[House Report 114-53]
[From the U.S. Government Publishing Office]


114th Congress    }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                      {       114-53

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



 
         PRESERVING ACCESS TO MANUFACTURED HOUSING ACT OF 2015

                                _______
                                

 April 6, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 650]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 650) to amend the Truth in Lending Act to modify 
the definitions of a mortgage originator and a high-cost 
mortgage, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                          Purpose and Summary

    H.R. 650, the ``Preserving Access to Manufactured Housing 
Act of 2015,'' provides technical clarifications to the 
definition of a ``mortgage originator'' for purposes of the 
Truth in Lending Act. The bill also amends the definition of a 
``high cost'' mortgage to ensure that consumers of small-
balance residential loans have access to mortgage credit.

                  Background and Need for Legislation

    The Home Ownership and Equity Protection Act (HOEPA) was 
enacted in 1994 as an amendment to the Truth in Lending Act (15 
U.S.C. 1601 et seq.) to address abusive practices in 
refinancings and closed-end home equity loans with high 
interest rates or high fees. Since HOEPA's enactment, 
refinancings or home equity mortgage loans meeting any of 
HOEPA's high-cost coverage tests have been subject to special 
disclosure requirements and restrictions on loan terms, and 
consumers with high-cost mortgages have had enhanced remedies 
for violations of the law. HOEPA identifies a class of high-
cost mortgage loans through rate and fee triggers, and it 
provides consumers entering into these transactions with 
special protections.
    On January 10, 2013, the Consumer Financial Protection 
Bureau (CFPB) issued a final rule implementing the changes to 
HOEPA mandated by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (P.L. 111-203). The Dodd-Frank Act 
expanded the scope of HOEPA coverage to include purchase money 
mortgage loans and home equity lines of credit. Previously 
HOEPA only applied to refinancings and home equity installment 
loans.
    Additionally, the Dodd-Frank Act, and the implementing 
rule, amends the tests for determining whether a loan is ``high 
cost'' under HOEPA. Previously a loan was covered by HOEPA if 
the annual percentage rate (APR) exceeded the rate for Treasury 
securities with a comparable maturity by more than 10 
percentage points, or if the points and fees paid by the 
consumer exceeded the greater of 8 percent of the loan amount 
or $400. The $400 figure, set in 1994, was adjusted annually 
based on the Consumer Price Index. The Dodd-Frank Act, and the 
implementing rule, lowered the rate threshold for HOEPA 
coverage. Under the new regime, a loan will be covered by HOEPA 
if the APR applicable to the transaction exceeds the average 
prime offer rate (APOR) for a comparable transaction by more 
than 6.5 percent for a first-lien mortgage, or by more than 8.5 
percent for a first-lien mortgage if the transaction is for 
less than $50,000. Additionally, the Dodd-Frank Act, and the 
implementing rule, reduces the total amount of points and fees 
that would trigger HOEPA coverage. A loan will be covered by 
HOEPA if the points and fees associated with the transaction 
exceed 5 percent of the total loan amount for a loan greater 
than or equal to $20,000; or 8 percent of the total loan amount 
or $1,000 (whichever is less) for a loan less than $20,000.
    The Financial Services Committee heard testimony that the 
new tests for determining whether a loan is ``high cost'' are 
problematic and could reduce access to credit for consumers of 
manufactured housing. In a March 2015 letter, the Manufactured 
Housing Institute wrote in support of H.R. 650, stating that:

