subsection:
``(k) Exemption From Liability and Rescission in Case of Borrower
Fraud or Deception.--In addition to any other remedy available by law
or contract, no creditor, assignee, or securitizer shall be liable to
an obligor under this section, nor shall it be subject to the right of
rescission of any obligor under 129B, if such obligor, or co-obligor,
knowingly, or willfully and with actual knowledge furnished material
information known to be false for the purpose of obtaining such
residential mortgage loan.''.

SEC. 212. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE
RATE MORTGAGES.

(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 128 the following
new section:

``Sec. 128A. Reset of hybrid adjustable rate mortgages

``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of this
section, the term `hybrid adjustable rate mortgage' means a consumer
credit transaction secured by the consumer's principal residence with a
fixed interest rate for an introductory period that adjusts or resets
to a variable interest rate after such period.
``(b) Notice of Reset and Alternatives.--During the 1-month period
that ends 6 months before the date on which the interest rate in effect
during the introductory period of a hybrid adjustable rate mortgage
adjusts or resets to a variable interest rate or, in the case of such
an adjustment or resetting that occurs within the first 6 months after
consummation of such loan, at consummation, the creditor or servicer of
such loan shall provide a written notice, separate and distinct from
all other correspondence to the consumer, that includes the following:
``(1) Any index or formula used in making adjustments to or
resetting the interest rate and a source of information about
the index or formula.
``(2) An explanation of how the new interest rate and payment
would be determined, including an explanation of how the index
was adjusted, such as by the addition of a margin.
``(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of the
monthly payment that will apply after the date of the
adjustment or reset, and the assumptions on which this estimate
is based.
``(4) A list of alternatives consumers may pursue before the
date of adjustment or reset, and descriptions of the actions
consumers must take to pursue these alternatives, including--
``(A) refinancing;
``(B) renegotiation of loan terms;
``(C) payment forbearances; and
``(D) pre-foreclosure sales.
``(5) The names, addresses, telephone numbers, and Internet
addresses of counseling agencies or programs reasonably
available to the consumer that have been certified or approved
and made publicly available by the Secretary of Housing and
Urban Development or a State housing finance authority (as
defined in section 1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989).
``(6) The address, telephone number, and Internet address for
the State housing finance authority (as so defined) for the
State in which the consumer resides.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 128 the following new item:

``128A. Reset of hybrid adjustable rate mortgages.''.

SEC. 213. CREDIT RISK RETENTION.

Section 129C of the Truth in Lending Act is amended by inserting
after subsection (k) (as added by section 206) the following new
subsection:
``(l) Credit Risk Retention.--
``(1) In general.--The Federal banking agencies shall
prescribe regulations jointly to require any creditor that
makes a residential mortgage loan that is not a qualified
mortgage (as defined in section 129C(c)(2)(A)), to retain an
economic interest in a material portion of the credit risk for
any such loan that the creditor transfers, sells or conveys to
a third party.
``(2) Standards for regulations.--Regulations prescribed
under paragraph (1) shall--
``(A) apply only to residential mortgage loans that
are not qualified mortgages (as so defined);
``(B) prohibit creditors from directly or indirectly
hedging or otherwise transferring the credit risk
creditors are required to retain under the regulations
with respect to any residential mortgage loan;
``(C) require creditors to retain at least 5 percent
of the credit risk on any non-qualified mortgage that
is transferred, sold or conveyed; and
``(D) specify the permissible forms of the required
risk retention (for example, first loss position or pro
rata vertical slice) and the minimum duration of the
required risk retention.
``(3) Exceptions and adjustments.--
``(A) In general.--The Federal banking agencies shall
have authority to provide exceptions or adjustments to
the requirements of this subsection, including
exceptions or adjustments relating to the 5 percent
risk retention threshold and the hedging prohibition.
``(B) Applicable standards.--Any exceptions or
adjustments granted by the Federal banking agencies
shall--
``(i) be consistent with the purpose of this
subsection to help ensure high quality
underwriting standards for mortgage lenders;
and
``(ii) facilitate appropriate risk management
practices by mortgage lenders, improve access
of consumers to mortgage credit on reasonable
terms, or otherwise serve the public interest.
``(4) Alternative risk retention for securitization
sponsors.--The Federal banking agencies shall have discretion
to apply the risk retention requirements of this subsection to
securitizers of non-qualified mortgages in addition to or in
place of creditors that make non-qualified mortgages if the
agencies determine that applying the requirements to
securitization sponsors rather than originators would--
``(A) be consistent with the purpose of this
subsection to help ensure high quality underwriting
standards for mortgage lenders; and
``(B) facilitate appropriate risk management
practices by mortgage lenders, or improve access of
consumers to mortgage credit on reasonable terms.
``(m) Section 129C and any regulations promulgated thereunder do not
apply to an extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.''.

SEC. 214. REQUIRED DISCLOSURES.

(a) Additional Information.--Section 128(a) of Truth in Lending Act
(15 U.S.C. 1638(a)) is amended by adding at the end the following new
paragraphs:
``(16) In the case of a variable rate residential mortgage
loan for which an escrow or impound account will be established
for the payment of all applicable taxes, insurance, and
assessments--
``(A) the amount of initial monthly payment due under
the loan for the payment of principal and interest, and
the amount of such initial monthly payment including
the monthly payment deposited in the account for the
payment of all applicable taxes, insurance, and
assessments; and
``(B) the amount of the fully indexed monthly payment
due under the loan for the payment of principal and
interest, and the amount of such fully indexed monthly
payment including the monthly payment deposited in the
account for the payment of all applicable taxes,
insurance, and assessments.
``(17) In the case of a residential mortgage loan, the
aggregate amount of settlement charges for all settlement
services provided in connection with the loan, the amount of
charges that are included in the loan and the amount of such
charges the borrower must pay at closing, the approximate
amount of the wholesale rate of funds in connection with the
loan, and the aggregate amount of other fees or required
payments in connection with the loan.
``(18) In the case of a residential mortgage loan, the
aggregate amount of fees paid to the mortgage originator in
connection with the loan, the amount of such fees paid directly
by the consumer, and any additional amount received by the
originator from the creditor.''.
(b) Timing.--Section 128(b) of the Truth in Lending Act (15 U.S.C.
1638(b)) is amended by adding at the end the following new paragraph:
``(4) Residential mortgage loan disclosures.--In the case of
a residential mortgage loan, the information required to be
disclosed under subsection (a) with respect to such loan shall
be disclosed before the earlier of--
``(A) the time required under the first sentence of
paragraph (1); or
``(B) the end of the 3-business-day period beginning
on the date the application for the loan from a
consumer is received by the creditor.''.

SEC. 215. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL
MORTGAGE LOANS.

Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended
by adding at the end the following new subsection:
``(f) Periodic Statements for Residential Mortgage Loans.--
``(1) In general.--The creditor, assignee, or servicer with
respect to any residential mortgage loan shall transmit to the
obligor, for each billing cycle, a statement setting forth each
of the following items, to the extent applicable, in a
conspicuous and prominent manner:
``(A) The amount of the principal obligation under
the mortgage.
``(B) The current interest rate in effect for the
loan.
``(C) The date on which the interest rate may next
reset or adjust.
``(D) The amount of any prepayment fee to be charged,
if any.
``(E) A description of any late payment fees.
``(F) A telephone number and electronic mail address
that may be used by the obligor to obtain information
regarding the mortgage.
``(G) Such other information as the Board may
prescribe in regulations.
``(2) Development and use of standard form.--The Federal
banking agencies shall jointly develop and prescribe a standard
form for the disclosure required under this subsection, taking
into account that the statements required may be transmitted in
writing or electronically.''.

SEC. 216. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.

(a) Establishment.--The Secretary of Housing and Urban Development
(hereafter in this section referred to as the ``Secretary'' shall
establish a program for making grants for providing a full range of
foreclosure legal assistance to low- and moderate-income homeowners and
tenants related to home ownership preservation, home foreclosure
prevention, and tenancy associated with home foreclosure.
(b) Competitive Allocation.--The Secretary shall allocate amounts
made available for grants under this section to State and local legal
organizations on the basis of a competitive process. For purposes of
this subsection ``State and local legal organizations'' are those State
and local organizations whose primary business or mission is to provide
legal assistance.
(c) Priority to Certain Areas.--In allocating amounts in accordance
with subsection (b), the Secretary shall give priority consideration to
State and local legal organizations that are operating in the 100
metropolitan statistical areas (as that term is defined by the Director
of the Office of Management and Budget) with the highest home
foreclosure rates.
(d) Legal Assistance.--
(1) In general.--Any State or local legal organization that
receives financial assistance pursuant to this section may use
such amounts only to assist--
(A) homeowners of owner-occupied homes with mortgages
in default, in danger of default, or subject to or at
risk of foreclosure; and
(B) tenants at risk of or subject to eviction as a
result of foreclosure of the property in which such
tenant resides.
(2) Commence use within 90 days.--Any State or local legal
organization that receives financial assistance pursuant to
this section shall begin using any financial assistance
received under this section within 90 days after receipt of the
assistance.
(3) Prohibition on class actions.--No funds provided to a
State or local legal organization under this section may be
used to support any class action litigation.
(4) Limitation on legal assistance.--Legal assistance funded
with amounts provided under this section shall be limited to
mortgage-related default, eviction, or foreclosure proceedings,
without regard to whether such foreclosure is judicial or
nonjudicial.
(5) Effective date.--Notwithstanding section 217, this
subsection shall take effect on the date of the enactment of
this Act.
(e) Limitation on Distribution of Assistance.--
(1) In general.--None of the amounts made available under
this section shall be distributed to--
(A) any organization which has been indicted for a
violation under Federal law relating to an election for
Federal office; or
(B) any organization which employs applicable
individuals.
(2) Definition of applicable individual.--In this
subparagraph, the term ``applicable individual''' means an
individual who--
(A) is--
(i) employed by the organization in a
permanent or temporary capacity;
(ii) contracted or retained by the
organization; or
(iii) acting on behalf of, or with the
express or apparent authority of, the
organization; and
(B) has been indicted for a violation under Federal
law relating to an election for Federal office.
(f) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $35,000,000 for each of fiscal years 2009
through 2012 for grants under this section.

SEC. 217. EFFECTIVE DATE.

The amendments made by this title shall apply to transactions
consummated on or after the effective date of the regulations specified
in section 209.

SEC. 218. REPORT BY THE GAO.

(a) Report Required.--The Comptroller General shall conduct a study
to determine the effects the enactment of this Act will have on the
availability and affordability of credit for homebuyers and mortgage
lending, including the effect--
(1) on the mortgage market for mortgages that are not within
the safe harbor provided in the amendments made by this title;
(2) on the ability of prospective homebuyers to obtain
financing;
(3) on the ability of homeowners facing resets or adjustments
to refinance--for example, do they have fewer refinancing
options due to the unavailability of certain loan products that
were available before the enactment of this Act;
(4) on minorities' ability to access affordable credit
compared with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on adjustable
rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an investor's
ability to transfer a property after foreclosure;
(8) of expanding the existing provisions of the Home
Ownership and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-cost
mortgages; and
(10) of establishing counseling services under the Department
of Housing and Urban Development and offered through the Office
of Housing Counseling.
(b) Report.--Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report to the Congress containing the findings and conclusions of the
Comptroller General with respect to the study conducted pursuant to
subsection (a).
(c) Examination Related to Certain Credit Risk Retention
Provisions.--The report required by subsection (b) shall also include
an analysis by the Comptroller General of the effect on the capital
reserves and funding of lenders of credit risk retention provisions for
non-qualified mortgages.

SEC. 219. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.

Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended by striking ``section 129 may also'' and inserting ``section
129, 129B, or 129C of this Act, section 219 of the Mortgage Reform and
Anti-Predatory Lending Act, or any amendment made by section 219 of the
Mortgage Reform and Anti-Predatory Lending Act may also''.

SEC. 220. TENANT PROTECTION.

(a) Tenant Protection Generally.--
(1) In general.--In the case of any foreclosure on any
dwelling or residential real property, after the date of the
enactment of the Mortgage Reform and Anti-Predatory Lending
Act, the immediate successor in interest in such property
pursuant to the foreclosure shall assume such interest subject
to--
(A) except as provided in paragraph (2), the rights
of any bona fide tenant, as of the date of foreclosure
under any bona fide lease entered into before the date
of foreclosure, to occupy the premises until the end of
the remaining term of the lease; and
(B) the rights of any bona fide tenant, as of the
date of foreclosure, without a lease or with a lease
terminable at will under State law, subject to the
provision by the immediate successor in interest and
the receipt by the tenant in the unit, of a notice to
vacate at least 90 days before the effective date of
such notice.
(2) Exception for subsequent owner-occupant.--Notwithstanding
paragraph (1), if the immediate successor in interest of any
dwelling or residential real property that is otherwise subject
to paragraph (1) is a purchaser who will occupy a unit of the
dwelling or residential real property as a primary residence,
or such successor in interest sells the dwelling or residential
real property to a purchaser who will occupy a unit of the
dwelling or residential real property, as a primary residence--
(A) such purchaser may terminate a lease relating to
such unit on the effective date of a notice to vacate;
and
(B) such notice to vacate shall be provided by the
purchaser to the tenant in such unit at least 90 days
before the effective date of such notice.
(3) Bona fide lease or tenancy.--For purposes of this
subsection, 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; and
(C) the lease or tenancy requires the receipt of rent
that is not substantially less than fair market rent
for the property or the unit's rent is reduced or
subsidized due to a Federal, State, or local subsidy.
(4) Rule of construction.--Except for the specific provisions
of this subsection, no provision of this subsection shall be
construed as affecting the requirements for termination of any
Federal- or State-subsidized tenancy. The provisions of this
subsection shall not be construed to limit any State or local
law that provides longer time periods or other additional
protections for tenants.
(b) Corresponding Provision Relating to Effect of Foreclosures on
Section 8 Tenancies.--Paragraph (7) of section 8(o) of the United
States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended--
(1) in subparagraph (C), by inserting before the semicolon at
the end the following: ``, and in the case of an owner who is
an immediate successor in interest pursuant to foreclosure--
``(i) during the initial term of the tenant's
lease, having the property vacant prior to sale
shall not constitute good cause; and
``(ii) in subsequent lease terms of the
tenant's lease, who will occupy the unit as a
primary residence, who sells the property to a
purchaser who will occupy a unit of the
property as a primary residence, or if the unit
is unmarketable while occupied, such owner may
terminate a lease relating to such unit for
good cause on the effective date of the notice
to vacate, where such notice is provided by the
owner to the tenant in such unit at least 90
days before the effective date of such
notice;''.
(2) in subparagraph (E), by striking ``and'' at the end;
(3) by redesignating subparagraph (F) as subparagraph (G);
and
(4) by inserting after subparagraph (E) the following:
``(F) shall provide that in the case of any
foreclosure on any residential real property in which a
recipient of assistance under this subsection resides,
the immediate successor in interest in such property
pursuant to the foreclosure shall assume such interest
subject to the lease between the prior owner and the
tenant and to the housing assistance payments contract
between the prior owner and the public housing agency
for the occupied unit; if a public housing agency is
unable to make payments under the contract to the
immediate successor in interest after foreclosure, due
to action or inaction by the successor in interest,
including the rejection of payments or the failure of
the successor to maintain the unit in compliance with
paragraph (8) or an inability to identify the
successor, the agency may use funds that would have
been used to pay the rental amount on behalf of the
family--
``(i) to pay for utilities that are the
responsibility of the owner under the lease or
applicable law, after taking reasonable steps
to notify the owner that it intends to make
payments to a utility provider in lieu of
payments to the owner, except prior
notification shall not be required in any case
in which the unit will be or has been rendered
uninhabitable due to the termination or threat
of termination of service, in which case the
public housing agency shall notify the owner
within a reasonable time after making such
payment; or
``(ii) for the family's reasonable moving
costs, including security deposit costs;
except that this subparagraph and the provisions
related to foreclosure in subparagraph (C) shall not
affect any State or local law that provides longer time
periods or other additional protections for tenants.''.
(c) Effective Date.--Notwithstanding section 217, this section and
the amendments made by this section shall take effect on the date of
the enactment of this Act.

TITLE III--HIGH-COST MORTGAGES

SEC. 301. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.

(a) High-Cost Mortgage Defined.--Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that
precedes paragraph (2) and inserting the following:
``(aa) High-Cost Mortgage.--
``(1) Definition.--
``(A) In general.--The term `high-cost mortgage', and
a mortgage referred to in this subsection, means a
consumer credit transaction that is secured by the
consumer's principal dwelling, other than a reverse
mortgage transaction, if--
``(i) in the case of a credit transaction
secured--
``(I) by a first mortgage on the
consumer's principal dwelling, the
annual percentage rate at consummation
of the transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the dwelling is
personal property and the transaction
is for less than $50,000) the average
prime offer rate, as defined in section
129C(c)(2)(B), for a comparable
transaction; or
``(II) by a subordinate or junior
mortgage on the consumer's principal
dwelling, the annual percentage rate at
consummation of the transaction will
exceed by more than 8.5 percentage
points the average prime offer rate, as
defined in section 129C(c)(2)(B), for a
comparable transaction;
``(ii) the total points and fees payable in
connection with the transaction exceed--
``(I) in the case of a transaction
for $20,000 or more, 5 percent of the
total transaction amount; or
``(II) in the case of a transaction
for less than $20,000, the lesser of 8
percent of the total transaction amount
or $1,000 (or such other dollar amount
as the Board shall prescribe by
regulation); or
``(iii) the credit transaction documents
permit the creditor to charge or collect
prepayment fees or penalties more than 36
months after the transaction closing or such
fees or penalties exceed, in the aggregate,
more than 2 percent of the amount prepaid.
``(B) Introductory rates taken into account.--For
purposes of subparagraph (A)(i), the annual percentage
rate of interest shall be determined based on the
following interest rate:
``(i) In the case of a fixed-rate transaction
in which the annual percentage rate will not
vary during the term of the loan, the interest
rate in effect on the date of consummation of
the transaction.
``(ii) In the case of a transaction in which
the rate of interest varies solely in
accordance with an index, the interest rate
determined by adding the index rate in effect
on the date of consummation of the transaction
to the maximum margin permitted at any time
during the transaction agreement.
``(iii) In the case of any other transaction
in which the rate may vary at any time during
the term of the loan for any reason, the
interest charged on the transaction at the
maximum rate that may be charged during the
term of the transaction.''.
(b) Adjustment of Percentage Points.--Section 103(aa)(2) of the Truth
in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking
subparagraph (B) and inserting the following new subparagraph:
``(B) An increase or decrease under subparagraph
(A)--
``(i) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(I) being less than 6 percentage
points or greater than 10 percentage points;
and
``(ii) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(II) being less than 8 percentage
points or greater than 12 percentage points.''.
(c) Points and Fees Defined.--
(1) In general.--Section 103(aa)(4) of the Truth in Lending
Act (15 U.S.C. 1602(aa)(4)) is amended--
(A) by striking subparagraph (B) and inserting the
following:
``(B) all compensation paid directly or indirectly by
a consumer or creditor to a mortgage broker from any
source, including a mortgage originator that originates
a loan in the name of the originator in a table-funded
transaction;'';
(B) in subparagraph (C)(ii), by inserting ``except
where applied to the charges set forth in section
106(e)(1) where a creditor may receive indirect
compensation solely as a result of obtaining
distributions of profits from an affiliated entity
based on its ownership interest in compliance with
section 8(c)(4) of the Real Estate Settlement
Procedures Act of 1974'' before the semicolon at the
end;
(C) in subparagraph (C)(iii), by striking ``; and''
and inserting ``, except as provided for in clause
(ii);'';
(D) by redesignating subparagraph (D) as subparagraph
(G); and
(E) by inserting after subparagraph (C) the following
new subparagraphs:
``(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit
unemployment, or credit property insurance, or any
other accident, loss-of-income, life or health
insurance, or any payments directly or indirectly for
any debt cancellation or suspension agreement or
contract, except that insurance premiums or debt
cancellation or suspension fees calculated and paid in
full on a monthly basis shall not be considered
financed by the creditor;
``(E) except as provided in subsection (cc), the
maximum prepayment fees and penalties which may be
charged or collected under the terms of the credit
transaction;
``(F) all prepayment fees or penalties that are
incurred by the consumer if the loan refinances a
previous loan made or currently held by the same
creditor or an affiliate of the creditor; and''.
(2) Calculation of points and fees for open-end consumer
credit plans.--Section 103(aa) of the Truth in Lending Act (15
U.S.C. 1602(aa)) is amended--
(A) by redesignating paragraph (5) as paragraph (6);
and
(B) by inserting after paragraph (4) the following
new paragraph:
``(5) Calculation of points and fees for open-end consumer
credit plans.--In the case of open-end consumer credit plans,
points and fees shall be calculated, for purposes of this
section and section 129, by adding the total points and fees
known at or before closing, including the maximum prepayment
penalties which may be charged or collected under the terms of
the credit transaction, plus the minimum additional fees the
consumer would be required to pay to draw down an amount equal
to the total credit line.''.
(d) Bona Fide Discount Loan Discount Points and Prepayment
Penalties.--Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is
amended by inserting after subsection (cc) (as added by section 101)
the following new subsection:
``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the
purposes of determining the amount of points and fees for purposes of
subsection (aa), either the amounts described in paragraph (1) or (4)
of the following paragraphs, but not both, may be excluded:
``(1) Exclusion of bona fide discount points.--The discount
points described in 1 of the following subparagraphs shall be
excluded from determining the amounts of points and fees with
respect to a high-cost mortgage for purposes of subsection
(aa):
``(A) Up to and including 2 bona fide discount points
payable by the consumer in connection with the
mortgage, but only if the interest rate from which the
mortgage's interest rate will be discounted does not
exceed by more than 1 percentage point (i) 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, or (ii) if secured by a personal property
loan, the average rate on a loan in connection with
which insurance is provided under title I of the
National Housing Act (12 U.S.C. 1702 et seq.).
``(B) Unless 2 bona fide discount points have been
excluded under subparagraph (A), up to and including 1
bona fide discount point payable by the consumer in
connection with the mortgage, but only if the interest
rate from which the mortgage's interest rate will be
discounted does not exceed by more than 2 percentage
points (i) 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, or (ii) if secured
by a personal property loan, the average rate on a loan
in connection with which insurance is provided under
title I of the National Housing Act (12 U.S.C. 1702 et
seq.).
``(2) Definition.--For purposes of paragraph (1), the term
`bona fide discount points' means loan discount points which
are knowingly paid by the consumer for the purpose of reducing,
and which in fact result in a bona fide reduction of, the
interest rate or time-price differential applicable to the
mortgage.
``(3) Exception for interest rate reductions inconsistent
with industry norms.--Paragraph (1) shall not apply to discount
points used to purchase an interest rate reduction unless the
amount of the interest rate reduction purchased is reasonably
consistent with established industry norms and practices for
secondary mortgage market transactions.''.

SEC. 302. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth in
Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
(b) No Balloon Payments.--Section 129(e) of the Truth in Lending Act
(15 U.S.C. 1639(e)) is amended to read as follows:
``(e) No Balloon Payments.--No high-cost mortgage may contain a
scheduled payment that is more than twice as large as the average of
earlier scheduled payments. This subsection shall not apply when the
payment schedule is adjusted to the seasonal or irregular income of the
consumer.''.

SEC. 303. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) Additional Requirements for Certain Mortgages.--Section 129 of
the Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (j), (k) and (l) as
subsections (n), (o) and (p) respectively; and
(2) by inserting after subsection (i) the following new
subsections:
``(j) Recommended Default.--No creditor shall recommend or encourage
default on an existing loan or other debt prior to and in connection
with the closing or planned closing of a high-cost mortgage that
refinances all or any portion of such existing loan or debt.
``(k) Late Fees.--
``(1) In general.--No creditor may impose a late payment
charge or fee in connection with a high-cost mortgage--
``(A) in an amount in excess of 4 percent of the
amount of the payment past due;
``(B) unless the loan documents specifically
authorize the charge or fee;
``(C) before the end of the 15-day period beginning
on the date the payment is due, or in the case of a
loan on which interest on each installment is paid in
advance, before the end of the 30-day period beginning
on the date the payment is due; or
``(D) more than once with respect to a single late
payment.
``(2) Coordination with subsequent late fees.--If a payment
is otherwise a full payment for the applicable period and is
paid on its due date or within an applicable grace period, and
the only delinquency or insufficiency of payment is
attributable to any late fee or delinquency charge assessed on
any earlier payment, no late fee or delinquency charge may be
imposed on such payment.
``(3) Failure to make installment payment.--If, in the case
of a loan agreement the terms of which provide that any payment
shall first be applied to any past due principal balance, the
consumer fails to make an installment payment and the consumer
subsequently resumes making installment payments but has not
paid all past due installments, the creditor may impose a
separate late payment charge or fee for any principal due
(without deduction due to late fees or related fees) until the
default is cured.
``(l) Acceleration of Debt.--No high-cost mortgage may contain a
provision which permits the creditor, in its sole discretion, to
accelerate the indebtedness. This provision shall not apply when
repayment of the loan has been accelerated by default, pursuant to a
due-on-sale provision, or pursuant to a material violation of some
other provision of the loan documents unrelated to the payment
schedule.
``(m) Restriction on Financing Points and Fees.--No creditor may
directly or indirectly finance, in connection with any high-cost
mortgage, any of the following:
``(1) Any prepayment fee or penalty payable by the consumer
in a refinancing transaction if the creditor or an affiliate of
the creditor is the noteholder of the note being refinanced.
``(2) Any points or fees.''.
(b) Prohibitions on Evasions.--Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as
so redesignated by subsection (a)(1)) the following new subsection:
``(q) Prohibitions on Evasions, Structuring of Transactions, and
Reciprocal Arrangements.--A creditor may not take any action in
connection with a high-cost mortgage--
``(1) to structure a loan transaction as an open-end credit
plan or another form of loan for the purpose and with the
intent of evading the provisions of this title; or
``(2) to divide any loan transaction into separate parts for
the purpose and with the intent of evading provisions of this
title.''.
(c) Modification or Deferral Fees.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(q) (as added by subsection (b) of this section) the following new
subsection:
``(r) Modification and Deferral Fees Prohibited.--A creditor may not
charge a consumer any fee to modify, renew, extend, or amend a high-
cost mortgage, or to defer any payment due under the terms of such
mortgage, unless the modification, renewal, extension or amendment
results in a lower annual percentage rate on the mortgage for the
consumer and then only if the amount of the fee is comparable to fees
imposed for similar transactions in connection with consumer credit
transactions that are secured by a consumer's principal dwelling and
are not high-cost mortgages.''.
(d) Payoff Statement.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (r) (as added by
subsection (c) of this section) the following new subsection:
``(s) Payoff Statement.--
``(1) Fees.--
``(A) In general.--Except as provided in subparagraph
(B), no creditor or servicer may charge a fee for
informing or transmitting to any person the balance due
to pay off the outstanding balance on a high-cost
mortgage.
``(B) Transaction fee.--When payoff information
referred to in subparagraph (A) is provided by
facsimile transmission or by a courier service, a
creditor or servicer may charge a processing fee to
cover the cost of such transmission or service in an
amount not to exceed an amount that is comparable to
fees imposed for similar services provided in
connection with consumer credit transactions that are
secured by the consumer's principal dwelling and are
not high-cost mortgages.
``(C) Fee disclosure.--Prior to charging a
transaction fee as provided in subparagraph (B), a
creditor or servicer shall disclose that payoff
balances are available for free pursuant to
subparagraph (A).
``(D) Multiple requests.--If a creditor or servicer
has provided payoff information referred to in
subparagraph (A) without charge, other than the
transaction fee allowed by subparagraph (B), on 4
occasions during a calendar year, the creditor or
servicer may thereafter charge a reasonable fee for
providing such information during the remainder of the
calendar year.
``(2) Prompt delivery.--Payoff balances shall be provided
within 5 business days after receiving a request by a consumer
or a person authorized by the consumer to obtain such
information.
``(3) Services considered assignee.--For the purposes of this
subsection, a servicer shall be considered an assignee under
the Truth in Lending Act.''.
(e) Pre-Loan Counseling Required.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(s) (as added by subsection (d) of this section) the following new
subsection:
``(t) Pre-Loan Counseling.--
``(1) In general.--A creditor may not extend credit to a
consumer under a high-cost mortgage without first receiving
certification from a counselor that is approved by the
Secretary of Housing and Urban Development, or at the
discretion of the Secretary, a State housing finance authority,
that the consumer has received counseling on the advisability
of the mortgage. Such counselor shall not be employed by the
creditor or an affiliate of the creditor or be affiliated with
the creditor.
``(2) Disclosures required prior to counseling.--No counselor
may certify that a consumer has received counseling on the
advisability of the high-cost mortgage unless the counselor can
verify that the consumer has received each statement required
(in connection with such loan) by this section or the Real
Estate Settlement Procedures Act of 1974 with respect to the
transaction.
``(3) Regulations.--The Board may prescribe such regulations
as the Board determines to be appropriate to carry out the
requirements of paragraph (1).''.
(f) Flipping Prohibited.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (t) (as added by
subsection (e)) the following new subsection:
``(u) Flipping.--
``(1) In general.--No creditor may knowingly or intentionally
engage in the unfair act or practice of flipping in connection
with a high-cost mortgage.
``(2) Flipping defined.--For purposes of this subsection, the
term `flipping' means the making of a loan or extension of
credit in the form a high-cost mortgage to a consumer which
refinances an existing mortgage when the new loan or extension
of credit does not have reasonable, net tangible benefit (as
determined in accordance with regulations prescribed under
section 129C(b)) to the consumer considering all of the
circumstances, including the terms of both the new and the
refinanced loans or credit, the cost of the new loan or credit,
and the consumer's circumstances.
``(v) Corrections and Unintentional Violations.--A creditor or
assignee in a high cost loan who, when acting in good faith, fails to
comply with any requirement under this section will not be deemed to
have violated such requirement if the creditor or assignee establishes
that either--
``(1) within 30 days of the loan closing and prior to the
institution of any action, the consumer is notified of or
discovers the violation, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change the
terms of the loan in a manner beneficial to the
consumer so that the loan will no longer be a high-cost
mortgage; or
``(2) within 60 days of the creditor's discovery or receipt
of notification of an unintentional violation or bona fide
error as described in subsection (c) and prior to the
institution of any action, the consumer is notified of the
compliance failure, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change the
terms of the loan in a manner beneficial so that the
loan will no longer be a high-cost mortgage.''.

SEC. 304. REGULATIONS.

(a) In General.--The Board of Governors of the Federal Reserve System
shall publish regulations implementing this title and the amendments
made by this title in final form before the end of the 6-month period
beginning on the date of the enactment of this Act.
(b) Consumer Mortgage Education.--
(1) Regulations.--The Board of Governors of the Federal
Reserve System may prescribe regulations requiring or
encouraging creditors to provide consumer mortgage education to
prospective customers or direct such customers to qualified
consumer mortgage education or counseling programs in the
vicinity of the residence of the consumer.
(2) Coordination with state law.--No requirement established
by the Board of Governors of the Federal Reserve System
pursuant to paragraph (1) shall be construed as affecting or
superseding any requirement under the law of any State with
respect to consumer mortgage counseling or education.

SEC. 305. EFFECTIVE DATE.

The amendments made by this title shall take effect at the end of the
6-month period beginning on the date of the enactment of this Act and
shall apply to mortgages referred to in section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) for which an application is received
by the creditor after the end of such period.

TITLE IV--OFFICE OF HOUSING COUNSELING

SEC. 401. SHORT TITLE.

This title may be cited as the ``Expand and Preserve Home Ownership
Through Counseling Act''.

SEC. 402. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.

Section 4 of the Department of Housing and Urban Development Act (42
U.S.C. 3533) is amended by adding at the end the following new
subsection:
``(g) Office of Housing Counseling.--
``(1) Establishment.--There is established, in the
Department, the Office of Housing Counseling.
``(2) Director.--There is established the position of
Director of Housing Counseling. The Director shall be the head
of the Office of Housing Counseling and shall be appointed by,
and shall report to, the Secretary. Such position shall be a
career-reserved position in the Senior Executive Service.
``(3) Functions.--
``(A) In general.--The Director shall have primary
responsibility within the Department for all activities
and matters relating to homeownership counseling and
rental housing counseling, including--
``(i) research, grant administration, public
outreach, and policy development relating to
such counseling; and
``(ii) establishment, coordination, and
administration of all regulations,
requirements, standards, and performance
measures under programs and laws administered
by the Department that relate to housing
counseling, homeownership counseling (including
maintenance of homes), mortgage-related
counseling (including home equity conversion
mortgages and credit protection options to
avoid foreclosure), and rental housing
counseling, including the requirements,
standards, and performance measures relating to
housing counseling.
``(B) Specific functions.--The Director shall carry
out the functions assigned to the Director and the
Office under this section and any other provisions of
law. Such functions shall include establishing rules
necessary for--
``(i) the counseling procedures under section
106(g)(1) of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(h)(1));
``(ii) carrying out all other functions of
the Secretary under section 106(g) of the
Housing and Urban Development Act of 1968,
including the establishment, operation, and
publication of the availability of the toll-
free telephone number under paragraph (2) of
such section;
``(iii) contributing to the preparation and
distribution of home buying information
booklets pursuant to section 5 of the Real
Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604);
``(iv) carrying out the certification program
under section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e));
``(v) carrying out the assistance program
under section 106(a)(4) of the Housing and
Urban Development Act of 1968, including
criteria for selection of applications to
receive assistance;
``(vi) carrying out any functions regarding
abusive, deceptive, or unscrupulous lending
practices relating to residential mortgage
loans that the Secretary considers appropriate,
which shall include conducting the study under
section 6 of the Expand and Preserve Home
Ownership Through Counseling Act;
``(vii) providing for operation of the
advisory committee established under paragraph
(4) of this subsection;
``(viii) collaborating with community-based
organizations with expertise in the field of
housing counseling; and
``(ix) providing for the building of capacity
to provide housing counseling services in areas
that lack sufficient services.
``(4) Advisory committee.--
``(A) In general.--The Secretary shall appoint an
advisory committee to provide advice regarding the
carrying out of the functions of the Director.
``(B) Members.--Such advisory committee shall consist
of not more than 12 individuals, and the membership of
the committee shall equally represent the mortgage and
real estate industry, including consumers and housing
counseling agencies certified by the Secretary.
``(C) Terms.--Except as provided in subparagraph (D),
each member of the advisory committee shall be
appointed for a term of 3 years. Members may be
reappointed at the discretion of the Secretary.
``(D) Terms of initial appointees.--As designated by
the Secretary at the time of appointment, of the
members first appointed to the advisory committee, 4
shall be appointed for a term of 1 year and 4 shall be
appointed for a term of 2 years.
``(E) Prohibition of pay; travel expenses.--Members
of the advisory committee shall serve without pay, but
shall receive travel expenses, including per diem in
lieu of subsistence, in accordance with applicable
provisions under subchapter I of chapter 57 of title 5,
United States Code.
``(F) Advisory role only.--The advisory committee
shall have no role in reviewing or awarding housing
counseling grants.
``(5) Scope of homeownership counseling.--In carrying out the
responsibilities of the Director, the Director shall ensure
that homeownership counseling provided by, in connection with,
or pursuant to any function, activity, or program of the
Department addresses the entire process of homeownership,
including the decision to purchase a home, the selection and
purchase of a home, issues arising during or affecting the
period of ownership of a home (including refinancing, default
and foreclosure, and other financial decisions), and the sale
or other disposition of a home.''.

SEC. 403. COUNSELING PROCEDURES.

(a) In General.--Section 106 of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following
new subsection:
``(g) Procedures and Activities.--
``(1) Counseling procedures.--
``(A) In general.--The Secretary shall establish,
coordinate, and monitor the administration by the
Department of Housing and Urban Development of the
counseling procedures for homeownership counseling and
rental housing counseling provided in connection with
any program of the Department, including all
requirements, standards, and performance measures that
relate to homeownership and rental housing counseling.
``(B) Homeownership counseling.--For purposes of this
subsection and as used in the provisions referred to in
this subparagraph, the term `homeownership counseling'
means counseling related to homeownership and
residential mortgage loans. Such term includes
counseling related to homeownership and residential
mortgage loans that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 8(y)(1)(D) (42 U.S.C.
1437f(y)(1)(D));
``(III) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
``(IV) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(V) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(VI) section 33(d)(2)(B) (42 U.S.C.
1437z-5(d)(2)(B));
``(VII) sections 302(b)(6) and
303(b)(7) (42 U.S.C. 1437aaa-1(b)(6),
1437aaa-2(b)(7)); and
``(VIII) section 304(c)(4) (42 U.S.C.
1437aaa-3(c)(4));
``(iii) section 302(a)(4) of the American
Homeownership and Economic Opportunity Act of
2000 (42 U.S.C. 1437f note);
``(iv) sections 233(b)(2) and 258(b) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12773(b)(2), 12808(b));
``(v) this section and section 101(e) of the
Housing and Urban Development Act of 1968 (12
U.S.C. 1701x, 1701w(e));
``(vi) section 220(d)(2)(G) of the Low-Income
Housing Preservation and Resident Homeownership
Act of 1990 (12 U.S.C. 4110(d)(2)(G));
``(vii) sections 422(b)(6), 423(b)(7),
424(c)(4), 442(b)(6), and 443(b)(6) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12872(b)(6), 12873(b)(7),
12874(c)(4), 12892(b)(6), and 12893(b)(6));
``(viii) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11408(b)(1)(F)(iii));
``(ix) sections 202(3) and 810(b)(2)(A) of
the Native American Housing and Self-
Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A));
``(x) in the National Housing Act--
``(I) in section 203 (12 U.S.C.
1709), the penultimate undesignated
paragraph of paragraph (2) of
subsection (b), subsection (c)(2)(A),
and subsection (r)(4);
``(II) subsections (a) and (c)(3) of
section 237 (12 U.S.C. 1715z-2); and
``(III) subsections (d)(2)(B) and
(m)(1) of section 255 (12 U.S.C. 1715z-
20);
``(xi) section 502(h)(4)(B) of the Housing
Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and
``(xii) section 508 of the Housing and Urban
Development Act of 1970 (12 U.S.C. 1701z-7).
``(C) Rental housing counseling.--For purposes of
this subsection, the term `rental housing counseling'
means counseling related to rental of residential
property, which may include counseling regarding future
homeownership opportunities and providing referrals for
renters and prospective renters to entities providing
counseling and shall include counseling related to such
topics that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 18(a)(4)(D) (42 U.S.C.
1437p(a)(4)(D));
``(III) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(IV) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(V) section 33(d)(2)(B) (42 U.S.C.
1437z-5(d)(2)(B)); and
``(VI) section 302(b)(6) (42 U.S.C.
1437aaa-1(b)(6));
``(iii) section 233(b)(2) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12773(b)(2));
``(iv) section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x);
``(v) section 422(b)(6) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12872(b)(6));
``(vi) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11408(b)(1)(F)(iii));
``(vii) sections 202(3) and 810(b)(2)(A) of
the Native American Housing and Self-
Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A)); and
``(viii) the rental assistance program under
section 8 of the United States Housing Act of
1937 (42 U.S.C. 1437f).
``(2) Standards for materials.--The Secretary, in
consultation with the advisory committee established under
subsection (g)(4) of the Department of Housing and Urban
Development Act, shall establish standards for materials and
forms to be used, as appropriate, by organizations providing
homeownership counseling services, including any recipients of
assistance pursuant to subsection (a)(4).
``(3) Mortgage software systems.--
``(A) Certification.--The Secretary shall provide for
the certification of various computer software programs
for consumers to use in evaluating different
residential mortgage loan proposals. The Secretary
shall require, for such certification, that the
mortgage software systems take into account--
``(i) the consumer's financial situation and
the cost of maintaining a home, including
insurance, taxes, and utilities;
``(ii) the amount of time the consumer
expects to remain in the home or expected time
to maturity of the loan;
``(iii) such other factors as the Secretary
considers appropriate to assist the consumer in
evaluating whether to pay points, to lock in an
interest rate, to select an adjustable or fixed
rate loan, to select a conventional or
government-insured or guaranteed loan and to
make other choices during the loan application
process.
If the Secretary determines that available existing
software is inadequate to assist consumers during the
residential mortgage loan application process, the
Secretary shall arrange for the development by private
sector software companies of new mortgage software
systems that meet the Secretary's specifications.
``(B) Use and initial availability.--Such certified
computer software programs shall be used to supplement,
not replace, housing counseling. The Secretary shall
provide that such programs are initially used only in
connection with the assistance of housing counselors
certified pursuant to subsection (e).
``(C) Availability.--After a period of initial
availability under subparagraph (B) as the Secretary
considers appropriate, the Secretary shall take
reasonable steps to make mortgage software systems
certified pursuant to this paragraph widely available
through the Internet and at public locations, including
public libraries, senior-citizen centers, public
housing sites, offices of public housing agencies that
administer rental housing assistance vouchers, and
housing counseling centers.
``(D) Budget compliance.--This paragraph shall be
effective only to the extent that amounts to carry out
this paragraph are made available in advance in
appropriations Acts.
``(4) National public service multimedia campaigns to promote
housing counseling.--
``(A) In general.--The Director of Housing Counseling
shall develop, implement, and conduct national public
service multimedia campaigns designed to make persons
facing mortgage foreclosure, persons considering a
subprime mortgage loan to purchase a home, elderly
persons, persons who face language barriers, low-income
persons, minorities, and other potentially vulnerable
consumers aware that it is advisable, before seeking or
maintaining a residential mortgage loan, to obtain
homeownership counseling from an unbiased and reliable
sources and that such homeownership counseling is
available, including through programs sponsored by the
Secretary of Housing and Urban Development.
``(B) Contact information.--Each segment of the
multimedia campaign under subparagraph (A) shall
publicize the toll-free telephone number and website of
the Department of Housing and Urban Development through
which persons seeking housing counseling can locate a
housing counseling agency in their State that is
certified by the Secretary of Housing and Urban
Development and can provide advice on buying a home,
renting, defaults, foreclosures, credit issues, and
reverse mortgages.
``(C) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary, not to
exceed $3,000,000 for fiscal years 2009, 2010, and
2011, for the development, implementation, and conduct
of national public service multimedia campaigns under
this paragraph.
``(D) Foreclosure rescue education programs.--
``(i) In general.--Ten percent of any funds
appropriated pursuant to the authorization
under subparagraph (C) shall be used by the
Director of Housing Counseling to conduct an
education program in areas that have a high
density of foreclosure. Such program shall
involve direct mailings to persons living in
such areas describing--
``(I) tips on avoiding foreclosure
rescue scams;
``(II) tips on avoiding predatory
lending mortgage agreements;
``(III) tips on avoiding for-profit
foreclosure counseling services; and
``(IV) local counseling resources
that are approved by the Department of
Housing and Urban Development.
``(ii) Program emphasis.--In conducting the
education program described under clause (i),
the Director of Housing Counseling shall also
place an emphasis on serving communities that
have a high percentage of retirement
communities or a high percentage of low-income
minority communities.
``(iii) Terms defined.--For purposes of this
subparagraph:
``(I) High density of foreclosures.--
An area has a `high density of
foreclosures' if such area is one of
the metropolitan statistical areas (as
that term is defined by the Director of
the Office of Management and Budget)
with the highest home foreclosure
rates.
``(II) High percentage of retirement
communities.--An area has a `high
percentage of retirement communities'
if such area is one of the metropolitan
statistical areas (as that term is
defined by the Director of the Office
of Management and Budget) with the
highest percentage of residents aged 65
or older.
``(III) High percentage of low-income
minority communities.--An area has a
`high percentage of low-income minority
communities' if such area contains a
higher-than-normal percentage of
residents who are both minorities and
low-income, as defined by the Director
of Housing Counseling.
``(5) Education programs.--The Secretary shall provide advice
and technical assistance to States, units of general local
government, and nonprofit organizations regarding the
establishment and operation of, including assistance with the
development of content and materials for, educational programs
to inform and educate consumers, particularly those most
vulnerable with respect to residential mortgage loans (such as
elderly persons, persons facing language barriers, low-income
persons, minorities, and other potentially vulnerable
consumers), regarding home mortgages, mortgage refinancing,
home equity loans, and home repair loans.''.
(b) Conforming Amendments to Grant Program for Homeownership
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is
amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after subclause (IV) the following new
subclause:
``(V) notify the housing or mortgage
applicant of the availability of
mortgage software systems provided
pursuant to subsection (g)(3).''.

SEC. 404. GRANTS FOR HOUSING COUNSELING ASSISTANCE.

