[House Report 110-450]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-450
======================================================================
PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 3915) TO AMEND THE TRUTH
IN LENDING ACT TO REFORM CONSUMER MORTGAGE PRACTICES AND PROVIDE
ACCOUNTABILITY FOR SUCH PRACTICES, TO ESTABLISH LICENSING AND
REGISTRATION REQUIREMENTS FOR RESIDENTIAL MORTGAGE ORIGINATORS, TO
PROVIDE CERTAIN MINIMUM STANDARDS FOR CONSUMER MORTGAGE LOANS, AND FOR
OTHER PURPOSES
_______
November 14, 2007.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Arcuri, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 825]
The Committee on Rules, having had under consideration
House Resolution 825, by a non-record vote, report the same to
the House with the recommendation that the resolution be
adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for consideration of H.R. 3915, the
Mortgage Reform and Anti-Predatory Lending Act of 2007, under a
structured rule. The rule provides one hour of general debate
equally divided and controlled by the chairman and ranking
minority member of the Committee on Financial Services. The
rule waives all points of order against consideration of the
bill except clauses 9 and 10 of rule XXI. The rule provides
that the amendment in the nature of a substitute recommended by
the Committee on Financial Services now printed in the bill
shall be considered as an original bill for the purpose of
amendment and shall be considered as read. The rule waives all
points of order against the amendment in the nature of a
substitute except for clause 10 of rule XXI. This waiver does
not affect the point of order available under clause 9 of rule
XXI (regarding earmark disclosure).
The rule makes in order only those amendments printed in
this report. The amendments made in order may be offered only
in the order printed in this report, may be offered only by a
Member designated in this report, shall be considered as read,
shall be debatable for the time specified in this report
equally divided and controlled by the proponent and an
opponent, shall not be subject to amendment except as specified
in this report, and shall not be subject to a demand for a
division of the question in the House or in the Committee of
the Whole. All points of order against the amendments except
for clauses 9 and 10 of rule XXI are waived. The rule provides
one motion to recommit with or without instructions. The rule
provides that, notwithstanding the operation of the previous
question, the Chair may postpone further consideration of the
bill to a time designated by the Speaker.
EXPLANATION OF WAIVERS
The waiver of all points of order against consideration of
the bill (except for clauses 9 and 10 of rule XXI) includes a
waiver of Section 302(f) of the Congressional Budget Act which
prohibits consideration of legislation providing new budget
authority in excess of a committee's 302(a) allocation of such
authority. The waiver of all points of order against the
committee amendment in the nature of a substitute (except for
clause 10 of rule XXI) includes a waiver of clause 7 of rule
XVI, regarding germaneness.
SUMMARY OF AMENDMENTS MADE IN ORDER
1. Frank (MA)/Bachus (AL): The amendment makes a number of
technical and conforming changes as well as enhancements to the
bill including the following: (1) clarifies the definition of
loan originator; (2) narrows the scope of the preemption
provision to make it clear that states cannot use or adopt
state laws against securitizers/assignees for violations of the
national standards or to impose remedies outside of the unique
Federal remedy established in the bill, and to make it clear
that actions for fraud, misrepresentation, deception, false
advertising or civil rights laws are not preempted; (3)
clarifies the registration requirements for the Nationwide
Mortgage Licensing System and Registry; (4) allows consumers to
obtain a cure from assignee or securitizer if creditor or other
assignees cease to exist or go bankrupt; (5) clarifies the
incentive compensation provision; and (6) adds a monthly
disclosure requirement for mortgages. (10 minutes)
2. Kanjorski (PA)/Biggert (IL)/Capito (WV)/Hodes (NH)/
Moore, Gwen (WI): The amendment, reflecting provisions from
H.R. 3837 (The Escrow, Appraisal, and Mortgage Servicing
Improvements Act), would better consumer protection by
improving mortgage servicing, protecting appraiser
independence, ensuring better appraisal quality and regulatory
oversight, requiring escrows for mortgages for borrowers who
might experience difficulty with repayment, and establishing
disclosure for consumers who waive escrow accounts. (10
minutes)
3. Maloney (NY): Would require a borrower to receive the
option of a mortgage without a prepayment penalty, if they are
offered an amendment with a prepayment penalty. Sets the
maximum time for a prepayment penalty of 3 years and a maximum
prepayment amount of 3% of the loan for the first year, 2% for
the second year and 1% for the third year. (10 minutes)
4. Watt (NC)/Miller, Brad (NC): This amendment allows for
actual damages in the liability section. (10 minutes)
5. Watt (NC)/Miller, Brad (NC): The amendment requires the
assignee to have policies/procedures and to cure the loan to
avoid being liable for rescission. (10 minutes)
6. Watt (NC)/Miller, Brad (NC): The amendment changes the
irrebuttable presumption under section 203 to a rebuttable
presumption for all mortgages that allow a borrower to defer
payment of principal or interest. (10 minutes)
7. Hensarling (TX): Amendment would remove the civil
liability of a lender and cancel the right of rescission for a
borrower in instances when a borrower knowingly lied on their
mortgage loan application. (10 minutes)
8. Watt (NC)/Miller, Brad (NC): The second-degree amendment
to Hensarling #7 adds that the obligor must have had actual
knowledge of the false material information for the exemption
from liability to take effect. (10 minutes)
9. Meeks (NY): The amendment provides that the Nationwide
Mortgage Licensing System and Registry shall not directly or
indirectly offer educational courses for pre-licensure or
continuing education for mortgage originators. In approving
courses under this Act, the Nationwide Mortgage Licensing
System and Registry shall apply reasonable standards in the
review and approval of courses. (10 minutes)
10. Putnam (FL): The amendment would direct the GAO to
conduct a study to determine the effects the enactment of H.R.