          Due to an unintended consequence of the Dodd-Frank 
        Act, manufactured housing is less available as an 
        affordable housing option. The CFPB rules are having a 
        significant impact on credit availability for the 
        purchase of affordable manufactured housing . . .
          H.R. 650, the Preserving Access to Affordable Housing 
        Act would clarify the Dodd-Frank provisions that have 
        impeded the ability of consumers to access affordable 
        manufactured housing financing, without undermining key 
        Dodd-Frank mortgage protections . . . H.R. 650 revises 
        the triggers by which small-sized manufactured home 
        loans are considered ``High-Cost'' under the Home 
        Ownership and Equity Protection Act (HOEPA). The fixed 
        costs of originating and servicing loans causes 
        smaller-sized manufactured housing loans to violate 
        caps in Dodd-Frank and be categorized as ``High-Cost'' 
        or predatory. The discrepancy exists because while the 
        cost of originating and servicing a $200,000 loan and a 
        $20,000 loan are nearly [the] same in terms of real 
        dollars, the cost as a percentage of each loan's size 
        is very different. Many manufactured home owners will 
        not be able to purchase, refinance or sell a home 
        because small-balance manufactured home loans will not 
        exist due to their stigma as High-Cost Mortgage loans 
        under HOEPA.
          H.R. 650 clarifies that manufactured home retailers 
        and their employees are not considered Loan Originators 
        (LOs) under Consumer Financial Protection Bureau (CFPB) 
        guidelines, provided they receive no compensation for 
        performing LO activities. Similar to real estate 
        agents, manufactured housing retailers and salespeople 
        are fundamentally in the business of selling homes, not 
        originating loans. Their compensation is solely derived 
        from the sale of a home. The sales compensation paid to 
        retailers and their employees is not tied to LO 
        activities, as defined by CFPB, because: (1) the sales 
        compensation is not paid by lenders; (2) the amount and 
        type of sales compensation is not dependent on whether 
        a home is purchased with cash or financing, lender 
        incentives, or loan terms; and (3) the compensation is 
        clearly for sales services that are NOT loan 
        origination activities. Just as a real estate agent's 
        sales commission does not make them an LO under CFPB 
        rules, a similar distinction is needed for those 
        selling manufactured homes.

    In a March 23, 2015 letter to the Committee, the Mortgage 
Bankers Association stated its support for the bill:

          H.R. 650 would allow more low-balance loans to fit 
        within the cap on points and fees under the Home 
        Ownership and Equity Protection Act (HOEPA) by revising 
        those triggers. This will allow more consumers, 
        particularly on the lower end of the economic spectrum, 
        to gain access to safe and affordable mortgage credit. 
        The legislation also contains an important technical 
        change that will clarify that manufactured home 
        salespersons are not considered mortgage originators, 
        provided they receive no compensation from a creditor, 
        lender or mortgage broker.

    In a March 23, 2015 letter to the Committee, the National 
Association of Federal Credit Unions explained that H.R. 650:

        would modify the definitions of a mortgage originator 
        and a high-cost mortgage to ensure that consumers of 
        small-balance mortgage loans, including manufactured 
        housing loans, will have access to credit. Working 
        families across the country, particularly in rural 
        America, depend on access to financing for affordable 
        manufactured homes and this bill addresses an important 
        barrier to entry in the marketplace.

    In a March 6, 2015 letter to the Committee, the California 
Association of Mortgage professionals explained

        [Manufactured] homes are often a more accessible and 
        affordable way for many people to buy their own home. 
        Manufactured housing has come a long way with respect 
        to the features and benefits it provides homeowners. 
        Today, manufactured homes can blend seamlessly into any 
        market or neighborhood. In many areas of the country, 
        particularly rural communities, manufactured homes are 
        the only type of quality affordable housing available.
          The Dodd/Frank regulations mistakenly result in 
        manufactured homes becoming less available as an 
        affordable housing option. H.R. 650 clarifies the 
        difference between manufactured housing manufacturers 
        and loan originators, and insures that low-dollar 
        manufactured housing loans are exempt from HOEPA 
        standards.