Section 106(a) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new
paragraph:
``(4) Homeownership and Rental Counseling Assistance.--
``(A) In general.--The Secretary shall make financial
assistance available under this paragraph to HUD-approved
housing counseling agencies and State housing finance agencies.
``(B) Qualified entities.--The Secretary shall establish
standards and guidelines for eligibility of organizations
(including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance with
subparagraph (D).
``(C) Distribution.--Assistance made available under this
paragraph shall be distributed in a manner that encourages
efficient and successful counseling programs.
``(D) Limitation on distribution of assistance.--
``(i) In general.--None of the assistance made
available under this paragraph shall be distributed
to--
``(I) any organization which has been
indicted for a violation under Federal law
relating to an election for Federal office; or
``(II) any organization which employs
applicable individuals.
``(ii) Definition of applicable individual.--In this
subparagraph, the term `applicable individual'' means
an individual who--
``(I) is--
``(aa) employed by the organization
in a permanent or temporary capacity;
``(bb) contracted or retained by the
organization; or
``(cc) acting on behalf of, or with
the express or apparent authority of,
the organization; and
``(II) has been indicted for a violation
under Federal law relating to an election for
Federal office.
``(E) Grantmaking process.--In making assistance available
under this paragraph, the Secretary shall consider appropriate
ways of streamlining and improving the processes for grant
application, review, approval, and award.
``(F) Authorization of appropriations.--There are authorized
to be appropriated $45,000,000 for each of fiscal years 2009
through 2012 for--
``(i) the operations of the Office of Housing
Counseling of the Department of Housing and Urban
Development;
``(ii) the responsibilities of the Director of
Housing Counseling under paragraphs (2) through (5) of
subsection (g); and
``(iii) assistance pursuant to this paragraph for
entities providing homeownership and rental
counseling.''.

SEC. 405. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD
PROGRAMS.

Section 106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) is amended--
(1) by striking paragraph (1) and inserting the following new
paragraph:
``(1) Requirement for assistance.--An organization may not
receive assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or
under section 101(e), unless the organization, or the
individuals through which the organization provides such
counseling, has been certified by the Secretary under this
subsection as competent to provide such counseling.'';
(2) in paragraph (2)--
(A) by inserting ``and for certifying organizations''
before the period at the end of the first sentence; and
(B) in the second sentence by striking ``for
certification'' and inserting ``, for certification of
an organization, that each individual through which the
organization provides counseling shall demonstrate,
and, for certification of an individual,'';
(3) in paragraph (3), by inserting ``organizations and''
before ``individuals'';
(4) by redesignating paragraph (3) as paragraph (5); and
(5) by inserting after paragraph (2) the following new
paragraphs:
``(3) Requirement under hud programs.--Any homeownership
counseling or rental housing counseling (as such terms are
defined in subsection (g)(1)) required under, or provided in
connection with, any program administered by the Department of
Housing and Urban Development shall be provided only by
organizations or counselors certified by the Secretary under
this subsection as competent to provide such counseling.
``(4) Outreach.--The Secretary shall take such actions as the
Secretary considers appropriate to ensure that individuals and
organizations providing homeownership or rental housing
counseling are aware of the certification requirements and
standards of this subsection and of the training and
certification programs under subsection (f).''.

SEC. 406. STUDY OF DEFAULTS AND FORECLOSURES.

The Secretary of Housing and Urban Development shall conduct an
extensive study of the root causes of default and foreclosure of home
loans, using as much empirical data as are available. The study shall
also examine the role of escrow accounts in helping prime and nonprime
borrowers to avoid defaults and foreclosures. Not later than 12 months
after the date of the enactment of this Act, the Secretary shall submit
to the Congress a preliminary report regarding the study. Not later
than 24 months after such date of enactment, the Secretary shall submit
a final report regarding the results of the study, which shall include
any recommended legislation relating to the study, and recommendations
for best practices and for a process to identify populations that need
counseling the most.

SEC. 407. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.

Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this title, is
further amended by adding at the end the following new subsection:
``(h) Definitions.--For purposes of this section:
``(1) Nonprofit organization.--The term `nonprofit
organization' has the meaning given such term in section 104(5)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12704(5)), except that subparagraph (D) of such section
shall not apply for purposes of this section.
``(2) State.--The term `State' means each of the several
States, the Commonwealth of Puerto Rico, the District of
Columbia, the Commonwealth of the Northern Mariana Islands,
Guam, the Virgin Islands, American Samoa, the Trust Territories
of the Pacific, or any other possession of the United States.
``(3) Unit of general local government.--The term `unit of
general local government' means any city, county, parish, town,
township, borough, village, or other general purpose political
subdivision of a State.
``(4) HUD-approved counseling agency.--The term `HUD-approved
counseling agency' means a private or public nonprofit
organization that is--
``(A) exempt from taxation under section 501(c) of
the Internal Revenue Code of 1986; and
``(B) certified by the Secretary to provide housing
counseling services.
``(5) State housing finance agency.--The term `State housing
finance agency' means any public body, agency, or
instrumentality specifically created under State statute that
is authorised to finance activities designed to provide housing
and related facilities throughout an entire State through land
acquisition, construction, or rehabilitation.''.

SEC. 408. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.

Section 5 of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604) is amended--
(1) in the section heading, by striking ``special'' and
inserting ``home buying'';
(2) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Preparation and Distribution.--The Secretary shall prepare, at
least once every 5 years, a booklet to help consumers applying for
federally related mortgage loans to understand the nature and costs of
real estate settlement services. The Secretary shall prepare the
booklet in various languages and cultural styles, as the Secretary
determines to be appropriate, so that the booklet is understandable and
accessible to homebuyers of different ethnic and cultural backgrounds.
The Secretary shall distribute such booklets to all lenders that make
federally related mortgage loans. The Secretary shall also distribute
to such lenders lists, organized by location, of homeownership
counselors certified under section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying with
the requirement under subsection (c) of this section.
``(b) Contents.--Each booklet shall be in such form and detail as the
Secretary shall prescribe and, in addition to such other information as
the Secretary may provide, shall include in plain and understandable
language the following information:
``(1) A description and explanation of the nature and purpose
of the costs incident to a real estate settlement or a
federally related mortgage loan. The description and
explanation shall provide general information about the
mortgage process as well as specific information concerning, at
a minimum--
``(A) balloon payments;
``(B) prepayment penalties; and
``(C) the trade-off between closing costs and the
interest rate over the life of the loan.
``(2) An explanation and sample of the uniform settlement
statement required by section 4.
``(3) A list and explanation of lending practices, including
those prohibited by the Truth in Lending Act or other
applicable Federal law, and of other unfair practices and
unreasonable or unnecessary charges to be avoided by the
prospective buyer with respect to a real estate settlement.
``(4) A list and explanation of questions a consumer
obtaining a federally related mortgage loan should ask
regarding the loan, including whether the consumer will have
the ability to repay the loan, whether the consumer
sufficiently shopped for the loan, whether the loan terms
include prepayment penalties or balloon payments, and whether
the loan will benefit the borrower.
``(5) An explanation of the right of rescission as to certain
transactions provided by sections 125 and 129 of the Truth in
Lending Act.
``(6) A brief explanation of the nature of a variable rate
mortgage and a reference to the booklet entitled `Consumer
Handbook on Adjustable Rate Mortgages', published by the Board
of Governors of the Federal Reserve System pursuant to section
226.19(b)(1) of title 12, Code of Federal Regulations, or to
any suitable substitute of such booklet that such Board of
Governors may subsequently adopt pursuant to such section.
``(7) A brief explanation of the nature of a home equity line
of credit and a reference to the pamphlet required to be
provided under section 127A of the Truth in Lending Act.
``(8) Information about homeownership counseling services
made available pursuant to section 106(a)(4) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a
recommendation that the consumer use such services, and
notification that a list of certified providers of
homeownership counseling in the area, and their contact
information, is available.
``(9) An explanation of the nature and purpose of escrow
accounts when used in connection with loans secured by
residential real estate and the requirements under section 10
of this Act regarding such accounts.
``(10) An explanation of the choices available to buyers of
residential real estate in selecting persons to provide
necessary services incidental to a real estate settlement.
``(11) An explanation of a consumer's responsibilities,
liabilities, and obligations in a mortgage transaction.
``(12) An explanation of the nature and purpose of real
estate appraisals, including the difference between an
appraisal and a home inspection.
``(13) Notice that the Office of Housing of the Department of
Housing and Urban Development has made publicly available a
brochure regarding loan fraud and a World Wide Web address and
toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures that may
exist among the several States and territories of the United States and
among separate political subdivisions within the same State and
territory.'';
(3) in subsection (c), by inserting at the end the following
new sentence: ``Each lender shall also include with the booklet
a reasonably complete or updated list of homeownership
counselors who are certified pursuant to section 106(e) of the
Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e))
and located in the area of the lender.''; and
(4) in subsection (d), by inserting after the period at the
end of the first sentence the following: ``The lender shall
provide the HUD-issued booklet in the version that is most
appropriate for the person receiving it.''.

SEC. 409. HOME INSPECTION COUNSELING.

(a) Public Outreach.--
(1) In general.--The Secretary of Housing and Urban
Development (in this section referred to as the ``Secretary'')
shall take such actions as may be necessary to inform potential
homebuyers of the availability and importance of obtaining an
independent home inspection. Such actions shall include--
(A) publication of the HUD/FHA form HUD 92564-CN
entitled ``For Your Protection: Get a Home
Inspection'', in both English and Spanish languages;
(B) publication of the HUD/FHA booklet entitled ``For
Your Protection: Get a Home Inspection'', in both
English and Spanish languages;
(C) development and publication of a HUD booklet
entitled ``For Your Protection--Get a Home Inspection''
that does not reference FHA-insured homes, in both
English and Spanish languages; and
(D) publication of the HUD document entitled ``Ten
Important Questions To Ask Your Home Inspector'', in
both English and Spanish languages.
(2) Availability.--The Secretary shall make the materials
specified in paragraph (1) available for electronic access and,
where appropriate, inform potential homebuyers of such
availability through home purchase counseling public service
announcements and toll-free telephone hotlines of the
Department of Housing and Urban Development. The Secretary
shall give special emphasis to reaching first-time and low-
income homebuyers with these materials and efforts.
(3) Updating.--The Secretary may periodically update and
revise such materials, as the Secretary determines to be
appropriate.
(b) Requirement for FHA-Approved Lenders.--Each mortgagee approved
for participation in the mortgage insurance programs under title II of
the National Housing Act shall provide prospective homebuyers, at first
contact, whether upon pre-qualification, pre-approval, or initial
application, the materials specified in subparagraphs (A), (B), and (D)
of subsection (a)(1).
(c) Requirements for HUD-Approved Counseling Agencies.--Each
counseling agency certified pursuant by the Secretary to provide
housing counseling services shall provide each of their clients, as
part of the home purchase counseling process, the materials specified
in subparagraphs (C) and (D) of subsection (a)(1).
(d) Training.--Training provided the Department of Housing and Urban
Development for housing counseling agencies, whether such training is
provided directly by the Department or otherwise, shall include--
(1) providing information on counseling potential homebuyers
of the availability and importance of getting an independent
home inspection;
(2) providing information about the home inspection process,
including the reasons for specific inspections such as radon
and lead-based paint testing;
(3) providing information about advising potential homebuyers
on how to locate and select a qualified home inspector; and
(4) review of home inspection public outreach materials of
the Department.

TITLE V--MORTGAGE SERVICING

SEC. 501. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.

(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129C (as added by
section 201) the following new section:

``SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.

``(a) In General.--Except as provided in subsection (b), (c), or (d)
, a creditor, in connection with the formation or consummation of a
consumer credit transaction secured by a first lien on the principal
dwelling of the consumer, other than a consumer credit transaction
under an open end credit plan or a reverse mortgage, shall establish,
before the consummation of such transaction, an escrow or impound
account for the payment of taxes and hazard insurance, and, if
applicable, flood insurance, mortgage insurance, ground rents, and any
other required periodic payments or premiums with respect to the
property or the loan terms, as provided in, and in accordance with,
this section.
``(b) When Required.--No impound, trust, or other type of account for
the payment of property taxes, insurance premiums, or other purposes
relating to the property may be required as a condition of a real
property sale contract or a loan secured by a first deed of trust or
mortgage on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit plan or a reverse
mortgage, except when--
``(1) any such impound, trust, or other type of escrow or
impound account for such purposes is required by Federal or
State law;
``(2) a loan is made, guaranteed, or insured by a State or
Federal governmental lending or insuring agency;
``(3) the transaction is secured by a first mortgage or lien
on the consumer's principal dwelling and the annual percentage
rate on the credit, at the date the interest rate is set, will
exceed the average prime offer rate for a comparable
transaction by 1.5 percentage points or more; or
``(4) so required pursuant to regulation.
``(c) Duration of Mandatory Escrow or Impound Account.--An escrow or
impound account established pursuant to subsection (b), shall remain in
existence for a minimum period of 5 years, beginning with the date of
the consummation of the loan, and until such borrower has sufficient
equity in the dwelling securing the consumer credit transaction so as
to no longer be required to maintain private mortgage insurance, or
such other period as may be provided in regulations to address
situations such as borrower delinquency, unless the underlying mortgage
establishing the account is terminated.
``(d) Limited Exemptions for Loans Secured by Shares in a Cooperative
and for Certain Condominium Units.--Escrow accounts need not be
established for loans secured by shares in a cooperative. Insurance
premiums need not be included in escrow accounts for loans secured by
condominium units, where the condominium association has an obligation
to the condominium unit owners to maintain a master policy insuring
condominium units.
``(e) Clarification on Escrow Accounts for Loans Not Meeting
Statutory Test.--For mortgages not covered by the requirements of
subsection (b), no provision of this section shall be construed as
precluding the establishment of an impound, trust, or other type of
account for the payment of property taxes, insurance premiums, or other
purposes relating to the property--
``(1) on terms mutually agreeable to the parties to the loan;
``(2) at the discretion of the lender or servicer, as
provided by the contract between the lender or servicer and the
borrower; or
``(3) pursuant to the requirements for the escrowing of flood
insurance payments for regulated lending institutions in
section 102(d) of the Flood Disaster Protection Act of 1973.
``(f) Administration of Mandatory Escrow or Impound Accounts.--
``(1) In general.--Except as may otherwise be provided for in
this title or in regulations prescribed by the Board, escrow or
impound accounts established pursuant to subsection (b) shall
be established in a federally insured depository institution.
``(2) Administration.--Except as provided in this section or
regulations prescribed under this section, an escrow or impound
account subject to this section shall be administered in
accordance with--
``(A) the Real Estate Settlement Procedures Act of
1974 and regulations prescribed under such Act;
``(B) the Flood Disaster Protection Act of 1973 and
regulations prescribed under such Act; and
``(C) the law of the State, if applicable, where the
real property securing the consumer credit transaction
is located.
``(3) Applicability of payment of interest.--If prescribed by
applicable State or Federal law, each creditor shall pay
interest to the consumer on the amount held in any impound,
trust, or escrow account that is subject to this section in the
manner as prescribed by that applicable State or Federal law.
``(4) Penalty coordination with respa.--Any action or
omission on the part of any person which constitutes a
violation of the Real Estate Settlement Procedures Act of 1974
or any regulation prescribed under such Act for which the
person has paid any fine, civil money penalty, or other damages
shall not give rise to any additional fine, civil money
penalty, or other damages under this section, unless the action
or omission also constitutes a direct violation of this
section.
``(g) Disclosures Relating to Mandatory Escrow or Impound Account.--
In the case of any impound, trust, or escrow account that is subject to
this section, the creditor shall disclose by written notice to the
consumer at least 3 business days before the consummation of the
consumer credit transaction giving rise to such account or in
accordance with timeframes established in prescribed regulations the
following information:
``(1) The fact that an escrow or impound account will be
established at consummation of the transaction.
``(2) The amount required at closing to initially fund the
escrow or impound account.
``(3) The amount, in the initial year after the consummation
of the transaction, of the estimated taxes and hazard
insurance, including flood insurance, if applicable, and any
other required periodic payments or premiums that reflects, as
appropriate, either the taxable assessed value of the real
property securing the transaction, including the value of any
improvements on the property or to be constructed on the
property (whether or not such construction will be financed
from the proceeds of the transaction) or the replacement costs
of the property.
``(4) The estimated monthly amount payable to be escrowed for
taxes, hazard insurance (including flood insurance, if
applicable) and any other required periodic payments or
premiums.
``(5) The fact that, if the consumer chooses to terminate the
account at the appropriate time in the future, the consumer
will become responsible for the payment of all taxes, hazard
insurance, and flood insurance, if applicable, as well as any
other required periodic payments or premiums on the property
unless a new escrow or impound account is established.
``(6) Such other information as the Federal banking agencies
jointly determine necessary for the protection of the consumer.
``(h) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Flood insurance.--The term `flood insurance' means
flood insurance coverage provided under the national flood
insurance program pursuant to the National Flood Insurance Act
of 1968.
``(2) Hazard insurance.--The term `hazard insurance' shall
have the same meaning as provided for `hazard insurance',
`casualty insurance', `homeowner's insurance', or other similar
term under the law of the State where the real property
securing the consumer credit transaction is located.''.
(b) Implementation.--
(1) Regulations.--The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation, the National Credit Union Administration
Board, (hereafter in this Act referred to as the ``Federal
banking agencies'') and the Federal Trade Commission shall
prescribe, in final form, such regulations as determined to be
necessary to implement the amendments made by subsection (a)
before the end of the 180-day period beginning on the date of
the enactment of this Act.
(2) Effective date.--The amendments made by subsection (a)
shall only apply to covered mortgage loans consummated after
the end of the 1-year period beginning on the date of the
publication of final regulations in the Federal Register.
(c) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129C (as added by section 201) the following new item:

``129D. Escrow or impound accounts relating to certain consumer credit
transactions.''.

SEC. 502. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW
SERVICES.

(a) In General.--Section 129D of the Truth in Lending Act (as added
by section 501) is amended by adding at the end the following new
subsection:
``(i) Disclosure Notice Required for Consumers Who Waive Escrow
Services.--
``(1) In general.--If--
``(A) an impound, trust, or other type of account for
the payment of property taxes, insurance premiums, or
other purposes relating to real property securing a
consumer credit transaction is not established in
connection with the transaction; or
``(B) a consumer chooses, and provides written notice
to the creditor or servicer of such choice, at any time
after such an account is established in connection with
any such transaction and in accordance with any
statute, regulation, or contractual agreement, to close
such account,
the creditor or servicer shall provide a timely and clearly
written disclosure to the consumer that advises the consumer of
the responsibilities of the consumer and implications for the
consumer in the absence of any such account.
``(2) Disclosure requirements.--Any disclosure provided to a
consumer under paragraph (1) shall include the following:
``(A) Information concerning any applicable fees or
costs associated with either the non-establishment of
any such account at the time of the transaction, or any
subsequent closure of any such account.
``(B) A clear and prominent notice that the consumer
is responsible for personally and directly paying the
non-escrowed items, in addition to paying the mortgage
loan payment, in the absence of any such account, and
the fact that the costs for taxes, insurance, and
related fees can be substantial.
``(C) A clear explanation of the consequences of any
failure to pay non-escrowed items, including the
possible requirement for the forced placement of
insurance by the creditor or servicer and the
potentially higher cost (including any potential
commission payments to the servicer) or reduced
coverage for the consumer in the event of any such
creditor-placed insurance.
``(D) Such other information as the Federal banking
agencies jointly determine necessary for the protection
of the consumer.''.
(b) Implementation.--
(1) Regulations.--The Federal banking agencies and the
Federal Trade Commission shall prescribe, in final form, such
regulations as such agencies determine to be necessary to
implement the amendments made by subsection (a) before the end
of the 180-day period beginning on the date of the enactment of
this Act.
(2) Effective date.--The amendments made by subsection (a)
shall only apply in accordance with the regulations established
in paragraph (1) and beginning on the date occurring 180-days
after the date of the publication of final regulations in the
Federal Register.

SEC. 503. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.

(a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end
the following new subsections:
``(k) Servicer Prohibitions.--
``(1) In general.--A servicer of a federally related mortgage
shall not--
``(A) obtain force-placed hazard insurance unless
there is a reasonable basis to believe the borrower has
failed to comply with the loan contract's requirements
to maintain property insurance;
``(B) charge fees for responding to valid qualified
written requests (as defined in regulations which the
Secretary shall prescribe) under this section;
``(C) fail to take timely action to respond to a
borrower's requests to correct errors relating to
allocation of payments, final balances for purposes of
paying off the loan, or avoiding foreclosure, or other
standard servicer's duties;
``(D) fail to respond within 10 business days to a
request from a borrower to provide the identity,
address, and other relevant contact information about
the owner assignee of the loan; or
``(E) fail to comply with any other obligation found
by the Secretary, by regulation, to be appropriate to
carry out the consumer protection purposes of this Act.
``(2) Force-placed insurance defined.--For purposes of this
subsection and subsections (l) and (m), the term `force-placed
insurance' means hazard insurance coverage obtained by a
servicer of a federally related mortgage when the borrower has
failed to maintain or renew hazard insurance on such property
as required of the borrower under the terms of the mortgage.
``(l) Requirements for Force-Placed Insurance.--A servicer of a
federally related mortgage shall not be construed as having a
reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
``(1) Written notices to borrower.--A servicer may not impose
any charge on any borrower for force-placed insurance with
respect to any property securing a federally related mortgage
unless--
``(A) the servicer has sent, by first-class mail, a
written notice to the borrower containing--
``(i) a reminder of the borrower's obligation
to maintain hazard insurance on the property
securing the federally related mortgage;
``(ii) a statement that the servicer does not
have evidence of insurance coverage of such
property;
``(iii) a clear and conspicuous statement of
the procedures by which the borrower may
demonstrate that the borrower already has
insurance coverage; and
``(iv) a statement that the servicer may
obtain such coverage at the borrower's expense
if the borrower does not provide such
demonstration of the borrower's existing
coverage in a timely manner;
``(B) the servicer has sent, by first-class mail, a
second written notice, at least 30 days after the
mailing of the notice under subparagraph (A) that
contains all the information described in each clauses
of such subparagraph; and
``(C) the servicer has not received from the borrower
any demonstration of hazard insurance coverage for the
property securing the mortgage by the end of the 15-day
period beginning on the date the notice under
subparagraph (B) was sent by the servicer.
``(2) Sufficiency of demonstration.--A servicer of a
federally related mortgage shall accept any reasonable form of
written confirmation from a borrower of existing insurance
coverage, which shall include the existing insurance policy
number along with the identity of, and contact information for,
the insurance company or agent.
``(3) Termination of force-placed insurance.--Within 15 days
of the receipt by a servicer of confirmation of a borrower's
existing insurance coverage, the servicer shall--
``(A) terminate the force-placed insurance; and
``(B) refund to the consumer all force-placed
insurance premiums paid by the borrower during any
period during which the borrower's insurance coverage
and the force-placed insurance coverage were each in
effect, and any related fees charged to the consumer's
account with respect to the force-placed insurance
during such period.
``(4) Clarification with respect to flood disaster protection
act.--No provision of this section shall be construed as
prohibiting a servicer from providing simultaneous or
concurrent notice of a lack of flood insurance pursuant to
section 102(e) of the Flood Disaster Protection Act of 1973.
``(m) Limitations on Force-Placed Insurance Charges.--All charges for
force-placed insurance premiums shall be bona fide and reasonable in
amount.''.
(b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
(1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000''
each place such term appears and inserting ``$2,000''; and
(2) in paragraph (2)(B)(i), by striking ``$500,000'' and
inserting ``$1,000,000''.
(c) Decrease in Response Times.--Section 6(e) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
(1) in paragraph (1)(A), by striking ``20 days'' and
inserting ``5 days'';
(2) in paragraph (2), by striking ``60 days'' and inserting
``30 days''; and
(3) by adding at the end the following new paragraph:
``(4) Limited extension of response time.--The 30-day period
described in paragraph (2) may be extended for not more than 15
days if, before the end of such 30-day period, the servicer
notifies the borrower of the extension and the reasons for the
delay in responding.''.
(d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g))
is amended by adding at the end the following new sentence: ``Any
balance in any such account that is within the servicer's control at
the time the loan is paid off shall be promptly returned to the
borrower within 20 business days or credited to a similar account for a
new mortgage loan to the borrower with the same lender.''.

SEC. 504. TRUTH IN LENDING ACT AMENDMENTS.

(a) Requirements for Prompt Crediting of Home Loan Payments.--Chapter
2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by
inserting after section 129E (as added by section 602) the following
new section (and by amending the table of contents accordingly):

``SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.

``(a) In General.--In connection with a consumer credit transaction
secured by a consumer's principal dwelling, no servicer shall fail to
credit a payment to the consumer's loan account as of the date of
receipt, except when a delay in crediting does not result in any charge
to the consumer or in the reporting of negative information to a
consumer reporting agency, except as required in subsection (b).
``(b) Exception.--If a servicer specifies in writing requirements for
the consumer to follow in making payments, but accepts a payment that
does not conform to the requirements, the servicer shall credit the
payment as of 5 days after receipt.''.
(b) Requests for Payoff Amounts.--Chapter 2 of such Act is further
amended by inserting after section 129F (as added by subsection (a))
the following new section (and by amending the table of contents
accordingly):

``SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

``A creditor or servicer of a home loan shall send an accurate payoff
balance within a reasonable time, but in no case more than 7 business
days, after the receipt of a written request for such balance from or
on behalf of the borrower.''.

SEC. 505. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.

(a) In General.--Section 128(b) of the Truth in Lending Act (15
U.S.C. 1638(b)) is amended by adding at the end the following new
paragraph:
``(5) Repayment analysis required to include escrow
payments.--
``(A) In general.--In the case of any consumer credit
transaction secured by a first mortgage or lien on the
principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit
plan or a reverse mortgage, for which an impound,
trust, or other type of account has been or will be
established in connection with the transaction for the
payment of property taxes, hazard and flood (if any)
insurance premiums, or other periodic payments or
premiums with respect to the property, the information
required to be provided under subsection (a) with
respect to the number, amount, and due dates or period
of payments scheduled to repay the total of payments
shall take into account the amount of any monthly
payment to such account for each such repayment in
accordance with section 10(a)(2) of the Real Estate
Settlement Procedures Act of 1974.
``(B) Assessment value.--The amount taken into
account under subparagraph (A) for the payment of
property taxes, hazard and flood (if any) insurance
premiums, or other periodic payments or premiums with
respect to the property shall reflect the taxable
assessed value of the real property securing the
transaction after the consummation of the transaction,
including the value of any improvements on the property
or to be constructed on the property (whether or not
such construction will be financed from the proceeds of
the transaction), if known, and the replacement costs
of the property for hazard insurance, in the initial
year after the transaction.''.

TITLE VI--APPRAISAL ACTIVITIES

SEC. 601. PROPERTY APPRAISAL REQUIREMENTS.

Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended
by inserting after subsection (v) (as added by section 303(f)) the
following new subsection:
``(w) Property Appraisal Requirements.--
``(1) In general.--A creditor may not extend credit in the
form of a subprime mortgage to any consumer without first
obtaining a written appraisal of the property to be mortgaged
prepared in accordance with the requirements of this
subsection.
``(2) Appraisal requirements.--
``(A) Physical property visit.--An appraisal of
property to be secured by a subprime mortgage does not
meet the requirement of this subsection unless it is
performed by a qualified appraiser who conducts a
physical property visit of the interior of the
mortgaged property.
``(B) Second appraisal under certain circumstances.--
``(i) In general.--If the purpose of a
subprime mortgage is to finance the purchase or
acquisition of the mortgaged property from a
person within 180 days of the purchase or
acquisition of such property by that person at
a price that was lower than the current sale
price of the property, the creditor shall
obtain a second appraisal from a different
qualified appraiser. The second appraisal shall
include an analysis of the difference in sale
prices, changes in market conditions, and any
improvements made to the property between the
date of the previous sale and the current sale.
``(ii) No cost to applicant.--The cost of any
second appraisal required under clause (i) may
not be charged to the applicant.
``(C) Qualified appraiser defined.--For purposes of
this subsection, the term `qualified appraiser' means a
person who--
``(i) is, at a minimum, certified or licensed
by the State in which the property to be
appraised is located; and
``(ii) performs each appraisal in conformity
with the Uniform Standards of Professional
Appraisal Practice and title XI of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and the regulations
prescribed under such title, as in effect on
the date of the appraisal.
``(3) Free copy of appraisal.--A creditor shall provide 1
copy of each appraisal conducted in accordance with this
subsection in connection with a subprime mortgage to the
applicant without charge, and at least 3 days prior to the
transaction closing date.
``(4) Consumer notification.--At the time of the initial
mortgage application, the applicant shall be provided with a
statement by the creditor that any appraisal prepared for the
mortgage is for the sole use of the creditor, and that the
applicant may choose to have a separate appraisal conducted at
their own expense.
``(5) Violations.--In addition to any other liability to any
person under this title, a creditor found to have willfully
failed to obtain an appraisal as required in this subsection
shall be liable to the applicant or borrower for the sum of
$2,000.
``(6) Subprime mortgage defined.--For purposes of this
subsection, the term `subprime mortgage' means a residential
mortgage loan with an annual percentage rate that exceeds the
average prime offer rate for a comparable transaction, as of
the date the interest rate is set--
``(A) by 1.5 or more percentage points for a first
lien residential mortgage loan; and
``(B) by 3.5 or more percentage points for a
subordinate lien residential mortgage loan.''.

SEC. 602. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN
CONSUMER CREDIT TRANSACTIONS.

(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129D (as added by
section 501(a)) the following new section:

``SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO
CERTAIN CONSUMER CREDIT TRANSACTIONS.

``(a) In General.--It shall be unlawful, in extending credit or in
providing any services for a consumer credit transaction secured by the
principal dwelling of the consumer, to engage in any unfair or
deceptive act or practice as described in or pursuant to regulations
prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection (a), unfair
and deceptive practices shall include--
``(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with an
interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person conducting or involved in an appraisal, or attempts, to
compensate, coerce, extort, collude, instruct, induce, bribe,
or intimidate such a person, for the purpose of causing the
appraised value assigned, under the appraisal, to the property
to be based on any factor other than the independent judgment
of the appraiser;
``(2) mischaracterizing, or suborning any mischaracterization
of, the appraised value of the property securing the extension
of the credit;
``(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making or
pricing of the transaction; and
``(4) withholding or threatening to withhold timely payment
for an appraisal report or for appraisal services rendered.
``(c) Exceptions.--The requirements of subsection (b) shall not be
construed as prohibiting a mortgage lender, mortgage broker, mortgage
banker, real estate broker, appraisal management company, employee of
an appraisal management company, consumer, or any other person with an
interest in a real estate transaction from asking an appraiser to
provide 1 or more of the following services:
``(1) Consider additional, appropriate property information,
including the consideration of additional comparable properties
to make or support an appraisal.
``(2) Provide further detail, substantiation, or explanation
for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management company
procuring or facilitating, an appraisal in connection with a consumer
credit transaction secured by the principal dwelling of a consumer may
have a direct or indirect interest, financial or otherwise, in the
property or transaction involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company,
employee of an appraisal management company, or any other person
involved in a real estate transaction involving an appraisal in
connection with a consumer credit transaction secured by the principal
dwelling of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws, or is
otherwise engaging in unethical or unprofessional conduct, shall refer
the matter to the applicable State appraiser certifying and licensing
agency.
``(f) No Extension of Credit.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, a creditor who
knows, at or before loan consummation, of a violation of the appraisal
independence standards established in subsections (b) or (d) shall not
extend credit based on such appraisal unless the creditor documents
that the creditor has acted with reasonable diligence to determine that
the appraisal does not materially misstate or misrepresent the value of
such dwelling.
``(g) Rulemaking Proceedings.--The Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation, the National Credit Union Administration
Board, and the Federal Trade Commission--
``(1) shall, for purposes of this section, jointly prescribe
regulations no later than 180 days after the date of the
enactment of this section, and where such regulations have an
effective date of no later than 1 year after the date of the
enactment of this section, defining with specificity acts or
practices which are unfair or deceptive in the provision of
mortgage lending services for a consumer credit transaction
secured by the principal dwelling of the consumer or mortgage
brokerage services for such a transaction and defining any
terms in this section or such regulations; and
``(2) may jointly issue interpretive guidelines and general
statements of policy with respect to unfair or deceptive acts
or practices in the provision of mortgage lending services for
a consumer credit transaction secured by the principal dwelling
of the consumer and mortgage brokerage services for such a
transaction, within the meaning of subsections (a), (b), (c),
(d), (e), and (f).
``(h) Penalties.--
``(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who violates
this section shall forfeit and pay a civil penalty of not more
than $10,000 for each day any such violation continues.
``(2) Subsequent violations.--In the case of any person on
whom a civil penalty has been imposed under paragraph (1),
paragraph (1) shall be applied by substituting `$20,000' for
`$10,000' with respect to all subsequent violations.
``(3) Assessment.--The agency referred to in subsection (a)
or (c) of section 108 with respect to any person described in
paragraph (1) shall assess any penalty under this subsection to
which such person is subject.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129D (as added by section 501(c)) the following new item:

``129E. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.''.

SEC. 603. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC,
APPRAISER INDEPENDENCE, AND APPROVED APPRAISER
EDUCATION.

(a) Consumer Protection Mission.--
(1) Purposes.--Section 1101 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331)
is amended by inserting ``and to provide the Appraisal
Subcommittee with a consumer protection mandate'' before the
period at the end.
(2) Functions of appraisal subcommittee.--Section 1103(a) of
the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3332(a)) is amended--
(A) by striking ``and'' at the end of paragraph (3);
(B) by striking the period at the end of paragraph
(4) and inserting ``;''; and
(C) by adding at the end the following new paragraph:
``(5) monitor the efforts of, and requirements established
by, States and the Federal financial institutions regulatory
agencies to protect consumers from improper appraisal practices
and the predations of unlicensed appraisers in consumer credit
transactions that are secured by a consumer's principal
dwelling; and''.
(3) Threshold levels.--Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3341(b)) is amended by inserting before the period the
following: ``, and that such threshold level provides
reasonable protection for consumers who purchase 1-4 unit
single-family residences. In determining whether a threshold
level provides reasonable protection for consumers, each
Federal financial institutions regulatory agency shall consult
with consumer groups and convene a public hearing''.
(b) Annual Report of Appraisal Subcommittee.--
(1) In general.--Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3332(a)) is amended at the end by inserting the
following new paragraph:
``(6) transmit an annual report to the Congress not later
than January 31 of each year that describes the manner in which
each function assigned to the Appraisal Subcommittee has been
carried out during the preceding year. The report shall also
detail the activities of the Appraisal Subcommittee, including
the results of all audits of State appraiser regulatory
agencies, and provide an accounting of disapproved actions and
warnings taken in the previous year, including a description of
the conditions causing the disapproval and actions taken to
achieve compliance.''.
(c) Open Meetings.--Section 1104(b) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is
amended by inserting ``in public session after notice in the Federal
Register'' after ``shall meet''.
(d) Regulations.--Section 1106 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is amended--
(1) by inserting ``prescribe regulations after notice and
opportunity for comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations prescribed by
the Appraisal Subcommittee shall (unless otherwise provided in
this title) be limited to the following functions: temporary
practice, national registry, information sharing, and
enforcement. For purposes of prescribing regulations, the
Appraisal Subcommittee shall establish an advisory committee of
industry participants, including appraisers, lenders, consumer
advocates, and government agencies, and hold meetings as
necessary to support the development of regulations.''.
(e) Field Appraisals and Appraisal Reviews.--Section 1113 of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3342) is amended--
(1) by striking ``In determining'' and inserting ``(a) In
General.--In determining'';
(2) in subsection (a) (as designated by paragraph (1)), by
inserting before the period the following: ``, where a complex
1-to-4 unit single family residential appraisal means an
appraisal for which the property to be appraised, the form of
ownership, the property characteristics, or the market
conditions are atypical''; and
(3) by adding at the end the following new subsection:
``(b) Appraisals and Appraisal Reviews.--All appraisals performed at
a property within a State shall be prepared by appraisers licensed or
certified in the State where the property is located. All appraisal
reviews, including appraisal reviews by a lender, appraisal management
company, or other third party organization, shall be performed by an
appraiser who is duly licensed or certified by a State appraisal
board.''.
(f) Appraisal Management Services.--
(1) Supervision of third party providers of appraisal
management services.--Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3332(a)) (as previously amended by this section) is
further amended--
(A) by amending paragraph (1) to read as follows:
``(1) monitor the requirements established by States--
``(A) for the certification and licensing of
individuals who are qualified to perform appraisals in
connection with federally related transactions,
including a code of professional responsibility; and
``(B) for the registration and supervision of the
operations and activities of an appraisal management
company;''; and
(B) by adding at the end the following new paragraph:
``(7) maintain a national registry of appraisal management
companies that either are registered with and subject to
supervision of a State appraiser certifying and licensing
agency or are operating subsidiaries of a Federally regulated
financial institution.''.
(2) Appraisal management company minimum qualifications.--
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by
adding at the end the following new section (and amending the
table of contents accordingly):

``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

``(a) In General.--The Appraiser Qualifications Board of the
Appraisal Foundation shall establish minimum qualifications to be
applied by a State in the registration of appraisal management
companies. Such qualifications shall include a requirement that such
companies--
``(1) register with and be subject to supervision by a State
appraiser certifying and licensing agency in each State in
which such company operates;
``(2) verify that only licensed or certified appraisers are
used for federally related transactions;
``(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
``(4) require that appraisals are conducted independently and
free from inappropriate influence and coercion pursuant to the
appraisal independence standards established under section 129E
of the Truth in Lending Act.
``(b) Exception for Federally Regulated Financial Institutions.--The
requirements of subsection (a) shall not apply to an appraisal
management company that is a subsidiary owned and controlled by a
financial institution and regulated by a federal financial institution
regulatory agency. In such case, the appropriate federal financial
institutions regulatory agency shall, at a minimum, develop regulations
affecting the operations of the appraisal management company to--
``(1) verify that only licensed or certified appraisers are
used for federally related transactions;
``(2) require that appraisals coordinated by an institution
or subsidiary providing appraisal management services comply
with the Uniform Standards of Professional Appraisal Practice;
and
``(3) require that appraisals are conducted independently and
free from inappropriate influence and coercion pursuant to the
appraisal independence standards established under section 129E
of the Truth in Lending Act.''
``(c) Registration Limitations.--An appraisal management company
shall not be registered by a State if such company, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State.
Additionally, each person that owns more than 10 percent of an
appraisal management company shall be of good moral character, as
determined by the State appraiser certifying and licensing agency, and
shall submit to a background investigation carried out by the State
appraiser certifying and licensing agency.
``(d) Regulations.--The Appraisal Subcommittee shall promulgate
regulations to implement the minimum qualifications developed by the
Appraiser Qualifications Board under this section, as such
qualifications relate to the State appraiser certifying and licensing
agencies. The Appraisal Subcommittee shall also promulgate regulations
for the reporting of the activities of appraisal management companies
in determining the payment of the annual registry fee.
``(e) Effective Date.--
``(1) In general.--No appraisal management company may
perform services related to a federally related transaction in
a State after the date that is 36 months after the date of the
enactment of this section unless such company is registered
with such State or subject to oversight by a federal financial
institutions regulatory agency.
``(2) Extension of effective date.--Subject to the approval
of the Council, the Appraisal Subcommittee may extend by an
additional 12 months the requirements for the registration and
supervision of appraisal management companies if it makes a
written finding that a State has made substantial progress in
establishing a State appraisal management company registration
and supervision system that appears to conform with the
provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is
amended by adding at the end the following: ``The duties of
such agency may additionally include the registration and
supervision of appraisal management companies.''.
(4) Appraisal management company definition.--Section 1121 of
the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3350) is amended by adding at the end
the following:
``(11) Appraisal management company.--The term ``appraisal
management company'' means, in connection with valuing
properties collateralizing mortgage loans or mortgages
incorporated into a securitization, any external third party
authorized either by a creditor of a consumer credit
transaction secured by a consumer's principal dwelling or by an
underwriter of or other principal in the secondary mortgage
markets, that oversees a network or panel of more than 10
certified or licensed appraisers in a State or 25 or more
nationally within a given year--
``(A) to recruit, select, and retain appraisers;
``(B) to contract with licensed and certified
appraisers to perform appraisal assignments;
``(C) to manage the process of having an appraisal
performed, including providing administrative duties
such as receiving appraisal orders and appraisal
reports, submitting completed appraisal reports to
creditors and underwriters, collecting fees from
creditors and underwriters for services provided, and
reimbursing appraisers for services performed; or
``(D) to review and verify the work of appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in paragraph (1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) transmit reports on sanctions, disciplinary actions,
license and certification revocations, and license and
certification suspensions on a timely basis to the national
registry of the Appraisal Subcommittee;
``(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or other
third-party providers of appraisals and appraisal management
services, including investigations initiated and disciplinary
actions taken; and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(a)) is amended--
(A) by amending paragraph (4) (as modified by section
603(g) of this Act) to read as follows:
``(4) collect--
``(A) from such individuals who perform or seek to
perform appraisals in federally related transactions,
an annual registry fee of not more than $40, such fees
to be transmitted by the State agencies to the Council
on an annual basis; and
``(B) from an appraisal management company that
either has registered with a State appraiser certifying
and licensing agency in accordance with this title or
operates as a subsidiary of a federally regulated
financial institution, an annual registry fee of--
``(i) in the case of such a company that has
been in existence for more than a year, $25
multiplied by the number of appraisers working
for or contracting with such company in such
State during the previous year, but where such
$25 amount may be adjusted, up to a maximum of
$50, at the discretion of the Appraisal
Subcommittee, if necessary to carry out the
Subcommittee's functions under this title; and
``(ii) in the case of such a company that has
not been in existence for more than a year, $25
multiplied by an appropriate number to be
determined by the Appraisal Subcommittee, and
where such number will be used for determining
the fee of all such companies that were not in
existence for more than a year, but where such
$25 amount may be adjusted, up to a maximum of
$50, at the discretion of the Appraisal
Subcommittee, if necessary to carry out the
Subcommittee's functions under this title.'';
and
(B) by amending the matter following paragraph (4),
as redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee
may adjust the dollar amount of registry fees under paragraph (4)(A),
up to a maximum of $80 per annum, as necessary to carry out its
functions under this title. The Appraisal Subcommittee shall consider
at least once every 5 years whether to adjust the dollar amount of the
registry fees to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide flexibility to
the States for multi-year certifications and licenses already in place,
as well as a transition period to implement the changes in registry
fees. In establishing the amount of the annual registry fee for an
appraisal management company, the Appraisal Subcommittee shall have the
discretion to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of the number
of appraisers working for or contracted by the appraisal management
company.''.
(2) Incremental revenues.--Incremental revenues collected
pursuant to the increases required by this subsection shall be
placed in a separate account at the United States Treasury,
entitled the ``Appraisal Subcommittee Account''.
(i) Grants and Reports.--Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3348(b)) is amended--
(1) by striking ``and'' after the semicolon in paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon;
(3) by adding at the end the following new paragraphs:
``(5) to make grants to State appraiser certifying and
licensing agencies to support the efforts of such agencies to
comply with this title, including--
``(A) the complaint process, complaint
investigations, and appraiser enforcement activities of
such agencies; and
``(B) the submission of data on State licensed and
certified appraisers and appraisal management companies
to the National appraisal registry, including
information affirming that the appraiser or appraisal
management company meets the required qualification
criteria and formal and informal disciplinary actions;
and
``(6) to report to all State appraiser certifying and
licensing agencies when a license or certification is
surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent
of the fiscal year total of incremental increase in fees collected and
deposited in the ``Appraisal Subcommittee Account'' pursuant to
subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
(1) in subsection (c), by inserting ``whose criteria for the
licensing of a real estate appraiser currently meet or exceed
the minimum criteria issued by the Appraisal Qualifications
Board of The Appraisal Foundation for the licensing of real
estate appraisers'' before the period at the end; and
(2) by striking subsection (e) and inserting the following
new subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee Appraiser' and
`Supervisory Appraiser' shall meet or exceed the minimum qualification
requirements of the Appraiser Qualifications Board of The Appraisal
Foundation. The Appraisal Subcommittee shall have the authority to
enforce these requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor each
State appraiser certifying and licensing agency for the purposes of
determining whether such agency--
``(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
``(2) processes complaints and completes investigations in a
reasonable time period;
``(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
``(4) maintains an effective regulatory program; and
``(5) reports complaints and disciplinary actions on a timely
basis to the national registries on appraisers and appraisal
management companies maintained by the Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State
licensed or certified appraiser or a registered appraisal management
company from a national registry on an interim basis pending State
agency action on licensing, certification, registration, and
disciplinary proceedings. The Appraisal Subcommittee and all agencies,
instrumentalities, and Federally recognized entities under this title
shall not recognize appraiser certifications and licenses from States
whose appraisal policies, practices, funding, staffing, or procedures
are found to be inconsistent with this title. The Appraisal
Subcommittee shall have the authority to impose sanctions, as described
in this section, against a State agency that fails to have an effective
appraiser regulatory program. In determining whether such a program is
effective, the Appraisal Subcommittee shall include an analyses of the
licensing and certification of appraisers, the registration of
appraisal management companies, the issuance of temporary licenses and
certifications for appraisers, the receiving and tracking of submitted
complaints against appraisers and appraisal management companies, the
investigation of complaints, and enforcement actions against appraisers
and appraisal management companies. The Appraisal Subcommittee shall
have the authority to impose interim actions and suspensions against a
State agency as an alternative to, or in advance of, the derecognition
of a State agency.''.
(2) in subsection (b)(2), by inserting after ``authority''
the following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351(b)) is amended to read as follows:
``(b) Reciprocity.--A State appraiser certifying or licensing agency
shall issue a reciprocal certification or license for an individual
from another State when--
``(1) the appraiser licensing and certification program of
such other State is in compliance with the provisions of this
title; and
``(2) the appraiser holds a valid certification from a State
whose requirements for certification or licensing meet or
exceed the licensure standards established by the State where
an individual seeks appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--Section
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not
exclude'' and all that follows through the end of the subsection and
inserting the following: ``may include education achieved, experience,
sample appraisals, and references from prior clients. Membership in a
nationally recognized professional appraisal organization may be a
criteria considered, though lack of membership therein shall not be the
sole bar against consideration for an assignment under these
criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by adding at the end the following new subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal Subcommittee
shall monitor each State appraiser certifying and licensing agency for
the purpose of determining whether such agency's policies, practices,
and procedures are consistent with the purposes of maintaining
appraiser independence and whether such State has adopted and maintains
effective laws, regulations, and policies aimed at maintaining
appraiser independence.''.
(o) Appraiser Education.--Section 1122 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended by inserting after subsection (g) (as added by subsection (l)
of this section) the following new subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall encourage
the States to accept courses approved by the Appraiser Qualification
Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351), as amended by this section, is further amended by adding at the
end the following new subsection:
``(i) Appraisal Complaint National Hotline.--If, 1 year after the
date of the enactment of this subsection, the Appraisal Subcommittee
determines that no national hotline exists to receive complaints of
non-compliance with appraisal independence standards and Uniform
Standards of Professional Appraisal Practice, including complaints from
appraisers, individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers or the
appraisal process, the Appraisal Subcommittee shall establish and
operate such a national hotline, which shall include a toll-free
telephone number and an email address. If the Appraisal Subcommittee
operates such a national hotline, the Appraisal Subcommittee shall
refer complaints for further action to appropriate governmental bodies,
including a State appraiser certifying and licensing agency, a
financial institution regulator, or other appropriate legal
authorities. For complaints referred to State appraiser certifying and
licensing agencies or to Federal regulators, the Appraisal Subcommittee
shall have the authority to follow up such complaint referrals in order
to determine the status of the resolution of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331 et seq.), as amended by this section, is further amended by adding
at the end the following new section (and amending the table of
contents accordingly):

``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN
MORTGAGES.