    In a September 2014 white paper entitled ``Manufactured-
housing consumer finance in the United States,'' the CFPB 
stated that:

          The Dodd-Frank changes likely increased the share of 
        manufactured-home loans that are classified as HOEPA 
        loans substantially . . . In their comments during the 
        HOEPA rulemaking process, some industry commenters 
        stated that . . . they would not make HOEPA loans and 
        therefore consumers would experience reduced access to 
        credit for manufactured-home loans . . . 
        Notwithstanding these arguments, the Bureau decided to 
        implement the statute as Congress had written it, 
        rather than use its authority to make adjustments 
        beyond those that Congress deemed appropriate . . . The 
        extension of HOEPA to home-purchase loans increased the 
        share of all loans (i.e., home-purchase, refinance or 
        home improvement loans) that are classified as HOEPA 
        loans, but the resulting increase in the share of high-
        cost mortgages was much larger for manufactured-housing 
        loans than for loans on site-built homes.

    By improving the definition of ``high cost'' mortgages for 
purposes of the application of HOEPA, H.R. 650 preserves the 
ability of lenders to make smaller mortgage loans to low and 
moderate income borrowers. Without this critical change, 
American consumers seeking to purchase manufactured or modular 
housing will face reduced choice and fewer financing 
opportunities.

                                Hearings

    The Committee held no hearings on H.R. 650 in the 114th 
Congress. However, while the Committee did not hold a specific 
legislative hearing on this measure, it held a hearing entitled 
``Preserving Consumer Choice and Financial Independence'' on 
March 18, 2015, at which matters relating to this measure were 
discussed.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 25, 2015 and March 26, 2015, and ordered H.R. 650 to be 
reported favorably to the House without amendment by a recorded 
vote of 43 yeas to 15 nays (Record vote no. FC-22), a quorum 
being present.

                            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. The 
sole vote in committee was a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 43 yeas to 15 nays 
(Record vote no. FC-22), a quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of 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 states that H.R. 650 
will alter certain definitions contained within the Truth in 
Lending Act to ensure that consumers of small-balance 
residential loans have access to mortgage credit.

   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 Estimates

    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:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 3, 2015.
Hon. Jeb Hensarling,
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. 650, the 
Preserving Access to Manufactured Housing Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 650--Preserving Access to Manufactured Housing Act of 2015

    H.R. 650 would amend the Truth in Lending Act (TILA) by 
adjusting the definitions of a mortgage originator and a high-
cost mortgage. Under current law, employees of retailers of 
manufactured homes who do not accept residential mortgage loan 
applications, offer or negotiate terms of loans, or advise 
consumers on loan terms are excluded from the definition of 
mortgage originator. H.R. 650 would broaden the exception to 
include retailers of manufactured homes as well as their 
employees, as long as they do not receive more compensation for 
selling a home with a mortgage than they would for selling the 
same home for cash.
    The TILA also provides special protections for consumers 
who are offered high-cost mortgages. H.R. 650 would amend the 
definition of a high-cost mortgage by increasing the maximum 
rates and fees that an originator or creditor could charge on 
loans for manufactured housing without a mortgage being 
considered a high-cost mortgage.
    Based on information from the Consumer Financial Protection 
Bureau (CFPB), CBO estimates that enacting H.R. 650 would 
increase direct spending by less than $500,000 for that agency 
to implement changes to the TILA. Because H.R. 650 would affect 
direct spending, pay-as-you-go procedures apply. CBO estimates 
that the bill would not affect revenues. Implementing H.R. 650 
would not affect spending subject to appropriation because the 
CFPB is permanently authorized to spend amounts transferred 
from the Federal Reserve System.
    H.R. 650 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by Theresa Gullo, Assistant Director 
for Budget 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.

                  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 the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 650 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 650 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 650 does not require any 
directed rulemakings.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 650 as the ``Preserving Access to 
Manufactured Housing Act of 2015.''

Section 2. Mortgage originator definition

    This section amends section 103 of the Truth in Lending Act 
(P.L. 90-321) to specify that the definition of ``mortgage 
originator'' does not include any person who is a retailer of 
manufactured or modular homes unless the retailer or its 
employees receive compensation for taking a residential 
mortgage loan application, assisting a consumer in obtaining or 
applying to obtain a residential mortgage loan, or offering or 
negotiating terms of a residential mortgage loan that is in 
excess of any compensation or gain received in a comparable 
cash transaction.

Section 3. High-cost mortgage definition

    This section amends section 103 of the Truth in Lending Act 
(P.L. 90-321), as added by the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (P.L. 111-203), to clarify that a 
first mortgage on a consumer's principal dwelling that is 
considered personal property will be considered a ``high-cost 
mortgage'' if the annual percentage rate at consummation of the 
transaction will exceed the average prime offer rate for a 
comparable transaction by more than 10 percentage points, in 
the case of a transaction in an amount of $75,000 or less. This 
section would also amend the definition of ``high-cost 
mortgage'' to include a transaction for less than $75,000 in 
which the dwelling is personal property and the total points 
and fees payable in connection with the transaction, other than 
bona fide third party charges not retained by the mortgage 
originator, creditor, or an affiliate of the creditor or 
mortgage originator, exceed the greater of 5 percent of the 
total transaction amount or $3,000. This section authorizes the 
CFPB to adjust such amounts to reflect the change in the 
Consumer Price Index.

         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, and 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) The definitions and rules of construction set forth in 
this section are applicable for the purposes of this title.
  (b) Bureau.--The term ``Bureau'' means the Bureau of Consumer 
Financial Protection.
  (c) The term ``Bureau'' refers to the Bureau of Governors of 
the Federal Reserve System.
  (d) The term ``organization'' means a corporation, government 
or governmental subdivision or agency, trust, estate, 
partnership, cooperative, or association.
  (e) The term ``person'' means a natural person or an 
organization.
  (f) The term ``credit'' means the right granted by a creditor 
to a debtor to defer payment of debt or to incur debt and defer 
its payment.
  (g) The term ``creditor'' refers only to a person who both 
(1) regularly extends, whether in connection with loans, sales 
of property or services, or otherwise, consumer credit which is 
payable by agreement in more than four installments or for 
which the payment of a finance charge is or may be required, 
and (2) is the person to whom the debt arising from the 
consumer credit transaction is initially payable on the face of 
the evidence of indebtedness or, if there is no such evidence 
of indebtedness, by agreement. Notwithstanding the preceding 
sentence, in the case of an open-end credit plan involving a 
credit card, the card issuer and any person who honors the 
credit card and offers a discount which is a finance charge are 
creditors. For the purpose of the requirements imposed under 
chapter 4 and sections 127(a)(5), 127(a)(6), 127(a)(7), 
127(b)(1), 127(b)(2), 127(b)(3), 127(b)(8), and 127(b)(10) of 
chapter 2 of this title, the term ``creditor'' shall also 
include card issuers whether or not the amount due is payable 
by agreement in more than four installments or the payment of a 
finance charge is or may be required, and the Bureau shall, by 
regulation, apply these requirements to such card issuers, to 
the extent appropriate, even though the requirements are by 
their terms applicable only to creditors offering open-end 
credit plans. Any person who originates 2 or more mortgages 
referred to in subsection (aa) in any 12-month period or any 
person who originates 1 or more such mortgages through a 
mortgage broker shall be considered to be a creditor for 
purposes of this title. The term ``creditor'' includes a 
private educational lender (as that term is defined in section 
140) for purposes of this title.
  (h) The term ``credit sale'' refers to any sale in which the 
seller is a creditor. The term includes any contract in the 
form of a bailment or lease if the bailee or lessee contracts 
to pay as compensation for use a sum substantially equivalent 
to or in excess of the aggregate value of the property and 
services involved and it is agreed that the bailee or lessee 
will become, or for no other or a nominal consideration has the 
option to become, the owner of the property upon full 
compliance with his obligations under the contract.
  (i) The adjective ``consumer'', used with reference to a 
credit transaction, characterizes the transaction as one in 
which the party to whom credit is offered or extended is a 
natural person, and the money, property, or services which are 
the subject of the transaction are primarily for personal, 
family, or household purposes.
  (j) The terms ``open end credit plan'' and ``open end 
consumer credit plan'' mean a plan under which the creditor 
reasonably contemplates repeated transactions, which prescribes 
the terms of such transactions, and which provides for a 
finance charge which may be computed from time to time on the 
outstanding unpaid balance. A credit plan or open end consumer 
credit plan which is an open end credit plan or open end 
consumer credit plan within the meaning of the preceding 
sentence is an open end credit plan or open end consumer credit 
plan even if credit information is verified from time to time.
  (k) The term ``adequate notice'', as used in section 133, 
means a printed notice to a cardholder which sets forth the 
pertinent facts clearly and conspicuously so that a person 
against whom it is to operate could reasonably be expected to 