``(a) In General.--Automated valuation models shall adhere to quality
control standards designed to--
``(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest; and
``(4) require random sample testing and reviews, where such
testing and reviews are performed by an appraiser who is
licensed or certified in the State where the testing and
reviews take place.
``(b) Adoption of Regulations.--The Appraisal Subcommittee and its
member agencies shall promulgate regulations to implement the quality
control standards required under this section.
``(c) Enforcement.--Compliance with regulations issued under this
subsection shall be enforced by--
``(1) with respect to a financial institution, or subsidiary
owned and controlled by a financial institution and regulated
by a federal financial institution or regulatory agency, the
federal financial institution regulatory agency that acts as
the primary federal supervisor of such financial institution or
subsidiary; and
``(2) with respect to other persons, the Appraisal
Subcommittee.
``(d) Automated Valuation Model Defined.--For purposes of this
section, the term `automated valuation model' means any computerized
model used by mortgage originators and secondary market issuers to
determine the collateral worth of a mortgage secured by a consumer's
principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.),
as amended by this section, is further amended by adding at the end the
following new section (and amending the table of contents accordingly):

``SEC. 1126. BROKER PRICE OPINIONS.

``(a) General Prohibition.--Broker price opinions may not be used as
the sole basis to determine the value of a piece of property for the
purpose of a loan origination of a residential mortgage loan secured by
such piece of property.
``(b) Exceptions.--Subsection (a) shall not apply to--
``(1) those transaction as may be designated by the federal
financial institutions regulatory agencies or the Federal
Housing Finance Agency; or
``(2) real estate brokers who produce broker price opinions
or competitive market analyses solely for the purposes of the
real estate listing process.
``(c) Broker Price Opinion Defined.--For purposes of this section,
the term `broker price opinion' means an estimate, done in lieu of a
written appraisal, prepared by a real estate broker, agent, or sales
person that details the probable selling price of a particular piece of
real estate property and provides a varying level of detail about the
property's condition, market, and neighborhood, and information on
comparable sales, but does not include an automated valuation model, as
defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of the
Federal Financial Institutions Examination Council Act of 1978 (12
U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the period the
following: ``and the Federal Housing Finance Agency''; and
(2) by inserting at the end the following: ``At all times at
least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the appraisal
profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) is
amended by striking ``council,'' and inserting ``Council,''.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is
amended by striking ``Corporations,'' and inserting
``Corporation,''.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is
amended by striking ``council'' and inserting ``Council''.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended--
(A) in subsection (a)(1) by moving the left margin of
subparagraphs (A), (B), and (C) 2 ems to the right; and
(B) in subsection (c)--
(i) by striking ``Federal Financial
Institutions Examination Council'' and
inserting ``Financial Institutions Examination
Council''; and
(ii) by striking ``the council's functions''
and inserting ``the Council's functions''.

SEC. 604. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND
COMPLIANCE PROGRAMS.

(a) Study.--The Comptroller General shall conduct a comprehensive
study on possible improvements in the appraisal process generally, and
specifically on the consistency in and the effectiveness of, and
possible improvements in, State compliance efforts and programs in
accordance with title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989. In addition, this study shall
examine the existing exemptions to the use of certified appraisers
issued by Federal financial institutions regulatory agencies. The study
shall also review the threshold level established by Federal regulators
for compliance under title XI and whether there is a need to revise
them to reflect the addition of consumer protection to the purposes and
functions of the Appraisal Subcommittee. The study shall additionally
examine the quality of different types of mortgage collateral
valuations produced by broker price opinions, automated valuation
models, licensed appraisals, and certified appraisals, among others,
and the quality of appraisals provided through different distribution
channels, including appraisal management companies, independent
appraisal operations within a mortgage originator, and fee-for-service
appraisals. The study shall also include an analysis and statistical
breakdown of enforcement actions taken during the last 10 years against
different types of appraisers, including certified, licensed,
supervisory, and trainee appraisers. Furthermore, the study shall
examine the benefits and costs, as well as the advantages and
disadvantages, of establishing a national repository to collect data
related to real estate property collateral valuations performed in the
United States.
(b) Report.--Before the end of the 18-month period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report on the study under subsection (a) to the Committee on
Financial Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate, together with such
recommendations for administrative or legislative action, at the
Federal or State level, as the Comptroller General may determine to be
appropriate.

SEC. 605. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.

Subsection (e) of section 701 of the Equal Credit Opportunity Act (
U.S.C. 1691) is amended to read as follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.--Each creditor shall furnish to an
applicant a copy of any and all written appraisals and
valuations developed in connection with the applicant's
application for a loan that is secured or would have been
secured by a first lien on a dwelling promptly upon completion,
but in no case later than 3 days prior to the closing of the
loan, whether the creditor grants or denies the applicant's
request for credit or the application is incomplete or
withdrawn.
``(2) Waiver.--The applicant may waive the 3 day requirement
provided for in paragraph (1), except where otherwise required
in law.
``(3) Reimbursement.--The applicant may be required to pay a
reasonable fee to reimburse the creditor for the cost of the
appraisal, except where otherwise required in law.
``(4) Free copy.--Notwithstanding paragraph (3), the creditor
shall provide a copy of each written appraisal or valuation at
no additional cost to the applicant.
``(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in writing
of the right to receive a copy of each written appraisal and
valuation under this subsection.
``(6) Regulations.--The Board shall prescribe regulations to
implement this subsection within 1 year of the date of the
enactment of this subsection.
``(7) Valuation defined.--For purposes of this subsection,
the term `valuation' shall include any estimate of the value of
a dwelling developed in connection with a creditor's decision
to provide credit, including those values developed pursuant to
a policy of a government sponsored enterprise or by an
automated valuation model, a broker price opinion, or other
methodology or mechanism.''.

SEC. 606. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT
RELATING TO CERTAIN APPRAISAL FEES.

Section 4 of the Real Estate Settlement Procedures Act of 1974 is
amended by adding at the end the following new subsection:
``(c) The standard form described in subsection (a) shall include, in
the case of an appraisal coordinated by an appraisal management company
(as such term is defined in section 1121(11) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3350(11))), a clear disclosure of--
``(1) the fee paid directly to the appraiser by such company;
and
``(2) the administration fee charged by such company.''.

TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT
SPONSORED ENTERPRISES REFORM

SEC. 701. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
SPONSORED ENTERPRISES REFORM TO ENHANCE THE
PROTECTION, LIMITATION, AND REGULATION OF THE TERMS
OF RESIDENTIAL MORTGAGE CREDIT.

(a) Findings.--The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac), were chartered by Congress
to ensure a reliable and affordable supply of mortgage funding,
but enjoy a dual legal status as privately owned corporations
with Government mandated affordable housing goals.
(2) In 1996, the Department of Housing and Urban Development
required that 42 percent of Fannie Mae's and Freddie Mac's
mortgage financing should go to borrowers with income levels
below the median for a given area.
(3) In 2004, the Department of Housing and Urban Development
revised those goals, increasing them to 56 percent of their
overall mortgage purchases by 2008, and additionally mandated
that 12 percent of all mortgage purchases by Fannie Mae and
Freddie Mac be ``special affordable'' loans made to borrowers
with incomes less than 60 percent of an area's median income, a
target that ultimately increased to 28 percent for 2008.
(4) To help fulfill those mandated affordable housing goals,
in 1995 the Department of Housing and Urban Development
authorized Fannie Mae and Freddie Mac to purchase subprime
securities that included loans made to low-income borrowers.
(5) After this authorization to purchase subprime securities,
subprime and near-prime loans increased from 9 percent of
securitized mortgages in 2001 to 40 percent in 2006, while the
market share of conventional mortgages dropped from 78.8
percent in 2003 to 50.1 percent by 2007 with a corresponding
increase in subprime and Alt-A loans from 10.1 percent to 32.7
percent over the same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac purchased
$175,000,000,000 in subprime mortgage securities, which
accounted for 44 percent of the market that year, and from 2005
through 2007, Fannie Mae and Freddie Mac purchased
approximately $1,000,000,000,000 in subprime and Alt-A loans,
while Fannie Mae's acquisitions of mortgages with less than 10
percent down payments almost tripled.
(7) According to data from the Federal Housing Finance Agency
(FHFA) for the fourth quarter of 2008, Fannie Mae and Freddie
Mac own or guarantee 75 percent of all newly originated
mortgages, and Fannie Mae and Freddie Mac currently own 13.3
percent of outstanding mortgage debt in the United States and
have issued mortgage-backed securities for 31.0 percent of the
residential debt market, a combined total of 44.3 percent of
outstanding mortgage debt in the United States.
(8) On September 7, 2008, the FHFA placed Fannie Mae and
Freddie Mac into conservatorship, with the Treasury Department
subsequently agreeing to purchase at least $200,000,000,000 of
preferred stock from each enterprise in exchange for warrants
for the purchase of 79.9 percent of each enterprise's common
stock.
(9) The conservatorship for Fannie Mae and Freddie Mac has
potentially exposed taxpayers to upwards of $5,300,000,000,000
worth of risk.
(10) The hybrid public-private status of Fannie Mae and
Freddie Mac is untenable and must be resolved to assure that
consumers are offered and receive residential mortgage loans on
terms that reasonably reflect their ability to repay the loans
and that are understandable and not unfair, deceptive, or
abusive.
(b) Sense of the Congress.--It is the sense of the Congress that
efforts to enhance by the protection, limitation, and regulation of the
terms of residential mortgage credit and the practices related to such
credit would be incomplete without enactment of meaningful structural
reforms of Fannie Mae and Freddie Mac.

Purpose and Summary

H.R. 1728, the Mortgage Reform and Anti-Predatory Lending
Act, is intended to reform mortgage lending practices to avert
a recurrence of the current situation of unprecedented levels
of defaults and foreclosures rates. The bill is fashioned after
similar legislation that passed the House in November 2007
(H.R. 3915), but has been updated and contains a number of new
provisions.
As reported, Titles I and II of H.R. 1728 set minimum
standards for mortgages requiring that consumers must have a
reasonable ability to repay at the time the mortgage is
consummated and that mortgage refinancings must provide a net
tangible benefit to the consumer. Under the bill, securitizers
and other participants in the secondary mortgage market would
for the first time under federal law be liable for supporting
irresponsible lending. It provides that certain high-quality,
low-cost loans (defined as Qualified Mortgages) will be
presumed to meet these Federal standards. This is a limited
safe harbor for these loans because the presumption can be
rebutted.
The bill also prohibits financial incentives (including
payments known as ``yield spread premiums'') that encourage
mortgage originators, including mortgage brokers and loan
officers of lending institutions, to steer consumers to higher-
cost and more abusive mortgages. In addition, it prohibits
prepayment penalties for any adjustable rate mortgage and other
mortgages that do not meet the definition of Qualified
Mortgage, limits prepayment penalties charged to borrowers who
wish to close out their loans, typically to refinance on more
affordable terms, bans single premium credit insurance and
prohibits mandatory arbitration clauses; and includes
protections for renters of foreclosed properties. Finally,
there are provisions to provide legal assistance to homeowners
and tenants facing foreclosure.
H.R. 1728 requires creditors to retain an economic interest
in a material portion of the credit risk for certain mortgages
they originate. Another provision authorizes the Banking
Agencies to address through rulemaking abusive mortgage terms
and practices that may arise in the future. The bill permits
consumers to obtain redress directly from firms involved in
``securitizing'' mortgages, unless the securitizer has
performed appropriate due diligence to comply with the ability
to repay and net tangible benefit standards and effected a
modification or refinancing that provides the borrower with a
loan that satisfies these standards.
Title III of H.R. 1728 expands the scope of and enhances
consumer protections for high-cost loans under the Home
Ownership and Equity Protection Act (HOEPA) and requires
additional disclosures to consumers. This title revises the
benchmark for determining these triggers from Treasuries
securities to the ``average prime offer rate,'' which is
determined by the Federal Reserve. In addition, it lowers the
points and fee trigger from 8 percent to 5 percent for
transactions of $20,000 or more and including additional costs
and fees in the trigger; prohibits the financing of points and
fees; prohibits excessive fees for payoff information,
modifications, or late payments; prohibits practices that
increase the risk of foreclosure, such as balloon payments,
encouraging a borrower to default, and call provisions; and
requires pre-loan counseling.
Title IV of the bill establishes an Office of Housing
Counseling at HUD that will carry out and coordinate
homeownership and rental housing counseling programs; requires
the launch of a national public service, multimedia campaign to
promote housing counseling and the establishment of a website
and toll-free hotline; authorizes the issuance of homeownership
and rental housing counseling grants to HUD-approved housing
counseling agencies and State housing finance agencies; and
requires HUD to update the Mortgage Information Booklet to
provide consumers with a greater understanding of the terms of
the home buying process. Additionally, the bill requires
increased information to consumers about the need for home
inspections and ways to avoid foreclosure scams.
Titles V and VI of H.R. 1728 offer a comprehensive,
balanced, and progressive set of solutions aimed at stopping or
mitigating a number of abusive and deceptive practices related
to escrow accounts, mortgage servicing, and appraisal
practices. The two titles also build on the provisions
previously incorporated by an amendment on the House floor into
H.R. 3915.
Regarding the escrow provisions contained in Title V, H.R.
1728 requires all subprime borrowers to have accounts
established in conjunction with their mortgages to provide
protection against tax liens and the forced placement of
insurance, among other things. In addition, the bill requires
lenders to provide written disclosures about the need to pay
taxes and insurance premiums to all borrowers if they opt out
of creating escrow accounts. To ensure that lenders alert
borrowers to all costs involved in a transaction, the bill
requires the inclusion of escrow payments for taxes and
insurance in any repayment analysis provided to consumers at
the time of a quote on a mortgage.
With respect to mortgage servicing reforms, the Title V of
H.R. 1728 also updates the Real Estate Settlement Procedures
Act (RESPA) and the Truth in Lending Act (TILA) to create new
consumer protections. These protections include detailing when
the servicer can impose force-placed insurance, mandating
swifter responses to consumer written inquiries, increasing
penalties for violations of RESPA, requiring the prompt
crediting of payments, and mandating that borrowers receive
payoff statement quotes within a reasonable amount of time
after a request.
Concerning appraisal practices, Title VI of H.R. 1728
prohibits the lender from making a subprime mortgage without
first obtaining a written appraisal of the physical property.
The bill also protects these loan applicants against loan
flipping by requiring a second written appraisal, free of
charge, if another loan on the property occurred in the past
six months. Lenders must additionally provide mortgage
applicants with copies of any and all written appraisal reports
and valuations developed in connection with a mortgage
transaction at least 3 days before the scheduled closing date
on the property.
H.R. 1728 further creates enforceable Federal appraisal
independence standards with penalties within TILA and amends
the Financial Institutions Reform, Recovery, and Enforcement
Act (FIRREA) to require the Appraisal Subcommittee to monitor
the effectiveness of State appraiser agencies in maintaining
appraisal independence. These standards prohibit the parties
involved in a real estate transaction from influencing the
independent judgment of an appraiser through collusion,
coercion, and bribery, among other activities. In addition to
other stipulations, they require appraisers to have no direct
or indirect interest in the property or transaction involving
the appraisal.
Moreover, the bill's changes will provide the Appraisal
Subcommittee with a consumer protection mandate and more
authority to monitor the performance of State appraiser
agencies. The Appraisal Subcommittee is also required to
describe its activities in greater detail in an annual report
to the Congress. Many of the additional appraisal changes are
designed to strengthen licensing and education standards, as
well as to establish a Federal grant program to the States.
The modifications to appraisal regulation found in H.R.
1728 also create a system for registering and supervising
appraisal management companies, ensure the establishment of a
national hotline for collecting appraisal complaints, provide
for the production of reliable results by automated valuation
models, and bar the use of broker price opinions as the sole
basis for determining the value of a property for purchase
mortgage loans. Finally, Title VI amends RESPA to require the
separate disclosure of fees paid to appraisal management
companies and appraisers.

Background and Need for Legislation

Mortgage crisis

It is now well documented that the explosive growth in
subprime and Alt-A mortgage lending in the early part of this
decade led many Americans to obtain mortgage credit that they
could not afford. As a result, the country is facing an
unprecedented foreclosure crisis and foreclosure rates are
expected to increase.
This crisis can be traced in part to the movement of
lenders and mortgage originators away from traditional
commonsense underwriting practices during the real estate boom,
giving rise to risky, exotic mortgages and practices such as
``no doc'' lending and allowing loans with ``negative
amortization'' features, and to the proliferation of subprime
mortgages, especially in refinancing. Many observers comment
that the growth of mortgage securitization and the market in
mortgage-backed securities--investment instruments backed by
pools of loans purchased by investment firms--increased the
number of lenders and propelled the sale of subprime products.
Investors' demand for high-yield mortgage bonds in turn may
have driven brokers and lenders to push borrowers to high-risk
loans, loosening underwriting standards. Government data and
academic studies have suggested that a disproportionate amount
of higher priced subprime lending was concentrated in the
minority population and in minority neighborhoods.
In general, subprime mortgages are loans that have more
costly terms and conditions than ``prime'' mortgages (e.g.,
they may have higher interest rates, additional fees,
prepayment penalties, or other features). Many subprime loans
were made to borrowers who, due to weakened credit histories,
pose higher credit risks. These borrowers may have lower credit
scores than prime borrowers or higher debt to income ratios on
their properties. In other cases, subprime borrowers may
actually have qualified for prime loans, but did not receive
them, for various reasons ranging from the benign (such as an
inability to produce full income documentation) to predatory
practices such as loan steering.
Subprime lenders included banks, bank affiliates, and non-
bank mortgage companies. According to Mortgage Bankers
Association (MBA), more than half of subprime mortgages were
made by mortgage brokers and lenders with no Federal
supervision; a quarter were made by finance companies that are
affiliates of bank holding companies and indirectly regulated
by the Federal Reserve Board; and the rest were made by
institutions directly regulated by Federal financial regulators
such as banks, thrifts, and credit unions.
Additional controversy surrounded so-called subprime
payment option adjustable rate mortgages (ARMs) in which the
interest rate starts at a low ``teaser'' level and then
ratchets upward after a set period, often two or three years.
The term ``hybrid'' refers to the blend of fixed-rate and
adjustable-rate characteristics found in such ARMs. Like other
adjustable-rate products, hybrid ARMs transfer some interest
rate risk from the lender to the consumer, thus allowing the
lender to offer a lower initial rate.
Hybrid ARMs are referred to by their initial fixed period
and adjustment periods, for example 3/1 for an ARM with a 3-
year fixed period and subsequent 1-year rate adjustment
periods. Two products that have drawn particular attention are
2/28s and 3/27s. For these loans, the rate resets every six
months after the initial teaser rate period for the remaining
28 or 27 years of the loan at a margin over a particular
designated short-term interest rate, such as the London
Interbank Offered Rate (LIBOR). Interest-only, no-principal
balloon loans often result in even steeper increases as a
result of deferred unpaid principal.
Many of these loans also had prepayment penalties that may
extend beyond the low initial payment period. When these loans
reset, consumers may face penalties for refinancing or have a
very short time in which to refinance. Prepayment penalties
can, however, sometimes provide consumers with lower interest
rates because they provide a more stable revenue stream and
thus increase the value of the loan on the secondary market.
The number of hybrid ARMs and other subprime loans--and
their share of the mortgage market--has significantly increased
in the past few years. According to press reports, in 1998, the
percentage of hybrids relative to 30-year fixed-rate mortgages
was less than 2 percent. By 2004, this percentage had risen to
27.5 percent. Origination volumes of subprime mortgages grew
from $100 billion in 2001 to $800 billion in 2005. Many
homeowners took out these loans because they couldn't afford
the monthly payments that came with a 30-year fixed-rate loan.
They were counting on having the value of their homes
appreciate and then refinancing. Instead, home prices
throughout the country have plummeted. In a period of declining
home values, the principal amounts of many loans became greater
than the value of the underlying assets, making refinancing
difficult.
Many of these loans began to ``reset'' in 2007 from their
two- and three-year teaser rates to significantly higher
monthly payments for homeowners, pushing many borrowers into
foreclosure. Foreclosures not only harm homeowners, who can
lose their homes and the equity in them and suffer from
tarnished credit records, but also can have negative effects on
the broader community and the economy. Foreclosures can trigger
domino effects that result in housing abandonment, declining
property values in surrounding neighborhoods, and loss of
property tax revenue to states and localities. Many observers
also have cited the widespread apprehension over exposure to
subprime mortgage-backed bonds as the root cause of the ongoing
credit crisis.
Congress has enacted a number of consumer protection laws
in the financial sector over the last few decades. These
statutes include TILA, the Fair Credit Reporting Act (FCRA),
the Fair Debt Collection Practices Act (FDCPA), and the Equal
Credit Opportunity Act (ECOA). Most of these statutes have
sought to address particular consumer problems in particular
sub-sectors. TILA, for example, requires that consumers receive
critical disclosures in a uniform manner before entering into
credit transactions. In response to reports of predatory
lending practices in home equity lending in the early 1990s,
Congress enacted HOEPA in 1994, which covers home equity loans
but not purchase-money mortgages. Loans classified as `high-
cost home loans' under HOEPA because of their high annual
percentage rates (APRs) or points and fees trigger certain
prohibitions or disclosures or both.
In July 2008, the Federal Reserve adopted final rules to
address unfair, abusive or deceptive home mortgage lending
practices and to restrict certain other mortgage practices. The
rules also establish advertising standards and require certain
mortgage disclosures to be given to consumers earlier in a
transaction. The Federal Reserve's action adds four key
protections to a newly defined category of ``higher-priced
mortgage loans'' secured by a consumer's principal dwelling.
The four protections adopted for the newly defined category
of higher-priced mortgage loans will:
Prohibit a lender from making a loan without
regard to borrowers' ability to repay the loan from
income and assets other than the home's value. A lender
complies, in part, by assessing repayment ability based
on the highest scheduled payment in the first seven
years of the loan. To show that a lender violated this
prohibition, a borrower does not need to demonstrate
that it is part of a ``pattern or practice;''
Require creditors to verify the income and
assets they rely upon to determine repayment ability;
Ban any prepayment penalty if the payment
can change in the initial four years. For other higher-
priced loans, a prepayment penalty period cannot last
for more than two years; and
Require creditors to establish escrow
accounts for property taxes and homeowner's insurance
for all first-lien mortgage loans.
While the Federal Reserve's rules addressed some of the
practices that led to the current crisis, H.R. 1728 will
compliment the Federal Reserve's rule and provide additional
protections to mortgage borrowers.
Many States have enacted statutes modeled after HOEPA.
Currently, at least thirty States, the District of Columbia,
and roughly a dozen municipalities have enacted either
comprehensive statutes or other limited statutory protections
aimed at predatory lending practices, some addressing a
specific practice, some generally tracking HOEPA, and others
going far beyond it.
As more families face foreclosure, the need for affordable
legal assistance for homeowners and tenants increases.
Throughout the country, legal assistance organizations report a
dramatic increase in unmet need for foreclosure-related legal
services. Given this urgent need, the bill provides for grants
to state and local legal organizations to provide legal
assistance to low and moderate income homeowners and tenants
with foreclosure-related issues.
Affordable housing advocates report that at least 20
percent of properties in foreclosure were rental properties and
roughly 40 percent of families facing eviction due to
foreclosure are tenants. To address this unintended impact of
the foreclosure crisis, the bill allows bona fide tenants to
remain in their residence, pursuant to their lease, following
foreclosure on the property, except in certain limited
circumstance.

Escrows

An escrow is a trust account set up in a borrower's name to
ensure the timely payment of specified obligations affiliated
with a property. Current Federal law permits all consumers to
voluntarily establish escrow accounts with their lender or
mortgage servicer to cover property taxes, hazard insurance,
and certain other periodic expenses related to the property or
the contract. The administration of these accounts is covered
by RESPA and, if applicable, State law.
Borrowers with escrows pay an additional amount on their
mortgage each month to fund the account. In addition to any
principal and interest payments, lenders collect a pro-rata
assessment of the total expected annual outlays for taxes and
insurance using RESPA's established guidelines. Lenders then
use these collected sums to guarantee the timely payment of
property tax bills and insurance premiums. In a way, an escrow
serves as a safety net to protect the lender and the borrower
from tax liens and property losses.
In analyzing the recent problems related to the fallout in
the subprime lending industry, some experts have noted that
subprime borrowers, even though they are more likely to need
budgeting assistance given their weaker credit histories, are
less likely than prime borrowers to have escrows. In its 2006
benchmarking studies, for example, the Mortgage Bankers
Association found that approximately 50 percent of all first
lien subprime mortgages had escrows, compared to 71 percent of
prime loans. Other experts have suggested that the number of
subprime borrowers with escrows is significantly lower.
In 2004, Fannie Mae updated its policies on escrows in its
Selling and Servicing Guides. While it continued to allow the
waiver of an escrow account requirement in certain instances,
the updated policy recommends against waiving escrows for a
borrower with a blemished credit record. In doing so, the
enterprise noted that the borrower may find it difficult to
maintain homeownership if he or she faces the need to make
large lump-sum payments for taxes and/or insurance and any
other periodic payment items.
In early 2007, the Federal banking regulators also issued
guidance on disclosure notices for consumers who opt out of
escrow services. The guidance laid out fundamental consumer
protection principles for underwriting, including that
consumers should be informed of their responsibilities to pay
taxes and insurance, in addition to their loan payments, if not
escrowed, and the fact that the costs for taxes and insurance
costs can be substantial. Fannie Mae has adopted similar escrow
opt-out disclosure policies, too.
Issues related to escrows have also arisen as part of the
homebuying and refinancing process. Some mortgage originators,
at the time of a payment quote, provide consumers only with
details on principal and interest amounts. As a result,
borrowers may underestimate the monthly payment actually needed
to own a home. Moreover, because some quotes contain
information regarding additional fees associated with a
property like taxes and insurance premiums and some do not,
borrowers sometimes lack the information needed to make
accurate comparisons between different mortgage offers.
In its commentary in a rule promulgated last summer under
the Home Ownership and Equity Protection Act (HOEPA), the
Federal Reserve Board noted that ``[c]onsumers in the subprime
market tend to shop based on monthly payment amounts, rather
than on interest rates. So creditors who are active in the
subprime market, and who can quote low monthly payments to a
prospective borrower, have a competitive advantage over
creditors who quote higher monthly payments.'' Both apples-to-
apples comparisons of payments and more realistic expectations
of monthly obligations are better accomplished by mortgage
offers containing four payment obligations: principal,
interest, taxes, and insurance, otherwise known as PITI.
As a result of its findings, the Federal Reserve Board's
recent HOEPA regulations require a creditor to establish an
escrow account for taxes and insurance for subprime borrowers.
These escrow accounts must remain in place for at least 12
months before a consumer can cancel them. The final rule also
adopted changes to advertising practices to require the
prominent disclosure that taxes and insurance are not included
in promotional quotes.

Mortgage servicing

While much of the recent attention related to mitigating
predatory lending practices has focused on the mortgage
origination and underwriting process, the problems of abusive
and deceptive lending also extends into mortgage servicing,
which occurs after the consummation of a home loan. The
problems that homeowners have encountered with loan servicing
have received media attention.\1\
---------------------------------------------------------------------------
\1\See Gretchen Morgenson, ``Can These Mortgages Be Saved,'' New
York Times, September 30, 2007, and Jack Guttentag, ``Loan Servicers,
the Lesser-Known Predators,'' Washington Post, November 3, 2007.
---------------------------------------------------------------------------
Under RESPA, servicers are the entities responsible for
servicing a loan. Typically, servicers are large corporations
servicing millions of mortgage loans at any one time. Servicers
generally have no legal relationship with the owners or
assignees of the loan and make their income from a small
percentage earned on each payment made on the loan. Servicers
may also earn income from the float from escrow accounts they
maintain for borrowers to cover the required payments for
property insurance on the loan.
Unfortunately, in recent years, some servicers have
discovered that greater profits can be obtained by squeezing
borrowers in a variety of ways. One problematic method used to
increase revenue by servicers is the forced placement of
insurance without a reasonable basis for doing so. The 2004
agreement between Ocwen Federal Bank and the Office of Thrift
Supervision and the 2003 settlement between Fairbanks Capital
Holding Corporation and the Federal Trade Commission and the
Department of Housing and Urban Development (HUD) both resulted
in internal servicing reforms to improve the process for the
forced placement of insurance.
Force-placed insurance is a product obtained by lenders to
protect their interest in the property in the event the
borrower fails to maintain or renew hazard and flood insurance
as required under the terms of the mortgage contract. Force-
placed insurance generally costs at least twice the amount of
standard homeowners insurance, even though it generally only
covers the replacement value of the underlying collateral. By
comparison, homeowners insurance would cover not only the costs
of repairing or replacing the home, but also the contents of
the home itself.
Another practice that raises the concerns of consumer
advocates relates to the prompt crediting of payments. A
servicer may sometimes hold a payment past the due date in
order to impose a late charge. Servicers may also profit from
the float that occurs when the borrower makes less than a full
payment. In such instances, the servicer will deposit the
partial payment into a suspense account rather than crediting
the consumer's account for the amount paid.
There are still many other concerns related to mortgage
servicing. A lender may refuse to provide a pay-off amount on a
loan, thus limiting a borrower's ability to satisfy the
obligation (and potentially to refinance into a cheaper loan).
Servicers may also postpone refunding balances in escrow
accounts or charge excessive fees, including when responding to
borrower requests to correct errors. RESPA establishes
affirmative obligations on servicers to answer questions and
address concerns consumers have about the status of their loans
and their escrow accounts after the consumer has sent a
``qualified written request.'' Some servicers, however, will
game the system by failing to respond adequately to each such
request, forcing the consumer to make repeated inquiries, yet
charging amounts for each response.
Finally, servicers currently have no enforceable obligation
to provide consumers with information about the true owner of
the mortgage. A recent court case held that a consumer's
attempt to rescind a loan under the Truth in Lending Act was
ineffective when the rescission notice was served on the
servicer, because the servicer was not an agent for the holder
(even though the servicer is clearly an agent for purposes of
receiving payments on the loan).
In its July 2008 HOEPA rulemaking, the Federal Reserve
addressed several of the most problematic mortgage servicing
issues, including those related to the prompt crediting of
mortgage payments and the timely provision of pay-off
statements. In response to the growing need to expeditiously
help troubled borrowers to modify their loans, the HOPE Now
coalition has also adopted best practices aimed at shortening
the response times for processing requests. More, however,
could be done to help protect consumer interests in the area of
mortgage servicing.

Appraisals

Obtaining an appraisal is a key step in the mortgage
underwriting process. It helps to verify a property's value for
the buyer, seller, lender, investor, and others. For the
process to work as intended, appraisers must act as unbiased
arbiters. In other words, they ought to have independence in
making their determinations of a property's worth.
In recent years, however, the appraisal process has
experienced increased stress. According to the Appraisal
Institute, appraiser-related mortgage fraud continues largely
because:
Unscrupulous third parties pressure
appraisers to meet predetermined values;
Appraiser regulators provide inadequate
oversight over licensed appraisers;
Too little attention is paid to improving
appraisal quality; and
Appraisals, in some areas of lending, have
been reduced from an important safeguard role to merely
a ``speed bump'' in the process of closing a loan.
Moreover, the October Research Corporation released a study
in December 2006 finding that 90 percent of appraisers were
pressured to raise property valuations to enable the completion
of a transaction.\2\ Such pressure can come from mortgage
brokers, real estate agents/brokers, consumers, lenders, and
appraisal management companies. The survey also found that 75
percent of appraisers reported ``negative ramifications'' if
they did not cooperate by altering their appraisals.
---------------------------------------------------------------------------
\2\National Appraisal Survey, October Research Corporation,
December 2006. www.octoberresearch.com
---------------------------------------------------------------------------
Faulty appraisals can have real consequences: Individuals
who obtained an overvalued appraisal may later encounter
difficulty in refinancing or selling a home because the true
value of the property used as collateral is less than the
original mortgage.
The problems of inflated appraisals have also increasingly
attracted the attention of enforcement officials. In January
2006, for example, State attorneys general announced a
settlement with Ameriquest Mortgage Company. Among other
things, the company agreed to take reasonable steps to ensure
the accuracy of appraisals and enhance the independence of the
appraisal process. The Ohio Attorney General additionally has
filed and settled several cases against mortgage originators
since the start of 2007 regarding violations of the State's new
appraisal independence law.
Furthermore, New York Attorney General Andrew Cuomo filed a
lawsuit on November 1, 2007 against one of the nation's largest
real estate appraisal management companies (eAppraiseIT) and
its parent corporation for colluding with a lender to inflate
the appraised values of homes.\3\ As part of his examinations
of the appraisal industry, the New York Attorney General also
identified problems with the loan purchased by Fannie Mae and
Freddie Mac. As a result, he finalized an agreement known as
the Home Valuation Code of Conduct to promote appraiser
independence. The agreement became effective on May 1, 2009.
---------------------------------------------------------------------------
\3\http://www.oag.state.ny.us/press/2007/nov/nov1a_07.html
---------------------------------------------------------------------------
Interest in enacting laws aimed at protecting the
independence of appraisers has blossomed in recent years. Since
the start of the decade, 25 States have passed such laws. Many
of these laws aim to protect appraiser independence by ensuring
that no one with an interest in a transaction involving an
appraisal can influence or attempt to influence an appraiser
through coercion, extortion, compensation, instruction,
inducement, intimidation, bribery, or non-payment for services
rendered. Many State legislatures around the nation also have
similar bills under consideration.
Currently, no Federal statute specifically requires
appraisal independence in the private mortgage markets, but the
members of the Appraisal Subcommittee (ASC) have issued
regulations and guidance to address this issue. These
requirements, however, only apply to federally regulated banks,
thrifts, and credit unions, as well as the parties affiliated
with these federally regulated depositories.
In its 2008 HOEPA rulemaking, the Federal Reserve Board
took further steps to address this issue. In its final rule,
the Board determined that ``[e]ncouraging an appraiser to
overstate or understate the value of a consumer's dwelling
causes consumers substantial injury.'' As a result, the Board
adopted a standard ``to prohibit creditors and mortgage brokers
and their affiliates from coercing, influencing, or otherwise
encouraging appraisers to misstate or misrepresent the value of
a consumer's principal dwelling.''
While this rule established a national standard for
appraisal independence, to date Congress has not adopted a
national law in this area to cover the vast majority of
mortgage transactions. Moreover, the Federal Reserve rulemaking
incorporated only some of the independence terms found in the
growing field of State appraisal laws.
In the wake of the savings and loan crisis, the Congress
established the ASC and housed it within the Financial
Institutions Examination Council (FIEC) as part of the
Financial Institutions Reform, Recovery, and Enforcement Act
(FIRREA). Members of the ASC presently include the Federal
Reserve Board, the Office of the Comptroller of the Currency,
the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, the National Credit Union Association, and the
Department of Housing and Urban Development (HUD). Although it
worked with New York Attorney General Cuomo to modify the Home
Valuation Code of Conduct for Fannie Mae and Freddie Mac and
this agreement has significant implications for the entities
currently regulated by the members of the ASC, the Federal
Housing Finance Agency currently does not belong to the ASC. A
formal membership on the ASC by this agency might have
facilitated the agreement's adoption.
The ASC presently works to ensure that real estate
appraisers, who perform appraisals in real estate transactions
that could expose the United States government to financial
loss, are sufficiently trained and tested to assure competency,
independence, and high ethical judgment according to the
Uniform Standards of Professional Appraisal Practice, or USPAP.
The ASC also monitors the work of the Appraisal Foundation, a
nonprofit educational corporation established by the U.S.
appraisal industry.
The ASC additionally monitors appraisers using State-based
laws and enforcement agencies. A survey of State appraisal
regulators by the Government Accountability Office in 2003
reported resource limitations as the primary impediment in
carrying out their oversight responsibilities.\4\ One of the
critiques about the current oversight system often made by the
Appraisal Institute and other professional appraisal
organizations is that the ASC's 2006 annual report found that
more than 60 percent of the State appraisal agencies failed to
uphold their responsibilities in conducting enforcement
activities. The ASC's 2007 report also found 18 instances in
which a State failed to investigate and resolve complaints in a
timely manner.
---------------------------------------------------------------------------
\4\http://www.gao.gov/htext/d04580t.html
---------------------------------------------------------------------------
Moreover, the Associated Press reached similar conclusions
in August 2008 about the effectiveness of current system to
oversee appraisers and appraisals. After its 6-month
investigation, which included the review of thousands of State
and Federal documents and interviews with more than 35 real
estate appraisers across the country, the Associated Press
concluded that ``the system is crippled by both the bumbling of
its policemen and their inability to effectively punish those
caught committing fraud.'' The study also found more than two
dozen States and U.S. territories unable to investigate and
resolve appraisal complaints within the one-year Federal
deadline. The study additionally observed that both State
appraisal boards and the ASC are chronically understaffed, many
with only one full-time investigator to handle the hundreds of
complaints that arrive each year.
The Congress has not taken any significant legislative
action since establishing the ASC in 1989 to address newly
identified shortcomings related to appraisal regulation. For
example, the ASC presently lacks the authority to issue rules
and enforce its own standards, and relies instead on policy
statements. It additionally does not have a consumer protection
mandate and provides very limited information in its annual
report to the Congress. Short of decertifying a State's
appraisal enforcement program for non-conformance with FIRREA,
the ASC also lacks the power to pursue incremental improvements
in State regulatory performance, like the prompt corrective
action regime used by Federal banking regulators for monitoring
depository institutions. The ASC also cannot make grants to the
State appraisal regulators to improve their functioning.
Another problem with appraisals relates to consumer access.
Under current Federal law, creditors must promptly furnish a
borrower with a copy of the appraisal report used in connection
with the application for a mortgage. Under regulations, a
creditor may either routinely provide a copy of the appraisal
report used in connection with a loan or send it within 30 days
of receiving a written request. The receipt of the property
appraisal typically comes at or after closing on the home loan.
As a result, the consumer often cannot examine this document
related to a purchase before the completion of the transaction.
In addition, sometimes the appraisal used to close the loan
may not be the only appraisal performed in connection with the
transaction. If an earlier appraisal comes in that is below the
one needed to make the mortgage, then an originator may order
another appraisal in order to ``hit'' the sales price and close
the transaction. Borrowers affected by such a situation would
only have access to the second appraisal report with the higher
value instead of both appraisal reports.
Appraisal reforms could also help to address problems
related to property flipping, which occurs when a recently
acquired home is resold shortly thereafter for a profit,
typically after undergoing some renovations and sometimes with
an artificially inflated value. While the practice has been
around for a long time, it has become increasingly popular and
profitable during the last decade because of low interest rates
and surging home prices. A number of reality television shows
have even surfaced on the topic, such as Bravo's ``Flipping
Out'', A&E's ``Flip This House'', and TLC's ``Flip That
House''.
Many industry observers have further expressed concern that
an individual flipping a property can often find an appraiser
to inflate the home's value. Concern about property flipping
scams has caused entities like the Federal Housing
Administration to protect consumers by adopting regulatory
reforms that involve appraisal reforms.
In response to the implementation of the Home Valuation
Code of Conduct, concerns about the oversight of the operations
of appraisal management companies (AMCs) have also grown.
Generally, AMCs are external third-party entities that manage
the appraisal process for a mortgage originator. According to
some estimates, AMCs are now involved in more than 60 percent
of appraisals, and their market share is expected to grow as
the Home Valuation Code of Conduct is implemented and mortgage
originators seek outside parties to comply with the agreement's
appraisal independence stipulations.
AMCs, however, are subject to little direct oversight. Only
in recent months have three States--Utah, Arkansas, and New
Mexico--adopted laws requiring their registration and
supervision. The ASC also currently has no explicit statutory
authority with respect to AMCs. Moreover, there have been
instances in places like Florida and New Hampshire where
individuals who have lost their appraisal licenses or
certifications have turned around and opened AMCs to manage the
work of other appraisers.
Critics have also warned that that the growth of AMCs may
lead to a decline in appraisal quality. In testimony before the
Financial Services Committee in March, Mr. Jim Amorin on behalf
of the Appraisal Institute observed: ``With many AMCs taking as
much as 60 percent of the fee as their `management' cost, many
highly qualified appraisers are reluctant to perform mortgage
appraisals for such entities.'' Because all appraisal fees are
disclosed in a single line on closing documents, consumers and
regulators currently lack the information needed to determine
whether the growth of AMCs has led to low-cost, lower-quality
appraisals.
Finally, in testimony before the Financial Services
Committee during the 111th Congress, entities like the National
Community Reinvestment Coalition and the Appraisal Institute
have raised additional concerns about other methods for home
valuation. For example, witnesses questioned the reliability of
and confidence in the automated valuation models often used to
develop estimates of home values. They also raised
apprehensions about the quality of home value estimates
developed by real estate brokers that are used for collateral
purposes, particularly for purchase mortgages.