have noticed it and understood its meaning. Such notice may be 
given to a cardholder by printing the notice on any credit 
card, or on each periodic statement of account, issued to the 
cardholder, or by any other means reasonably assuring the 
receipt thereof by the cardholder.
  (l) The term ``credit card'' means any card, plate, coupon 
book or other credit device existing for the purpose of 
obtaining money, property, labor, or services on credit.
  (m) The term ``accepted credit card'' means any credit card 
which the cardholder has requested and received or has signed 
or has used, or authorized another to use, for the purpose of 
obtaining money, property, labor, or services on credit.
  (n) The term ``cardholder'' means any person to whom a credit 
card is issued or any person who has agreed with the card 
issuer to pay obligations arising from the issuance of a credit 
card to another person.
  (o) The term ``card issuer'' means any person who issues a 
credit card, or the agent of such person with respect to such 
card.
  (p) The term ``unauthorized use'', as used in section 133, 
means a use of a credit card by a person other than the 
cardholder who does not have actual, implied, or apparent 
authority for such use and from which the cardholder receives 
no benefit.
  (q) The term ``discount'' as used in section 167 means a 
reduction made from the regular price. The term ``discount'' as 
used in section 167 shall not mean a surcharge.
  (r) The term ``surcharge'' as used in section 103 and section 
167 means any means of increasing the regular price to a 
cardholder which is not imposed upon customers paying by cash, 
check, or similar means.
  (s) The term ``State'' refers to any State, the Commonwealth 
of Puerto Rico, the District of Columbia, and any territory or 
possession of the United States.
  (t) The term ``agricultural purposes'' includes the 
production, harvest, exhibition, marketing, transportation, 
processing, or manufacture of agricultural products by a 
natural person who cultivates, plants, propagates, or nurtures 
those agricultural products, including but not limited to the 
acquisition of farmland, real property with a farm residence, 
and personal property and services used primarily in farming.
  (u) The term ``agricultural products'' includes agricultural, 
horticultural, viticultural, and dairy products, livestock, 
wildlife, poultry, bees, forest products, fish and shellfish, 
and any products thereof, including processed and manufactured 
products, and any and all products raised or produced on farms 
and any processed or manufactured products thereof.
  (v) The term ``material disclosures'' means the disclosure, 
as required by this title, of the annual percentage rate, the 
method of determining the finance charge and the balance upon 
which a finance charge will be imposed, the amount of the 
finance charge, the amount to be financed, the total of 
payments, the number and amount of payments, the due dates or 
periods of payments scheduled to repay the indebtedness, and 
the disclosures required by section 129(a).
  (w) The term ``dwelling'' means a residential structure or 
mobile home which contains one to four family housing units, or 
individual units of condominiums or cooperatives.
  (x) The term ``residential mortgage transaction'' means a 
transaction in which a mortgage, deed of trust, purchase money 
security interest arising under an installment sales contract, 
or equivalent consensual security interest is created or 
retained against the consumer's dwelling to finance the 
acquisition or initial construction of such dwelling.
  (y) As used in this section and section 167, the term 
``regular price'' means the tag or posted price charged for the 
property or service if a single price is tagged or posted, or 
the price charged for the property or service when payment is 
made by use of an open-end credit plan or a credit card if 
either (1) no price is tagged or posted, or (2) two prices are 
tagged or posted, one of which is charged when payment is made 
by use of an open-end credit plan or a credit card and the 
other when payment is made by use of cash, check, or similar 
means. For purposes of this definition, payment by check, 
draft, or other negotiable instrument which may result in the 
debiting of an open-end credit plan or a credit cardholder's 
open-end account shall not be considered payment made by use of 
the plan or the account.
  (z) Any reference to any requirement imposed under this title 
or any provision thereof includes reference to the regulations 
of the Bureau under this title or the provision thereof in 
question.
  [(bb)] (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)] (10 percentage 
                                points if the dwelling is 
                                personal property or is a 
                                transaction that does not 
                                include the purchase of real 
                                property on which a dwelling is 
                                to be placed, and the 
                                transaction is for less than 
                                $75,000 (as such amount is 
                                adjusted by the Bureau to 
                                reflect the change in the 
                                Consumer Price Index)) the 
                                average prime offer rate, as 