Hearings

The Subcommittee on Financial Institutions and Consumer
Credit held a hearing on March 11, 2009 entitled ``Mortgage
Lending Reform: A Comprehensive Review of the American Mortgage
System.'' The following witnesses testified: Panel One: Ms.
Sandra F. Braunstein, Director, Division of Consumer and
Community Affairs, Board of Governors of the Federal Reserve
System, Mr. Steven L. Antonakes, Commissioner, Massachusetts
Division of Banks, on behalf of Conference of State Bank
Supervisors; Panel Two: Mr. David Berenbaum, Executive Vice
President, National Community Reinvestment Coalition, Ms. Julia
Gordon, Senior Policy Counsel, Center for Responsible Lending,
Ms. Margot Saunders, Counsel, National Consumer Law Center, Ms.
Stephanie Jones, Executive Director, National Urban League
Policy Institute, Ms. Graciela Aponte, Analyst, National
Council of La Raza, Mr. Donald C. Lampe, Partner, Womble
Carlyle Sandridge & Rice, PLLC; Panel Three: Mr. Michael
Middleton, President and CEO, Community Bank of Tri-County, on
behalf of the American Bankers Association, Mr. David G.
Kittle, Chairman, Mortgage Bankers Association, Mr. Marc S.
Savitt, President, National Association of Mortgage Brokers,
Mr. Charles McMillan, President, National Association of
Realtors, Mr. Jim Amorin, President, Appraisal Institute, Mr.
Joe J. Robson, Chairman of the Board, National Association of
Home Builders, Mr. Laurence E. Platt, Partner, K&L Gates, on
behalf of the Securities Industry and Financial Markets
Association.
The Committee on Financial Services held a hearing on April
23, 2009 entitled ``H.R. 1728: Mortgage Reform and Anti-
Predatory Lending Act''. The following witnesses testified:
Panel One: Ms. Sandra Braunstein, Director of the Division of
Consumer and Community Affairs, Board of Governors of the
Federal Reserve System, Mr. Steven L. Antonakes, Commissioner
of Banks for the Commonwealth of Massachusetts on behalf of the
Conference of State Bank Supervisors; Panel Two: Mr. John
Taylor, President and Chief Executive Officer, National
Community Reinvestment Coalition, Mr. Michael D. Calhoun,
President, Center for Responsible Lending, Ms. Margot Saunders,
Counsel, National Consumer Law Center, Mr. Eric Rodriguez, Vice
President of Public Policy, National Council of La Raza, Mr.
Hilary O. Shelton, Vice President for Advocacy and Director,
Washington Bureau, NAACP; Panel Three: Mr. G. Gary Berner,
Executive Vice President, Commercial Real Estate, First Niagara
Bank on behalf of American Bankers Association, The Honorable
John H. Dalton, President, Housing Policy Council, The
Financial Services Roundtable, Mr. David G. Kittle, Chairman,
Mortgage Bankers Association, Mr. Michael S. Menzies, Sr.,
President and Chief Executive Officer, Easton Bank and Trust
Company on behalf of Independent Community Bankers Association,
The Honorable T. Timothy Ryan, Jr., President and Chief
Executive Officer, Securities Industry and Financial Markets
Association, Ms. Denise M. Leonard, Vice President, Government
Affairs, National Association of Mortgage Brokers, Mr. Charles
McMillan, President, National Association of Realtors, Mr. Jim
Amorin, President, Appraisal Institute, Mr. Jim Arbury, Senior
Vice President, Government Affairs, on behalf of the National
Multi Housing Council and the National Apartment Association.

Committee Consideration

The Committee on Financial Services met in open session on
April 28, 2009, and on April 29, 2009, ordered H.R. 1728, the
Mortgage Reform and Anti-Predatory Lending Act, as amended,
favorably reported to the House by a record vote of 49 yeas and
21 nays.

Committee Votes

Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Frank to report the bill to the House with a
favorable recommendation was agreed to by a record vote of 49
yeas and 21 nays (Record vote no. FC-28). The names of Members
voting for and against follow:

RECORD VOTE NO. FC-28
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... X ........ ......... Mr. Bachus....... ........ X .........
Mr. Kanjorski.................. X ........ ......... Mr. Castle....... X ........ .........
Ms. Waters..................... X ........ ......... Mr. King (NY).... ........ X .........
Mrs. Maloney................... X ........ ......... Mr. Royce........ ........ X .........
Mr. Gutierrez.................. X ........ ......... Mr. Lucas........ ........ X .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... ........ X .........
Mr. Watt....................... X ........ ......... Mr. Manzullo..... ........ X .........
Mr. Ackerman................... X ........ ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... X ........ ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... X ........ ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. X ........ ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... X ........ ......... Mr. Hensarling... ........ X .........
Mr. Hinojosa................... X ........ ......... Mr. Garrett (NJ). ........ X .........
Mr. Clay....................... X ........ ......... Mr. Barrett (SC). ........ X .........
Mrs. McCarthy.................. X ........ ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... X ........ ......... Mr. Neugebauer... ........ X .........
Mr. Lynch...................... X ........ ......... Mr. Price (GA)... ........ X .........
Mr. Miller (NC)................ X ........ ......... Mr. McHenry...... ........ X .........
Mr. Scott...................... X ........ ......... Mr. Campbell..... ........ X .........
Mr. Green...................... X ........ ......... Mr. Putnam....... ........ X .........
Mr. Cleaver.................... X ........ ......... Mrs. Bachmann.... ........ X .........
Ms. Bean....................... X ........ ......... Mr. Marchant..... ........ X .........
Ms. Moore (WI)................. X ........ ......... Mr. McCotter..... ........ X .........
Mr. Hodes...................... X ........ ......... Mr. McCarthy..... ........ X .........
Mr. Ellison.................... X ........ ......... Mr. Posey........ X ........ .........
Mr. Klein...................... X ........ ......... Ms. Jenkins...... ........ X .........
Mr. Wilson..................... X ........ ......... Mr. Lee.......... ........ X .........
Mr. Perlmutter................. X ........ ......... Mr. Paulsen...... ........ X .........
Mr. Donnelly................... X ........ ......... Mr. Lance........ X ........ .........
Mr. Foster..................... X ........ .........
Mr. Carson..................... X ........ .........
Mr. Speier..................... X ........ .........
Mr. Childers................... X ........ .........
Mr. Minnick.................... X ........ .........
Mr. Adler...................... X ........ .........
Ms. Kilroy..................... X ........ .........
Mr. Driehaus................... X ........ .........
Ms. Kosmas..................... X ........ .........
Mr. Grayson.................... X ........ .........
Mr. Himes...................... X ........ .........
Mr. Peters..................... X ........ .........
Mr. Maffei..................... X ........ .........
----------------------------------------------------------------------------------------------------------------

During the consideration of the bill, the following
amendments were disposed of by record votes. The names of
Members voting for and against follow:
An amendment by Mr. Frank (and Mr. Minnick), No. 9,
relating to risk retention exceptions and adjustments, was
agreed to by a record vote of 67 yeas and 1 nay (Record vote
no. FC-17):

RECORD VOTE NO. FC-17
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... X ........ ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. X ........ ......... Mr. Castle....... X ........ .........
Ms. Waters..................... X ........ ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... X ........ ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. X ........ ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. X ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... X ........ ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... X ........ ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... X ........ ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... X ........ ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. X ........ ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... X ........ ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... X ........ ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... X ........ ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. X ........ ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... X ........ ......... Mr. Neugebauer... ........ X .........
Mr. Lynch...................... X ........ ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ X ........ ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... X ........ ......... Mr. Campbell..... X ........ .........
Mr. Green...................... X ........ ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... X ........ ......... Mrs. Bachmann.... ........ ........ .........
Ms. Bean....................... X ........ ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. X ........ ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... X ........ ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... X ........ ......... Mr. Posey........ ........ ........ .........
Mr. Klein...................... X ........ ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... X ........ ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. X ........ ......... Mr. Paulsen...... ........ ........ .........
Mr. Donnelly................... X ........ ......... Mr.Lance......... X ........ .........
Mr. Foster..................... X ........ .........
Mr. Carson..................... X ........ .........
Mr. Speier..................... X ........ .........
Mr. Childers................... X ........ .........
Mr. Minnick.................... X ........ .........
Mr. Adler...................... X ........ .........
Ms. Kilroy..................... X ........ .........
Mr. Driehaus................... X ........ .........
Ms. Kosmas..................... X ........ .........
Mr. Grayson.................... X ........ .........
Mr. Himes...................... X ........ .........
Mr. Peters..................... X ........ .........
Mr. Maffei..................... X ........ .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Garrett (NJ) (and Mr. McHenry), No. 15,
relating to a credit risk retention study, was not agreed to by
a record vote of 27 yeas and 43 nays (Record vote no. FC-18):

RECORD VOTE NO. FC-18
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... ........ X .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... ........ ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. McHenry, No. 17, striking title III
(High-Cost Mortgages), was not agreed to by a record vote of 29
yeas and 41 nays (Record vote no. FC-19):

RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ ........ ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Hensarling, No. 24, relating to legal
costs, was not agreed to by a record vote of 29 yeas and 42
nays (Record vote no. FC-20):

RECORD VOTE NO. FC-20
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ X ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Neugebauer, No. 25, striking tenant
protection, was not agreed to by a record vote of 27 yeas and
43 nays (Record vote no. FC-21):

RECORD VOTE NO. FC-21
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... ........ X .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ ........ X .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Price, No. 26, regarding arbitration,
was not agreed to by a record vote of 30 yeas and 40 nays
(Record vote no. FC-22):

RECORD VOTE NO. FC-22
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... X ........ .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Price, No. 27, relating to the
effective date, was not agreed to by a record vote of 29 yeas
and 41 nays (Record vote no. FC-23):

RECORD VOTE NO. FC-23
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Hensarling, No. 29, relating to
ineligibility of non-qualified mortgages for taxpayer-funded
assistance under the Hope for Homeowners program, was not
agreed to by a record vote of 29 yeas and 41 nays (Record vote
no. FC-24):

Record Vote No. FC-24
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Prize (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Miller (CA) (and Mr. Childers and Mrs.
Bachmann), No. 34, regarding a moratorium on implementation of
the Home Valuation Code of Conduct, was not agreed to by a
record vote of 31 yeas and 39 nays (Record vote no. FC-25):

Record Vote No. FC-25
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... ........ X .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry..... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... X ........ ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. X ........ ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... X ........ .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Hensarling, No. 39, striking legal
assistance for foreclosure-related issues and inserting
enhanced fraud investigation and prevention efforts, was not
agreed to by a record vote of 29 yeas and 41 nays (Record vote
no. FC-26):

RECORD VOTE NO. FC-26
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mrs. Bachmann, No. 36, relating to assignee
or securitization conditions, was not agreed to by a record
vote of 29 yeas and 41 nays (Record vote no. FC-27):

RECORD VOTE NO. FC-27
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank...................... ........ X ......... Mr. Bachus....... X ........ .........
Mr. Kanjorski.................. ........ X ......... Mr. Castle....... X ........ .........
Ms. Waters..................... ........ X ......... Mr. King (NY).... X ........ .........
Mrs. Maloney................... ........ X ......... Mr. Royce........ X ........ .........
Mr. Gutierrez.................. ........ X ......... Mr. Lucas........ X ........ .........
Ms. Velazquez.................. ........ ........ ......... Mr. Paul......... X ........ .........
Mr. Watt....................... ........ X ......... Mr. Manzullo..... X ........ .........
Mr. Ackerman................... ........ X ......... Mr. Jones........ X ........ .........
Mr. Sherman.................... ........ X ......... Mrs. Biggert..... X ........ .........
Mr. Meeks...................... ........ X ......... Mr. Miller (CA).. X ........ .........
Mr. Moore (KS)................. ........ X ......... Mrs. Capito...... X ........ .........
Mr. Capuano.................... ........ X ......... Mr. Hensarling... X ........ .........
Mr. Hinojosa................... ........ X ......... Mr. Garrett (NJ). X ........ .........
Mr. Clay....................... ........ X ......... Mr. Barrett (SC). X ........ .........
Mrs. McCarthy.................. ........ X ......... Mr. Gerlach...... X ........ .........
Mr. Baca....................... ........ X ......... Mr. Neugebauer... X ........ .........
Mr. Lynch...................... ........ X ......... Mr. Price (GA)... X ........ .........
Mr. Miller (NC)................ ........ X ......... Mr. McHenry...... X ........ .........
Mr. Scott...................... ........ X ......... Mr. Campbell..... X ........ .........
Mr. Green...................... ........ X ......... Mr. Putnam....... X ........ .........
Mr. Cleaver.................... ........ X ......... Mrs. Bachmann.... X ........ .........
Ms. Bean....................... ........ X ......... Mr. Marchant..... X ........ .........
Ms. Moore (WI)................. ........ X ......... Mr. McCotter..... X ........ .........
Mr. Hodes...................... ........ X ......... Mr. McCarthy..... X ........ .........
Mr. Ellison.................... ........ X ......... Mr. Posey........ X ........ .........
Mr. Klein...................... ........ X ......... Ms. Jenkins...... X ........ .........
Mr. Wilson..................... ........ X ......... Mr. Lee.......... X ........ .........
Mr. Perlmutter................. ........ X ......... Mr. Paulsen...... X ........ .........
Mr. Donnelly................... ........ X ......... Mr. Lance........ X ........ .........
Mr. Foster..................... ........ X .........
Mr. Carson..................... ........ X .........
Mr. Speier..................... ........ X .........
Mr. Childers................... ........ X .........
Mr. Minnick.................... ........ X .........
Mr. Adler...................... ........ X .........
Ms. Kilroy..................... ........ X .........
Mr. Driehaus................... ........ X .........
Ms. Kosmas..................... ........ X .........
Mr. Grayson.................... ........ X .........
Mr. Himes...................... ........ X .........
Mr. Peters..................... ........ X .........
Mr. Maffei..................... ........ X .........
----------------------------------------------------------------------------------------------------------------

The following other amendments were also considered by the
Committee:
An amendment by Mr. Sherman (and Mr. Green), No. 1,
relating to the definition of mortgage originator-real estate
brokerage activities, was agreed to by a voice vote.
An amendment by Mr. Sherman, No. 2, relating to the
definition of mortgage originator--five or fewer properties,
was offered and withdrawn.
An amendment by Mr. Grayson, No. 3, relating to time
shares, was agreed to by a voice vote.
An amendment by Mr. Donnelly, No. 4, relating to the
definition of mortgage originator and exclusion of bona fide
discount points, was agreed to by a voice vote.
An amendment by Mr. Carson, No. 5, relating to foreclosure
rescue education programs, was agreed to, as modified, by a
voice vote.
An amendment by Mrs. Biggert, No. 6, making technical
corrections to housing counseling, was agreed to by a voice
vote.
An amendment by Mr. Kanjorski (and Mrs. Biggert), No. 7,
regarding appraisals, was agreed to by a voice vote.
An amendment by Ms. Waters, No. 8, regarding housing
counseling-minorities, was agreed to by a voice vote.
An amendment by Ms. Velazquez, No. 10, regarding home
inspection counseling, was agreed to, as modified, by a voice
vote.
An amendment by Mr. Paulson, No. 11, relating to examining
certain credit risk retention provisions, was agreed to by a
voice vote.
An amendment by Ms. Bean, No. 12, regarding closing
document inspection by borrowers, was offered and withdrawn.
An amendment by Mr. Ellison, No. 13, regarding fiduciary
duties of mortgage brokers, was offered and withdrawn.
An amendment by Mr. Moore (KS), No. 14, regarding
residential mortgage loan origination purposes, was agreed to,
reconsidered, and withdrawn.
An amendment by Mr. Hodes, No. 16, regarding State attorney
general enforcement authority, was agreed to by a voice vote.
An amendment by Ms. Waters (and Mr. Meeks), No. 18,
prohibiting prepayment penalties, was not agreed to by a voice
vote.
An amendment by Mr. Neugebauer, No. 19, requiring full
recourse mortgage loans for civil actions, was not agreed to by
a voice vote.
An amendment by Mr. Sherman, No. 20, regarding the
definition of mortgage originator, was agreed to by a voice
vote.
An amendment by Ms. Bean (and Mr. Castle), No. 21,
regarding safe harbor and rebuttable presumption, as amended by
an amendment by Mr. Lance (and Mr. Miller (CA)), No. 21a, was
agreed to by a voice vote.
An amendment by Mrs. Biggert (and Mr. Hinojosa and Mr.
Neugebauer), No. 22, regarding RESPA and TILA disclosure
improvement, as amended by an amendment by Mr. Neugebauer, No.
22a, (as modified) was agreed to by a voice vote.
An amendment by Mr. Moore (KS), No. 23, regarding
residential mortgage loan origination findings, was agreed to
by a voice vote.
An amendment by Mr. Frank, No. 28, the first manager's
amendment was agreed to by a voice vote. An amendment offered
by Mr. Miller (CA), No. 28a, to the amendment was offered and
withdrawn.
An amendment by Ms. Waters, No. 30, regarding excessive
points and fees, was agreed to by a voice vote.
An amendment by Mr. Royce, No. 31, striking assignee and
securitizer liability, was not agreed to by a voice vote.
An amendment by Mr. Ellison, No. 32, regarding tenant
protection, was offered and withdrawn.
An amendment by Mr. Ellison, No. 33, regarding tenant
protection, was agreed to by a voice vote.
An amendment by Mr. Hensarling, No. 38, expressing the
Sense of the Congress regarding the importance of government
sponsored enterprises reform, as modified, was agreed to by a
voice vote.
An amendment by Mrs. Bachmann, No. 40, regarding a
limitation on assistance, was agreed to by a voice vote.
An amendment by Ms. Moore (WI), No. 41, regarding
foreclosure rescue fraud, was offered and withdrawn.

Committee Oversight Findings

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.

Performance Goals And Objectives

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
H.R. 1728 is intended to reform mortgage lending practices
to avert a recurrence of the current situation of unprecedented
levels of defaults and foreclosures rates.

New Budget Authority, Entitlement Authority, and Tax Expenditures

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.

Committee Cost Estimate

The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.

Congressional Budget Office Estimate

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
May 4, 2009.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1728, the Mortgage
Reform and Anti-Predatory Lending Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.

H.R. 1728--Mortgage Reform and Anti-Predatory Lending Act

Summary: H.R. 1728 would amend the Truth in Lending Act to
reform consumer mortgage practices, establish minimum standards
for consumer mortgage loans, and provide other protections to
borrowers and investors. The bill also would broaden the
oversight of professional appraisers and require the Government
Accountability Office to conduct a study on the effects of H.R.
1728 on the availability of credit for homebuyers. The bill
would require the Board of Governors of the Federal Reserve
(Federal Reserve), in consultation with other agencies that
regulate the financial industry, to prescribe regulations and
forms to implement the new requirements.
H.R. 1728 would authorize the appropriation of $323 million
over the 2009-2014 period for the Department of Housing and
Urban Development (HUD) to support efforts to provide
homeownership counseling and legal assistance to certain
homeowners and tenants. In addition, CBO estimates that $80
million would be required over the 2009-2014 period for HUD to
establish an Office of Housing Counseling. In total, CBO
estimates that implementing H.R. 1728 would cost $403 million
over the 2009-2014 period, subject to appropriation of the
necessary amounts.
CBO estimates that enacting H.R. 1728 would increase
revenues by $13 million over the 2009-2014 period and by $28
million over the 2009-2019 period. We estimate that direct
spending would increase by corresponding amounts over the same
time periods.
H.R. 1728 would impose intergovernmental and private-sector
mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on participants in the mortgage industry. While the
costs of some of the mandates are likely to be small, the costs
to comply with other mandates are uncertain. Consequently, CBO
cannot determine whether the aggregate costs to comply with the
mandates in the bill would exceed the annual thresholds
established in UMRA for intergovernmental or private-sector
mandates ($69 million and $139 million in 2009, respectively,
adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1728 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------
2009 2010 2011 2012 2013 2014 2009-2014
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Public Service Campaign:
Authorization Level.............................. 3 0 0 0 0 0 3
Estimated Outlays................................ * 2 1 0 0 0 3
Housing Counseling Grants:
Authorization Level.............................. 45 45 45 45 0 0 180
Estimated Outlays................................ 1 38 49 45 40 7 180
Administrative Support for Office of Counseling:
Estimated Authorization Level.................... 16 16 16 16 16 16 96
Estimated Outlays................................ * 16 16 16 16 16 80
Legal Assistance:
Authorization Level.............................. 35 35 35 35 0 0 140
Estimated Outlays................................ 1 30 38 35 31 5 140
Total Changes:
Estimated Authorization Level.................... 99 96 96 96 16 16 419
Estimated Outlays................................ 2 86 104 96 87 28 403

CHANGES IN REVENUES

Estimated Revenues................................... * 2 2 3 3 3 13

CHANGES IN DIRECT SPENDING

Estimated Budget Authority........................... * 2 2 3 3 3 13
Estimated Outlays.................................... * 2 2 3 3 3 13
----------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

Basis of Estimate: For this estimate, CBO assumes that H.R.
1728 will be enacted around July 2009 and that the necessary
amounts will be appropriated for each year.
Spending Subject to Appropriation: CBO estimates that
implementing H.R. 1728 would cost $403 million over the 2009-
2014 period, subject to appropriation of the necessary amounts.
Public Service Campaign, Grants for Housing Counseling, and
Administrative Support for the Office of Counseling. Title IV
would establish the Office of Housing Counseling within HUD to
support various activities related to providing counseling on
homeownership and renting. Section 403 would authorize the
appropriation of $3 million over the 2009-2011 period to
support a national campaign to publicize the existence of
counseling for home buyers, homeowners, and renters. In
addition, section 404 would authorize the appropriation of $45
million annually over the 2009-2012 period to provide grants to
states, local governments, and nonprofit organizations to
support counseling services. In total, CBO estimates that
implementing those provisions would cost $183 million over the
2009-2014 period.
In addition, based on information from HUD, CBO expects
that funds for additional personnel, contractors, and
information technology would be necessary to run the Office of
Housing Counseling. We estimate that support would cost $80
million over the 2009-2014 period.
Legal Assistance for Foreclosure-Related Issues. Section
216 would authorize the appropriation of $35 million annually
for fiscal years 2009 through 2012 for grants to provide legal
assistance to low- and moderate-income homeowners and tenants
related to home foreclosure prevention. Assuming appropriation
of the authorize amounts, CBO estimates that implementing this
section would cost $140 million over the 2009-2014 period.
Revenues and Direct Spending: CBO estimates that enacting
H.R. 1728 would increase both revenues and direct spending by
$28 million over the 2009-2019 period, as shown in the
following table.
Appraisal Monitoring. Section 603 would expand the
monitoring and oversight responsibilities of the Appraisal
Subcommittee (ASC) of the Federal Financial Institutions
Examination Council. The ASC is responsible for ensuring that
real estate appraisals used in certain transactions are
performed according to uniform standards by appraisers that are
certified and licensed by states. To do this, the ASC monitors
the activities of the state agencies that are responsible for
licensing real estate appraisers. The ASC is authorized to
collect fees from licensed and certified appraisers to offset
the costs of its operations.

--------------------------------------------------------------------------------------------------------------------------------------------------------
By Fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------------------
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009-2014 2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES

Net Revenues........................................ * 2 2 3 3 3 3 3 3 3 3 13 28

CHANGES IN DIRECT SPENDING
aaa
Estimated Budget Authority.......................... * 2 2 3 3 3 3 3 3 3 3 13 28
Estimated Outlays................................... * 2 2 3 3 3 3 3 3 3 3 13 28
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: * = less than $500,000.

H.R. 1728 would authorize the ASC to monitor companies that
retain or contract with appraisers and manage the process of
having an appraisal performed (appraisal management companies).
The bill would require those companies to be registered with a
state (or be subject to oversight by a financial regulatory
agency) in order to provide appraisal services on transactions
undertaken through federally regulated financial institutions.
As a result, the ASC would be required to develop regulations
that states must follow in licensing appraisal management
companies. Further, the ASC would be required to maintain a
registry of appraisal management companies that are registered
with a state licensing agency. The bill would authorize the ASC
to collect fees from this new group of licensed entities.
Other provisions of the bill would authorize the ASC to
make grants to states to improve their compliance with ASC
regulations and would require the ASC to establish a complaint
hotline.
Licensed and certified appraisers pay a fee, capped at $25
annually, to the ASC to support its operations. H.R. 1728 would
raise the upper limit for the fee to $40, and would authorize
the ASC to charge fees to appraisal management companies that
are registered with a state licensing agency. Based on
information from the ASC, CBO estimates that enacting the new
fees would increase federal revenues by $13 million over the
2009-2014 period, and by $28 million over the 2009-2019 period,
net of income and payroll tax effects.
Based on information from the ASC, CBO estimates that
enacting H.R. 1728 would increase direct spending by $13
million over the 2009-2014 period and by $28 million over the
2009-2019 period to provide grants to states to improve their
ability to comply with the requirements of the bill.
Spending by Federal Bank Regulators. According to Federal
Reserve and other federal financial regulatory agencies,
implementing H.R. 1728 would not have a significant effect on
their workload or budgets. Any additional direct spending by
the Office of the Comptroller of the Currency, the Office of
Thrift Supervision, and the National Credit Union
Administration would be offset by income from annual fees
covering their administrative expenses. Similarly, the Federal
Deposit Insurance Corporation would recover any added costs
when it adjusts the premiums paid by insured depository
institutions. Budgetary effects of spending by the Federal
Reserve are recorded as changes in revenues, but current law
requires the Federal Reserve to recover direct and indirect
costs incurred in providing such services. Thus, CBO estimates
that the additional activities of the agencies that regulate
banks would have no significant net effect on direct spending
or revenues.
Penalties. Under this legislation, certain civil penalties
(which are recorded as revenues) currently applicable under the
Truth in Lending Act would be increased and new civil penalties
would be created for violations under this bill. CBO estimates
that any increase in revenues resulting from those civil
penalties would not be significant.
Intergovernmental and private-sector impact: H.R. 1728
contains several intergovernmental and private-sector mandates,
as defined in UMRA, by placing new restrictions on entities
that securitize mortgages, and on entities that purchase
foreclosed properties. The bill also would impose
intergovernmental mandates by preempting certain state property
and securities laws. In addition, the bill would impose
private-sector mandates by establishing new requirements for
creditors, loan originators, mortgage servicers, real estate
appraisers, and other entities that participate in the mortgage
industry.
While the costs of some of the mandates are likely to be
small (for example, the preemptions of state law), the costs to
comply with other mandates are uncertain for several reasons.
Many industry participants, including public entities, already
comply with some of the bill's requirements. In addition, the
cost of some of the requirements would depend on federal
regulations to be issued under the bill, and the scope of those
regulations is uncertain. Lastly, CBO does not have sufficient
information about current business practices or how the
requirements in the bill would affect industry income.
Consequently, CBO cannot determine whether the aggregate costs
to comply with the mandates in the bill would exceed the annual
thresholds established in UMRA for intergovernmental or
private-sector mandates ($69 million and $139 million in 2009,
respectively, adjusted annually for inflation).
The bill also would authorize grants to support state
agencies that license and certify appraisers, which would
benefit state, local, and tribal governments.
Estimate prepared by: Federal Spending: Chad Chirico and
Susan Willie; Federal Revenues: Barbara Edwards; Impact on
State, Local, and Tribal Governments: Elizabeth Cove Delise;
Impact on the Private Sector: Marin Randall.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis; Frank J. Sammartino, Acting
Assistant Director for Tax Analysis.

Federal Mandates Statement

The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.

Advisory Committee Statement

No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.

Constitutional Authority Statement

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate commerce).

Applicability to Legislative Branch

The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.

Earmark Identification

H.R. 1728 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.

Section-by-Section Analysis of the Legislation

Section 1. Short Title; Table of Contents

This section establishes the short title of the bill as the
`Mortgage Reform and Anti-Predatory Lending Act' (the Act).

TITLE I--RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

Section 101. Definitions

This section establishes definitions for various terms,
including: `Federal banking agencies,' `mortgage originator,'
`nationwide mortgage licensing system,' `residential mortgage
loan,' `securitization vehicle,' `securitizer,' and `servicer.'

Section 102. Residential mortgage loan origination

Subsection (a) of this section is a Findings and Purpose
provision in which Congress finds that economic stabilization
would be enhanced by the protection, limitation, and regulation
of the terms of residential mortgage credit and the practices
related to such credit, while ensuring that responsible,
affordable mortgage credit remains available to consumers. It
is the purpose of the new sections 129B and 129C of the Truth
in Lending Act to assure that consumers are offered and receive
residential mortgage loans on terms that reasonably reflect
their ability to repay the loans and that are understandable
and not unfair, deceptive or abusive.
Subsection (b) of this section provides that all mortgage
originators (including mortgage brokers and depository
institutions that originate mortgages, and their loan officers)
will be subject to a Federal duty of care that requires (1)
licensing and registration under State or Federal law
(including subtitle A of title I of this Act), (2) diligently
working to present the consumer with a range of residential
mortgage loan products for which the consumer likely qualifies
and are appropriate to the consumer's existing circumstances
(i.e., consumer has reasonable ability to repay and, in the
case of refinancings, receives net tangible benefit and loan
does not have predatory characteristics), (3) making full,
complete, and timely disclosures to consumers, (4) certifying
to creditors compliance with mortgage origination requirements
under this section, and (5) including in all loan documents any
unique identifier of the mortgage originator. Mortgage
originators are not required, however, to present residential
mortgage loan products of creditors that do not accept consumer
referrals or applications from the mortgage originator, and
creditors are not required to offer products that the creditor
does not offer to the general public. The Act expressly does
not create an agency or fiduciary relationship, but mortgage
originators are free to become an agent or a fiduciary if they
so desire. The Federal banking agencies, in consultation with
the Secretary and the Federal Trade Commission (Commission),
will jointly prescribe regulations to further define the
Federal duty of care. The Federal banking agencies will
prescribe regulations requiring depository institutions to
establish procedures for monitoring compliance with the
requirements of this section and the registration procedures of
section 106 of the Act.

Section 103. Prohibition on steering incentives

This section provides that for any mortgage loan, the total
amount of direct and indirect compensation from all sources
permitted to a mortgage originator may not vary based on the
terms of the loan (other than amount of principal). In
addition, the Federal banking agencies, in consultation with
the Secretary and the Commission, will jointly prescribe
regulations to prohibit (1) mortgage originators from steering
any consumer to a residential mortgage loan that the consumer
lacks a reasonable ability to repay, that does not provide net
tangible benefit, or that has predatory characteristics, (2)
mortgage originators from steering any consumer from a
qualified mortgage (prime loan) to a loan that is not a
qualified mortgage, (3) abusive or unfair lending practices
that promote disparities among consumers of equal
creditworthiness but of different race, ethnicity, gender, or
age, and (4) mortgage originators from assessing excessive
points and fees to a consumer for the origination of a
residential mortgage loan based on such consumer's decision to
finance all or part of the payment through the rate for such
points and fees. However, nothing in the Act should be
construed as permitting yield spread premiums or other similar
incentive compensation, affecting the mechanism for providing
the total amount of direct and indirect compensation permitted
to a mortgage originator, restricting a consumer's ability to
finance origination fees if they were disclosed to the consumer
and do not vary with the consumer's decision to finance such
fees, or prohibiting incentive payments to a mortgage
originator based on the number of loans originated.

Section 104. Liability

This section provides that a cause of action will exist
under section 130(a) and 130(b) of the Truth in Lending Act
(TILA) for a mortgage originator's failure to comply with this
section. The maximum liability of a mortgage originator for
violation of this section will not exceed the greater of actual
damages or an amount equal to three times the total amount of
direct and indirect mortgage originator fees, plus the
consumer's costs including reasonable attorney's fees.

Section 105. Regulations

This section provides the Federal banking agencies
discretionary regulatory authority to issue joint regulations
to prohibit or condition terms, acts or practices relating to
residential mortgage loans that the agencies find to be
abusive, unfair, deceptive, predatory, inconsistent with
reasonable underwriting standards, necessary or proper to
effectuate the purposes of this section and section 129C, to
prevent circumvention or evasion thereof, or to facilitate
compliance with such sections, or are not in the interest of
the borrower. The section makes clear that this new authority
will not prevent regulations adopted by the Federal Reserve
concerning mortgage lending (73 Fed. Reg. 44522 (July 30,
2008)) will take effect as decided by the Federal Reserve with
such exceptions or revisions as the Federal Reserve determines
necessary.
This section also provides that regulations under this
title will be promulgated within 12 months of the enactment of
the Act and take effect no later than 18 months after the
enactment of the Act.

Section 106. RESPA and TILA Disclosure Improvement

This section requires HUD and the Federal Reserve, not
later than six months after the date of enactment, to jointly
issue for public comment proposed regulations providing for
compatible disclosures for borrowers to receive at the time of
mortgage application and at the time of closing. The statute
requires the disclosures to meet both the requirements of the
TILA and RESPA. The section also suspends the rulemaking HUD
issued relating to RESPA (73 Fed. Reg. 26204 (Nov. 17, 2008))
until the joint regulations are issued by the Federal Reserve
and HUD.

TITLE II--MINIMUM STANDARDS FOR MORTGAGES

Section 201. Ability to Repay

This section provides that no creditor may make a
residential mortgage loan unless the creditor makes a
reasonable and good faith determination based on verified and
documented information that, at the time the loan is
consummated, the consumer has a reasonable ability to repay the
loan (including all applicable taxes, insurance, and
assessments). The Federal banking agencies, in consultation
with the Commission, will jointly prescribe regulations
regarding this provision. A determination of reasonable ability
to repay will include consideration of a consumer's credit
history, current income, expected income the consumer is
reasonably assured of receiving, current obligations, debt-to-
income ratio, employment status, and other financial resources
other than the consumer's equity in the real property securing
the loan.

Section 202. Net Tangible Benefit for Refinancing of Residential
Mortgage Loans

This section provides that no creditor may extend credit
for refinancing unless the creditor reasonably and in good
faith determines, at the time the loan is consummated and on
the basis of information known by or obtained in good faith by
the creditor, that the refinanced loan will provide a net
tangible benefit to the consumer. The refinanced loan will not
be considered to provide net tangible benefit if the costs of
the loan, including points, fees, and other charges, exceed the
amount of newly advanced principal without any corresponding
changes in the terms of the refinanced loan that are
advantageous to the consumer. The Federal banking agencies will
jointly prescribe regulations further defining the term `net
tangible benefit.'

Section 203. Safe harbor and rebuttable presumption

This section provides that any creditor, assignee or
securitizer may presume that a mortgage loan meets the minimum
standards (reasonable ability to repay and net tangible
benefit) if it is a `qualified mortgage.' Qualified mortgages
are loans--
that do not allow a consumer to defer
repayment of principal or interest, or is not otherwise
deemed a ``non-traditional mortgage'' under guidance,
advisories, or regulations prescribed by the Federal
Banking Agencies;
that do not provide for a repayment schedule
that results in negative amortization at any time;
for which the terms are fully amortizing and
which does not result in a balloon payment (where a
balloon payment is a scheduled payment that is more
than twice as large as the average of earlier scheduled
payments);
which have an annual percentage rate that does
not exceed the average prime offer rate for a
comparable transaction (set by the Federal Reserve), as
of the date the interest rate is set--
by 1.5 or more percentage points for
residential mortgage loans with principal amounts that
do not exceed the conforming loan limits in section
305(a)(2) of the Federal Home Loan Mortgage Corporation
Act (Freddie Mac); and
by 2.5 or more percentage points for
residential mortgage loans with principal amounts that
exceed the Freddie Mac conforming loan limit.
for which the income and financial resources
relied upon to qualify the obligors on the loan are
verified and documented;
in the case of a fixed rate loan, for which
the underwriting process is based on a payment schedule
that fully amortizes the loan over the loan term and
takes into account all applicable taxes, insurance and
assessments;
in the case of an adjustable rate loan, for
which the underwriting is based on the maximum rate
permitted under the loan during the first seven years,
and a payment schedule that fully amortizes the loan
over the loan term and takes into account all
applicable taxes, insurance and assessments;
that do not cause the consumer's total monthly
debts, including amounts under the loan, to exceed a
debt-to-income ratio or ratios prescribed by the
Banking Agencies;
for which the total points and fees payable in
connection with the loan do not exceed two percent of
the total loan amount, where ``points and fees'' means
points and fees as defined by Section 103(aa)(4) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(4)), as
amended by this legislation; and
for which the term of the loan does not exceed
30 years.
The Federal banking agencies may jointly prescribe
regulations to revise, add to, or subtract from these safe
harbor provisions to the extent necessary and appropriate to
effectuate the purposes of section 129B and 129C, to prevent
circumvention or evasion thereof, or to facilitate compliance
with such section. In addition, HUD, the Secretary of Veterans
Affairs, Secretary of Agriculture, the Federal Housing Finance
Agency and the Rural Housing Service each are authorized to
prescribe rules defining the types of loans they guarantee,
insure, or administer, as the case may be, that are Qualified
Mortgages.

Section 204. Liability

This section provides that a consumer has a cause of action
against a creditor for rescission of the loan and the
consumer's costs for a loan that violates the minimum standards
for reasonable ability to repay or net tangible benefits as set
forth by regulation. A creditor will not be liable for such
rescission if the creditor provides a cure to make the loan
conform to the minimum standards within 90 days of receiving
notice from the consumer. In addition, for a loan that violates
the minimum standards, a consumer has an individual cause of
action against any assignee or securitizer for rescission of
the loan and the consumer's costs. An assignee or securitizer
that has exercised reasonable due diligence in complying with
the ability to repay and net tangible benefit standards is not
liable for violations of these standards if it provides a cure
to make the loan conform to the minimum standards within 90
days of receiving notice from the consumer.
If any creditor, assignee or securitizer and a consumer
fail to agree on a cure, or if the consumer fails to accept a
cure, the creditor, assignee, or securitizer may provide the
cure and the consumer may challenge the adequacy of the cure
within six months of the cure. If a creditor, assignee, or
securitizer cannot provide rescission, they can provide the
financial equivalent of a rescission. Liability of a creditor,
assignee, or securitizer will apply for three years after
consummation of the loan or, for a variable rate loan or a
negative amortization loan, the earlier of one year after the
loan resets or six years after consummation of the loan.
Liability will not apply to pools of loans, including the
securitization vehicle, or investors in pools of loans. It is
not intended that liability will apply to trustees or
titleholders who in their capacity hold loans solely for the
benefit of the securitization vehicle.
Securitizers are responsible for providing in any agreement
providing for the transfer, conveyance, or the establishment of
a securitization vehicle that they have the right and ability
to (i) identify and obtain access to the loans, (ii) acquire
the loans in the event of a violation of an ability to repay or
net tangible benefit standard, and (iii) provide to the
consumer any and all remedies provided for under the statute.
Securitizers subject to a remedy under this section will be
subject to additional exemplary or punitive damages not to
exceed the original principal balance of the loan.
Servicers are required to provide a written notice to a
consumer about the creditor, assignee and securitizers relating
to that loan upon request, whenever there is a change in
ownership of the loan and on a regular basis (not less than
annually). In addition, the Federal Reserve will promulgate
rules to govern the rescission process established for
violations of the ability to repay and net tangible benefit
standards.

Section 205. Defense to foreclosure

This section provides that, when the holder (including the
securitization vehicle) of a residential mortgage loan or
anyone acting on such holder's behalf initiates a judicial or
non-judicial foreclosure, (1) a consumer who has a rescission
right under this section may assert such right as a defense or
counterclaim to foreclosure against the holder to forestall
such foreclosure, or (2) if the foreclosure proceeding begins
after the rescission right expires, the consumer may seek
actual damages plus costs against the creditor or any assignee
or securitizer. Such holder, anyone acting on behalf of such
holder, or any other applicable third party may sell or assign
a residential mortgage loan to a creditor, any assignee, or any
securitizer, or their designee, to effect a rescission or a
cure.

Section 206. Additional standards and requirements

This section prohibits prepayment penalties on loans that
are not qualified mortgages as defined in section 203 of the
Act and adjustable rate mortgages that are qualified mortgages.
For qualified mortgages that are not ARMs, phased out penalties
are permitted provided that all remaining prepayment penalties
expire three months before a loan resets.
Single-premium credit insurance and mandatory arbitration
on mortgage loans are prohibited. Securitizers must reserve the
right in any document or contract establishing pools of loans
to obtain access to such loans and to provide for and obtain a
remedy under this title. Negative amortization loans to a
first-time borrower are prohibited unless the creditor makes
certain disclosures to the consumer and the consumer has
received homeownership counseling from a HUD-certified
organization or counselor.

Section 207. Rule of construction

This section provides that, except as otherwise expressly
provided, no provisions of new TILA sections 129A and 129B
added by the Act will be construed as superseding, repealing,
or affecting any duty, right, obligation, privilege, or remedy
of any person under any other provision of TILA or any other
provision of Federal or State law.

Section 208. Effect on State laws

This section provides that the provisions of section 204 of
the Act will supersede any State law to the extent that it
provides additional remedies against any assignee, securitizer,
or securitization vehicle for a violation of section 201 or 202
of the Act or any other State law other than a provision of
such law the terms of which address the specific subject matter
of sections 201 and 202 of the Act, and the remedies in section
204 of the Act will constitute the sole remedies against any
assignee, securitizer, or securitization vehicle for those
violations. No provision of this section will be construed as
limiting the application of any state law or the availability
of remedies, including equitable remedies such as injunctive
relief, against creditors, even if they also act as assignees
or securitizers or against assignees, securitizers or
securitization vehicles for their own participation in or
direction of the credit or underwriting decisions of the
creditor in making mortgages. It also shall not be construed as
limiting the application of state laws or the availability of
remedies under State law against an assignee, securitizer or
securitization vehicle other than laws the terms of which
address the specific subject matter of sections 201 and 202 of
the Act.

Section 209. Regulations

This section provides that regulations under this title
will be promulgated within 12 months of the enactment of the
Act, and take effect no later than 18 months after the
enactment of the Act.

Section 210. Amendments to civil liability provisions

This section doubles the amount of certain statutory civil
liability penalties currently applicable under TILA and extends
the statute of limitations from one year to three years.

Section 211. Lender rights in the context of borrower deception

This provision provides that no creditor, assignee, or
securitizer shall be liable to an obligor under section 129B
and 129C if the obligor or co-obligor knowingly or willfully
and with actual knowledge furnished material information known
to be false for the purpose of obtaining such residential
mortgage loan.

Section 212. Six-month notice required before reset of hybrid
adjustable rate mortgages

This section requires a notice to consumers in connection
with adjustable rate mortgage loans at least six months before
the expiration of a fixed introductory rate that explains the
rate adjustment process and the consumer's alternatives.

Section 213. Credit risk retention

This section requires the Federal banking agencies to
prescribe regulations to require creditors that make
residential mortgage loans that are not qualified mortgages, as
defined by section 203, to retain an economic interest in a
material portion of the credit risk for any loans they
transfer, sell or convey. The regulations must prohibit
creditors from hedging or otherwise transferring the credit
risk, require creditors to retain at least 5 percent of the
credit risk on any particular loan, specify the permissible
forms of the risk to be held (e.g., first loss position or pro
rata vertical slice) and the minimum duration of the required
risk retention. The Federal banking agencies have the
discretion to apply the risk retention requirements to
securitizers in addition to or in place of creditors if the
agencies determine such change would help ensure high quality
underwriting standards for mortgage lenders and facilitate
appropriate risk management practices by mortgage lenders or
improve access of consumers to mortgage credit on reasonable
terms.

Section 214. Required disclosures

This section provides additional required disclosures under
TILA. A creditor must disclose the maximum amount of regular
payment a consumer has to make on a variable rate or otherwise
variable payment mortgage. For a residential mortgage loan with
an escrow or impound account for the payment of taxes,
insurance, and assessments, a creditor must disclose that
mortgage payments will be increased to cover taxes and
insurance and the monthly dollar amount a consumer will pay to
cover taxes and insurance in the first year of the mortgage.
For a variable rate residential mortgage with an escrow or
impound account, a creditor is required to disclose (1) the
amount of initial monthly payment for principal and interest;
(2) the amount of initial monthly payment including the amount
deposited in an escrow or impound to pay for taxes, insurance,
and assessments; (3) the amount of the fully indexed monthly
payment for principal and interest; and (4) the amount of fully
indexed monthly payment deposited in an escrow or impound to
pay for taxes, insurance, and assessments. For all residential
mortgages, a creditor must disclose the aggregate amount of
settlement charges, the amount of charges included in a
mortgage, the amount of charges a consumer must pay at closing,
the approximate amount of the wholesale rate of funds, the
aggregate amount of other fees or required payments, the
aggregate amount of fees paid to a mortgage originator, the
amount of fees paid directly by a consumer, and any additional
amounts received by a mortgage originator from a creditor based
on the interest rate of the loan. For all residential mortgage
loans, the aggregate amount of fees paid to the mortgage
originator in connection with the loan.

Section 215. Disclosures required in monthly statements for residential
mortgage loans

This section requires the new disclosures for monthly
statements for all residential mortgage loans that require
information about the remaining balance, interest and fees
incurred on the account. The Federal banking agencies shall
jointly prescribe a standard form for this disclosure.

Section 216. Legal assistance for foreclosure-related issues

This section authorizes funds for foreclosure-related legal
assistance. The funds will be administered by HUD and
distributed through a competitive grant process to state and
local legal organizations to provide legal assistance to low-
and moderate-income homeowners and tenants with foreclosure
related issues, including civil litigation. In allocating these
funds, HUD shall give priority consideration to state and local
legal organizations that are operating in the 100 metropolitan
statistical areas with the highest home foreclosure rates. No
funds authorized by this section may be used for class action
lawsuits. Organizations eligible for the funding are state and
local organizations whose primary business or mission is to
provide legal assistance. No funds under this subsection may be
distributed to any organization which has been or which employs
an individual who has been indicted for a violation under
Federal law relating to an election for Federal office.

Section 217. Effective date

This section provides that the amendments made by this
title shall apply to transactions consummated on or after the
effective date of the regulations specified in section 209.

Section 218. Report by the GAO

This section directs the Government Accountability Office
to conduct a study to determine the effects of the bill on the
availability and affordability of credit for homebuyers and
mortgage lending, and submit a report to Congress within one
year of enactment. The report will also include an analysis of
the effect on the capital reserves and funding of lenders of
credit risk retention provisions for non-qualified mortgages.

Section 219. State Attorney General enforcement authority

This section extends the current authority of State
attorneys general to enforce HOEPA violations to authorize
State attorneys general to enforce violations of section 129B
and 129C of TILA (the sections creating the new standards under
this Act) and section 219 of this Act.

Section 220. Tenant protections

This section allows bona fide tenants to remain in their
residence, pursuant to their lease, following a foreclosure on
the property except when the successor in interest or
subsequent purchaser will occupy the unit as a primary
residence. If the lease is to be terminated for subsequent
occupancy by the successor in interest or purchaser, the tenant
must receive notice to vacate at least 90 days before the
effective date of such notice. A lease or tenancy is bona fide
if it is the result of arms-length transaction and if the rent
is not substantially less than fair market rent or is reduced
or subsidized due to a Federal, state, or local subsidy.
The section also provides similar protections for section 8
tenants. In addition, for section 8 tenancies, during the
initial term of the lease, the foreclosure cannot constitute
good cause for termination of the lease. In subsequent lease
terms, the lease may be terminated for good cause if the
successor in interest or subsequent purchaser will occupy the
unit as a primary residence or if the unit is unmarketable
while occupied. If the lease is to be terminated, the tenant
must receive notice to vacate at least 90 days before the
effective date of such notice.
Also, the immediate successor in interest shall assume such
interest subject to the lease between the prior owner and the
housing assistance payment contract between the prior owner and
the public housing agency for the occupied unit. If a public
housing agency is unable to make payments under the contract to
the immediate successor in interest after foreclosure, due to
action or inaction by the successor in interest, including
rejection of payments or failure to maintain the unit, then
after reasonable steps to notify the owner, the agency may use
the funds that would have been used to pay rent to pay for
utilities that perhaps: were the responsibility of the owner or
for the family's reasonable moving costs.

TITLE III--HIGH-COST MORTGAGES

Section 301. Definitions relating to high-cost mortgages

This section expands the scope of the Home Ownership and
Equity Protection Act (HOEPA) by revising the high-cost
mortgage definition in 15 USC 1602(aa) in several respects. The
new definition would cover purchase money loans, construction
loans, and open-end loans, all of which specifically are
excluded by the existing definition, that meet certain
definitional triggers.
The new definition also would change the existing triggers
for determining whether a loan is a high-cost mortgage. HOEPA
currently has two triggers--one based on the amount by which
the APR exceeds a benchmark rate, and another based on the
level of the total points and fees payable in connection with
the loan transaction. This section changes the benchmark
against which to determine the APR trigger from the yield on
Treasury securities to the ``average prime offer rate,'' which
is determined, and updated at least weekly, by the Federal
Reserve. This section also lowers the number of percentage
points by which the APR at consummation must exceed the
benchmark in order to be a high-cost mortgage, includes
separate APR triggers for first lien and subordinate lien
loans, and specifies how to determine the APR for variable rate
loans. This section also lowers the points-and-fees trigger
from 8 percent to 5 percent of the total transaction amount
(or, for mortgages less than $20,000, the lesser of 8 percent
of the total transaction or $1,000). This section adds a third
trigger by providing that a mortgage is a high-cost mortgage if
the creditor may charge or collect prepayment penalties more
than 36 months after the transaction closing or may charge
prepayments penalties that exceed, in the aggregate, 2 percent
of the amount prepaid.
This section revises the definition of points and fees to
include all compensation paid directly or indirectly by a
consumer or creditor to a mortgage originator from any source
(including a mortgage originator that originates a loan in the
name of the creditor in a table-funded transaction), certain
insurance premiums, prepayment penalty charges under the loan,
and prepayment penalties actually charged in a refinance by the
original creditor or the original creditor's affiliate.
Finally, this section excludes certain bona fide discount
points (up to two points for near-market interest rate loans)
from the determination of the amount of points and fees that
trigger HOEPA protections.

Section 302. Amendments to existing requirements for certain mortgages

Section 206 bans prepayment penalties for any mortgage that
is not a Qualified Mortgage. Because all high-cost mortgages
subject to HOEPA (HOEPA loans) will, by definition, not be
Qualified Mortgages, this section conforms HOEPA to section 206
by banning prepayment penalties on HOEPA loans. This section
also revises the balloon payment prohibition in HOEPA to
provide that no high-cost mortgage may contain a scheduled
payment that is more than twice as large as the average of
earlier scheduled payments, unless the payment schedule is
adjusted to the seasonal or irregular income of the consumer.

Section 303. Additional Requirements for Certain Mortgages

This section prohibits creditors from encouraging that
borrowers default on an existing loan or other debt in
connection with the planned refinancing of all or any portion
of such existing loan or debt with a high-cost mortgage. This
section also places amount, timing, frequency, and other
restrictions on late fees for high-cost mortgages, including by
prohibiting a creditor from charging more than one fee on the
same delinquent payment and by capping a late fee at 4 percent
of the amount of the past-due payment. This section also
prohibits a creditor from unilaterally accelerating a high-cost
mortgage, except in cases of default, pursuant to a due-on-sale
provision, or pursuant to material violation of provisions of
the loan document not related to the payment schedule. Finally,
this section prohibits a creditor from directly or indirectly
financing points and fees for high-cost mortgages if the
creditor or its affiliate is the noteholder of the note being
refinanced.
This section prohibits a creditor from structuring a
mortgage transaction to evade the HOEPA protections that apply
to high-cost mortgages, such as by structuring the loan in
another form or dividing the loan transaction into separate
parts with intent to evade HOEPA.
This section prohibits a creditor from charging a consumer
any fee to modify, renew, extend, or amend a high-cost
mortgage, or to defer any payment due under the mortgage terms,
unless such adjustment results in a lower APR on the mortgage
and the fee amount is comparable to fees imposed for similar
transactions.
This section generally prohibits a creditor or servicer
from charging a fee to any person for informing or transmitting
to them the payoff amount for a high-cost mortgage and requires
that payoff balance information be provided within 5 business
days of the consumer's request. This section includes limited
exceptions that allow the creditor to charge service fees for
providing a payoff statement by facsimile or courier service
(provided that the creditor meets specified requirements) or
for providing payoff statements to the same consumer more than
4 times during a calendar year.
This section prohibits flipping, which is defined as making
a high-cost mortgage that refinances an existing mortgage when
the new, high-cost mortgage does not have a net tangible
benefit, as defined in rules promulgated under Title II, to the
consumer consider all the circumstances.
Finally, this section permits a creditor or assignee, prior
to the institution of any legal action, (1) to correct
violations and non-bona fide errors within 30 days of the loan
closing and (2) to correct bona fide errors within 60 days of
the creditor's discovery or receipt of notification of the
error. To avoid liability, a creditor must make appropriate
restitution and make whatever adjustments are necessary to
either, at the choice of the consumer, make the loan satisfy
the applicable requirements of TILA (including requirements of
the Act), or, for a high-cost mortgage, change the terms of the
loan so that the loan will no longer be a high-cost mortgage.

Section 304. Regulations

This Federal Reserve Board must publish final regulations
to implement this title by the effective date of the Act may
prescribe regulations encouraging or requiring creditors to
provide consumer mortgage education to prospective customers or
direct such customers to qualified consumer mortgage education
or counseling program.

Section 305. Effective date

The amendments made by this title will take effect at the
end of the 6-month period beginning on the date of enactment
and will apply to HOEPA loans for which an application is
received by a creditor after the end of such period.

TITLE IV--OFFICE OF HOUSING COUNSELING

Section 401. Short title

This section provides that this title may be cited as the
`Expand and Preserve Home Ownership Through Counseling Act.'

Section 402. Establishment of Office of Housing Counseling

This section establishes the Office of Housing Counseling,
headed by a Director of Housing Counseling (Director) appointed
by the Secretary. The Director will be responsible for all
homeownership and rental housing counseling programs for HUD,
and will establish, coordinate and administer all regulations,
requirements, standards, and performance measures under the
programs that relate to housing counseling, homeownership
counseling, mortgage-related counseling, and rental housing
counseling. The Director shall establish rules for (1)
counseling procedures, (2) carrying out all other related
functions, including establishing a toll-free number, (3)
information booklets, (4) carrying out the certification of
counseling service providers, (5) providing assistance in the
provision of counseling services, (6) carrying out functions
the Secretary deems appropriate with regard to unscrupulous
lending practices in the home mortgage business, (7) support
the advisory committee created under this act, (8) collaborate
with community-based organizations, and (9) provide for
building capacity to provide housing counseling services in
areas that lack sufficient services. The Secretary shall
appoint an advisory committee composed of no more than 12
individuals representing the mortgage and real estate industry,
including consumers and housing counseling agencies. Advisory
committee members appointed by the Secretary will serve 3-year
terms, except that initially, four will be appointed for 1-year
terms and four will be appointed for 2-year terms. The
Secretary may reappoint members at his discretion. Members will
not be paid, but may receive travel expenses. The advisory
committee has no role in reviewing or awarding housing
counseling grants. Counseling services will cover the entire
process of homeownership, including refinancing and
foreclosure.
This section directs the Secretary to establish,
coordinate, and monitor all HUD counseling procedures,
including requirements, standards, and performance measures
that relate to homeownership and rental housing. `Homeownership
counseling' is defined as counseling related to homeownership
and residential mortgage loans. `Rental housing counseling' is
defined as counseling related to rental of residential
property, which may include counseling regarding future
homeownership opportunities and providing referral for renters
and prospective renters to entities providing counseling. The
Secretary shall establish standards for materials and forms
used by counseling service providers, and provide for the
certification of various computer software programs for
consumers to use in evaluating different residential mortgage
loan proposals. The mortgage software system shall take into
account (1) the consumer's financial situation and the cost of
maintaining a home, including insurance, taxes, and utilities,
(2) the amount of time the consumer expects to remain in the
home or expected time to maturity of the loan, and (3) any
other factors to assist the consumer in making choices during
the loan application process. The certified software programs
shall be used to supplement, not replace, housing counseling,
and the software programs initially will be used only in
connection with the assistance of certified housing counselors.
Additionally, the certification program for mortgage software
systems will be implemented only to the extent that funds are
made available in advance in appropriations Acts. The Secretary
shall develop, implement, and conduct national public service
multimedia campaigns to make potentially vulnerable consumers
aware of the existence of homeownership counseling. 10 percent
of the multimedia campaign funds shall be used to distribute
literature on ways to avoid foreclosure rescue scams, predatory
lending agreements, for-profit foreclosure counseling services,
and to provide a list of local HUD-approved counseling
resources. Appropriations not to exceed $3 million are
authorized for national public service multimedia campaigns for
fiscal years 2009, 2010, and 2011. The Secretary shall provide
advice and technical assistance to States, units of local
government, and non-profit organizations regarding provisions
of counseling services.

Section 404. Grants for housing counseling assistance

This section directs the Secretary to make financial
assistance available for homeownership or rental counseling to
HUD-approved counseling agencies and State housing finance
agencies. The Secretary shall establish standards and
guidelines for assistance eligibility. Appropriations of $45
million are authorized for each of fiscal years 2009 through
2012 for the operations of the Office of Housing Counseling;
homeownership and rental counseling assistance grants; and the
establishment of materials and forms standards, computer
software certification, and the national public service
multimedia campaigns created in section 403 of the Act. This
amount is meant to be in addition to the amounts currently
authorized and appropriated for housing counseling activities.
In making funds available, the Secretary will consider ways to
streamline and improve the process for grant application,
review, approval, and award. No funds under this section may be
distributed to any organization which has been or which employs
an individual who has been indicted for a violation under
Federal law relating to an election for Federal office.

Section 405. Requirements to use HUD-certified counselors under HUD
programs

This section requires any homeownership counseling or
rental housing counseling administered by HUD to be provided
solely by organizations or counselors certified by the
Secretary.

Section 406. Study of defaults and foreclosures

This section directs the Secretary to submit to Congress
not later than 12 months after the enactment of the Act a
preliminary report on the root causes of default and
foreclosure of home loans and the role of escrow accounts in
helping prime and nonprime borrowers to avoid defaults and
foreclosures. No later than 24 months after the enactment of
the Act, the Secretary will submit a final report regarding the
results of the study, which will include any recommended
legislation relating to the study and recommendations for best
practices and for a process to identify populations that need
counseling the most.

Section 407. Definitions for counseling-related programs

This section provides definitions of ``nonprofit
organization,'' ``State,'' ``unit of general local
government,'' ``HUD-approved counseling agency,'' and ``State
housing finance agency.''

Section 408. Updating and simplification of mortgage information
booklet

This section directs the Secretary to prepare a booklet at
least once every 5 years to help consumers applying for
federally related mortgage loans to understand the nature and
costs of real estate settlement services. The Secretary must
include specific topics in the information booklet in plain and
understandable language, including explanation of (1) costs
incident to real estate settlement or Federally related
mortgage loan (including at a minimum balloon payments,
prepayment penalties, and trade-off between closing costs and
the interest rate over the life of the loan); (2) the uniform
settlement statement; (3) unfair lending practices and
unreasonable or unnecessary charges to be avoided by the
prospective buyer with respect to a real estate settlement; (4)
questions that the consumer should ask about a loan; (5) the
right of rescission; (6) variable rate mortgages; (7) home
equity line of credit; (8) the availability and the value of
homeownership counseling services; (9) escrow accounts; (10)
available choices for providers of incidental services; (11)
the buyer's responsibilities, liabilities, and obligations;
(12) appraisals; and (13) HUD brochure regarding loan fraud.

Section 409. Home inspection counseling.

This section requires HUD to publish outreach materials in
both English and Spanish entitled ``For Your Protection: Get a
Home Inspection'' and ``Ten Important Questions To Ask Your
Home Inspector''. HUD must make these materials available for
electronic access and through toll free telephone hotlines and
public service announcements, and include the materials as part
of any home purchase counseling.
HUD is required to make special efforts to reach first-time
and low-income homebuyers, to require FHA approved mortgagees
to provide these materials to prospective homebuyers at first
contact, and to require HUD-approved housing counseling
agencies to provide this information to clients as part of the
home purchase counseling process.
HUD training of HUD-approved housing counseling agencies
must include information about the home inspection process,
including the reasons for specific inspections such as radon
and lead based paint testing.

TITLE V--MORTGAGE SERVICING

Section 501. Escrow and impound accounts relating to certain consumer
credit transactions

This section establishes a new section in the Truth in
Lending Act (TILA) to require that specified first-lien
mortgages have an escrow account established at the time of
consummation of the transaction to cover taxes and hazard
insurance, and, if applicable, mortgage insurance, ground
rents, and any other required periodic payments or premiums
with respect to the property or loan terms.
The instances in which an escrow account must be
established include (1) when required by Federal or State law;
(2) when a loan is made, guaranteed, or insured by a State or
Federal lending or insuring agency; (3) when the rate on the
first lien on the consumer's principal dwelling, as of the date
the interest rate is set, exceeds the average prime offer rate
for a comparable transaction by 1.5 percentage points; or (4)
when required pursuant to regulation.
Escrow accounts established pursuant to this section,
unless the underlying mortgage is terminated, must remain in
existence for a minimum of 5 years and until the borrower has
enough equity to no longer meet the requirements of maintaining
private mortgage insurance, or such other period provided in
regulations to address situations such as a borrower's
delinquency. These standards exceed the 12-month period
provided for in the Federal Reserve Board's 2008 rulemaking
under the Home Ownership and Equity Protection Act (HOEPA).
Consistent with the HOEPA rulemaking, a limited exemption
of the escrow account requirement is provided for loans secured
by shares in a cooperative and for certain condominium units.
For mortgages not meeting the specified tests established under
the law, clarifications are further provided that nothing
precludes the establishment of an escrow account on terms
mutually agreeable to the parties to the loan, at the
discretion of the servicer or lender pursuant to the contract,
or pursuant to the Flood Disaster Protection Act (FDPA).
Servicers must administer such accounts in accordance with
the Real Estate Settlement Procedures Act (RESPA), FDPA, and,
if applicable, the law of the State where the real property
securing the transaction is located, including making interest
payments on the escrow account if required under such laws. The
account must also be maintained in a federally insured
depository institution, and the amounts escrowed must reflect
the actual property value (land and improvements thereto).
Clarification is also provided that any violation of RESPA for
a mandated escrow established under TILA does not also result
in additional penalties under TILA unless the action or
omission also constitutes a direct violation of TILA.
Consumers with mortgages covered by this section must also
receive specific written disclosures about the establishment of
an escrow account at least 3 business days before loan
consummation or in accordance with timeframes established in
prescribed regulations.
The Federal banking regulators and the Federal Trade
Commission (FTC) have 180 days to adopt final regulations to
implement the section. These regulations become effective and
apply to all covered mortgages beginning one year after the
publication of final rules.

Section 502. Disclosure notice required for consumers who opt out of
escrow services

This section amends the new section of TILA established by
section 501 to require all consumers, regardless of whether
they must have an escrow account established at the time the
loan is consummated, to receive specified written disclosures
advising them of the responsibilities of the consumer and
implications for the consumer in the absence of any such
account. The Federal banking regulators and the FTC have 180
days to adopt final regulations to implement these new
disclosure requirements. These regulations become effective 180
days after the publication of final rules.

Section 503. Real Estate Settlement Procedures Act of 1974 amendments

This section updates section 6 of RESPA and establishes new
consumer protections related to servicer prohibitions, the
administration of force-placed insurance, increased penalty
amounts, servicer response times, and escrow account refunds.
Servicer prohibitions
The section prohibits mortgage servicers from obtaining
force-placed hazard insurance unless they have a reasonable
basis to believe that the borrower has failed to comply with
the requirement to maintain property insurance. It also bars
servicers from charging fees for responding to valid qualified
written requests placed by the borrower, with regulations
promulgated to determine the interpretation of what constitutes
a valid qualified written request. The section further
prohibits mortgage servicers from failing to take timely action
to respond to a borrower's requests to correct errors relating
to the allocation of payments, obtain final balances for
purposes of paying off the loan, or avoid foreclosure.
The section additionally requires a servicer to respond
within 10 business days to a request from a borrower to provide
the identity of and contact information for the owner/assignee
of the loan. Finally, the section requires servicers to comply
with any other obligation to protect consumers established by
the Secretary of the Department of Housing and Urban
Development (HUD) via rulemaking.
Force-placed insurance
The section further establishes a definition for force-
placed insurance.
The procedures for the forced placement of hazard insurance
require the servicer initially to send, by first-class mail, a
written notice with certain disclosures about the need to
obtain hazard insurance. After at least 30 days, the servicer
must send a second notice by first-class mail containing the
same disclosures. The servicer may then force place insurance
if it has not received demonstration from the borrower in
writing of any insurance coverage 15 days after sending the
second notice. The borrower's response must include the
existing insurance policy number along with the identity of and
contact information for the insurance company or agent.
The section requires the servicer to terminate force-placed
insurance within 15 days of the receipt of confirmation of a
borrower's existing hazard insurance coverage. The section also
requires lenders to refund amounts to the consumer for force-
placed insurance that overlap in time with the hazard insurance
obtained directly by the homeowner. It additionally allows for
the concurrent administration of notices required by FDPA for
the forced placement of flood insurance.
The section additionally requires that all charges for
force-placed insurance to be bona fide and reasonable in
amount.
Increase in penalties
The section doubles the maximum statutory RESPA penalties
in individual cases from $1,000 to $2,000, and in class action
cases from $500,000 to $1,000,000. The changes apply to all
RESPA violations.
Response times
The section mandates decreases in response times to
qualified written requests made pursuant to RESPA.
Specifically, these changes require a servicer to acknowledge
receipt of a qualified written request within 5 days (down from
20 days) and complete action on the inquiry within 30 days
(down from 60 days) except that this 30-day period may be
extended for not more than 15 days if the servicer notifies the
borrower of the extension within the initial 30-day period and
details the reasons for the delay in responding.
Prompt refund of escrow accounts
The section finally requires the prompt refund of escrow
accounts that are within the servicer's control within 20
business days of a loan's payoff. Alternatively, borrowers may
roll over existing escrowed amounts for a similar account
established by a new mortgage with the same lender.

Section 504. Truth in Lending Act amendments

This section amends TILA to require the prompt crediting of
mortgage payments and the timely provision to consumers of
mortgage payoff amounts.
Requirements for prompt crediting of home loan payments
Consistent with the final HOEPA regulations adopted by the
Federal Reserve Board in 2008, the section amends TILA to
require servicers to credit payments made in connection with a
credit transaction secured by a consumer's principal dwelling
as of the date of receipt, except when a delay in crediting
does not result in any charge to the consumer or in the
reporting of negative information to a consumer reporting
agency. For consumers who do not follow specified written
requirements when making payments, an exception is provided to
require the servicer to credit the payment as of 5 days after
receipt.
Requests for payoff amounts
The section amends TILA to require a creditor or servicer
of a home loan to send an accurate payoff balance within a
reasonable time, but in no case more than 7 business days after
the receipt of a written request for such balance from or on
behalf of the borrower.

Section 505. Escrows required in repayment analysis

The section amends TILA to require the inclusion of escrow
payments for taxes and insurance in any monthly repayment
analysis provided to consumers. The change will allow all
consumers to make apples-to-apples comparisons in the mortgage
quotes they receive and improve consumer understanding of the
total costs of homeownership.

TITLE VI--APPRAISAL ACTIVITIES

Section 601. Property appraisal requirements

This section modifies TILA to require lenders to obtain a
written appraisal, resulting from an interior assessment of a
physical property visit made by a qualified appraiser, of the
covered property before extending credit in the form of a
subprime mortgage. If the purpose of the covered mortgage is to
finance the purchase or acquisition of the mortgaged property
within 180 days of the purchase or acquisition of such property
at a price that was lower than the current sale price of the
property, this section also directs lenders to obtain a second
appraisal at no cost to the applicant.
Also, this section entitles covered applicants to 1 free
copy of each such appraisal provided at least 3 days prior to
the transaction closing date and requires certain notifications
about the limits of appraisals. Creditors found to have
willfully failed to obtain an appraisal for a subprime mortgage
are liable to the applicant or borrower for the sum of $2,000.
The section defines a subprime mortgage consistent with metrics
established by the Federal Reserve Board in its 2008 HOEPA
rulemaking for first- and subordinate-liens on a residential
mortgage loan.

Section 602. Unfair and deceptive practices and acts relating to
certain consumer transactions

The section creates a Federal unfair and deceptive
practices standard for appraisals within TILA, with rules
written and interpretative guidelines issued by the Federal
banking regulators and the FTC. Specifically, this section
prohibits the compensation, coercion, extortion, collusion,
instruction, inducement, bribing, or intimidation or attempting
any of the aforementioned activities for the purpose of causing
the appraised value assigned to the property to be based on any
fact other than the independent judgment of the appraiser.
This section further prohibits the mischaracterization of
an appraised value, efforts to influence an appraiser to hit a
targeted value, and withholding timely payment for an appraisal
report. The bar against such withholding, however, is not
intended to apply when an appraiser has breached the terms of a
contract in the performance of duties. Exceptions are provided
to permit valid communications about the property itself, to
correct errors, and to obtain further detail about the
appraiser's value conclusion.
The section additionally creates a statutory requirement
that certified and licensed appraisers and appraisal management
companies (AMCs) have no direct or indirect interest, financial
or otherwise, in either the property or in the transaction
involving the appraisal. The interest-in-property prohibition
shall apply equally to both fee-for-service and staff
appraisers. The interest-in-the-transaction bar, however,
should not be construed as to prohibit work by staff appraisers
within a financial institution or other organization, if such
an entity has established firewalls, consistent with those
outlined in the Home Valuation Code of Conduct, between the
origination group and the appraisal unit designed to ensure the
independence of appraisal results and reviews.
Moreover, the section establishes a requirement for those
parties who have a reasonable basis to believe an appraiser is
violating applicable laws or otherwise engaging in unethical or
unprofessional conduct to report such matters to the applicable
State appraisal agency. In addition, the section prohibits a
creditor from extending credit in connection with a consumer
credit transaction secured by a consumer's principal dwelling
if the creditor knows of a violation of appraisal independence
standards, unless the creditor documents that the creditor has
acted with reasonable diligence to determine that the appraisal
does not materially misstate or misrepresent the value of such
dwelling.
This section establishes sanctions in addition to those
already provided under TILA. These penalties are up to $10,000
for first violations and $20,000 for subsequent violations.

Section 603. Amendments relating to Appraisal Subcommittee of the
Financial Institutions Examination Council, appraiser
independence, and approved appraiser education

This section generally supplements, strengthens, and
modifies the existing appraisal requirements contained in Title
XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA).
Appraisal Subcommittee reforms
Subsection (a) adds consumer protection to the mission and
functions of the Appraisal Subcommittee (ASC). The section also
requires the ASC to monitor the efforts of States and Federal
banking regulators to protect consumers from improper appraisal
practices and the predations of unlicensed appraisers in
mortgage transactions. In order to reconcile this new consumer
protection mandate with the existing safety-and-soundness
mission of the ASC, the section amends the criteria and
procedures by which Federal banking regulators establish the
threshold below which a written appraisal by a certified or
licensed appraiser is not required.
The Federal Reports Elimination and Sunset Act of 1995
(P.L. 104-66) effectively ended the ASC's annual reporting
requirement as of May 15, 2000, although the ASC has continued
in since then to produce such a document for Congress.
Subsection (b) definitively reinstates the requirement that the
ASC submit an annual report to Congress. This subsection
additionally requires the ASC in its annual report to describe
in greater detail its activities and the work of State
appraisal agencies. The subsection further requires the ASC to
provide information about the results of all audits of State
appraisal agencies and details about disapprovals and warnings
issued to State appraisal agencies.
Subsection (c) codifies the decision of the ASC to open its
meetings to the general public.
Subsection (d) authorizes the panel to issue binding rules
and regulations after public notice and opportunity for comment
in several new areas: temporary practice, national registry,
information sharing, and enforcement. The term ``enforcement''
covers the actions the ASC may take in evaluating State
appraisal agencies and the gamut of sanctions that the ASC may
impose against such agencies.
Subsection (e) statutorily defines what constitutes a
complex transaction requiring the use of a certified appraiser
in lieu of a licensed appraiser, consistent with Uniform
Standards of Professional Appraisal Practice. The subsection
also requires all appraisals performed at a property within a
State to be prepared by appraisers licensed or certified in the
State where the property is located. The subsection
additionally requires all appraisal reviews by a lender, AMC,
or other third-party organization to be performed by an
appraiser who is duly licensed or certified by a State
appraisal board.
Subsection (g) requires State appraisal agencies to
transmit reports on sanctions, disciplinary actions,
revocations, and suspensions to the ASC on a timely basis.
These reports apply to both individuals and AMCs.
To account for inflation since the enactment of FIRREA in
1989, subsection (h) updates registry fee amounts annually paid
by licensed and certified appraisers to support the activities
of the ASC. The subsection additionally establishes a program
for collecting fees from AMCs to support the additional work of
the ASC. The subsection further requires the ASC to consider at
least once every 5 years whether to adjust the dollar amounts
for inflation and provides administrative flexibility to allow
for the implementation of such adjustments in fee amounts. The
incremental revenues raised by the fee increases are placed in
the Appraisal Subcommittee Account within the U.S. Treasury.
Subsection (i) allows the ASC to use the amounts placed in
the Appraisal Subcommittee Account to make grants to State
appraisal agencies to help defray costs related to the
complaint process, complaint investigations, and appraiser
enforcement activities. The ASC may also use this funding to
provide grants to States for the submission of data. It also
requires the national registry to report to State appraisal
agencies when a license or certification is surrendered,
revoked, or suspended.
Subsection (k) improves the ability of the ASC to oversee
State appraisal agencies in a number of ways. First, it adds
funding and staffing to the list of criteria against which the
ASC must evaluate a State appraisal agency. It also requires
the ASC to evaluate whether a State appraisal agency processes
complaints and completes its examinations in a reasonable time
period, whether a state appropriately disciplines sanctioned
appraisers and AMCs, whether a state maintains an effective
regulatory program, and whether a State appraisal agency
reports claims and disciplinary actions to the national
registry on a timely basis. The subsection further permits the
ASC to impose interim sanctions and suspensions.
Subsection (n) requires the ASC to monitor each State
appraisal agency for the purpose of determining whether such
agency's policies, practices, and procedures are consistent
with the purpose of maintaining appraiser independence and
whether such State has adopted and maintains effective laws,
regulations, and policies aimed at maintaining appraiser
independence.
Finally, Subsection (s) expands the membership of the ASC
to include the Federal Housing Finance Agency. The subsection
also requires that at all times at least one member of the
Appraisal Subcommittee shall be a certified or licensed
appraiser.
Appraisal management company registration and supervision
In response to the growth of and concerns about AMCs,
subsection (f) creates a State-by-State system for registering
and supervising AMCs, with oversight of the States conducted by
the ASC, and it generally requires the system to be in place
within 3 years of enactment. The subsection provides for the
establishment of minimum standards to be applied in the
registration of AMCs. The subsection also ensures that those
who complete appraisal fraud or those who lose their appraisal
licenses or certifications cannot turn around and establish an
AMC. The amendment additionally puts in place a parallel
Federal system of oversight for an AMC that operates as a
subsidiary of a financial institution overseen by a Federal
banking regulator. The section also incorporates a definition
for appraisal management company.
Appraiser education and licensing
Subsections (j), (l), (m) and (o) generally make a variety
of changes to appraiser licensing and educational standards.
Subsection (j) expands the ability of the ASC to set minimum
licensing standards for appraisers in addition to its existing
authority to establish minimum certification standards. The
subsection also permits the establishment of minimum
requirements for trainee appraisers and supervisory appraisers.
Subsection (l) provides for reciprocity in State appraiser
licenses and certifications. To promote greater professionalism
and advanced training within the appraisal industry, subsection
(m) codifies language now found in the selling guides for
government-sponsored enterprises to allow for special
consideration of appraisers who have obtained special
designations or training from professional appraisal
organizations. Finally, subsection (o) requires the ASC to
encourage State appraisal agencies to accept courses and
seminars approved by the Appraiser Qualification Board's Course
Approval Program for educational training requirements.
Appraisal complaint national hotline
If no national hotline exists to receive complaints about
non-compliance with appraisal independence standards within one
year of enactment, subsection (p) requires the ASC to put in
place a national hotline, which shall consist of a toll-free
phone number and an e-mail address. The ASC must refer
complaints received by the national hotline to the appropriate
State or Federal regulator, or other appropriate legal
authorities. In order to determine the status of the resolution
of the complaint, the subsection also provides the ASC with the
authority to follow up on referrals made to State appraisal
agencies and Federal banking regulators.
The Committee intends that the ASC will not need to
establish a national hotline if the national hotline provided
for in the Home Valuation Code of Conduct becomes operative
within the 1 year after enactment timeframe established under
the Act. If, however, such a national hotline ceases to exist,
then the ASC will establish and maintain a national hotline at
that point in time.
Automated valuation model quality control standards
To enhance confidence in the results produced by automated
valuation models used to develop estimates of home values,
subsection (q) establishes minimum standards and requires the
development and enforcement of rules by Federal banking
regulators and the Appraisal Subcommittee.
Broker price opinion limitations
To address concerns about the quality of home value
estimates developed by real estate brokers that are used for
collateral purposes, subsection (r) codifies a policy recently
adopted by Freddie Mac to prohibit the use of broker price
opinions as a sole method for determining the value of a
purchase mortgage loan.
Technical corrections
Subsection (t) makes several technical corrections to title
XI of FIRREA to fix drafting errors.

Section 604. Study required on improvements in appraisal process and
compliance programs

This section requires the Comptroller General to conduct a
comprehensive study within 18 months of enactment of this Act
on possible improvements in the appraisal process generally,
and on the consistency in, the effectiveness of, and possible
improvements to State compliance efforts and programs in
accordance with FIRREA specifically. The study by the
Government Accountability Office will also examine current
exemptions to the use of certified appraisers issued by the
Federal banking regulators and, in light of the new consumer
protection mission of the ASC, explore the existing threshold
levels below which Federal banking regulators do not require a
written appraisal.
The section also requires a review of the quality of
appraisals produced through different mechanisms and different
distribution channels. It additionally mandates an analysis and
statistical breakdown of the enforcement actions taken during
the last decade against different types of appraisers. Finally,
the study must examine the need to create a national repository
to collect data related to real estate property collateral
valuations performed in the United States.

Section 605. Equal Credit Opportunity Act amendment

This section amends the Equal Credit Opportunity Act to
provide mortgage applicants with access to a written appraisal
report no later than 3 days before closing. This set of changes
is generally consistent with the requirements of the Home
Valuation Code of Conduct. The section also requires creditors
to provide applicants with access to any other valuation report
developed in conjunction with a mortgage transaction.

Section 606. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees

This section modifies RESPA to require the disclosure to
consumers of the fees paid to licensed and certified
appraisers, as well the fees paid to AMCs. These disclosures
will help interested parties, including Federal and State
regulators and other appropriate authorities, to make better
determinations about the quality of appraisals facilitated by
an AMC.

TITLE VII--SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT
SPONSORED ENTERPRISES REFORM

Section 701. Sense of Congress regarding the importance of Government-
sponsored enterprises reform to enhance the protection,
limitation and regulation of the terms of residential mortgage
credit

This section provides findings and a sense of Congress that
efforts to enhance by the protection, limitation, and
regulation of the terms of residential mortgage credit and the
practices related to such credit would be incomplete without
enactment of meaningful structural reforms of Fannie Mae and
Freddie Mac.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):

TRUTH IN LENDING ACT

* * * * * * *

TITLE I--CONSUMER CREDIT COST DISCLOSURE

* * * * * * *

CHAPTER 1--GENERAL PROVISIONS

* * * * * * *

Sec. 103. Definitions and rules of construction

(a) * * *

* * * * * * *

[(aa)(1) A mortgage referred to in this subsection means a
consumer credit transaction that is secured by the consumer's
principal dwelling, other than a residential mortgage
transaction, a reverse mortgage transaction, or a transaction
under an open end credit plan, if--
[(A) the annual percentage rate at consummation of
the transaction will exceed by more than 10 percentage
points the yield on Treasury securities having
comparable periods of maturity on the fifteenth day of
the month immediately preceding the month in which the
application for the extension of credit is received by
the creditor; or
[(B) the total points and fees payable by the
consumer at or before closing will exceed the greater
of--
[(i) 8 percent of the total loan amount; or
[(ii) $400.]
(aa) High-Cost Mortgage.--
(1) Definition.--
(A) In general.--The term ``high-cost
mortgage'', and a mortgage referred to in this
subsection, means a consumer credit transaction
that is secured by the consumer's principal
dwelling, other than a reverse mortgage
transaction, if--
(i) in the case of a credit
transaction secured--
(I) by a first mortgage on
the consumer's principal
dwelling, the annual percentage
rate at consummation of the
transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the
dwelling is personal property
and the transaction is for less
than $50,000) the average prime
offer rate, as defined in
section 129C(c)(2)(B), for a
comparable transaction; or
(II) by a subordinate or
junior mortgage on the
consumer's principal dwelling,
the annual percentage rate at
consummation of the transaction
will exceed by more than 8.5
percentage points the average
prime offer rate, as defined in
section 129C(c)(2)(B), for a
comparable transaction;
(ii) the total points and fees
payable in connection with the
transaction exceed--
(I) in the case of a
transaction for $20,000 or
more, 5 percent of the total
transaction amount; or
(II) in the case of a
transaction for less than
$20,000, the lesser of 8
percent of the total
transaction amount or $1,000
(or such other dollar amount as
the Board shall prescribe by
regulation); or
(iii) the credit transaction
documents permit the creditor to charge
or collect prepayment fees or penalties
more than 36 months after the
transaction closing or such fees or
penalties exceed, in the aggregate,
more than 2 percent of the amount
prepaid.
(B) Introductory rates taken into account.--
For purposes of subparagraph (A)(i), the annual
percentage rate of interest shall be determined
based on the following interest rate:
(i) In the case of a fixed-rate
transaction in which the annual
percentage rate will not vary during
the term of the loan, the interest rate
in effect on the date of consummation
of the transaction.
(ii) In the case of a transaction in
which the rate of interest varies
solely in accordance with an index, the
interest rate determined by adding the
index rate in effect on the date of
consummation of the transaction to the
maximum margin permitted at any time
during the transaction agreement.
(iii) In the case of any other
transaction in which the rate may vary
at any time during the term of the loan
for any reason, the interest charged on
the transaction at the maximum rate
that may be charged during the term of
the transaction.
(2)(A) * * *
[(B) An increase or decrease under subparagraph (A) may not
result in the number of percentage points referred to in
subparagraph (A) being--
[(i) less that 8 percentage points; or
[(ii) greater than 12 percentage points.]
(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.

* * * * * * *

(4) For purposes of paragraph (1)(B), points and fees shall
include--
(A) * * *
[(B) all compensation paid to mortgage brokers;]
(B) all compensation paid directly or indirectly by a
consumer or creditor to a mortgage broker from any
source, including a mortgage originator that originates
a loan in the name of the originator in a table-funded
transaction;
(C) each of the charges listed in section 106(e)
(except an escrow for future payment of taxes),
unless--
(i) * * *
(ii) the creditor receives no direct or
indirect compensation except where applied to
the charges set forth in section 106(e)(1)
where a creditor may receive indirect
compensation solely as a result of obtaining
distributions of profits from an affiliated
entity based on its ownership interest in
compliance with section 8(c)(4) of the Real
Estate Settlement Procedures Act of 1974; and
(iii) the charge is paid to a third party
unaffiliated with the creditor[; and], except
as provided for in clause (ii);
(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit
unemployment, or credit property insurance, or any
other accident, loss-of-income, life or health
insurance, or any payments directly or indirectly for
any debt cancellation or suspension agreement or
contract, except that insurance premiums or debt
cancellation or suspension fees calculated and paid in
full on a monthly basis shall not be considered
financed by the creditor;
(E) except as provided in subsection (cc), the
maximum prepayment fees and penalties which may be
charged or collected under the terms of the credit
transaction;
(F) all prepayment fees or penalties that are
incurred by the consumer if the loan refinances a
previous loan made or currently held by the same
creditor or an affiliate of the creditor; and
[(D)] (G) such other charges as the Board determines
to be appropriate.
(5) Calculation of points and fees for open-end
consumer credit plans.--In the case of open-end
consumer credit plans, points and fees shall be
calculated, for purposes of this section and section
129, by adding the total points and fees known at or
before closing, including the maximum prepayment
penalties which may be charged or collected under the
terms of the credit transaction, plus the minimum
additional fees the consumer would be required to pay
to draw down an amount equal to the total credit line.
[(5)] (6) This subsection shall not be construed to limit the
rate of interest or the finance charge that a person may charge
a consumer for any extension of credit.

* * * * * * *

(cc) Definitions Relating to Mortgage Origination and
Residential Mortgage Loans.--
(1) Commission.--Unless otherwise specified, the term
``Commission'' means the Federal Trade Commission.
(2) Federal banking agencies.--The term ``Federal
banking agencies'' means the Board of Governors of the
Federal Reserve System, the Comptroller of the
Currency, the Director of the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation,
and the National Credit Union Administration Board.
(3) Mortgage originator.--The term ``mortgage
originator''--
(A) means any person who, for direct or
indirect compensation or gain, or in the
expectation of direct or indirect compensation
or gain--
(i) takes a residential mortgage loan
application;
(ii) assists a consumer in obtaining
or applying to obtain a residential
mortgage loan; or
(iii) offers or negotiates terms of a
residential mortgage loan;
(B) includes any person who represents to the
public, through advertising or other means of
communicating or providing information
(including the use of business cards,
stationery, brochures, signs, rate lists, or
other promotional items), that such person can
or will provide any of the services or perform
any of the activities described in subparagraph
(A);
(C) does not include any person who is (i)
not otherwise described in subparagraph (A) or
(B) and who performs purely administrative or
clerical tasks on behalf of a person who is
described in any such subparagraph, or (ii) an
employee of a retailer of manufactured homes
who is not described in clause (i) or (iii) of
subparagraph (A);
(D) does not include a person or entity that
only performs real estate brokerage activities
and is licensed or registered in accordance
with applicable State law, unless such person
or entity is compensated for performing such
brokerage activities by a lender, a mortgage
broker, or other mortgage originator or by any
agent of such lender, mortgage broker, or other
mortgage originator; and
(E) does not include, with respect to a
residential mortgage loan, a person, estate, or
trust that provides mortgage financing for the
sale of 1 property in any 36 month period,
provided that such loan--
(i) is fully amortizing;
(ii) is with respect to a sale for
which the seller determines in good
faith and documents that the buyer has
a reasonable ability to repay the loan;
(iii) has a fixed rate or an
adjustable rate that is adjustable
after 5 or more years, subject to
reasonable annual and lifetime
limitations on interest rate increases;
and
(iv) meets any other criteria the
Federal banking agencies may prescribe.
(4) Nationwide mortgage licensing system and
registry.--The term ``Nationwide Mortgage Licensing
System and Registry'' has the same meaning as in the
Secure and Fair Enforcement for Mortgage Licensing Act
of 2008.
(5) Other definitions relating to mortgage
originator.--For purposes of this subsection, a person
``assists a consumer in obtaining or applying to obtain
a residential mortgage loan'' by, among other things,
advising on residential mortgage loan terms (including
rates, fees, and other costs), preparing residential
mortgage loan packages, or collecting information on
behalf of the consumer with regard to a residential
mortgage loan.
(6) Residential mortgage loan.--The term
``residential mortgage loan'' means any consumer credit
transaction that is secured by a mortgage, deed of
trust, or other equivalent consensual security interest
on a dwelling or on residential real property that
includes a dwelling, other than a consumer credit
transaction under an open end credit plan or a reverse
mortgage or, for purposes of sections 129B and 129C and
section 128(a)(16), (17), and (18), 128(a)(f) and
128(b)(4) and any regulations promulgated thereunder,
an extension of credit relating to a plan described in
section 101(53D) of title 11, United States Code.
(7) Secretary.--The term ``Secretary'', when used in
connection with any transaction or person involved with
a residential mortgage loan, means the Secretary of
Housing and Urban Development.
(8) Securitization vehicle.--The term
``securitization vehicle'' means a trust, corporation,
partnership, limited liability entity, special purpose
entity, or other structure that--
(A) is the issuer, or is created by the
issuer, of mortgage pass-through certificates,
participation certificates, mortgage-backed
securities, or other similar securities backed
by a pool of assets that includes residential
mortgage loans; and
(B) holds such loans.
(9) Securitizer.--The term ``securitizer'' means the
person that transfers, conveys, or assigns, or causes
the transfer, conveyance, or assignment of, residential
mortgage loans, including through a special purpose
vehicle, to any securitization vehicle, excluding any
trustee that holds such loans solely for the benefit of
the securitization vehicle.
(10) Servicer.--The term ``servicer'' has the same
meaning as in section 6(i)(2) of the Real Estate
Settlement Procedures Act of 1974.
(dd) Bona Fide Discount Points and Prepayment Penalties.--For
the purposes of determining the amount of points and fees for
purposes of subsection (aa), either the amounts described in
paragraph (1) or (4) of the following paragraphs, but not both,
may be excluded:
(1) Exclusion of bona fide discount points.--The
discount points described in 1 of the following
subparagraphs shall be excluded from determining the
amounts of points and fees with respect to a high-cost
mortgage for purposes of subsection (aa):
(A) Up to and including 2 bona fide discount
points payable by the consumer in connection
with the mortgage, but only if the interest
rate from which the mortgage's interest rate
will be discounted does not exceed by more than
1 percentage point (i) 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, or (ii) if
secured by a personal property loan, the
average rate on a loan in connection with which
insurance is provided under title I of the
National Housing Act (12 U.S.C. 1702 et seq.).
(B) Unless 2 bona fide discount points have
been excluded under subparagraph (A), up to and
including 1 bona fide discount point payable by
the consumer in connection with the mortgage,
but only if the interest rate from which the
mortgage's interest rate will be discounted
does not exceed by more than 2 percentage
points (i) 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, or (ii) if secured by a
personal property loan, the average rate on a
loan in connection with which insurance is
provided under title I of the National Housing
Act (12 U.S.C. 1702 et seq.).
(2) Definition.--For purposes of paragraph (1), the
term ``bona fide discount points'' means loan discount
points which are knowingly paid by the consumer for the
purpose of reducing, and which in fact result in a bona
fide reduction of, the interest rate or time-price
differential applicable to the mortgage.
(3) Exception for interest rate reductions
inconsistent with industry norms.--Paragraph (1) shall
not apply to discount points used to purchase an
interest rate reduction unless the amount of the
interest rate reduction purchased is reasonably
consistent with established industry norms and
practices for secondary mortgage market transactions.