                                defined in section 
                                129C(b)(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(b)(2)(B), for a 
                                comparable transaction;
                          (ii) the total points and fees 
                        payable in connection with the 
                        transaction, other than bona fide third 
                        party charges not retained by the 
                        mortgage originator, creditor, or an 
                        affiliate of the creditor or mortgage 
                        originator, 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 Bureau shall prescribe by 
                                regulation); or
                                  (III) in the case of a 
                                transaction for less than 
                                $75,000 (as such amount is 
                                adjusted by the Bureau to 
                                reflect the change in the 
                                Consumer Price Index) in which 
                                the dwelling is personal 
                                property (or is a consumer 
                                credit transaction that does 
                                not include the purchase of 
                                real property on which a 
                                dwelling is to be placed) the 
                                greater of 5 percent of the 
                                total transaction amount or 
                                $3,000 (as such amount is 
                                adjusted by the Bureau to 
                                reflect the change in the 
                                Consumer Price Index); 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 loan 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 loan.
                  (C) Mortgage insurance.-- For the purposes of 
                computing the total points and fees under 
                paragraph (4), the total points and fees shall 
                exclude--
                          (i) any premium provided by an agency 
                        of the Federal Government or an agency 
                        of a State;
                          (ii) any amount that is not in excess 
                        of the amount payable under policies in 
                        effect at the time of origination under 
                        section 203(c)(2)(A) of the National 
                        Housing Act (12 U.S.C. 1709(c)(2)(A)), 
                        provided that the premium, charge, or 
                        fee is required to be refundable on a 
                        pro-rated basis and the refund is 
                        automatically issued upon notification 
                        of the satisfaction of the underlying 
                        mortgage loan; and
                          (iii) any premium paid by the 
                        consumer after closing.
  (2)(A) After the 2-year period beginning on the effective 
date of the regulations promulgated under section 155 of the 
Riegle Community Development and Regulatory Improvement Act of 
1994, and no more frequently than biennially after the first 
increase or decrease under this subparagraph, the Bureau may by 
regulation increase or decrease the number of percentage points 
specified in paragraph (1)(A), if the Bureau determines that 
the increase or decrease is--
          (i) consistent with the consumer protections against 
        abusive lending provided by the amendments made by 
        subtitle B of title I of the Riegle Community 
        Development and Regulatory Improvement Act of 1994; and
          (ii) warranted by the need for credit.
          (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) In determining whether to increase or decrease the number 
of percentage points referred to in subparagraph (A), the 
Bureau shall consult with representatives of consumers, 
including low-income consumers, and lenders.
  (3) The amount specified in paragraph (1)(B)(ii) shall be 
adjusted annually on January 1 by the annual percentage change 
in the Consumer Price Index, as reported on June 1 of the year 
preceding such adjustment.
  (4) For purposes of paragraph (1)(B), points and fees shall 
include--
          (A) all items included in the finance charge, except 
        interest or the time-price differential;
          (B) all compensation paid directly or indirectly by a 
        consumer or creditor to a mortgage originator from any 
        source, including a mortgage originator that is also 
        the creditor 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) the charge is reasonable;
                  (ii) the creditor receives no direct or 
                indirect compensation; and
                  (iii) the charge is paid to a third party 
                unaffiliated with the creditor; and
          (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) 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
          (G) such other charges as the Bureau 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.
  (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.
  [(aa)] (bb) The disclosure of an amount or percentage which 
is greater than the amount or percentage required to be 