* * * * * * *

Sec. 108. Administrative enforcement

(a) Compliance with the requirements imposed under this title
shall be enforced under
(1) * * *

* * * * * * *

(7) sections 21B and 21C of the Securities Exchange
Act of 1934, in the case of a broker or dealer, other
than a depository institution, by the Securities and
Exchange Commission.

* * * * * * *

CHAPTER 2--CREDIT TRANSACTIONS

Sec.
121. General requirement of disclosure.
* * * * * * *
128A. Reset of hybrid adjustable rate mortgages.
* * * * * * *
129A. Fiduciary duty of servicers of pooled residential mortgages.
129B. Residential mortgage loan origination.
129C. Minimum standards for residential mortgage loans.
129D. Escrow or impound accounts relating to certain consumer credit
transactions.
129E. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.
129F. Requirements for prompt crediting of home loan payments.
129G. Requests for payoff amounts of home loan.

* * * * * * *

Sec. 128. Consumer credit not under open end credit plans

(a) For each consumer credit transaction other than under an
open end credit plan, the creditor shall disclose each of the
following items, to the extent applicable:
(1) * * *

* * * * * * *

(16) In the case of a variable rate residential
mortgage loan for which an escrow or impound account
will be established for the payment of all applicable
taxes, insurance, and assessments--
(A) the amount of initial monthly payment due
under the loan for the payment of principal and
interest, and the amount of such initial
monthly payment including the monthly payment
deposited in the account for the payment of all
applicable taxes, insurance, and assessments;
and
(B) the amount of the fully indexed monthly
payment due under the loan for the payment of
principal and interest, and the amount of such
fully indexed monthly payment including the
monthly payment deposited in the account for
the payment of all applicable taxes, insurance,
and assessments.
(17) In the case of a residential mortgage loan, the
aggregate amount of settlement charges for all
settlement services provided in connection with the
loan, the amount of charges that are included in the
loan and the amount of such charges the borrower must
pay at closing, the approximate amount of the wholesale
rate of funds in connection with the loan, and the
aggregate amount of other fees or required payments in
connection with the loan.
(18) In the case of a residential mortgage loan, the
aggregate amount of fees paid to the mortgage
originator in connection with the loan, the amount of
such fees paid directly by the consumer, and any
additional amount received by the originator from the
creditor.
(b)(1) * * *

* * * * * * *

(4) Residential mortgage loan disclosures.--In the
case of a residential mortgage loan, the information
required to be disclosed under subsection (a) with
respect to such loan shall be disclosed before the
earlier of--
(A) the time required under the first
sentence of paragraph (1); or
(B) the end of the 3-business-day period
beginning on the date the application for the
loan from a consumer is received by the
creditor.
(5) Repayment analysis required to include escrow
payments.--
(A) In general.--In the case of any consumer
credit transaction secured by a first mortgage
or lien on the principal dwelling of the
consumer, other than a consumer credit
transaction under an open end credit plan or a
reverse mortgage, for which an impound, trust,
or other type of account has been or will be
established in connection with the transaction
for the payment of property taxes, hazard and
flood (if any) insurance premiums, or other
periodic payments or premiums with respect to
the property, the information required to be
provided under subsection (a) with respect to
the number, amount, and due dates or period of
payments scheduled to repay the total of
payments shall take into account the amount of
any monthly payment to such account for each
such repayment in accordance with section
10(a)(2) of the Real Estate Settlement
Procedures Act of 1974.
(B) Assessment value.--The amount taken into
account under subparagraph (A) for the payment
of property taxes, hazard and flood (if any)
insurance premiums, or other periodic payments
or premiums with respect to the property shall
reflect the taxable assessed value of the real
property securing the transaction after the
consummation of the transaction, including the
value of any improvements on the property or to
be constructed on the property (whether or not
such construction will be financed from the
proceeds of the transaction), if known, and the
replacement costs of the property for hazard
insurance, in the initial year after the
transaction.

* * * * * * *

(f) Periodic Statements for Residential Mortgage Loans.--
(1) In general.--The creditor, assignee, or servicer
with respect to any residential mortgage loan shall
transmit to the obligor, for each billing cycle, a
statement setting forth each of the following items, to
the extent applicable, in a conspicuous and prominent
manner:
(A) The amount of the principal obligation
under the mortgage.
(B) The current interest rate in effect for
the loan.
(C) The date on which the interest rate may
next reset or adjust.
(D) The amount of any prepayment fee to be
charged, if any.
(E) A description of any late payment fees.
(F) A telephone number and electronic mail
address that may be used by the obligor to
obtain information regarding the mortgage.
(G) Such other information as the Board may
prescribe in regulations.
(2) Development and use of standard form.--The
Federal banking agencies shall jointly develop and
prescribe a standard form for the disclosure required
under this subsection, taking into account that the
statements required may be transmitted in writing or
electronically.

Sec. 128A. Reset of hybrid adjustable rate mortgages

(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes
of this section, the term ``hybrid adjustable rate mortgage''
means a consumer credit transaction secured by the consumer's
principal residence with a fixed interest rate for an
introductory period that adjusts or resets to a variable
interest rate after such period.
(b) Notice of Reset and Alternatives.--During the 1-month
period that ends 6 months before the date on which the interest
rate in effect during the introductory period of a hybrid
adjustable rate mortgage adjusts or resets to a variable
interest rate or, in the case of such an adjustment or
resetting that occurs within the first 6 months after
consummation of such loan, at consummation, the creditor or
servicer of such loan shall provide a written notice, separate
and distinct from all other correspondence to the consumer,
that includes the following:
(1) Any index or formula used in making adjustments
to or resetting the interest rate and a source of
information about the index or formula.
(2) An explanation of how the new interest rate and
payment would be determined, including an explanation
of how the index was adjusted, such as by the addition
of a margin.
(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of
the monthly payment that will apply after the date of
the adjustment or reset, and the assumptions on which
this estimate is based.
(4) A list of alternatives consumers may pursue
before the date of adjustment or reset, and
descriptions of the actions consumers must take to
pursue these alternatives, including--
(A) refinancing;
(B) renegotiation of loan terms;
(C) payment forbearances; and
(D) pre-foreclosure sales.
(5) The names, addresses, telephone numbers, and
Internet addresses of counseling agencies or programs
reasonably available to the consumer that have been
certified or approved and made publicly available by
the Secretary of Housing and Urban Development or a
State housing finance authority (as defined in section
1301 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989).
(6) The address, telephone number, and Internet
address for the State housing finance authority (as so
defined) for the State in which the consumer resides.

SEC. 129. REQUIREMENTS FOR CERTAIN MORTGAGES.

(a) * * *

* * * * * * *

(c) No Prepayment Penalty.--
(1) * * *
[(2) Exception.--Notwithstanding paragraph (1), a
mortgage referred to in section 103(aa) may contain a
prepayment penalty (including terms calculating a
refund by a method that is not prohibited under section
933(b) of the Housing and Community Development Act of
1992 for the transaction in question) if--
[(A) at the time the mortgage is
consummated--
[(i) the consumer is not liable for
an amount of monthly indebtedness
payments (including the amount of
credit extended or to be extended under
the transaction) that is greater than
50 percent of the monthly gross income
of the consumer; and
[(ii) the income and expenses of the
consumer are verified by a financial
statement signed by the consumer, by a
credit report, and in the case of
employment income, by payment records
or by verification from the employer of
the consumer (which verification may be
in the form of a copy of a pay stub or
other payment record supplied by the
consumer);
[(B) the penalty applies only to a prepayment
made with amounts obtained by the consumer by
means other than a refinancing by the creditor
under the mortgage, or an affiliate of that
creditor;
[(C) the penalty does not apply after the end
of the 5-year period beginning on the date on
which the mortgage is consummated; and
[(D) the penalty is not prohibited under
other applicable law.]

* * * * * * *

[(e) No Balloon Payments.--A mortgage referred to in section
103(aa) having a term of less than 5 years may not include
terms under which the aggregate amount of the regular periodic
payments would not fully amortize the outstanding principal
balance.]
(e) No Balloon Payments.--No high-cost mortgage may contain a
scheduled payment that is more than twice as large as the
average of earlier scheduled payments. This subsection shall
not apply when the payment schedule is adjusted to the seasonal
or irregular income of the consumer.

* * * * * * *

(j) Recommended Default.--No creditor shall recommend or
encourage default on an existing loan or other debt prior to
and in connection with the closing or planned closing of a
high-cost mortgage that refinances all or any portion of such
existing loan or debt.
(k) Late Fees.--
(1) In general.--No creditor may impose a late
payment charge or fee in connection with a high-cost
mortgage--
(A) in an amount in excess of 4 percent of
the amount of the payment past due;
(B) unless the loan documents specifically
authorize the charge or fee;
(C) before the end of the 15-day period
beginning on the date the payment is due, or in
the case of a loan on which interest on each
installment is paid in advance, before the end
of the 30-day period beginning on the date the
payment is due; or
(D) more than once with respect to a single
late payment.
(2) Coordination with subsequent late fees.--If a
payment is otherwise a full payment for the applicable
period and is paid on its due date or within an
applicable grace period, and the only delinquency or
insufficiency of payment is attributable to any late
fee or delinquency charge assessed on any earlier
payment, no late fee or delinquency charge may be
imposed on such payment.
(3) Failure to make installment payment.--If, in the
case of a loan agreement the terms of which provide
that any payment shall first be applied to any past due
principal balance, the consumer fails to make an
installment payment and the consumer subsequently
resumes making installment payments but has not paid
all past due installments, the creditor may impose a
separate late payment charge or fee for any principal
due (without deduction due to late fees or related
fees) until the default is cured.
(l) Acceleration of Debt.--No high-cost mortgage may contain
a provision which permits the creditor, in its sole discretion,
to accelerate the indebtedness. This provision shall not apply
when repayment of the loan has been accelerated by default,
pursuant to a due-on-sale provision, or pursuant to a material
violation of some other provision of the loan documents
unrelated to the payment schedule.
(m) Restriction on Financing Points and Fees.--No creditor
may directly or indirectly finance, in connection with any
high-cost mortgage, any of the following:
(1) Any prepayment fee or penalty payable by the
consumer in a refinancing transaction if the creditor
or an affiliate of the creditor is the noteholder of
the note being refinanced.
(2) Any points or fees.
[(j)] (n) Consequence of Failure To Comply.--Any mortgage
that contains a provision prohibited by this section shall be
deemed a failure to deliver the material disclosures required
under this title, for the purpose of section 125.
[(k)] (o) Definition.--For purposes of this section, the term
``affiliate'' has the same meaning as in section 2(k) of the
Bank Holding Company Act of 1956.
[(l)] (p) Discretionary Regulatory Authority of Board.--
(1) * * *
(2) Prohibitions.--The Board, by regulation or order,
shall prohibit acts or practices in connection with--
(A) mortgage loans referred to in section
103(aa) that the Board finds to be unfair,
deceptive, or designed to evade the provisions
of this section; and
(B) refinancing of mortgage loans referred to
in section 103(aa) that the Board finds to be
associated with abusive lending practices, or
that are otherwise not in the interest of the
borrower.
(q) Prohibitions on Evasions, Structuring of Transactions,
and Reciprocal Arrangements.--A creditor may not take any
action in connection with a high-cost mortgage--
(1) to structure a loan transaction as an open-end
credit plan or another form of loan for the purpose and
with the intent of evading the provisions of this
title; or
(2) to divide any loan transaction into separate
parts for the purpose and with the intent of evading
provisions of this title.
(r) Modification and Deferral Fees Prohibited.--A creditor
may not charge a consumer any fee to modify, renew, extend, or
amend a high-cost mortgage, or to defer any payment due under
the terms of such mortgage, unless the modification, renewal,
extension or amendment results in a lower annual percentage
rate on the mortgage for the consumer and then only if the
amount of the fee is comparable to fees imposed for similar
transactions in connection with consumer credit transactions
that are secured by a consumer's principal dwelling and are not
high-cost mortgages.
(s) Payoff Statement.--
(1) Fees.--
(A) In general.--Except as provided in
subparagraph (B), no creditor or servicer may
charge a fee for informing or transmitting to
any person the balance due to pay off the
outstanding balance on a high-cost mortgage.
(B) Transaction fee.--When payoff information
referred to in subparagraph (A) is provided by
facsimile transmission or by a courier service,
a creditor or servicer may charge a processing
fee to cover the cost of such transmission or
service in an amount not to exceed an amount
that is comparable to fees imposed for similar
services provided in connection with consumer
credit transactions that are secured by the
consumer's principal dwelling and are not high-
cost mortgages.
(C) Fee disclosure.--Prior to charging a
transaction fee as provided in subparagraph
(B), a creditor or servicer shall disclose that
payoff balances are available for free pursuant
to subparagraph (A).
(D) Multiple requests.--If a creditor or
servicer has provided payoff information
referred to in subparagraph (A) without charge,
other than the transaction fee allowed by
subparagraph (B), on 4 occasions during a
calendar year, the creditor or servicer may
thereafter charge a reasonable fee for
providing such information during the remainder
of the calendar year.
(2) Prompt delivery.--Payoff balances shall be
provided within 5 business days after receiving a
request by a consumer or a person authorized by the
consumer to obtain such information.
(3) Services considered assignee.--For the purposes
of this subsection, a servicer shall be considered an
assignee under the Truth in Lending Act.
(t) Pre-Loan Counseling.--
(1) In general.--A creditor may not extend credit to
a consumer under a high-cost mortgage without first
receiving certification from a counselor that is
approved by the Secretary of Housing and Urban
Development, or at the discretion of the Secretary, a
State housing finance authority, that the consumer has
received counseling on the advisability of the
mortgage. Such counselor shall not be employed by the
creditor or an affiliate of the creditor or be
affiliated with the creditor.
(2) Disclosures required prior to counseling.--No
counselor may certify that a consumer has received
counseling on the advisability of the high-cost
mortgage unless the counselor can verify that the
consumer has received each statement required (in
connection with such loan) by this section or the Real
Estate Settlement Procedures Act of 1974 with respect
to the transaction.
(3) Regulations.--The Board may prescribe such
regulations as the Board determines to be appropriate
to carry out the requirements of paragraph (1).
(u) Flipping.--
(1) In general.--No creditor may knowingly or
intentionally engage in the unfair act or practice of
flipping in connection with a high-cost mortgage.
(2) Flipping defined.--For purposes of this
subsection, the term ``flipping'' means the making of a
loan or extension of credit in the form a high-cost
mortgage to a consumer which refinances an existing
mortgage when the new loan or extension of credit does
not have reasonable, net tangible benefit (as
determined in accordance with regulations prescribed
under section 129C(b)) to the consumer considering all
of the circumstances, including the terms of both the
new and the refinanced loans or credit, the cost of the
new loan or credit, and the consumer's circumstances.
(v) Corrections and Unintentional Violations.--A creditor or
assignee in a high cost loan who, when acting in good faith,
fails to comply with any requirement under this section will
not be deemed to have violated such requirement if the creditor
or assignee establishes that either--
(1) within 30 days of the loan closing and prior to
the institution of any action, the consumer is notified
of or discovers the violation, appropriate restitution
is made, and whatever adjustments are necessary are
made to the loan to either, at the choice of the
consumer--
(A) make the loan satisfy the requirements of
this chapter; or
(B) in the case of a high-cost mortgage,
change the terms of the loan in a manner
beneficial to the consumer so that the loan
will no longer be a high-cost mortgage; or
(2) within 60 days of the creditor's discovery or
receipt of notification of an unintentional violation
or bona fide error as described in subsection (c) and
prior to the institution of any action, the consumer is
notified of the compliance failure, appropriate
restitution is made, and whatever adjustments are
necessary are made to the loan to either, at the choice
of the consumer--
(A) make the loan satisfy the requirements of
this chapter; or
(B) in the case of a high-cost mortgage,
change the terms of the loan in a manner
beneficial so that the loan will no longer be a
high-cost mortgage.
(w) Property Appraisal Requirements.--
(1) In general.--A creditor may not extend credit in
the form of a subprime mortgage to any consumer without
first obtaining a written appraisal of the property to
be mortgaged prepared in accordance with the
requirements of this subsection.
(2) Appraisal requirements.--
(A) Physical property visit.--An appraisal of
property to be secured by a subprime mortgage
does not meet the requirement of this
subsection unless it is performed by a
qualified appraiser who conducts a physical
property visit of the interior of the mortgaged
property.
(B) Second appraisal under certain
circumstances.--
(i) In general.--If the purpose of a
subprime mortgage is to finance the
purchase or acquisition of the
mortgaged property from a person within
180 days of the purchase or acquisition
of such property by that person at a
price that was lower than the current
sale price of the property, the
creditor shall obtain a second
appraisal from a different qualified
appraiser. The second appraisal shall
include an analysis of the difference
in sale prices, changes in market
conditions, and any improvements made
to the property between the date of the
previous sale and the current sale.
(ii) No cost to applicant.--The cost
of any second appraisal required under
clause (i) may not be charged to the
applicant.
(C) Qualified appraiser defined.--For
purposes of this subsection, the term
``qualified appraiser'' means a person who--
(i) is, at a minimum, certified or
licensed by the State in which the
property to be appraised is located;
and
(ii) performs each appraisal in
conformity with the Uniform Standards
of Professional Appraisal Practice and
title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act
of 1989, and the regulations prescribed
under such title, as in effect on the
date of the appraisal.
(3) Free copy of appraisal.--A creditor shall provide
1 copy of each appraisal conducted in accordance with
this subsection in connection with a subprime mortgage
to the applicant without charge, and at least 3 days
prior to the transaction closing date.
(4) Consumer notification.--At the time of the
initial mortgage application, the applicant shall be
provided with a statement by the creditor that any
appraisal prepared for the mortgage is for the sole use
of the creditor, and that the applicant may choose to
have a separate appraisal conducted at their own
expense.
(5) Violations.--In addition to any other liability
to any person under this title, a creditor found to
have willfully failed to obtain an appraisal as
required in this subsection shall be liable to the
applicant or borrower for the sum of $2,000.
(6) Subprime mortgage defined.--For purposes of this
subsection, the term ``subprime mortgage'' means a
residential mortgage loan with an annual percentage
rate that exceeds the average prime offer rate for a
comparable transaction, as of the date the interest
rate is set--
(A) by 1.5 or more percentage points for a
first lien residential mortgage loan; and
(B) by 3.5 or more percentage points for a
subordinate lien residential mortgage loan.

* * * * * * *

Sec. 129B. Residential mortgage loan origination

(a) Finding and Purpose.--
(1) Finding.--The Congress finds that economic
stabilization would be enhanced by the protection,
limitation, and regulation of the terms of residential
mortgage credit and the practices related to such
credit, while ensuring that responsible, affordable
mortgage credit remains available to consumers.
(2) Purpose.--It is the purpose of this section and
section 129C to assure that consumers are offered and
receive residential mortgage loans on terms that
reasonably reflect their ability to repay the loans and
that are understandable and not unfair, deceptive or
abusive.
(b) Duty of Care.--
(1) Standard.--Subject to regulations prescribed
under this subsection, each mortgage originator shall,
in addition to the duties imposed by otherwise
applicable provisions of State or Federal law--
(A) be qualified and, when required,
registered and licensed as a mortgage
originator in accordance with applicable State
or Federal law, including the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008;
(B) with respect to each consumer seeking or
inquiring about a residential mortgage loan,
diligently work to present the consumer with a
range of residential mortgage loan products for
which the consumer likely qualifies and which
are appropriate to the consumer's existing
circumstances, based on information known by,
or obtained in good faith by, the originator;
(C) make full, complete, and timely
disclosure to each such consumer of--
(i) the comparative costs and
benefits of each residential mortgage
loan product offered, discussed, or
referred to by the originator;
(ii) the nature of the originator's
relationship to the consumer (including
the cost of the services to be provided
by the originator and a statement that
the mortgage originator is or is not
acting as an agent for the consumer, as
the case may be); and
(iii) any relevant conflicts of
interest between the originator and the
consumer;
(D) certify to the creditor, with respect to
any transaction involving a residential
mortgage loan, that the mortgage originator has
fulfilled all requirements applicable to the
originator under this section with respect to
the transaction; and
(E) include on all loan documents any unique
identifier of the mortgage originator provided
by the Nationwide Mortgage Licensing System and
Registry.
(2) Clarification of extent of duty to present range
of products and appropriate products.--
(A) No duty to offer products for which
originator is not authorized to take an
application.--Paragraph (1)(B) shall not be
construed as requiring--
(i) a mortgage originator to present
to any consumer any specific
residential mortgage loan product that
is offered by a creditor which does not
accept consumer referrals from, or
consumer applications submitted by or
through, such originator; or
(ii) a creditor to offer products
that the creditor does not offer to the
general public.
(B) Appropriate loan product.--For purposes
of paragraph (1)(B), a residential mortgage
loan shall be presumed to be appropriate for a
consumer if--
(i) the mortgage originator
determines in good faith, based on then
existing information and without
undergoing a full underwriting process,
that the consumer has a reasonable
ability to repay and, in the case of a
refinancing of an existing residential
mortgage loan, receives a net tangible
benefit, as determined in accordance
with regulations prescribed under
subsections (a) and (b) of section
129C; and
(ii) the loan does not have predatory
characteristics or effects (such as
equity stripping and excessive fees and
abusive terms) as determined in
accordance with regulations prescribed
under paragraph (4).
(3) Rules of construction.--No provision of this
subsection shall be construed as--
(A) creating an agency or fiduciary
relationship between a mortgage originator and
a consumer if the originator does not hold
himself or herself out as such an agent or
fiduciary; or
(B) restricting a mortgage originator from
holding himself or herself out as an agent or
fiduciary of a consumer subject to any
additional duty, requirement, or limitation
applicable to agents or fiduciaries under any
Federal or State law.
(4) Regulations.--
(A) In general.--The Federal banking
agencies, in consultation with the Secretary,
the Chairman of the State Liaison Committee to
the Financial Institutions Examination Council,
and the Commission, shall jointly prescribe
regulations to--
(i) further define the duty
established under paragraph (1);
(ii) implement the requirements of
this subsection;
(iii) establish the time period
within which any disclosure required
under paragraph (1) shall be made to
the consumer; and
(iv) establish such other
requirements for any mortgage
originator as such regulatory agencies
may determine to be appropriate to meet
the purposes of this subsection.
(B) Complementary and nonduplicative
disclosures.--The agencies referred to in
subparagraph (A) shall endeavor to make the
required disclosures to consumers under this
subsection complementary and nonduplicative
with other disclosures for mortgage consumers
to the extent such efforts--
(i) are practicable; and
(ii) do not reduce the value of any
such disclosure to recipients of such
disclosures.
(5) Compliance procedures required.--The Federal
banking agencies shall prescribe regulations requiring
depository institutions to establish and maintain
procedures reasonably designed to assure and monitor
the compliance of such depository institutions, the
subsidiaries of such institutions, and the employees of
such institutions or subsidiaries with the requirements
of this section and the registration procedures
established under section 1507 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.
(c) Prohibition on Steering Incentives.--
(1) In general.--For any mortgage loan, the total
amount of direct and indirect compensation from all
sources permitted to a mortgage originator may not vary
based on the terms of the loan (other than the amount
of the principal).
(2) Regulations.--The Federal banking agencies, in
consultation with the Secretary and the Commission,
shall jointly prescribe regulations to prohibit--
(A) mortgage originators from steering any
consumer to a residential mortgage loan that--
(i) the consumer lacks a reasonable
ability to repay (in accordance with
regulations prescribed under section
129C(a));
(ii) in the case of a refinancing of
a residential mortgage loan, does not
provide the consumer with a net
tangible benefit (in accordance with
regulations prescribed under section
129C(b)); or
(iii) has predatory characteristics
or effects (such as equity stripping,
excessive fees, or abusive terms);
(B) mortgage originators from steering any
consumer from a residential mortgage loan for
which the consumer is qualified that is a
qualified mortgage (as defined in section
129C(c)(3)) to a residential mortgage loan that
is not a qualified mortgage;
(C) abusive or unfair lending practices that
promote disparities among consumers of equal
credit worthiness but of different race,
ethnicity, gender, or age; and
(D) mortgage originators from assessing
excessive points and fees (as such term is
described under section 103(aa)(4) of the Truth
in Lending Act (15 U.S.C. 1602(aa)(4))) to a
consumer for the origination of a residential
mortgage loan based on such consumer's decision
to finance all or part of the payment through
the rate for such points and fees.
(3) Rules of construction.--No provision of this
subsection shall be construed as--
(A) permitting yield spread premiums or other
similar incentive compensation;
(B) affecting the mechanism for providing the
total amount of direct and indirect
compensation permitted to a mortgage
originator;
(C) limiting or affecting the amount of
compensation received by a creditor upon the
sale of a consummated loan to a subsequent
purchaser;
(D) restricting a consumer's ability to
finance, including through rate or principal,
any origination fees or costs permitted under
this subsection, or the mortgage originator's
ability to receive such fees or costs
(including compensation) from any person, so
long as such fees or costs were fully and
clearly disclosed to the consumer earlier in
the application process as required by
129B(b)(1)(C)(i) and do not vary based on the
terms of the loan (other than the amount of the
principal) or the consumer's decision about
whether to finance such fees or costs; or
(E) prohibiting incentive payments to a
mortgage originator based on the number of
residential mortgage loans originated within a
specified period of time.
(d) Liability for Violations.--
(1) In general.--For purposes of providing a cause of
action for any failure by a mortgage originator to
comply with any requirement imposed under this section
and any regulation prescribed under this section,
subsections (a) and (b) of section 130 shall be applied
with respect to any such failure by substituting
``mortgage originator'' for ``creditor'' each place
such term appears in each such subsection.
(2) Maximum.--The maximum amount of any liability of
a mortgage originator under paragraph (1) to a consumer
for any violation of this section shall not exceed the
greater of actual damages or an amount equal to 3 times
the total amount of direct and indirect compensation or
gain accruing to the mortgage originator in connection
with the residential mortgage loan involved in the
violation, plus the costs to the consumer of the
action, including a reasonable attorney's fee.
(e) Discretionary Regulatory Authority.--
(1) In general.--The Federal banking agencies shall,
by regulations issued jointly, prohibit or condition
terms, acts or practices relating to residential
mortgage loans that the agencies find to be abusive,
unfair, deceptive, predatory, inconsistent with
reasonable underwriting standards, necessary or proper
to effectuate the purposes of this section and section
129C, to prevent circumvention or evasion thereof, or
to facilitate compliance with such sections, or are not
in the interest of the borrower.
(2) Application.--The regulations prescribed under
paragraph (1) shall be applicable to all residential
mortgage loans and shall be applied in the same manner
as regulations prescribed under section 105.
(f) Section 129B and any regulations promulgated thereunder
do not apply to an extension of credit relating to a plan
described in section 101(53D) of title 11, United States Code.

Sec. 129C. Minimum standards for residential mortgage loans

(a) Ability To Repay.--
(1) In general.--In accordance with regulations
prescribed jointly by the Federal banking agencies, in
consultation with the Commission, no creditor may make
a residential mortgage loan unless the creditor makes a
reasonable and good faith determination based on
verified and documented information that, at the time
the loan is consummated, the consumer has a reasonable
ability to repay the loan, according to its terms, and
all applicable taxes, insurance, and assessments.
(2) Multiple loans.--If the creditor knows, or has
reason to know, that 1 or more residential mortgage
loans secured by the same dwelling will be made to the
same consumer, the creditor shall make a reasonable and
good faith determination, based on verified and
documented information, that the consumer has a
reasonable ability to repay the combined payments of
all loans on the same dwelling according to the terms
of those loans and all applicable taxes, insurance, and
assessments.
(3) Basis for determination.--A determination under
this subsection of a consumer's ability to repay a
residential mortgage loan shall include consideration
of the consumer's credit history, current income,
expected income the consumer is reasonably assured of
receiving, current obligations, debt-to-income ratio,
employment status, and other financial resources other
than the consumer's equity in the dwelling or real
property that secures repayment of the loan.
(4) Nonstandard loans.--
(A) Variable rate loans that defer repayment
of any principal or interest.--For purposes of
determining, under this subsection, a
consumer's ability to repay a variable rate
residential mortgage loan that allows or
requires the consumer to defer the repayment of
any principal or interest, the creditor shall
use a fully amortizing repayment schedule.
(B) Interest-only loans.--For purposes of
determining, under this subsection, a
consumer's ability to repay a residential
mortgage loan that permits or requires the
payment of interest only, the creditor shall
use the payment amount required to amortize the
loan by its final maturity.
(C) Calculation for negative amortization.--
In making any determination under this
subsection, a creditor shall also take into
consideration any balance increase that may
accrue from any negative amortization
provision.
(D) Calculation process.--For purposes of
making any determination under this subsection,
a creditor shall calculate the monthly payment
amount for principal and interest on any
residential mortgage loan by assuming--
(i) the loan proceeds are fully
disbursed on the date of the
consummation of the loan;
(ii) the loan is to be repaid in
substantially equal monthly amortizing
payments for principal and interest
over the entire term of the loan with
no balloon payment, unless the loan
contract requires more rapid repayment
(including balloon payment), in which
case the contract's repayment schedule
shall be used in this calculation; and
(iii) the interest rate over the
entire term of the loan is a fixed rate
equal to the fully indexed rate at the
time of the loan closing, without
considering the introductory rate.
(5) Fully-indexed rate defined.--For purposes of this
subsection, the term ``fully indexed rate'' means the
index rate prevailing on a residential mortgage loan at
the time the loan is made plus the margin that will
apply after the expiration of any introductory interest
rates.
(b) Net Tangible Benefit for Refinancing of Residential
Mortgage Loans.--
(1) In general.--In accordance with regulations
prescribed under paragraph (3), no creditor may extend
credit in connection with any residential mortgage loan
that involves a refinancing of a prior existing
residential mortgage loan unless the creditor
reasonably and in good faith determines, at the time
the loan is consummated and on the basis of information
known by or obtained in good faith by the creditor,
that the refinanced loan will provide a net tangible
benefit to the consumer.
(2) Certain loans providing no net tangible
benefit.--A residential mortgage loan that involves a
refinancing of a prior existing residential mortgage
loan shall not be considered to provide a net tangible
benefit to the consumer if the costs of the refinanced
loan, including points, fees and other charges, exceed
the amount of any newly advanced principal without any
corresponding changes in the terms of the refinanced
loan that are advantageous to the consumer.
(3) Net tangible benefit.--The Federal banking
agencies shall jointly prescribe regulations defining
the term ``net tangible benefit'' for purposes of this
subsection.
(c) Presumption of Ability To Repay and Net Tangible
Benefit.--
(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee or
securitizer of such loan, may presume that the loan has
met the requirements of subsections (a) and (b), if the
loan is a qualified mortgage.
(2) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Qualified mortgage.--The term ``qualified
mortgage'' means any residential mortgage
loan--
(i) that does not allow a consumer to
defer repayment of principal or
interest, or is not otherwise deemed a
``non-traditional mortgage'' under
guidance, advisories, or regulations
prescribed by the Federal Banking
Agencies;
(ii) that does not provide for a
repayment schedule that results in
negative amortization at any time;
(iii) for which the terms are fully
amortizing and which does not result in
a balloon payment, where a ``balloon
payment'' is a scheduled payment that
is more than twice as large as the
average of earlier scheduled payments;
(iv) which has an annual percentage
rate that does not exceed the average
prime offer rate for a comparable
transaction, as of the date the
interest rate is set--
(I) by 1.5 or more percentage
points, in the case of a first
lien residential mortgage loan
having a original principal
obligation amount that does not
exceed the amount of the
maximum limitation on the
original principal obligation
of mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the sixth sentence of section
305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12
U.S.C. 1454(a)(2)); and
(II) by 2.5 or more
percentage points, in the case
of a first lien residential
mortgage loan having a original
principal obligation amount
that exceeds the amount of the
maximum limitation on the
original principal obligation
of mortgage in effect for a
residence of the applicable
size, as of the date of such
interest rate set, pursuant to
the sixth sentence of section
305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12
U.S.C. 1454(a)(2));
(v) for which the income and
financial resources relied upon to
qualify the obligors on the loan are
verified and documented;
(vi) in the case of a fixed rate
loan, for which the underwriting
process is based on a payment schedule
that fully amortizes the loan over the
loan term and takes into account all
applicable taxes, insurance, and
assessments;
(vii) in the case of an adjustable
rate loan, for which the underwriting
is based on the maximum rate permitted
under the loan during the first seven
years, and a payment schedule that
fully amortizes the loan over the loan
term and takes into account all
applicable taxes, insurance, and
assessments;
(viii) that does not cause the
consumer's total monthly debts,
including amounts under the loan, to
exceed a percentage established by
regulation of the consumer's monthly
gross income or such other maximum
percentage of such income as may be
prescribed by regulation under
paragraph (4), and such rules shall
also take into consideration the
consumer's income available to pay
regular expenses after payment of all
installment and revolving debt;
(ix) for which the total points and
fees payable in connection with the
loan do not exceed 2 percent of the
total loan amount, where ``points and
fees'' means points and fees as defined
by Section 103(aa)(4) of the Truth in
Lending Act (15 U.S.C. 1602(aa)(4));
and
(x) for which the term of the loan
does not exceed 30 years, except as
such term may be extended under
paragraph (4).
(B) Average prime offer rate.--The term
``average prime offer rate'' means an annual
percentage rate that is derived from average
interest rates, points, and other loan pricing
terms currently offered to consumers by a
representative sample of creditors for mortgage
transactions that have low risk pricing
characteristics.
(3) Publication of average prime offer rate.--The
Board--
(A) shall publish, and update at least
weekly, average prime offer rates; and
(B) may publish multiple rates based on
varying types of mortgage transactions.
(4) Regulations.--
(A) In general.--The Federal banking agencies
shall jointly prescribe regulations to carry
out the purposes of this subsection.
(B) Revision of safe harbor criteria.--
(i) In general.--The Federal banking
agencies may jointly prescribe
regulations that revise, add to, or
subtract from the criteria that define
a qualified mortgage upon a finding
that such regulations are necessary and
appropriate to effectuate the purposes
of this section and section 129B, to
prevent circumvention or evasion
thereof, or to facilitate compliance
with such sections.
(ii) Loan definition.--The following
agencies shall prescribe rules defining
the types of loans they insure,
guarantee or administer, as the case
may be, that are Qualified Mortgages
for purposes of subsection (c)(1)(A)
upon a finding that such rules are
consistent with the purposes of this
section and section 129B, to prevent
circumvention or evasion thereof, or to
facilitate compliance with such
sections--
(I) The Department of Housing
and Urban Development, with
regard to mortgages insured
under title II of the National
Housing Act (12 U.S.C. 1707 et
seq.);
(II) The Secretary of
Veterans Affairs, with regard
to a loan made or guaranteed by
the Secretary of Veterans
Affairs;
(III) The Secretary of
Agriculture, with regard loans
guaranteed by the Secretary of
Agriculture pursuant to 42
U.S.C. 1472(h);
(IV) The Federal Housing
Finance Agency, with regard to
loans meeting the conforming
loan standards of the Federal
National Mortgage Corporation
or the Federal Home Loan
Mortgage Corporation; and
(V) The Rural Housing
Service, with regard to loans
insured by the Rural Housing
Service.
(d) Liability for Violations.--
(1) In general.--
(A) Rescission.--In addition to any other
liability under this title for a violation by a
creditor of subsection (a) or (b) (for example
under section 130) and subject to the statute
of limitations in paragraph (9), a civil action
may be maintained against a creditor for a
violation of subsection (a) or (b) with respect
to a residential mortgage loan for the
rescission of the loan, and such additional
costs as the obligor may have incurred as a
result of the violation and in connection with
obtaining a rescission of the loan, including a
reasonable attorney's fee.
(B) Cure.--A creditor shall not be liable for
rescission under subparagraph (A) with respect
to a residential mortgage loan if, no later
than 90 days after the receipt of notification
from the consumer that the loan violates
subsection (a) or (b), the creditor provides a
cure.
(2) Limited assignee and securitizer liability.--
Notwithstanding sections 125(e) and 131 and except as
provided in paragraph (3), a civil action which may be
maintained against a creditor with respect to a
residential mortgage loan for a violation of subsection
(a) or (b) may be maintained against any assignee or
securitizer of such residential mortgage loan, who has
acted in good faith, for the following liabilities
only:
(A) Rescission of the loan.
(B) Such additional costs as the obligor may
have incurred as a result of the violation and
in connection with obtaining a rescission of
the loan, including a reasonable attorney's
fee.
(3) Assignee and securitizer exemption.--No assignee
or securitizer of a residential mortgage loan that has
exercised reasonable due diligence in complying with
the requirements of subsections (a) and (b) shall be
liable under paragraph (2) with respect to such loan
if, no later than 90 days after the receipt of
notification from the consumer that the loan violates
subsection (a) or (b), the assignee or securitizer
provides a cure so that the loan satisfies the
requirements of subsections (a) and (b).
(4) Absent parties.--
(A) Absent creditor.--Notwithstanding the
exemption provided in paragraph (3), if the
creditor with respect to a residential mortgage
loan made in violation of subsection (a) or (b)
has ceased to exist as a matter of law or has
filed for bankruptcy protection under title 11,
United States Code, or has had a receiver,
conservator, or liquidating agent appointed, a
consumer may maintain a civil action against an
assignee to cure the residential mortgage loan,
plus the costs and reasonable attorney's fees
incurred in obtaining such remedy.
(B) Absent creditor and assignee.--
Notwithstanding the exemption provided in
paragraph (3), if the creditor with respect to
a residential mortgage loan made in violation
of subsection (a) or (b) and each assignee of
such loan have ceased to exist as a matter of
law or have filed for bankruptcy protection
under title 11, United States Code, or have had
receivers, conservators, or liquidating agents
appointed, the consumer may maintain the civil
action referred to in subparagraph (A) against
the securitizer.
(5) Cure defined.--For purposes of this subsection,
the term ``cure'' means, with respect to a residential
mortgage loan that violates subsection (a) or (b), the
modification or refinancing, at no cost to the
consumer, of the loan to provide terms that satisfy the
requirements of subsections (a) and (b) and the payment
of such additional costs as the obligor may have
incurred in connection with obtaining a cure of the
loan, including a reasonable attorney's fee.
(6) Disagreement over cure.--If any creditor,
assignee, or securitizer and a consumer fail to reach
agreement on a cure with respect to a residential
mortgage loan that violates subsection (a) or (b), or
the consumer fails to accept a cure proffered by a
creditor, assignee, or securitizer--
(A) the creditor, assignee, or securitizer
may provide the cure; and
(B) the consumer may challenge the adequacy
of the cure during the 6-month period beginning
when the cure is provided.
If the consumer's challenge, under this paragraph, of a
cure is successful, the creditor, assignee, or
securitizer shall be liable to the consumer for
rescission of the loan and such additional costs under
paragraph (2).
(7) Inability to provide or obtain rescission.--If a
creditor, assignee, or securitizer cannot provide, or a
consumer cannot obtain, rescission under paragraph (1)
or (2), the liability of such creditor, assignee, or
securitizer shall be met by providing the financial
equivalent of a rescission, together with such
additional costs as the obligor may have incurred as a
result of the violation and in connection with
obtaining a rescission of the loan, including a
reasonable attorney's fee.
(8) No class actions against assignee or securitizer
under paragraph (2).--Only individual actions may be
brought against an assignee or securitizer of a
residential mortgage loan for a violation of subsection
(a) or (b).
(9) Statute of limitations.--The liability of a
creditor, assignee, or securitizer under this
subsection shall apply in any original action against a
creditor under paragraph (1) or an assignee or
securitizer under paragraph (2) which is brought
before--
(A) in the case of any residential mortgage
loan other than a loan to which subparagraph
(B) applies, the end of the 3-year period
beginning on the date the loan is consummated;
or
(B) in the case of a residential mortgage
loan that provides for a fixed interest rate
for an introductory period and then resets or
adjusts to a variable rate or that provides for
a nonamortizing payment schedule and then
converts to an amortizing payment schedule, the
earlier of--
(i) the end of the 1-year period
beginning on the date of such reset,
adjustment, or conversion; or
(ii) the end of the 6-year period
beginning on the date the loan is
consummated.
(10) Pools and investors in pools excluded.--In the
case of residential mortgage loans acquired or
aggregated for the purpose of including such loans in a
pool of assets held for the purpose of issuing or
selling instruments representing interests in such
pools including through a securitization vehicle, the
terms ``assignee'' and ``securitizer'', as used in this
section, do not include the securitization vehicle, the
pools of such loans or any original or subsequent
purchaser of any interest in the securitization vehicle
or any instrument representing a direct or indirect
interest in such pool.
(e) Obligation of Securitizers, and Preservation of Borrower
Remedies.--
(1) Obligation to retain access.--Any securitizer of
a residential mortgage loan sold or to be sold as part
of a securitization vehicle shall, in any document or
contract providing for the transfer, conveyance, or the
establishment of such securitization vehicle, reserve
the right and preserve the ability--
(A) to identify and obtain access to any such
loan;
(B) to acquire any such loan in the event of
a violation of subsections (a) or (b) of this
section; and
(C) to provide to the consumer any and all
remedies provided for under this title for any
violation of this title.
(2) Additional damages.--Any creditor, assignee, or
securitizer of a residential mortgage loan that is
subject to a remedy under subsection (d) and has failed
to comply with paragraph (1) shall be subject to
additional exemplary or punitive damages not to exceed
the original principal balance of such loan.
(3) Contact information notice.--The servicer with
respect to a residential mortgage loan shall provide a
written notice to a consumer identifying the name and
contact information of the creditor or any assignee or
securitizer who should be contacted by the consumer for
any reason concerning the consumer's rights with
respect to the loan. Such notice shall be provided--
(A) upon request of the consumer;
(B) whenever there is a change in ownership
of a residential mortgage loan; or
(C) on a regular basis, not less than
annually.
(f) Rules to Establish Process.--The Board shall promulgate
rules to govern the rescission process established for
violations of subsections (a) and (b) of this section. Such
rules shall provide that notice given to a servicer or holder
is sufficient notice regardless of the identity of the party or
the parties liable under this title.
(g) Defense to Foreclosure.--Notwithstanding any other
provision of law--
(1) when the holder of a residential mortgage loan or
anyone acting for such holder initiates a judicial or
nonjudicial foreclosure--
(A) a consumer who has the right to rescind
under this section with respect to such loan
against the creditor or any assignee or
securitizer may assert such right as a defense
to foreclosure or counterclaim to such
foreclosure against the holder, or
(B) if the foreclosure proceeding begins
after the end of the period during which a
consumer may bring an action for rescission
under subsection (d) and the consumer would
have had a valid basis for such an action if it
had been brought before the end of such period,
the consumer may seek actual damages incurred
by reason of the violation which gave rise to
the right of rescission, together with costs of
the action, including a reasonable attorney's
fee against the creditor or any assignee or
securitizer; and
(2) such holder or anyone acting for such holder or
any other applicable third party may sell, transfer,
convey, or assign a residential mortgage loan to a
creditor, any assignee, or any securitizer, or their
designees, to effect a rescission or cure.
(h) Prohibition on Certain Prepayment Penalties.--
(1) Prohibited on certain loans.--A residential
mortgage loan that is not a ``qualified mortgage'' may
not contain terms under which a consumer must pay a
prepayment penalty for paying all or part of the
principal after the loan is consummated. For purposes
of this subsection, a ``qualified mortgage'' may not
include a residential mortgage loan that has an
adjustable rate.
(2) Phased-out penalties on qualified mortgages.--A
qualified mortgage (as defined in subsection (c)) may
not contain terms under which a consumer must pay a
prepayment penalty for paying all or part of the
principal after the loan is consummated in excess of
the following limitations:
(A) During the 1-year period beginning on the
date the loan is consummated, the prepayment
penalty shall not exceed an amount equal to 3
percent of the outstanding balance on the loan.
(B) During the 1-year period beginning after
the period described in subparagraph (A), the
prepayment penalty shall not exceed an amount
equal to 2 percent of the outstanding balance
on the loan.
(C) During the 1-year period beginning after
the 1-year period described in subparagraph
(B), the prepayment penalty shall not exceed an
amount equal to 1 percent of the outstanding
balance on the loan.
(D) After the end of the 3-year period
beginning on the date the loan is consummated,
no prepayment penalty may be imposed on a
qualified mortgage.
(3) Prohibited after initial period on loans with a
reset.--A qualified mortgage with a fixed interest rate
for an introductory period that adjusts or resets after
such period may not contain terms under which a
consumer must pay a prepayment penalty for paying all
or part of the principal after the beginning of the 3-
month period ending on the date of the adjustment or
reset.
(4) Option for no prepayment penalty required.--A
creditor may not offer a consumer a residential
mortgage loan product that has a prepayment penalty for
paying all or part of the principal after the loan is
consummated as a term of the loan without offering the
consumer a residential mortgage loan product that does
not have a prepayment penalty as a term of the loan.
(i) Single Premium Credit Insurance Prohibited.--No creditor
may finance, directly or indirectly, in connection with any
residential mortgage loan or with any extension of credit under
an open end consumer credit plan secured by the principal
dwelling of the consumer (other than a reverse mortgage), any
credit life, credit disability, credit unemployment or credit
property insurance, or any other accident, loss-of-income, life
or health insurance, or any payments directly or indirectly for
any debt cancellation or suspension agreement or contract,
except that--
(1) insurance premiums or debt cancellation or
suspension fees calculated and paid in full on a
monthly basis shall not be considered financed by the
creditor; and
(2) this subsection shall not apply to credit
unemployment insurance for which the unemployment
insurance premiums are reasonable, the creditor
receives no direct or indirect compensation in
connection with the unemployment insurance premiums,
and the unemployment insurance premiums are paid
pursuant to another insurance contract and not paid to
an affiliate of the creditor.
(j) Arbitration.--
(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer,
other than a reverse mortgage, may include terms which
require arbitration or any other nonjudicial procedure
as the method for resolving any controversy or settling
any claims arising out of the transaction.
(2) Post-controversy agreements.--Subject to
paragraph (3), paragraph (1) shall not be construed as
limiting the right of the consumer and the creditor,
any assignee, or any securitizer to agree to
arbitration or any other nonjudicial procedure as the
method for resolving any controversy at any time after
a dispute or claim under the transaction arises.
(3) No waiver of statutory cause of action.--No
provision of any residential mortgage loan or of any
extension of credit under an open end consumer credit
plan secured by the principal dwelling of the consumer
(other than a reverse mortgage), and no other agreement
between the consumer and the creditor relating to the
residential mortgage loan or extension of credit
referred to in paragraph (1), shall be applied or
interpreted so as to bar a consumer from bringing an
action in an appropriate district court of the United
States, or any other court of competent jurisdiction,
pursuant to section 130 or any other provision of law,
for damages or other relief in connection with any
alleged violation of this section, any other provision
of this title, or any other Federal law.
(k) Mortgages With Negative Amortization.--No creditor may
extend credit to a borrower in connection with a consumer
credit transaction under an open or closed end consumer credit
plan secured by a dwelling or residential real property that
includes a dwelling, other than a reverse mortgage, that
provides or permits a payment plan that may, at any time over
the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
(1) the creditor provides the consumer with a
statement that--
(A) the pending transaction will or may, as
the case may be, result in negative
amortization;
(B) describes negative amortization in such
manner as the Federal banking agencies shall
prescribe;
(C) negative amortization increases the
outstanding principal balance of the account;
and
(D) negative amortization reduces the
consumer's equity in the dwelling or real
property; and
(2) in the case of a first-time borrower with respect
to a residential mortgage loan that is not a qualified
mortgage, the first-time borrower provides the creditor
with sufficient documentation to demonstrate that the
consumer received homeownership counseling from
organizations or counselors certified by the Secretary
of Housing and Urban Development as competent to
provide such counseling.
(l) Credit Risk Retention.--
(1) In general.--The Federal banking agencies shall
prescribe regulations jointly to require any creditor
that makes a residential mortgage loan that is not a
qualified mortgage (as defined in section
129C(c)(2)(A)), to retain an economic interest in a
material portion of the credit risk for any such loan
that the creditor transfers, sells or conveys to a
third party.
(2) Standards for regulations.--Regulations
prescribed under paragraph (1) shall--
(A) apply only to residential mortgage loans
that are not qualified mortgages (as so
defined);
(B) prohibit creditors from directly or
indirectly hedging or otherwise transferring
the credit risk creditors are required to
retain under the regulations with respect to
any residential mortgage loan;
(C) require creditors to retain at least 5
percent of the credit risk on any non-qualified
mortgage that is transferred, sold or conveyed;
and
(D) specify the permissible forms of the
required risk retention (for example, first
loss position or pro rata vertical slice) and
the minimum duration of the required risk
retention.
(3) Exceptions and adjustments.--
(A) In general.--The Federal banking agencies
shall have authority to provide exceptions or
adjustments to the requirements of this
subsection, including exceptions or adjustments
relating to the 5 percent risk retention
threshold and the hedging prohibition.
(B) Applicable standards.--Any exceptions or
adjustments granted by the Federal banking
agencies shall--
(i) be consistent with the purpose of
this subsection to help ensure high
quality underwriting standards for
mortgage lenders; and
(ii) facilitate appropriate risk
management practices by mortgage
lenders, improve access of consumers to
mortgage credit on reasonable terms, or
otherwise serve the public interest.
(4) Alternative risk retention for securitization
sponsors.--The Federal banking agencies shall have
discretion to apply the risk retention requirements of
this subsection to securitizers of non-qualified
mortgages in addition to or in place of creditors that
make non-qualified mortgages if the agencies determine
that applying the requirements to securitization
sponsors rather than originators would--
(A) be consistent with the purpose of this
subsection to help ensure high quality
underwriting standards for mortgage lenders;
and
(B) facilitate appropriate risk management
practices by mortgage lenders, or improve
access of consumers to mortgage credit on
reasonable terms.
(m) Section 129C and any regulations promulgated thereunder
do not apply to an extension of credit relating to a plan
described in section 101(53D) of title 11, United States Code.

SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.

(a) In General.--Except as provided in subsection (b), (c),
or (d), a creditor, in connection with the formation or
consummation of a consumer credit transaction secured by a
first lien on the principal dwelling of the consumer, other
than a consumer credit transaction under an open end credit
plan or a reverse mortgage, shall establish, before the
consummation of such transaction, an escrow or impound account
for the payment of taxes and hazard insurance, and, if
applicable, flood insurance, mortgage insurance, ground rents,
and any other required periodic payments or premiums with
respect to the property or the loan terms, as provided in, and
in accordance with, this section.
(b) When Required.--No impound, trust, or other type of
account for the payment of property taxes, insurance premiums,
or other purposes relating to the property may be required as a
condition of a real property sale contract or a loan secured by
a first deed of trust or mortgage on the principal dwelling of
the consumer, other than a consumer credit transaction under an
open end credit plan or a reverse mortgage, except when--
(1) any such impound, trust, or other type of escrow
or impound account for such purposes is required by
Federal or State law;
(2) a loan is made, guaranteed, or insured by a State
or Federal governmental lending or insuring agency;
(3) the transaction is secured by a first mortgage or
lien on the consumer's principal dwelling and the
annual percentage rate on the credit, at the date the
interest rate is set, will exceed the average prime
offer rate for a comparable transaction by 1.5
percentage points or more; or
(4) so required pursuant to regulation.
(c) Duration of Mandatory Escrow or Impound Account.--An
escrow or impound account established pursuant to subsection
(b), shall remain in existence for a minimum period of 5 years,
beginning with the date of the consummation of the loan, and
until such borrower has sufficient equity in the dwelling
securing the consumer credit transaction so as to no longer be
required to maintain private mortgage insurance, or such other
period as may be provided in regulations to address situations
such as borrower delinquency, unless the underlying mortgage
establishing the account is terminated.
(d) Limited Exemptions for Loans Secured by Shares in a
Cooperative and for Certain Condominium Units.--Escrow accounts
need not be established for loans secured by shares in a
cooperative. Insurance premiums need not be included in escrow
accounts for loans secured by condominium units, where the
condominium association has an obligation to the condominium
unit owners to maintain a master policy insuring condominium
units.
(e) Clarification on Escrow Accounts for Loans Not Meeting
Statutory Test.--For mortgages not covered by the requirements
of subsection (b), no provision of this section shall be
construed as precluding the establishment of an impound, trust,
or other type of account for the payment of property taxes,
insurance premiums, or other purposes relating to the
property--
(1) on terms mutually agreeable to the parties to the
loan;
(2) at the discretion of the lender or servicer, as
provided by the contract between the lender or servicer
and the borrower; or
(3) pursuant to the requirements for the escrowing of
flood insurance payments for regulated lending
institutions in section 102(d) of the Flood Disaster
Protection Act of 1973.
(f) Administration of Mandatory Escrow or Impound Accounts.--
(1) In general.--Except as may otherwise be provided
for in this title or in regulations prescribed by the
Board, escrow or impound accounts established pursuant
to subsection (b) shall be established in a federally
insured depository institution.
(2) Administration.--Except as provided in this
section or regulations prescribed under this section,
an escrow or impound account subject to this section
shall be administered in accordance with--
(A) the Real Estate Settlement Procedures Act
of 1974 and regulations prescribed under such
Act;
(B) the Flood Disaster Protection Act of 1973
and regulations prescribed under such Act; and
(C) the law of the State, if applicable,
where the real property securing the consumer
credit transaction is located.
(3) Applicability of payment of interest.--If
prescribed by applicable State or Federal law, each
creditor shall pay interest to the consumer on the
amount held in any impound, trust, or escrow account
that is subject to this section in the manner as
prescribed by that applicable State or Federal law.
(4) Penalty coordination with respa.--Any action or
omission on the part of any person which constitutes a
violation of the Real Estate Settlement Procedures Act
of 1974 or any regulation prescribed under such Act for
which the person has paid any fine, civil money
penalty, or other damages shall not give rise to any
additional fine, civil money penalty, or other damages
under this section, unless the action or omission also
constitutes a direct violation of this section.
(g) Disclosures Relating to Mandatory Escrow or Impound
Account.--In the case of any impound, trust, or escrow account
that is subject to this section, the creditor shall disclose by
written notice to the consumer at least 3 business days before
the consummation of the consumer credit transaction giving rise
to such account or in accordance with timeframes established in
prescribed regulations the following information:
(1) The fact that an escrow or impound account will
be established at consummation of the transaction.
(2) The amount required at closing to initially fund
the escrow or impound account.
(3) The amount, in the initial year after the
consummation of the transaction, of the estimated taxes
and hazard insurance, including flood insurance, if
applicable, and any other required periodic payments or
premiums that reflects, as appropriate, either the
taxable assessed value of the real property securing
the transaction, including the value of any
improvements on the property or to be constructed on
the property (whether or not such construction will be
financed from the proceeds of the transaction) or the
replacement costs of the property.
(4) The estimated monthly amount payable to be
escrowed for taxes, hazard insurance (including flood
insurance, if applicable) and any other required
periodic payments or premiums.
(5) The fact that, if the consumer chooses to
terminate the account at the appropriate time in the
future, the consumer will become responsible for the
payment of all taxes, hazard insurance, and flood
insurance, if applicable, as well as any other required
periodic payments or premiums on the property unless a
new escrow or impound account is established.
(6) Such other information as the Federal banking
agencies jointly determine necessary for the protection
of the consumer.
(h) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Flood insurance.--The term ``flood insurance''
means flood insurance coverage provided under the
national flood insurance program pursuant to the
National Flood Insurance Act of 1968.
(2) Hazard insurance.--The term ``hazard insurance''
shall have the same meaning as provided for ``hazard
insurance'', ``casualty insurance'', ``homeowner's
insurance'', or other similar term under the law of the
State where the real property securing the consumer
credit transaction is located.
(i) Disclosure Notice Required for Consumers Who Waive Escrow
Services.--
(1) In general.--If--
(A) an impound, trust, or other type of
account for the payment of property taxes,
insurance premiums, or other purposes relating
to real property securing a consumer credit
transaction is not established in connection
with the transaction; or
(B) a consumer chooses, and provides written
notice to the creditor or servicer of such
choice, at any time after such an account is
established in connection with any such
transaction and in accordance with any statute,
regulation, or contractual agreement, to close
such account,
the creditor or servicer shall provide a timely and
clearly written disclosure to the consumer that advises
the consumer of the responsibilities of the consumer
and implications for the consumer in the absence of any
such account.
(2) Disclosure requirements.--Any disclosure provided
to a consumer under paragraph (1) shall include the
following:
(A) Information concerning any applicable
fees or costs associated with either the non-
establishment of any such account at the time
of the transaction, or any subsequent closure
of any such account.
(B) A clear and prominent notice that the
consumer is responsible for personally and
directly paying the non-escrowed items, in
addition to paying the mortgage loan payment,
in the absence of any such account, and the
fact that the costs for taxes, insurance, and
related fees can be substantial.
(C) A clear explanation of the consequences
of any failure to pay non-escrowed items,
including the possible requirement for the
forced placement of insurance by the creditor
or servicer and the potentially higher cost
(including any potential commission payments to
the servicer) or reduced coverage for the
consumer in the event of any such creditor-
placed insurance.
(D) Such other information as the Federal
banking agencies jointly determine necessary
for the protection of the consumer.

SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN
CONSUMER CREDIT TRANSACTIONS.

(a) In General.--It shall be unlawful, in extending credit or
in providing any services for a consumer credit transaction
secured by the principal dwelling of the consumer, to engage in
any unfair or deceptive act or practice as described in or
pursuant to regulations prescribed under this section.
(b) Appraisal Independence.--For purposes of subsection (a),
unfair and deceptive practices shall include--
(1) any appraisal of a property offered as security
for repayment of the consumer credit transaction that
is conducted in connection with such transaction in
which a person with an interest in the underlying
transaction compensates, coerces, extorts, colludes,
instructs, induces, bribes, or intimidates a person
conducting or involved in an appraisal, or attempts, to
compensate, coerce, extort, collude, instruct, induce,
bribe, or intimidate such a person, for the purpose of
causing the appraised value assigned, under the
appraisal, to the property to be based on any factor
other than the independent judgment of the appraiser;
(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the
property securing the extension of the credit;
(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the
making or pricing of the transaction; and
(4) withholding or threatening to withhold timely
payment for an appraisal report or for appraisal
services rendered.
(c) Exceptions.--The requirements of subsection (b) shall not
be construed as prohibiting a mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management
company, employee of an appraisal management company, consumer,
or any other person with an interest in a real estate
transaction from asking an appraiser to provide 1 or more of
the following services:
(1) Consider additional, appropriate property
information, including the consideration of additional
comparable properties to make or support an appraisal.
(2) Provide further detail, substantiation, or
explanation for the appraiser's value conclusion.
(3) Correct errors in the appraisal report.
(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management
company procuring or facilitating, an appraisal in connection
with a consumer credit transaction secured by the principal
dwelling of a consumer may have a direct or indirect interest,
financial or otherwise, in the property or transaction
involving the appraisal.
(e) Mandatory Reporting.--Any mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, or any other person involved in a real estate
transaction involving an appraisal in connection with a
consumer credit transaction secured by the principal dwelling
of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws,
or is otherwise engaging in unethical or unprofessional
conduct, shall refer the matter to the applicable State
appraiser certifying and licensing agency.
(f) No Extension of Credit.--In connection with a consumer
credit transaction secured by a consumer's principal dwelling,
a creditor who knows, at or before loan consummation, of a
violation of the appraisal independence standards established
in subsections (b) or (d) shall not extend credit based on such
appraisal unless the creditor documents that the creditor has
acted with reasonable diligence to determine that the appraisal
does not materially misstate or misrepresent the value of such
dwelling.
(g) Rulemaking Proceedings.--The Board, the Comptroller of
the Currency, the Director of the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation, the National Credit
Union Administration Board, and the Federal Trade Commission--
(1) shall, for purposes of this section, jointly
prescribe regulations no later than 180 days after the
date of the enactment of this section, and where such
regulations have an effective date of no later than 1
year after the date of the enactment of this section,
defining with specificity acts or practices which are
unfair or deceptive in the provision of mortgage
lending services for a consumer credit transaction
secured by the principal dwelling of the consumer or
mortgage brokerage services for such a transaction and
defining any terms in this section or such regulations;
and
(2) may jointly issue interpretive guidelines and
general statements of policy with respect to unfair or
deceptive acts or practices in the provision of
mortgage lending services for a consumer credit
transaction secured by the principal dwelling of the
consumer and mortgage brokerage services for such a
transaction, within the meaning of subsections (a),
(b), (c), (d), (e), and (f).
(h) Penalties.--
(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who
violates this section shall forfeit and pay a civil
penalty of not more than $10,000 for each day any such
violation continues.
(2) Subsequent violations.--In the case of any person
on whom a civil penalty has been imposed under
paragraph (1), paragraph (1) shall be applied by
substituting ``$20,000'' for ``$10,000'' with respect
to all subsequent violations.
(3) Assessment.--The agency referred to in subsection
(a) or (c) of section 108 with respect to any person
described in paragraph (1) shall assess any penalty
under this subsection to which such person is subject.

SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.

(a) In General.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, no
servicer shall fail to credit a payment to the consumer's loan
account as of the date of receipt, except when a delay in
crediting does not result in any charge to the consumer or in
the reporting of negative information to a consumer reporting
agency, except as required in subsection (b).
(b) Exception.--If a servicer specifies in writing
requirements for the consumer to follow in making payments, but
accepts a payment that does not conform to the requirements,
the servicer shall credit the payment as of 5 days after
receipt.

SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.

A creditor or servicer of a home loan shall send an accurate
payoff balance within a reasonable time, but in no case more
than 7 business days, after the receipt of a written request
for such balance from or on behalf of the borrower.

Sec. 130. Civil liability

(a) Except as otherwise provided in this section, any
creditor who fails to comply with any requirement imposed under
this chapter, including any requirement under section 125, or
chapter 4 or 5 of this title with respect to any person is
liable to such person in an amount equal to the sum of--
(1) * * *
(2)(A)(i) in the case of an individual action twice
the amount of any finance charge in connection with the
transaction, (ii) in the case of an individual action
relating to a consumer lease under chapter 5 of this
title, 25 per centum of the total amount of monthly
payments under the lease, except that the liability
under this subparagraph shall not be less than [$100]
$200 nor greater than [$1,000] $2,000, or (iii) in the
case of an individual action relating to a credit
transaction not under an open end credit plan that is
secured by real property or a dwelling, not less than
$400 or greater than $4,000; or
(B) in the case of a class action, such amount as the
court may allow, except that as to each member of the
class no minimum recovery shall be applicable, and the
total recovery under this subparagraph in any class
action or series of class actions arising out of the
same failure to comply by the same creditor shall not
be more than the lesser of [$500,000] $1,000,000 or 1
per centum of the net worth of the creditor;

* * * * * * *

(e) [Any action] Except as provided in the subsequent
sentence, any action under this section may be brought in any
United States district court, or in any other court of
competent juridisdiction, within one year from the date of the
occurrence of the violation or, in the case of a violation
involving a private education loan (as that term is defined in
section 140(a)), 1 year from the date on which the first
regular payment of principal is due under the loan. Any action
under this section with respect to any violation of section 129
may be brought in any United States district court, or in any
other court of competent jurisdiction, before the end of the 3-
year period beginning on the date of the occurrence of the
violation. This subsection does not bar a person from asserting
a violation of this title in an action to collect the debt
which was brought more than one year from the date of the
occurrence of the violation as a matter of defense by
recoupment or set-off in such action, except as otherwise
provided by State law. An action to enforce a violation of
[section 129 may also] section 129, 129B, or 129C of this Act,
section 219 of the Mortgage Reform and Anti-Predatory Lending
Act, or any amendment made by section 219 of the Mortgage
Reform and Anti-Predatory Lending 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. The State attorney general shall provide
prior written notice of any such civil action to the Federal
agency responsible for enforcement under section 108 and shall
provide the agency with a copy of the complaint. If prior
notice is not feasible, the State attorney general shall
provide notice to such agency immediately upon instituting the
action. The Federal agency may--
(1) * * *

* * * * * * *

(k) Exemption From Liability and Rescission in Case of
Borrower Fraud or Deception.--In addition to any other remedy
available by law or contract, no creditor, assignee, or
securitizer shall be liable to an obligor under this section,
nor shall it be subject to the right of rescission of any
obligor under 129B, if such obligor, or co-obligor, knowingly,
or willfully and with actual knowledge furnished material
information known to be false for the purpose of obtaining such
residential mortgage loan.

* * * * * * *

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SECTION 8 OF THE UNITED STATES HOUSING ACT OF 1937

lower income housing assistance

Sec. 8. (a) * * *

* * * * * * *

(o) Voucher Program.--
(1) * * *

* * * * * * *

(7) Leases and tenancy.--Each housing assistance
payment contract entered into by the public housing
agency and the owner of a dwelling unit--
(A) * * *

* * * * * * *

(C) shall provide that during the term of the
lease, the owner shall not terminate the
tenancy except for serious or repeated
violation of the terms and conditions of the
lease, for violation of applicable Federal,
State, or local law, or for other good cause,
and that an incident or incidents of actual or
threatened domestic violence, dating violence,
or stalking shall not be construed as a serious
or repeated violation of the lease by the
victim or threatened victim of that violence
and shall not be good cause for terminating the
tenancy or occupancy rights of the victim of
such violence, and in the case of an owner who
is an immediate successor in interest pursuant
to foreclosure--
(i) during the initial term of the
tenant's lease, having the property
vacant prior to sale shall not
constitute good cause; and
(ii) in subsequent lease terms of the
tenant's lease, who will occupy the
unit as a primary residence, who sells
the property to a purchaser who will
occupy a unit of the property as a
primary residence, or if the unit is
unmarketable while occupied, such owner
may terminate a lease relating to such
unit for good cause on the effective
date of the notice to vacate, where
such notice is provided by the owner to
the tenant in such unit at least 90
days before the effective date of such
notice;

* * * * * * *

(E) shall provide that any termination of
tenancy under this subsection shall be preceded
by the provision of written notice by the owner
to the tenant specifying the grounds for that
action, and any relief shall be consistent with
applicable State and local law; [and]
(F) shall provide that in the case of any
foreclosure on any residential real property in
which a recipient of assistance under this
subsection resides, the immediate successor in
interest in such property pursuant to the
foreclosure shall assume such interest subject
to the lease between the prior owner and the
tenant and to the housing assistance payments
contract between the prior owner and the public
housing agency for the occupied unit; if a
public housing agency is unable to make
payments under the contract to the immediate
successor in interest after foreclosure, due to
action or inaction by the successor in
interest, including the rejection of payments
or the failure of the successor to maintain the
unit in compliance with paragraph (8) or an
inability to identify the successor, the agency
may use funds that would have been used to pay
the rental amount on behalf of the family--
(i) to pay for utilities that are the
responsibility of the owner under the
lease or applicable law, after taking
reasonable steps to notify the owner
that it intends to make payments to a
utility provider in lieu of payments to
the owner, except prior notification
shall not be required in any case in
which the unit will be or has been
rendered uninhabitable due to the
termination or threat of termination of
service, in which case the public
housing agency shall notify the owner
within a reasonable time after making
such payment; or
(ii) for the family's reasonable
moving costs, including security
deposit costs;
except that this subparagraph and the
provisions related to foreclosure in
subparagraph (C) shall not affect any State or
local law that provides longer time periods or
other additional protections for tenants.
[(F)] (G) may include any addenda required by
the Secretary to set forth the provisions of
this subsection.

* * * * * * *

----------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ACT

* * * * * * *

UNDER SECRETARY AND OTHER OFFICERS AND OFFICES

Sec. 4. (a) * * *

* * * * * * *

(g) Office of Housing Counseling.--
(1) Establishment.--There is established, in the
Department, the Office of Housing Counseling.
(2) Director.--There is established the position of
Director of Housing Counseling. The Director shall be
the head of the Office of Housing Counseling and shall
be appointed by, and shall report to, the Secretary.
Such position shall be a career-reserved position in
the Senior Executive Service.
(3) Functions.--
(A) In general.--The Director shall have
primary responsibility within the Department
for all activities and matters relating to
homeownership counseling and rental housing
counseling, including--
(i) research, grant administration,
public outreach, and policy development
relating to such counseling; and
(ii) establishment, coordination, and
administration of all regulations,
requirements, standards, and
performance measures under programs and
laws administered by the Department
that relate to housing counseling,
homeownership counseling (including
maintenance of homes), mortgage-related
counseling (including home equity
conversion mortgages and credit
protection options to avoid
foreclosure), and rental housing
counseling, including the requirements,
standards, and performance measures
relating to housing counseling.
(B) Specific functions.--The Director shall
carry out the functions assigned to the
Director and the Office under this section and
any other provisions of law. Such functions
shall include establishing rules necessary
for--
(i) the counseling procedures under
section 106(g)(1) of the Housing and
Urban Development Act of 1968 (12
U.S.C. 1701x(h)(1));
(ii) carrying out all other functions
of the Secretary under section 106(g)
of the Housing and Urban Development
Act of 1968, including the
establishment, operation, and
publication of the availability of the
toll-free telephone number under
paragraph (2) of such section;
(iii) contributing to the preparation
and distribution of home buying
information booklets pursuant to
section 5 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C.
2604);
(iv) carrying out the certification
program under section 106(e) of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e));
(v) carrying out the assistance
program under section 106(a)(4) of the
Housing and Urban Development Act of
1968, including criteria for selection
of applications to receive assistance;
(vi) carrying out any functions
regarding abusive, deceptive, or
unscrupulous lending practices relating
to residential mortgage loans that the
Secretary considers appropriate, which
shall include conducting the study
under section 6 of the Expand and
Preserve Home Ownership Through
Counseling Act;
(vii) providing for operation of the
advisory committee established under
paragraph (4) of this subsection;
(viii) collaborating with community-
based organizations with expertise in
the field of housing counseling; and
(ix) providing for the building of
capacity to provide housing counseling
services in areas that lack sufficient
services.
(4) Advisory committee.--
(A) In general.--The Secretary shall appoint
an advisory committee to provide advice
regarding the carrying out of the functions of
the Director.
(B) Members.--Such advisory committee shall
consist of not more than 12 individuals, and
the membership of the committee shall equally
represent the mortgage and real estate
industry, including consumers and housing
counseling agencies certified by the Secretary.
(C) Terms.--Except as provided in
subparagraph (D), each member of the advisory
committee shall be appointed for a term of 3
years. Members may be reappointed at the
discretion of the Secretary.
(D) Terms of initial appointees.--As
designated by the Secretary at the time of
appointment, of the members first appointed to
the advisory committee, 4 shall be appointed
for a term of 1 year and 4 shall be appointed
for a term of 2 years.
(E) Prohibition of pay; travel expenses.--
Members of the advisory committee shall serve
without pay, but shall receive travel expenses,
including per diem in lieu of subsistence, in
accordance with applicable provisions under
subchapter I of chapter 57 of title 5, United
States Code.
(F) Advisory role only.--The advisory
committee shall have no role in reviewing or
awarding housing counseling grants.
(5) Scope of homeownership counseling.--In carrying
out the responsibilities of the Director, the Director
shall ensure that homeownership counseling provided by,
in connection with, or pursuant to any function,
activity, or program of the Department addresses the
entire process of homeownership, including the decision
to purchase a home, the selection and purchase of a
home, issues arising during or affecting the period of
ownership of a home (including refinancing, default and
foreclosure, and other financial decisions), and the
sale or other disposition of a home.

* * * * * * *

----------

SECTION 106 OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1968

* * * * * * *

TECHNICAL ASSISTANCE, COUNSELING TO TENANTS AND HOMEOWNERS, AND LOANS
TO SPONSORS OF LOW- AND MODERATE-INCOME HOUSING

Sec. 106. (a)(1) * * *

* * * * * * *

(4) Homeownership and rental counseling assistance.--
(A) In general.--The Secretary shall make financial
assistance available under this paragraph to HUD-
approved housing counseling agencies and State housing
finance agencies.
(B) Qualified entities.--The Secretary shall
establish standards and guidelines for eligibility of
organizations (including governmental and nonprofit
organizations) to receive assistance under this
paragraph, in accordance with subparagraph (D).
(C) Distribution.--Assistance made available under
this paragraph shall be distributed in a manner that
encourages efficient and successful counseling
programs.
(D) Limitation on distribution of assistance.--
(i) In general.--None of the assistance made
available under this paragraph shall be
distributed to--
(I) any organization which has been
indicted for a violation under Federal
law relating to an election for Federal
office; or
(II) any organization which employs
applicable individuals.
(ii) Definition of applicable individual.--In
this subparagraph, the term ``applicable
individual'' means an individual who--
(I) is--
(aa) employed by the
organization in a permanent or
temporary capacity;
(bb) contracted or retained
by the organization; or
(cc) acting on behalf of, or
with the express or apparent
authority of, the organization;
and
(II) has been indicted for a
violation under Federal law relating to
an election for Federal office.
(E) Grantmaking process.--In making assistance
available under this paragraph, the Secretary shall
consider appropriate ways of streamlining and improving
the processes for grant application, review, approval,
and award.
(F) Authorization of appropriations.--There are
authorized to be appropriated $45,000,000 for each of
fiscal years 2009 through 2012 for--
(i) the operations of the Office of Housing
Counseling of the Department of Housing and
Urban Development;
(ii) the responsibilities of the Director of
Housing Counseling under paragraphs (2) through
(5) of subsection (g); and
(iii) assistance pursuant to this paragraph
for entities providing homeownership and rental
counseling.

* * * * * * *

(5) Notification of availability of homeownership
counseling.--
(A) Notification of availability of
homeownership counseling.--
(i) * * *
(ii) Content.--Notification under
this subparagraph shall--
(I) * * *

* * * * * * *

(III) notify the homeowner or
mortgage applicant of the
availability of homeownership
counseling provided by
nonprofit organizations
approved by the Secretary and
experienced in the provision of
homeownership counseling, or
provide the toll-free telephone
number described in
subparagraph (D)(i); [and]
(IV) notify the homeowner by
a statement or notice, written
in plain English by the
Secretary of Housing and Urban
Development, in consultation
with the Secretary of Defense
and the Secretary of the
Treasury, explaining the
mortgage and foreclosure rights
of servicemembers, and the
dependents of such
servicemembers, under the
Servicemembers Civil Relief Act
(50 U.S.C. App. 501 et seq.),
including the toll-free
military one source number to
call if servicemembers, or the
dependents of such
servicemembers, require further
assistance[.]; and
(V) notify the housing or
mortgage applicant of the
availability of mortgage
software systems provided
pursuant to subsection (g)(3).

* * * * * * *

(e) Certification.--
[(1) Requirement for assistance.--An organization may
not receive assistance for counseling activities under
subsection (a)(1)(iii), (a)(2), (c), or (d), unless the
organization provides such counseling, to the extent
practicable, by individuals who have been certified by
the Secretary under this subsection as competent to
provide such counseling.]
(1) Requirement for assistance.--An organization may
not receive assistance for counseling activities under
subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of
this section, or under section 101(e), unless the
organization, or the individuals through which the
organization provides such counseling, has been
certified by the Secretary under this subsection as
competent to provide such counseling.
(2) Standards and examination.--The Secretary shall,
by regulation, establish standards and procedures for
testing and certifying counselors and for certifying
organizations. Such standards and procedures shall
require [for certification], for certification of an
organization, that each individual through which the
organization provides counseling shall demonstrate,
and, for certification of an individual, that the
individual shall demonstrate, by written examination
(as provided under subsection (f)(4)), competence to
provide counseling in each of the following areas:
(A) * * *

* * * * * * *

(3) Requirement under hud programs.--Any
homeownership counseling or rental housing counseling
(as such terms are defined in subsection (g)(1))
required under, or provided in connection with, any
program administered by the Department of Housing and
Urban Development shall be provided only by
organizations or counselors certified by the Secretary
under this subsection as competent to provide such
counseling.
(4) Outreach.--The Secretary shall take such actions
as the Secretary considers appropriate to ensure that
individuals and organizations providing homeownership
or rental housing counseling are aware of the
certification requirements and standards of this
subsection and of the training and certification
programs under subsection (f).
[(3)] (5) Encouragement.--The Secretary shall
encourage organizations engaged in providing
homeownership and rental counseling that do not receive
assistance under this section to employ organizations
and individuals to provide such counseling who are
certified under this subsection or meet the
certification standards established under this
subsection.

* * * * * * *

(g) Procedures and Activities.--
(1) Counseling procedures.--
(A) In general.--The Secretary shall
establish, coordinate, and monitor the
administration by the Department of Housing and
Urban Development of the counseling procedures
for homeownership counseling and rental housing
counseling provided in connection with any
program of the Department, including all
requirements, standards, and performance
measures that relate to homeownership and
rental housing counseling.
(B) Homeownership counseling.--For purposes
of this subsection and as used in the
provisions referred to in this subparagraph,
the term ``homeownership counseling'' means
counseling related to homeownership and
residential mortgage loans. Such term includes
counseling related to homeownership and
residential mortgage loans that is provided
pursuant to--
(i) section 105(a)(20) of the Housing
and Community Development Act of 1974
(42 U.S.C. 5305(a)(20));
(ii) in the United States Housing Act
of 1937--
(I) section 9(e) (42 U.S.C.
1437g(e));
(II) section 8(y)(1)(D) (42
U.S.C. 1437f(y)(1)(D));
(III) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
(IV) section 23(c)(4) (42
U.S.C. 1437u(c)(4));
(V) section 32(e)(4) (42
U.S.C. 1437z-4(e)(4));
(VI) section 33(d)(2)(B) (42
U.S.C. 1437z-5(d)(2)(B));
(VII) sections 302(b)(6) and
303(b)(7) (42 U.S.C. 1437aaa-
1(b)(6), 1437aaa-2(b)(7)); and
(VIII) section 304(c)(4) (42
U.S.C. 1437aaa-3(c)(4));
(iii) section 302(a)(4) of the
American Homeownership and Economic
Opportunity Act of 2000 (42 U.S.C.
1437f note);
(iv) sections 233(b)(2) and 258(b) of
the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C.
12773(b)(2), 12808(b));
(v) this section and section 101(e)
of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x,
1701w(e));
(vi) section 220(d)(2)(G) of the Low-
Income Housing Preservation and
Resident Homeownership Act of 1990 (12
U.S.C. 4110(d)(2)(G));
(vii) sections 422(b)(6), 423(b)(7),
424(c)(4), 442(b)(6), and 443(b)(6) of
the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C.
12872(b)(6), 12873(b)(7), 12874(c)(4),
12892(b)(6), and 12893(b)(6));
(viii) section 491(b)(1)(F)(iii) of
the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11408(b)(1)(F)(iii));
(ix) sections 202(3) and 810(b)(2)(A)
of the Native American Housing and
Self-Determination Act of 1996 (25
U.S.C. 4132(3), 4229(b)(2)(A));
(x) in the National Housing Act--
(I) in section 203 (12 U.S.C.
1709), the penultimate
undesignated paragraph of
paragraph (2) of subsection
(b), subsection (c)(2)(A), and
subsection (r)(4);
(II) subsections (a) and
(c)(3) of section 237 (12
U.S.C. 1715z-2); and
(III) subsections (d)(2)(B)
and (m)(1) of section 255 (12
U.S.C. 1715z-20);
(xi) section 502(h)(4)(B) of the
Housing Act of 1949 (42 U.S.C.
1472(h)(4)(B)); and
(xii) section 508 of the Housing and
Urban Development Act of 1970 (12
U.S.C. 1701z-7).
(C) Rental housing counseling.--For purposes
of this subsection, the term ``rental housing
counseling'' means counseling related to rental
of residential property, which may include
counseling regarding future homeownership
opportunities and providing referrals for
renters and prospective renters to entities
providing counseling and shall include
counseling related to such topics that is
provided pursuant to--
(i) section 105(a)(20) of the Housing
and Community Development Act of 1974
(42 U.S.C. 5305(a)(20));
(ii) in the United States Housing Act
of 1937--
(I) section 9(e) (42 U.S.C.
1437g(e));
(II) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
(III) section 23(c)(4) (42
U.S.C. 1437u(c)(4));
(IV) section 32(e)(4) (42
U.S.C. 1437z-4(e)(4));
(V) section 33(d)(2)(B) (42
U.S.C. 1437z-5(d)(2)(B)); and
(VI) section 302(b)(6) (42
U.S.C. 1437aaa-1(b)(6));
(iii) section 233(b)(2) of the
Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12773(b)(2));
(iv) section 106 of the Housing and
Urban Development Act of 1968 (12
U.S.C. 1701x);
(v) section 422(b)(6) of the
Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12872(b)(6));
(vi) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act
(42 U.S.C. 11408(b)(1)(F)(iii));
(vii) sections 202(3) and
810(b)(2)(A) of the Native American
Housing and Self-Determination Act of
1996 (25 U.S.C. 4132(3),
4229(b)(2)(A)); and
(viii) the rental assistance program
under section 8 of the United States
Housing Act of 1937 (42 U.S.C. 1437f).
(2) Standards for materials.--The Secretary, in
consultation with the advisory committee established
under subsection (g)(4) of the Department of Housing
and Urban Development Act, shall establish standards
for materials and forms to be used, as appropriate, by
organizations providing homeownership counseling
services, including any recipients of assistance
pursuant to subsection (a)(4).
(3) Mortgage software systems.--
(A) Certification.--The Secretary shall
provide for the certification of various
computer software programs for consumers to use
in evaluating different residential mortgage
loan proposals. The Secretary shall require,
for such certification, that the mortgage
software systems take into account--
(i) the consumer's financial
situation and the cost of maintaining a
home, including insurance, taxes, and
utilities;
(ii) the amount of time the consumer
expects to remain in the home or
expected time to maturity of the loan;
(iii) such other factors as the
Secretary considers appropriate to
assist the consumer in evaluating
whether to pay points, to lock in an
interest rate, to select an adjustable
or fixed rate loan, to select a
conventional or government-insured or
guaranteed loan and to make other
choices during the loan application
process.
If the Secretary determines that available
existing software is inadequate to assist
consumers during the residential mortgage loan
application process, the Secretary shall
arrange for the development by private sector
software companies of new mortgage software
systems that meet the Secretary's
specifications.
(B) Use and initial availability.--Such
certified computer software programs shall be
used to supplement, not replace, housing
counseling. The Secretary shall provide that
such programs are initially used only in
connection with the assistance of housing
counselors certified pursuant to subsection
(e).
(C) Availability.--After a period of initial
availability under subparagraph (B) as the
Secretary considers appropriate, the Secretary
shall take reasonable steps to make mortgage
software systems certified pursuant to this
paragraph widely available through the Internet
and at public locations, including public
libraries, senior-citizen centers, public
housing sites, offices of public housing
agencies that administer rental housing
assistance vouchers, and housing counseling
centers.
(D) Budget compliance.--This paragraph shall
be effective only to the extent that amounts to
carry out this paragraph are made available in
advance in appropriations Acts.
(4) National public service multimedia campaigns to
promote housing counseling.--
(A) In general.--The Director of Housing
Counseling shall develop, implement, and
conduct national public service multimedia
campaigns designed to make persons facing
mortgage foreclosure, persons considering a
subprime mortgage loan to purchase a home,
elderly persons, persons who face language
barriers, low-income persons, minorities, and
other potentially vulnerable consumers aware
that it is advisable, before seeking or
maintaining a residential mortgage loan, to
obtain homeownership counseling from an
unbiased and reliable sources and that such
homeownership counseling is available,
including through programs sponsored by the
Secretary of Housing and Urban Development.
(B) Contact information.--Each segment of the
multimedia campaign under subparagraph (A)
shall publicize the toll-free telephone number
and website of the Department of Housing and
Urban Development through which persons seeking
housing counseling can locate a housing
counseling agency in their State that is
certified by the Secretary of Housing and Urban
Development and can provide advice on buying a
home, renting, defaults, foreclosures, credit
issues, and reverse mortgages.
(C) Authorization of appropriations.--There
are authorized to be appropriated to the
Secretary, not to exceed $3,000,000 for fiscal
years 2009, 2010, and 2011, for the
development, implementation, and conduct of
national public service multimedia campaigns
under this paragraph.
(D) Foreclosure rescue education programs.--
(i) In general.--Ten percent of any
funds appropriated pursuant to the
authorization under subparagraph (C)
shall be used by the Director of
Housing Counseling to conduct an
education program in areas that have a
high density of foreclosure. Such
program shall involve direct mailings
to persons living in such areas
describing--
(I) tips on avoiding
foreclosure rescue scams;
(II) tips on avoiding
predatory lending mortgage
agreements;
(III) tips on avoiding for-
profit foreclosure counseling
services; and
(IV) local counseling
resources that are approved by
the Department of Housing and
Urban Development.
(ii) Program emphasis.--In conducting
the education program described under
clause (i), the Director of Housing
Counseling shall also place an emphasis
on serving communities that have a high
percentage of retirement communities or
a high percentage of low-income
minority communities.
(iii) Terms defined.--For purposes of
this subparagraph:
(I) High density of
foreclosures.--An area has a
``high density of
foreclosures'' if such area is
one of the metropolitan
statistical areas (as that term
is defined by the Director of
the Office of Management and
Budget) with the highest home
foreclosure rates.
(II) High percentage of
retirement communities.--An
area has a ``high percentage of
retirement communities'' if
such area is one of the
metropolitan statistical areas
(as that term is defined by the
Director of the Office of
Management and Budget) with the
highest percentage of residents
aged 65 or older.
(III) High percentage of low-
income minority communities.--
An area has a ``high percentage
of low-income minority
communities'' if such area
contains a higher-than-normal
percentage of residents who are
both minorities and low-income,
as defined by the Director of
Housing Counseling.
(5) Education programs.--The Secretary shall provide
advice and technical assistance to States, units of
general local government, and nonprofit organizations
regarding the establishment and operation of, including
assistance with the development of content and
materials for, educational programs to inform and
educate consumers, particularly those most vulnerable
with respect to residential mortgage loans (such as
elderly persons, persons facing language barriers, low-
income persons, minorities, and other potentially
vulnerable consumers), regarding home mortgages,
mortgage refinancing, home equity loans, and home
repair loans.
(h) Definitions.--For purposes of this section:
(1) Nonprofit organization.--The term ``nonprofit
organization'' has the meaning given such term in
section 104(5) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12704(5)), except
that subparagraph (D) of such section shall not apply
for purposes of this section.
(2) State.--The term ``State'' means each of the
several States, the Commonwealth of Puerto Rico, the
District of Columbia, the Commonwealth of the Northern
Mariana Islands, Guam, the Virgin Islands, American
Samoa, the Trust Territories of the Pacific, or any
other possession of the United States.
(3) Unit of general local government.--The term
``unit of general local government'' means any city,
county, parish, town, township, borough, village, or
other general purpose political subdivision of a State.
(4) Hud-approved counseling agency.--The term ``HUD-
approved counseling agency'' means a private or public
nonprofit organization that is--
(A) exempt from taxation under section 501(c)
of the Internal Revenue Code of 1986; and
(B) certified by the Secretary to provide
housing counseling services.
(5) State housing finance agency.--The term ``State
housing finance agency'' means any public body, agency,
or instrumentality specifically created under State
statute that is authorised to finance activities
designed to provide housing and related facilities
throughout an entire State through land acquisition,
construction, or rehabilitation.
----------

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974

* * * * * * *

UNIFORM SETTLEMENT STATEMENT

Sec. 4. (a) * * *

* * * * * * *

(c) The standard form described in subsection (a) shall
include, in the case of an appraisal coordinated by an
appraisal management company (as such term is defined in
section 1121(11) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a
clear disclosure of--
(1) the fee paid directly to the appraiser by such
company; and
(2) the administration fee charged by such company.

[SPECIAL] HOME BUYING INFORMATION BOOKLETS

Sec. 5. [(a) The Secretary shall prepare and distribute
booklets to help persons borrowing money to finance the
purchase of residential real estate better to understand the
nature and costs of real estate settlement services. The
Secretary shall distribute such booklets to all lenders which
make federally related mortgage loans.
[(b) Each booklet shall be in such form and detail as the
Secretary shall prescribe and, in addition to such other
information as the Secretary may provide, shall include in
clear and concise language--
[(1) a description and explanation of the nature and
purpose of each cost incident to a real estate
settlement;
[(2) an explanation and sample of the standard real
estate settlement form developed and prescribed under
section 4;
[(3) a description and explanation of the nature and
purpose of escrow accounts when used in connection with
loans secured by residential real estate;
[(4) an explanation of the choices available to
buyers of residential real estate in selecting persons
to provide necessary services incident to a real estate
settlement; and
[(5) an explanation of the unfair practices and
unreasonable or unnecessary charges to be avoided by
the prospective buyer with respect to a real estate
settlement.
Such booklets shall take into consideration differences in real
estate settlement procedures which may exist among the several
States and territories of the United States and among separate
political subdivisions within the same State and territory.]
(a) Preparation and Distribution.--The Secretary shall
prepare, at least once every 5 years, a booklet to help
consumers applying for federally related mortgage loans to
understand the nature and costs of real estate settlement
services. The Secretary shall prepare the booklet in various
languages and cultural styles, as the Secretary determines to
be appropriate, so that the booklet is understandable and
accessible to homebuyers of different ethnic and cultural
backgrounds. The Secretary shall distribute such booklets to
all lenders that make federally related mortgage loans. The
Secretary shall also distribute to such lenders lists,
organized by location, of homeownership counselors certified
under section 106(e) of the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(e)) for use in complying with the
requirement under subsection (c) of this section.
(b) Contents.--Each booklet shall be in such form and detail
as the Secretary shall prescribe and, in addition to such other
information as the Secretary may provide, shall include in
plain and understandable language the following information:
(1) A description and explanation of the nature and
purpose of the costs incident to a real estate
settlement or a federally related mortgage loan. The
description and explanation shall provide general
information about the mortgage process as well as
specific information concerning, at a minimum--
(A) balloon payments;
(B) prepayment penalties; and
(C) the trade-off between closing costs and
the interest rate over the life of the loan.
(2) An explanation and sample of the uniform
settlement statement required by section 4.
(3) A list and explanation of lending practices,
including those prohibited by the Truth in Lending Act
or other applicable Federal law, and of other unfair
practices and unreasonable or unnecessary charges to be
avoided by the prospective buyer with respect to a real
estate settlement.
(4) A list and explanation of questions a consumer
obtaining a federally related mortgage loan should ask
regarding the loan, including whether the consumer will
have the ability to repay the loan, whether the
consumer sufficiently shopped for the loan, whether the
loan terms include prepayment penalties or balloon
payments, and whether the loan will benefit the
borrower.
(5) An explanation of the right of rescission as to
certain transactions provided by sections 125 and 129
of the Truth in Lending Act.
(6) A brief explanation of the nature of a variable
rate mortgage and a reference to the booklet entitled
``Consumer Handbook on Adjustable Rate Mortgages'',
published by the Board of Governors of the Federal
Reserve System pursuant to section 226.19(b)(1) of
title 12, Code of Federal Regulations, or to any
suitable substitute of such booklet that such Board of
Governors may subsequently adopt pursuant to such
section.
(7) A brief explanation of the nature of a home
equity line of credit and a reference to the pamphlet
required to be provided under section 127A of the Truth
in Lending Act.
(8) Information about homeownership counseling
services made available pursuant to section 106(a)(4)
of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(4)), a recommendation that the consumer
use such services, and notification that a list of
certified providers of homeownership counseling in the
area, and their contact information, is available.
(9) An explanation of the nature and purpose of
escrow accounts when used in connection with loans
secured by residential real estate and the requirements
under section 10 of this Act regarding such accounts.
(10) An explanation of the choices available to
buyers of residential real estate in selecting persons
to provide necessary services incidental to a real
estate settlement.
(11) An explanation of a consumer's responsibilities,
liabilities, and obligations in a mortgage transaction.
(12) An explanation of the nature and purpose of real
estate appraisals, including the difference between an
appraisal and a home inspection.
(13) Notice that the Office of Housing of the
Department of Housing and Urban Development has made
publicly available a brochure regarding loan fraud and
a World Wide Web address and toll-free telephone number
for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures
that may exist among the several States and territories of the
United States and among separate political subdivisions within
the same State and territory.
(c) Each lender shall include with the booklet a good faith
estimate of the amount or range of charges for specific
settlement services the borrower is likely to incur in
connection with the settlement as prescribed by the Secretary.
Each lender shall also include with the booklet a reasonably
complete or updated list of homeownership counselors who are
certified pursuant to section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e)) and located in the
area of the lender.
(d) Each lender referred to in subsection (a) shall provide
the booklet described in such subsection to each person from
whom it receives or for whom it prepares a written application
to borrow money to finance the purchase of residential real
estate. The lender shall provide the HUD-issued booklet in the
version that is most appropriate for the person receiving it.
Such booklet shall be provided by delivering it or placing it
in the mail not later than 3 business days after the lender
receives the application, but no booklet need be provided if
the lender denies the application for credit before the end of
the 3-day period.

* * * * * * *

SERVICING OF MORTGAGE LOANS AND ADMINISTRATION OF ESCROW ACCOUNTS

Sec. 6. (a) * * *

* * * * * * *

(e) Duty of Loan Servicer To Respond to Borrower Inquiries.--
(1) Notice of receipt of inquiry.--
(A) In general.--If any servicer of a
federally related mortgage loan receives a
qualified written request from the borrower (or
an agent of the borrower) for information
relating to the servicing of such loan, the
servicer shall provide a written response
acknowledging receipt of the correspondence
within [20 days] 5 days (excluding legal public
holidays, Saturdays, and Sundays) unless the
action requested is taken within such period.

* * * * * * *

(2) Action with respect to inquiry.--Not later than
[60 days] 30 days (excluding legal public holidays,
Saturdays, and Sundays) after the receipt from any
borrower of any qualified written request under
paragraph (1) and, if applicable, before taking any
action with respect to the inquiry of the borrower, the
servicer shall--
(A) * * *

* * * * * * *

(4) Limited extension of response time.--The 30-day
period described in paragraph (2) may be extended for
not more than 15 days if, before the end of such 30-day
period, the servicer notifies the borrower of the
extension and the reasons for the delay in responding.
(f) Damages and Costs.--Whoever fails to comply with any
provision of this section shall be liable to the borrower for
each such failure in the following amounts:
(1) Individuals.--In the case of any action by an
individual, an amount equal to the sum of--
(A) * * *
(B) any additional damages, as the court may
allow, in the case of a pattern or practice of
noncompliance with the requirements of this
section, in an amount not to exceed [$1,000]
$2,000.
(2) Class actions.--In the case of a class action, an
amount equal to the sum of--
(A) * * *
(B) any additional damages, as the court may
allow, in the case of a pattern or practice of
noncompliance with the requirements of this
section, in an amount not greater than [$1,000]
$2,000 for each member of the class, except
that the total amount of damages under this
subparagraph in any class action may not exceed
the lesser of--
(i) [$500,000] $1,000,000; or

* * * * * * *

(g) Administration of Escrow Accounts.--If the terms of any
federally related mortgage loan require the borrower to make
payments to the servicer of the loan for deposit into an escrow
account for the purpose of assuring payment of taxes, insurance
premiums, and other charges with respect to the property, the
servicer shall make payments from the escrow account for such
taxes, insurance premiums, and other charges in a timely manner
as such payments become due. Any balance in any such account
that is within the servicer's control at the time the loan is
paid off shall be promptly returned to the borrower within 20
business days or credited to a similar account for a new
mortgage loan to the borrower with the same lender.

* * * * * * *

(k) Servicer Prohibitions.--
(1) In general.--A servicer of a federally related
mortgage shall not--
(A) obtain force-placed hazard insurance
unless there is a reasonable basis to believe
the borrower has failed to comply with the loan
contract's requirements to maintain property
insurance;
(B) charge fees for responding to valid
qualified written requests (as defined in
regulations which the Secretary shall
prescribe) under this section;
(C) fail to take timely action to respond to
a borrower's requests to correct errors
relating to allocation of payments, final
balances for purposes of paying off the loan,
or avoiding foreclosure, or other standard
servicer's duties;
(D) fail to respond within 10 business days
to a request from a borrower to provide the
identity, address, and other relevant contact
information about the owner assignee of the
loan; or
(E) fail to comply with any other obligation
found by the Secretary, by regulation, to be
appropriate to carry out the consumer
protection purposes of this Act.
(2) Force-placed insurance defined.--For purposes of
this subsection and subsections (l) and (m), the term
``force-placed insurance'' means hazard insurance
coverage obtained by a servicer of a federally related
mortgage when the borrower has failed to maintain or
renew hazard insurance on such property as required of
the borrower under the terms of the mortgage.
(l) Requirements for Force-Placed Insurance.--A servicer of a
federally related mortgage shall not be construed as having a
reasonable basis for obtaining force-placed insurance unless
the requirements of this subsection have been met.
(1) Written notices to borrower.--A servicer may not
impose any charge on any borrower for force-placed
insurance with respect to any property securing a
federally related mortgage unless--
(A) the servicer has sent, by first-class
mail, a written notice to the borrower
containing--
(i) a reminder of the borrower's
obligation to maintain hazard insurance
on the property securing the federally
related mortgage;
(ii) a statement that the servicer
does not have evidence of insurance
coverage of such property;
(iii) a clear and conspicuous
statement of the procedures by which
the borrower may demonstrate that the
borrower already has insurance
coverage; and
(iv) a statement that the servicer
may obtain such coverage at the
borrower's expense if the borrower does
not provide such demonstration of the
borrower's existing coverage in a
timely manner;
(B) the servicer has sent, by first-class
mail, a second written notice, at least 30 days
after the mailing of the notice under
subparagraph (A) that contains all the
information described in each clauses of such
subparagraph; and
(C) the servicer has not received from the
borrower any demonstration of hazard insurance
coverage for the property securing the mortgage
by the end of the 15-day period beginning on
the date the notice under subparagraph (B) was
sent by the servicer.
(2) Sufficiency of demonstration.--A servicer of a
federally related mortgage shall accept any reasonable
form of written confirmation from a borrower of
existing insurance coverage, which shall include the
existing insurance policy number along with the
identity of, and contact information for, the insurance
company or agent.
(3) Termination of force-placed insurance.--Within 15
days of the receipt by a servicer of confirmation of a
borrower's existing insurance coverage, the servicer
shall--
(A) terminate the force-placed insurance; and
(B) refund to the consumer all force-placed
insurance premiums paid by the borrower during
any period during which the borrower's
insurance coverage and the force-placed
insurance coverage were each in effect, and any
related fees charged to the consumer's account
with respect to the force-placed insurance
during such period.
(4) Clarification with respect to flood disaster
protection act.--No provision of this section shall be
construed as prohibiting a servicer from providing
simultaneous or concurrent notice of a lack of flood
insurance pursuant to section 102(e) of the Flood
Disaster Protection Act of 1973.
(m) Limitations on Force-Placed Insurance Charges.--All
charges for force-placed insurance premiums shall be bona fide
and reasonable in amount.

* * * * * * *

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FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989

* * * * * * *

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) * * *
(b) Table of Contents.--

* * * * * * *

TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

Sec. 1101. Purposes.
* * * * * * *
Sec. 1124. Appraisal management company minimum qualifications.
Sec. 1125. Automated valuation models used to value certain mortgages.
Sec. 1126. Broker price opinions.
* * * * * * *

TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

SEC. 1101. PURPOSE.

The purpose of this title is to provide that Federal
financial and public policy interests in real estate related
transactions will be protected by requiring that real estate
appraisals utilized in connection with federally related
transactions are performed in writing, in accordance with
uniform standards, by individuals whose competency has been
demonstrated and whose professional conduct will be subject to
effective supervision and to provide the Appraisal Subcommittee
with a consumer protection mandate.

SEC. 1103. FUNCTIONS OF APPRAISAL SUBCOMMITTEE.

(a) In General.--The Appraisal Subcommittee shall--
[(1) monitor the requirements established by States
for the certification and licensing of individuals who
are qualified to perform appraisals in connection with
federally related transactions, including a code of
professional responsibility;]
(1) monitor the requirements established by States--
(A) for the certification and licensing of
individuals who are qualified to perform
appraisals in connection with federally related
transactions, including a code of professional
responsibility; and
(B) for the registration and supervision of
the operations and activities of an appraisal
management company;

* * * * * * *

(3) maintain a national registry of State certified
and licensed appraisers who are eligible to perform
appraisals in federally related transactions; [and]
(4) transmit an annual report to the Congress not
later than January 31 of each year which describes the
manner in which each function assigned to the Appraisal
Subcommittee has been carried out during the preceding
year[.];
(5) monitor the efforts of, and requirements
established by, States and the Federal financial
institutions regulatory agencies to protect consumers
from improper appraisal practices and the predations of
unlicensed appraisers in consumer credit transactions
that are secured by a consumer's principal dwelling;
and
(6) transmit an annual report to the Congress not
later than January 31 of each year that describes the
manner in which each function assigned to the Appraisal
Subcommittee has been carried out during the preceding
year. The report shall also detail the activities of
the Appraisal Subcommittee, including the results of
all audits of State appraiser regulatory agencies, and
provide an accounting of disapproved actions and
warnings taken in the previous year, including a
description of the conditions causing the disapproval
and actions taken to achieve compliance.
(7) maintain a national registry of appraisal
management companies that either are registered with
and subject to supervision of a State appraiser
certifying and licensing agency or are operating
subsidiaries of a Federally regulated financial
institution.

* * * * * * *

SEC. 1104. CHAIRPERSON OF APPRAISAL SUBCOMMITTEE; TERM OF CHAIRPERSON;
MEETINGS.

(a) * * *
(b) Meetings; Quorum; Voting.--The Appraisal Subcommittee
shall meet in public session after notice in the Federal
Register at the call of the Chairperson or a majority of its
members when there is business to be conducted. A majority of
members of the Appraisal Subcommittee shall constitute a quorum
but 2 or more members may hold hearings. Decisions of the
Appraisal Subcommittee shall be made by the vote of a majority
of its members.

* * * * * * *

SEC. 1106. POWERS OF APPRAISAL SUBCOMMITTEE.

The Appraisal Subcommittee may, for the purpose of carrying
out this title, establish advisory committees, hold hearings
prescribe regulations after notice and opportunity for
comment,, sit and act at times and places, take testimony,
receive evidence, provide information, and perform research, as
the Appraisal Subcommittee considers appropriate. Any
regulations prescribed by the Appraisal Subcommittee shall
(unless otherwise provided in this title) be limited to the
following functions: temporary practice, national registry,
information sharing, and enforcement. For purposes of
prescribing regulations, the Appraisal Subcommittee shall
establish an advisory committee of industry participants,
including appraisers, lenders, consumer advocates, and
government agencies, and hold meetings as necessary to support
the development of regulations.

* * * * * * *

SEC. 1109. ROSTER OF STATE CERTIFIED OR LICENSED APPRAISERS; AUTHORITY
TO COLLECT AND TRANSMIT FEES.

(a) In General.--Each State with an appraiser certifying and
licensing agency whose certifications and licenses comply with
this title, shall--
(1) transmit to the Appraisal Subcommittee, no less
than annually, a roster listing individuals who have
received a State certification or license in accordance
with this title; [and]
(2) transmit reports on sanctions, disciplinary
actions, license and certification revocations, and
license and certification suspensions on a timely basis
to the national registry of the Appraisal Subcommittee;
(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or
other third-party providers of appraisals and appraisal
management services, including investigations initiated
and disciplinary actions taken; and
[(4) collect from such individuals who perform or
seek to perform appraisals in federally related
transactions, an annual registry fee of not more than
$25, such fees to be transmitted by the State agencies
to the Council on an annual basis.
Subject to the approval of the Council, the Appraisal
Subcommittee may adjust the dollar amount of registry fees, up
to a maximum of $50 per annum, as necessary to carry out its
functions under this title.]
(4) collect--
(A) from such individuals who perform or seek
to perform appraisals in federally related
transactions, an annual registry fee of not
more than $40, such fees to be transmitted by
the State agencies to the Council on an annual
basis; and
(B) from an appraisal management company that
either has registered with a State appraiser
certifying and licensing agency in accordance
with this title or operates as a subsidiary of
a federally regulated financial institution, an
annual registry fee of--
(i) in the case of such a company
that has been in existence for more
than a year, $25 multiplied by the
number of appraisers working for or
contracting with such company in such
State during the previous year, but
where such $25 amount may be adjusted,
up to a maximum of $50, at the
discretion of the Appraisal
Subcommittee, if necessary to carry out
the Subcommittee's functions under this
title; and
(ii) in the case of such a company
that has not been in existence for more
than a year, $25 multiplied by an
appropriate number to be determined by
the Appraisal Subcommittee, and where
such number will be used for
determining the fee of all such
companies that were not in existence
for more than a year, but where such
$25 amount may be adjusted, up to a
maximum of $50, at the discretion of
the Appraisal Subcommittee, if
necessary to carry out the
Subcommittee's functions under this
title.
Subject to the approval of the Council, the Appraisal
Subcommittee may adjust the dollar amount of registry fees
under paragraph (4)(A), up to a maximum of $80 per annum, as
necessary to carry out its functions under this title. The
Appraisal Subcommittee shall consider at least once every 5
years whether to adjust the dollar amount of the registry fees
to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide
flexibility to the States for multi-year certifications and
licenses already in place, as well as a transition period to
implement the changes in registry fees. In establishing the
amount of the annual registry fee for an appraisal management
company, the Appraisal Subcommittee shall have the discretion
to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of
the number of appraisers working for or contracted by the
appraisal management company.
(b) Use of Amounts Appropriated or Collected.--Amounts
appropriated for or collected by the Appraisal Subcommittee
under this section shall be used--
(1) * * *

* * * * * * *

(3) to reimburse the general fund of the Treasury for
amounts appropriated to and expended by the Appraisal
Subcommittee during the 24-month startup period
following the date of the enactment of this title;
[and]
(4) to make grants in such amounts as it deems
appropriate to the Appraisal Foundation, to help defray
those costs of the foundation relating to the
activities of its Appraisal Standards and Appraiser
Qualification Boards[.];
(5) to make grants to State appraiser certifying and
licensing agencies to support the efforts of such
agencies to comply with this title, including--
(A) the complaint process, complaint
investigations, and appraiser enforcement
activities of such agencies; and
(B) the submission of data on State licensed
and certified appraisers and appraisal
management companies to the National appraisal
registry, including information affirming that
the appraiser or appraisal management company
meets the required qualification criteria and
formal and informal disciplinary actions; and
(6) to report to all State appraiser certifying and
licensing agencies when a license or certification is
surrendered, revoked, or suspended.
Obligations authorized under this subsection may not exceed 75
percent of the fiscal year total of incremental increase in
fees collected and deposited in the ``Appraisal Subcommittee
Account'' pursuant to subsection (h).

* * * * * * *

SEC. 1112. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGULATORY
AGENCIES RELATING TO APPRAISER QUALIFICATIONS.

(a) * * *
(b) Threshold Level.--Each Federal financial institutions
regulatory agency and the Resolution Trust Corporation may
establish a threshold level at or below which a certified or
licensed appraiser is not required to perform appraisals in
connection with federally related transactions, if such agency
determines in writing that such threshold level does not
represent a threat to the safety and soundness of financial
institutions, and that such threshold level provides reasonable
protection for consumers who purchase 1-4 unit single-family
residences. In determining whether a threshold level provides
reasonable protection for consumers, each Federal financial
institutions regulatory agency shall consult with consumer
groups and convene a public hearing.

* * * * * * *

SEC. 1113. TRANSACTIONS REQUIRING THE SERVICES OF A STATE CERTIFIED
APPRAISER.

[In determining] (a) In General._In determining whether an
appraisal in connection with a federally related transaction
shall be performed by a State certified appraiser, an agency or
instrumentality under this title shall consider whether
transactions, either individually or collectively, are of
sufficient financial or public policy importance to the United
States that an individual who performs an appraisal in
connection with such transactions should be a State certified
appraiser, except that--
(1) * * *
(2) 1-to-4 unit, single family residential appraisals
may be performed by State licensed appraisers unless
the size and complexity requires a State certified
appraiser, where a complex 1-to-4 unit single family
residential appraisal means an appraisal for which the
property to be appraised, the form of ownership, the
property characteristics, or the market conditions are
atypical.
(b) Appraisals and Appraisal Reviews.--All appraisals
performed at a property within a State shall be prepared by
appraisers licensed or certified in the State where the
property is located. All appraisal reviews, including appraisal
reviews by a lender, appraisal management company, or other
third party organization, shall be performed by an appraiser
who is duly licensed or certified by a State appraisal board.

* * * * * * *

SEC. 1116. CERTIFICATION AND LICENSING REQUIREMENTS.

(a) * * *

* * * * * * *

(c) Definition.--As used in this section, the term ``State
licensed appraiser'' means an individual who has satisfied the
requirements for State licensing in a State or territory whose
criteria for the licensing of a real estate appraiser currently
meet or exceed the minimum criteria issued by the Appraisal
Qualifications Board of The Appraisal Foundation for the
licensing of real estate appraisers.

* * * * * * *

[(e) Authority of the Appraisal Subcommittee.--The Appraisal
Subcommittee shall not set qualifications or experience
requirements for the States in licensing real estate
appraisers, including a de minimus standard. Recommendations of
the Subcommittee shall be nonbinding on the States.]
(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of ``Trainee
Appraiser'' and ``Supervisory Appraiser'' shall meet or exceed
the minimum qualification requirements of the Appraiser
Qualifications Board of The Appraisal Foundation. The Appraisal
Subcommittee shall have the authority to enforce these
requirements.

SEC. 1117. ESTABLISHMENT OF STATE APPRAISER CERTIFYING AND LICENSING
AGENCIES.

To assure the availability of State certified and licensed
appraisers for the performance in a State of appraisals in
federally related transactions and to assure effective
supervision of the activities of certified and licensed
appraisers, a State may establish a State appraiser certifying
and licensing agency. The duties of such agency may
additionally include the registration and supervision of
appraisal management companies.

SEC. 1118. MONITORING OF STATE APPRAISER CERTIFYING AND LICENSING
AGENCIES.

[(a) In General.--The Appraisal Subcommittee shall monitor
State appraiser certifying and licensing agencies for the
purpose of determining whether a State agency's policies,
practices, and procedures are consistent with this title. The
Appraisal Subcommittee and all agencies, instrumentalities, and
federally recognized entities under this title shall not
recognize appraiser certifications and licenses from States
whose appraisal policies, practices, or procedures are found to
be inconsistent with this title.]
(a) In General.--The Appraisal Subcommittee shall monitor
each State appraiser certifying and licensing agency for the
purposes of determining whether such agency--
(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
(2) processes complaints and completes investigations
in a reasonable time period;
(3) appropriately disciplines sanctioned appraisers
and appraisal management companies;
(4) maintains an effective regulatory program; and
(5) reports complaints and disciplinary actions on a
timely basis to the national registries on appraisers
and appraisal management companies maintained by the
Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a
State licensed or certified appraiser or a registered appraisal
management company from a national registry on an interim basis
pending State agency action on licensing, certification,
registration, and disciplinary proceedings. The Appraisal
Subcommittee and all agencies, instrumentalities, and Federally
recognized entities under this title shall not recognize
appraiser certifications and licenses from States whose
appraisal policies, practices, funding, staffing, or procedures
are found to be inconsistent with this title. The Appraisal
Subcommittee shall have the authority to impose sanctions, as
described in this section, against a State agency that fails to
have an effective appraiser regulatory program. In determining
whether such a program is effective, the Appraisal Subcommittee
shall include an analyses of the licensing and certification of
appraisers, the registration of appraisal management companies,
the issuance of temporary licenses and certifications for
appraisers, the receiving and tracking of submitted complaints
against appraisers and appraisal management companies, the
investigation of complaints, and enforcement actions against
appraisers and appraisal management companies. The Appraisal
Subcommittee shall have the authority to impose interim actions
and suspensions against a State agency as an alternative to, or
in advance of, the derecognition of a State agency.
(b) Disapproval by Appraisal Subcommittee.--The Federal
financial institutions, regulatory agencies, the Federal
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, and the Resolution Trust Corporation shall accept
certifications and licenses awarded by a State appraiser
certifying the licensing agency unless the Appraisal
Subcommittee issues a written finding that--
(1) * * *
(2) the State agency is not granted authority or
sufficient funding by the State which is adequate to
permit the agency to carry out its functions under this
title; or

* * * * * * *

SEC. 1119. RECOGNITION OF STATE CERTIFIED AND LICENSED APPRAISERS FOR
PURPOSES OF THIS TITLE.

(a) Effective Date for Use of Certified or Licensed
Appraisers Only.--
(1) * * *
(2) Extension of effective date.--Subject to the
approval of the [council,] Council, the Appraisal
Subcommittee may extend, until December 31, 1991, the
effective date for the use of certified or licensed
appraisers if it makes a written finding that a State
has made substantial progress in establishing a State
certification and licensing system that appears to
conform to the provisions of this title.

* * * * * * *

SEC. 1121. DEFINITIONS.

For purposes of this title:
(1) * * *

* * * * * * *

(6) Federal financial institutions regulatory
agencies.--The term ``Federal financial institutions
regulatory agencies'' means the Board of Governors of
the Federal Reserve System, the Federal Deposit
Insurance [Corporations,] Corporation, the Office of
the Comptroller of the Currency, the Office of Thrift
Supervision, and the National Credit Union
Administration.

* * * * * * *

(8) Chairperson.--The term ``Chairperson'' means the
Chairperson of the Appraisal Subcommittee selected by
the [council] Council.

* * * * * * *

(11) Appraisal management company.--The term
``appraisal management company'' means, in connection
with valuing properties collateralizing mortgage loans
or mortgages incorporated into a securitization, any
external third party authorized either by a creditor of
a consumer credit transaction secured by a consumer's
principal dwelling or by an underwriter of or other
principal in the secondary mortgage markets, that
oversees a network or panel of more than 10 certified
or licensed appraisers in a State or 25 or more
nationally within a given year--
(A) to recruit, select, and retain
appraisers;
(B) to contract with licensed and certified
appraisers to perform appraisal assignments;
(C) to manage the process of having an
appraisal performed, including providing
administrative duties such as receiving
appraisal orders and appraisal reports,
submitting completed appraisal reports to
creditors and underwriters, collecting fees
from creditors and underwriters for services
provided, and reimbursing appraisers for
services performed; or
(D) to review and verify the work of
appraisers.

SEC. 1122. MISCELLANEOUS PROVISIONS.

(a) Temporary Practice.--
(1) In general.--A State appraiser certifying or
licensing agency shall recognize on a temporary basis
the certification or license of an appraiser issued by
another State if--
(A) the property to be appraised is part of a
federally related transaction,
(B) the appraiser's business is of a
temporary nature, and
(C) the appraiser registers with the
appraiser certifying or licensing agency in the
State of temporary practice.
[(b) Reciprocity.--The Appraisal Subcommittee shall encourage
the States to develop reciprocity agreements that readily
authorize appraisers who are licensed or certified in one State
(and who are in good standing with their State appraiser
certifying or licensing agency) to perform appraisals in other
States.]
(b) Reciprocity.--A State appraiser certifying or licensing
agency shall issue a reciprocal certification or license for an
individual from another State when--
(1) the appraiser licensing and certification program
of such other State is in compliance with the
provisions of this title; and
(2) the appraiser holds a valid certification from a
State whose requirements for certification or licensing
meet or exceed the licensure standards established by
the State where an individual seeks appraisal
licensure.
(c) Supplemental Funding.--Funds available to the Federal
financial institutions regulatory agencies may be made
available to the [Federal Financial Institutions Examination
Council] Financial Institutions Examination Council to support
[the council's functions] the Council's functions under this
title.
(d) Prohibition Against Discrimination.--Criteria established
by the Federal financial institutions regulatory agencies, the
Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and the Resolution Trust Corporation for
appraiser qualifications in addition to State certification or
licensing [shall not exclude a certified or licensed appraiser
for consideration for an assignment solely by virtue of
membership or lack of membership in any particular appraisal
organization.] may include education achieved, experience,
sample appraisals, and references from prior clients.
Membership in a nationally recognized professional appraisal
organization may be a criteria considered, though lack of
membership therein shall not be the sole bar against
consideration for an assignment under these criteria.

* * * * * * *

(g) Appraiser Independence Monitoring.--The Appraisal
Subcommittee shall monitor each State appraiser certifying and
licensing agency for the purpose of determining whether such
agency's policies, practices, and procedures are consistent
with the purposes of maintaining appraiser independence and
whether such State has adopted and maintains effective laws,
regulations, and policies aimed at maintaining appraiser
independence.
(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the
Appraiser Qualification Board's Course Approval Program.
(i) Appraisal Complaint National Hotline.--If, 1 year after
the date of the enactment of this subsection, the Appraisal
Subcommittee determines that no national hotline exists to
receive complaints of non-compliance with appraisal
independence standards and Uniform Standards of Professional
Appraisal Practice, including complaints from appraisers,
individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers or
the appraisal process, the Appraisal Subcommittee shall
establish and operate such a national hotline, which shall
include a toll-free telephone number and an email address. If
the Appraisal Subcommittee operates such a national hotline,
the Appraisal Subcommittee shall refer complaints for further
action to appropriate governmental bodies, including a State
appraiser certifying and licensing agency, a financial
institution regulator, or other appropriate legal authorities.
For complaints referred to State appraiser certifying and
licensing agencies or to Federal regulators, the Appraisal
Subcommittee shall have the authority to follow up such
complaint referrals in order to determine the status of the
resolution of the complaint.

* * * * * * *

SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.

(a) In General.--The Appraiser Qualifications Board of the
Appraisal Foundation shall establish minimum qualifications to
be applied by a State in the registration of appraisal
management companies. Such qualifications shall include a
requirement that such companies--
(1) register with and be subject to supervision by a
State appraiser certifying and licensing agency in each
State in which such company operates;
(2) verify that only licensed or certified appraisers
are used for federally related transactions;
(3) require that appraisals coordinated by an
appraisal management company comply with the Uniform
Standards of Professional Appraisal Practice; and
(4) require that appraisals are conducted
independently and free from inappropriate influence and
coercion pursuant to the appraisal independence
standards established under section 129E of the Truth
in Lending Act.
(b) Exception for Federally Regulated Financial
Institutions.--The requirements of subsection (a) shall not
apply to an appraisal management company that is a subsidiary
owned and controlled by a financial institution and regulated
by a federal financial institution regulatory agency. In such
case, the appropriate federal financial institutions regulatory
agency shall, at a minimum, develop regulations affecting the
operations of the appraisal management company to--
(1) verify that only licensed or certified appraisers
are used for federally related transactions;
(2) require that appraisals coordinated by an
institution or subsidiary providing appraisal
management services comply with the Uniform Standards
of Professional Appraisal Practice; and
(3) require that appraisals are conducted
independently and free from inappropriate influence and
coercion pursuant to the appraisal independence
standards established under section 129E of the Truth
in Lending Act.
(c) Registration Limitations.--An appraisal management
company shall not be registered by a State if such company, in
whole or in part, directly or indirectly, is owned by any
person who has had an appraiser license or certificate refused,
denied, cancelled, surrendered in lieu of revocation, or
revoked in any State. Additionally, each person that owns more
than 10 percent of an appraisal management company shall be of
good moral character, as determined by the State appraiser
certifying and licensing agency, and shall submit to a
background investigation carried out by the State appraiser
certifying and licensing agency.
(d) Regulations.--The Appraisal Subcommittee shall promulgate
regulations to implement the minimum qualifications developed
by the Appraiser Qualifications Board under this section, as
such qualifications relate to the State appraiser certifying
and licensing agencies. The Appraisal Subcommittee shall also
promulgate regulations for the reporting of the activities of
appraisal management companies in determining the payment of
the annual registry fee.
(e) Effective Date.--
(1) In general.--No appraisal management company may
perform services related to a federally related
transaction in a State after the date that is 36 months
after the date of the enactment of this section unless
such company is registered with such State or subject
to oversight by a federal financial institutions
regulatory agency.
(2) Extension of effective date.--Subject to the
approval of the Council, the Appraisal Subcommittee may
extend by an additional 12 months the requirements for
the registration and supervision of appraisal
management companies if it makes a written finding that
a State has made substantial progress in establishing a
State appraisal management company registration and
supervision system that appears to conform with the
provisions of this title.

SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN MORTGAGES.

(a) In General.--Automated valuation models shall adhere to
quality control standards designed to--
(1) ensure a high level of confidence in the
estimates produced by automated valuation models;
(2) protect against the manipulation of data;
(3) seek to avoid conflicts of interest; and
(4) require random sample testing and reviews, where
such testing and reviews are performed by an appraiser
who is licensed or certified in the State where the
testing and reviews take place.
(b) Adoption of Regulations.--The Appraisal Subcommittee and
its member agencies shall promulgate regulations to implement
the quality control standards required under this section.
(c) Enforcement.--Compliance with regulations issued under
this subsection shall be enforced by--
(1) with respect to a financial institution, or
subsidiary owned and controlled by a financial
institution and regulated by a federal financial
institution or regulatory agency, the federal financial
institution regulatory agency that acts as the primary
federal supervisor of such financial institution or
subsidiary; and
(2) with respect to other persons, the Appraisal
Subcommittee.
(d) Automated Valuation Model Defined.--For purposes of this
section, the term ``automated valuation model'' means any
computerized model used by mortgage originators and secondary
market issuers to determine the collateral worth of a mortgage
secured by a consumer's principal dwelling.

SEC. 1126. BROKER PRICE OPINIONS.

(a) General Prohibition.--Broker price opinions may not be
used as the sole basis to determine the value of a piece of
property for the purpose of a loan origination of a residential
mortgage loan secured by such piece of property.
(b) Exceptions.--Subsection (a) shall not apply to--
(1) those transaction as may be designated by the
federal financial institutions regulatory agencies or
the Federal Housing Finance Agency; or
(2) real estate brokers who produce broker price
opinions or competitive market analyses solely for the
purposes of the real estate listing process.
(c) Broker Price Opinion Defined.--For purposes of this
section, the term ``broker price opinion'' means an estimate,
done in lieu of a written appraisal, prepared by a real estate
broker, agent, or sales person that details the probable
selling price of a particular piece of real estate property and
provides a varying level of detail about the property's
condition, market, and neighborhood, and information on
comparable sales, but does not include an automated valuation
model, as defined in section 1125(c).

* * * * * * *

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FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1978

* * * * * * *

TITLE X--FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

* * * * * * *

SEC. 1011. ESTABLISHMENT OF APPRAISAL SUBCOMMITTEE.

There shall be within the Council a subcommittee to be known
as the ``Appraisal Subcommittee'', which shall consist of the
designees of the heads of the Federal financial institutions
regulatory agencies and the Federal Housing Finance Agency.
Each such designee shall be a person who has demonstrated
knowledge and competence concerning the appraisal profession.
At all times at least one member of the Appraisal Subcommittee
shall have demonstrated knowledge and competence through
licensure, certification, or professional designation within
the appraisal profession.
----------

EQUAL CREDIT OPPORTUNITY ACT

* * * * * * *

Sec. 701. Prohibited discrimination; reasons for adverse action

(a) * * *

* * * * * * *

[(e) Each creditor shall promptly furnish an applicant, upon
written request by the applicant made within a reasonable
period of time of the application, a copy of the appraisal
report used in connection with the applicant's application for
a loan that is or would have been secured by a lien on
residential real property. The creditor may require the
applicant to reimburse the creditor for the cost of the
appraisal.]
(e) Copies Furnished to Applicants.--
(1) In general.--Each creditor shall furnish to an
applicant a copy of any and all written appraisals and
valuations developed in connection with the applicant's
application for a loan that is secured or would have
been secured by a first lien on a dwelling promptly
upon completion, but in no case later than 3 days prior
to the closing of the loan, whether the creditor grants
or denies the applicant's request for credit or the
application is incomplete or withdrawn.
(2) Waiver.--The applicant may waive the 3 day
requirement provided for in paragraph (1), except where
otherwise required in law.
(3) Reimbursement.--The applicant may be required to
pay a reasonable fee to reimburse the creditor for the
cost of the appraisal, except where otherwise required
in law.
(4) Free copy.--Notwithstanding paragraph (3), the
creditor shall provide a copy of each written appraisal
or valuation at no additional cost to the applicant.
(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in
writing of the right to receive a copy of each written
appraisal and valuation under this subsection.
(6) Regulations.--The Board shall prescribe
regulations to implement this subsection within 1 year
of the date of the enactment of this subsection.
(7) Valuation defined.--For purposes of this
subsection, the term ``valuation'' shall include any
estimate of the value of a dwelling developed in
connection with a creditor's decision to provide
credit, including those values developed pursuant to a
policy of a government sponsored enterprise or by an
automated valuation model, a broker price opinion, or
other methodology or mechanism.

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DISSENTING VIEWS

Economists agree that the roots of the current problems in
the mortgage market can be traced to earlier this decade, when
falling interest rates encouraged lenders to significantly
relax--and in some cases abandon--sound underwriting criteria
when qualifying borrowers for mortgages. Lenders pushed the
envelope as they raised loan-to-value ratios to grow near term
profits. As a result, borrowers who at one time might have been
denied credit or granted limited credit found themselves able
to borrow larger sums, and they took advantage of this
opportunity to buy larger, more expensive houses than they
otherwise would have been able to afford.
As a consequence of low interest rates and weak
underwriting standards, home ownership rates rose from the 64
percent range in the 35 years prior to 1995 to an all-time high
of 69 percent in 2004. The growing demand for houses caused
home prices to skyrocket: according to the National Association
of Realtors, the national median home price went from $110,500
in 1995 to $190,000 ten years later. Economists have pointed
out that compared to other economic fundamentals, such as
rental prices or incomes, these soaring housing prices were
simply unsustainable.
Despite the higher risk associated with mortgages to
borrowers with checkered credit histories, the opportunities to
earn higher rates of return from subprime mortgages induced
many lenders to further loosen their underwriting standards
during the period 2005 to 2007, introducing even more risk into
the system. Instead of protecting themselves against this
increased risk by requiring borrowers to make higher down
payments, lenders engineered new loans that permitted borrowers
to buy with little or no money down, and compensated for this
increased risk by charging these borrowers higher interest
rates and fees. Lenders further eroded the integrity of the
underwriting process by permitting borrowers to sign up for so-
called ``low documentation'' or ``no documentation'' loans,
which became known in the mortgage industry as ``liar loans,''
so named because they often featured loan applications
characterized by misstated or falsified income.
As long as housing prices continued to rise, the risks
inherent in such shoddy underwriting practices remained hidden.
Borrowers who had stretched to purchase homes that they
otherwise could not afford either refinanced their mortgages
against home price appreciation or sold to other buyers and
paid off their mortgages. Investors in securities
collateralized by subprime residential mortgages believed their
risk was limited: even if risky borrowers defaulted, home price
appreciation all but guaranteed that the houses that secured
the underlying mortgages could either be resold to other buyers
through voluntary sales or, if necessary, foreclosed upon and
resold at auction with only minimal impairment of the
collateral securing the loan.
H.R. 1728, the ``Mortgage Reform and Anti-Predatory Lending
Act,'' attempts to correct past excesses in the mortgage market
by establishing new standards for mortgage origination and
imposing greater legal liability on the secondary mortgage
market. This is not the first time the Committee has considered
comprehensive mortgage reform legislation. In the 110th
Congress, H.R. 3915 was reported favorably out of the Committee
and passed the House by a vote of 291-127, although no action
was taken in the Senate. Included in Title I of H.R. 3915 was
the S.A.F.E. Act, which created a national licensing and
registration regime for all mortgage loan originators. The
S.A.F.E. Act later became law as part of the Housing and
Economic Recovery Act of 2008 (Public Law 110-289), and has,
according to testimony by state regulators at the Committee's
legislative hearing on H.R. 1728, already begun to yield
significant benefits in combating mortgage fraud and weeding
bad actors out of the industry. Many Republicans supported H.R.
3915 on the ground that it struck the right balance by
protecting consumers from unscrupulous originators without
constricting the ability of the secondary market to fund
suitable loan products for credit-worthy borrowers or
increasing the cost of mortgage credit.
Unfortunately, while it carries over many of the useful
reforms contained in H.R. 3915, H.R. 1728 strikes a far
different balance than that earlier legislation, one that will
undermine the mortgage market just as Americans are starting to
see preliminary signs of a possible housing bottom. H.R. 1728
lacks the clarity needed to provide meaningful protection to
consumers. Rather than focusing on basic underwriting
standards, as the Federal Reserve has done in promulgating
comprehensive regulations to combat abusive lending practices
under the Home Ownership and Equity Protection Act (HOEPA),
H.R. 1728 imposes new and untested mandates and duties that
regulators and industry participants do not know how to
implement, if they can be implemented at all, and that may end
up punishing the very consumers the Majority wants to protect.
The Fed's HOEPA rules, which are set to go into effect in
October 2009, will bring an end to the shoddy underwriting
standards that plagued the subprime market. Indeed, Chairman
Frank has previously acknowledged that ``the Federal Reserve .
. . has adopted regulations . . . so that the predatory and
deceptive lending practices that led to the subprime crisis
will be prohibited.'' But rather than allow the Fed's carefully
vetted regulations to take effect, the Majority has chosen to
superimpose onto those rules its own set of policy
prescriptions, which seem likely only to inject legal
uncertainty into the lending process, thereby raising the costs
and reducing the availability of mortgage credit to consumers.
At the only legislative hearing that the Majority convened
to consider H.R. 1728's complex and far-reaching provisions,
representatives of the Federal Reserve, consumer advocacy
groups, and affected industries expressed a number of concerns
about various aspects of this bill. The director of the Federal
Reserve's consumer affairs division, Sandra Braunstein,
testified that the bill seemed ``intended to drive the market
into 30-year fixed loans,'' which ``could have the consequence
of very much limiting the kinds of products that become
available when the markets reset.'' Even after the Committee
adopted an amendment to expand the scope of the safe harbor and
include certain prime ARMs within its coverage, the bill is
still constructed in a way to expose to legal liability many
safe and sustainable mortgage products, which will result in
most lenders simply choosing not to offer those products.
Interestingly, some of the most pointed criticism of H.R. 1728
came from consumer groups. Margot Saunders of the National
Consumer Law Center, testifying on behalf of a coalition of
consumer advocacy and labor organizations from across the
country, called the bill ``convoluted'' and ``virtually
impossible as a mechanism to solve the current problem.''
One of the changes to last Congress' legislation that has
drawn the most concern is a new ``credit risk retention''
requirement that would force loan originators to hold 5 percent
of any mortgage that does not fit the bill's narrow safe
harbor. While there was general consensus at the legislative
hearing on H.R. 1728 that requiring lenders to retain more
``skin in the game'' was a worthy concept, there was general
confusion as to how the execution of that concept in the bill
language would work in practice, particularly for smaller non-
bank lenders that do not enjoy the same reliable sources of
funding as depository institutions. The Majority attempted to
address those concerns through an amendment offered at the
mark-up giving the Federal banking regulators greater
discretion in writing rules to implement the ``credit risk
retention'' requirement, but serious questions remain as to
whether the requirement is either workable or necessary in
light of the bill's other reforms imposing more stringent
mortgage underwriting criteria.
Like H.R. 3915, H.R. 1728 contains provisions imposing
liability on assignees and securitizers for loans that violate
the ``ability to repay'' and ``net tangible benefit''
standards, giving consumers a cause of action for rescission of
the loan and costs, unless the assignee or securitizer provides
a cure to make the loan conform to the minimum standards within
90 days of receiving notice from the consumer. These liability
provisions are considerably more stringent than H.R. 3915's,
and eliminate one of the protections that H.R. 3915 offered to
assignees: under H.R. 3915, assignees and securitizers could
avoid liability if they could show that they had policies
against buying loans that were outside the safe harbor, had
exercised ``reasonable due diligence'' to adhere to such
policies, and had obtained representations and warranties from
the seller of the loans that the loans did not violate these
minimum standards. Moreover, the Committee adopted an amendment
authorizing suits by state Attorneys General to enforce H.R.
1728's provisions, magnifying the already substantial legal
risks faced by participants in the mortgage market under the
bill.
As if creating new avenues for additional litigation were
not enough, H.R. 1728 provides a taxpayer subsidy for such
activity by authorizing a $140 million fund for state and local
legal organizations to provide foreclosure-related legal
assistance to homeowners in default or foreclosure or tenants
facing eviction due to foreclosure. Fortunately, the Committee
adopted--with Chairman Frank's support--an amendment offered by
Mrs. Bachmann that would render groups like ACORN ineligible
for these legal assistance funds. The Bachmann amendment is
identical to language signed into law in the Housing and
Economic Recovery Act of 2008 (HERA) which barred any group
indicted for federal election fraud from receiving housing
counseling funds. Republicans will strongly oppose any attempt
to remove or modify the Bachmann amendment as H.R. 1728 moves
through the legislative process.
Finally, H.R. 1728 includes so-called ``tenant protection''
provisions creating new federal requirements that purchasers of
foreclosed properties honor both private leases and Section 8
vouchers. While well-intentioned, these provisions could have a
chilling effect on efforts to promote purchases of foreclosed
properties and on owner participation in the Section 8 program,
by making such participation more onerous. Currently,
foreclosure is grounds for termination of a lease in the
majority of states. While we share the Majority's concern for
tenants facing eviction, we are not convinced that the
provisions in H.R. 1728 are the most prudent way to provide
tenant protections. It is important to note that a Section 8
tenant does not lose the government housing subsidy if his or
her building goes into foreclosure. In fact, many new owners of
these properties may well opt to renew existing Section 8
tenants or voluntarily agree to allow them to stay for the
remainder of their Housing Assistance Payment (HAP) contract,
but mandating owner adherence to a contract to which they were
not a party is a dangerous precedent to set. It could also have
the unintended consequence of discouraging sales of foreclosed
properties, thereby frustrating the effectiveness of government
policies designed to reduce the inventory of such properties
and potentially prolonging the housing downturn. Mr. Neugebauer
offered an amendment to strike these misguided restrictions
from the bill, but it was defeated on a largely party-line
vote.
Because we believe that the Majority's failure to remedy
the many problems with H.R. 1728 identified during the
Committee's consideration of the legislation will likely result
in further damage to a fragile mortgage market in need of
greater certainty--not untested and ill-defined mandates from
Washington--we must reluctantly oppose it.
Spencer Bachus.
Jeb Hensarling.
Randy Neugebauer.
Erik Paulsen.
Scott Garrett.