disclosed under this title does not in itself constitute a 
violation of this title.
  (cc) The term ``reverse mortgage transaction'' means a 
nonrecourse transaction in which a mortgage, deed of trust, or 
equivalent consensual security interest is created against the 
consumer's principal dwelling--
          (1) securing one or more advances; and
          (2) with respect to which the payment of any 
        principal, interest, and shared appreciation or equity 
        is due and payable (other than in the case of default) 
        only after--
                  (A) the transfer of the dwelling;
                  (B) the consumer ceases to occupy the 
                dwelling as a principal dwelling; or
                  (C) the death of the consumer.
  [(cc)] (dd) Definitions Relating to Mortgage Origination and 
Residential Mortgage Loans.--
          (1) Commission.-- Unless otherwise specified, the 
        term ``Commission'' means the Federal Trade Commission.
          (2) 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) and who does not advise a 
                consumer on loan terms (including rates, fees, 
                and other costs)]  a retailer of manufactured 
                or modular homes or its employees unless such 
                retailer or its employees receive compensation 
                or gain for engaging in activities described in 
                subparagraph (A) that is in excess of any 
                compensation or gain received in a comparable 
                cash transaction;
                  (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 by a lender, a 
                mortgage broker, or other mortgage originator 
                or by any agent of such lender, mortgage 
                broker, or other mortgage originator;
                  (E) does not include, with respect to a 
                residential mortgage loan, a person, estate, or 
                trust that provides mortgage financing for the 
                sale of 3 properties in any 12-month period to 
                purchasers of such properties, each of which is 
                owned by such person, estate, or trust and 
                serves as security for the loan, provided that 
                such loan--
                          (i) is not made by a person, estate, 
                        or trust that has constructed, or acted 
                        as a contractor for the construction 
                        of, a residence on the property in the 
                        ordinary course of business of such 
                        person, estate, or trust;
                          (ii) is fully amortizing;
                          (iii) 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;
                          (iv) 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
                          (v) meets any other criteria the 
                        Bureau may prescribe;
                  (F) does not include the creditor (except the 
                creditor in a table-funded transaction) under 
                paragraph (1), (2), or (4) of section 129B(c); 
                and
                  (G) does not include a servicer or servicer 
                employees, agents and contractors, including 
                but not limited to those who offer or negotiate 
                terms of a residential mortgage loan for 
                purposes of renegotiating, modifying, replacing 
                and subordinating principal of existing 
                mortgages where borrowers are behind in their 
                payments, in default or have a reasonable 
                likelihood of being in default or falling 
                behind.
          (3) 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.
          (4) 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.
          (5) 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, for 
        purposes of sections 129B and 129C and section 128(a) 
        (16), (17), (18), and (19), and sections 128(f) and 
        130(k), and any regulations promulgated thereunder, an 
        extension of credit relating to a plan described in 
        section 101(53D) of title 11, United States Code.
          (6) 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.
          (7) Servicer.-- The term ``servicer'' has the same 
        meaning as in section 6(i)(2) of the Real Estate 
        Settlement Procedures Act of 1974 (12 U.S.C. 
        2605(i)(2)).
  [(dd)] (ee) 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 (2) of the following 
paragraphs, but not both, shall be excluded:
          (1) 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--
                  (A) the average prime offer rate, as defined 
                in section 129C; or
                  (B) 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) Unless 2 bona fide discount points have been 
        excluded under paragraph (1), 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--
                  (A) the average prime offer rate, as defined 
                in section 129C; or
                  (B) 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.).
          (3) 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.
          (4) Paragraphs (1) and (2) 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.

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