3915 will have on the availability and affordability of credit
for homebuyers and mortgage lending, and to submit a report to
Congress containing the findings and conclusions within one
year of the enactment of the legislation. (10 minutes)
11. Brown-Waite (FL): The amendment excludes loans insured
by the Federal Housing Administration from the provisions of
the bill. (10 minutes)
12. Garrett (NJ): The amendment would strike the rebuttable
presumption under section 203, stating that all qualified safe
harbor loans that meet the requirements listed in section
203(c)(3)(C) fall under the safe harbor. (10 minutes)
13. Miller, Brad (NC)/Frank (MA)/Watt (NC): Allow
regulators to fine mortgage originators, assignees and
securitizers who more than occasionally (``pattern or
practice'') violate the minimum standards for loans established
in the bill at least $1 million, $25,000 per loan. Proceeds
would be held in trust by the US Treasury for the benefit of
borrowers who have no other avenue for obtaining a remedy. (10
minutes)
14. Green, Al (TX): States that educational requirements
include instruction on fraud, consumer protection, and fair
lending issues. (10 minutes)
15. McHenry (NC): The amendment would strike Title III--
High-Cost Mortgages from the bill. (10 minutes)
16. Price, Tom (GA): This amendment would exempt prime
loans from the bill. (10 minutes)
17. Van Hollen (MD): The amendment requires that in the
case of a residential mortgage loan, closing costs may not
exceed by more than 10% any estimate of closing costs disclosed
to the consumer in advance of closing. (10 minutes)
18. Sutton (OH): This amendment would require loan
creditors or servicers to provide a written notice to consumers
with hybrid adjustable rate mortgages six months before their
interest rates are due to reset. This notice would state the
new interest rate, an explanation of how the new interest rate
would be determined, the creditor's or servicer's good faith
estimate of the monthly payment that will apply after the
reset, a list of alternatives consumers may pursue before the
date of adjustment or reset, and contact information for local
HUD-approved housing counseling agencies and the state housing
finance authority. (10 minutes)
TEXT OF AMENDMENTS MADE IN ORDER UNDER THE RULE
1. An Amendment To Be Offered by Representative Frank of Massachusetts,
or His Designee, Debatable for 10 Minutes
Page 6, strike line 19 and all that follows through line 22
and insert the following new clause:
(iii) does not include any individual
who is not otherwise described in
clause (i) or (ii) and who performs
purely administrative or clerical tasks
on behalf of a person who is described
in any such clause.
Page 19, strike line 16 and all that follows through line 24,
and insert the following new subparagraph:
(B) personal history and experience,
including authorization for the Nationwide
Mortgage Licensing System and Registry to
obtain information related to any
administrative, civil or criminal findings by
any governmental jurisdiction.
Page 20, line 1, strike ``(b) Unique Identifier.--The Federal
banking agencies'' and insert ``(b) Coordination.--
``(1) Unique identifier.--The Federal banking
agencies''.
Page 20, after line 9, insert the following new paragraph:
(2) Nationwide mortgage licensing system and registry
development.--To facilitate the transfer of information
required by subsection (a)(2), the Nationwide Mortgage
Licensing System and Registry shall coordinate with the
Federal banking agencies, through the Financial
Institutions Examination Council, concerning the
development and operation, by such System and Registry,
of the registration functionality and data requirements
for loan originators.
Page 37, line 22, strike the closing quotation marks and the
second period.
Page 37, after line 22, insert the following new paragraph:
``(10) Servicer.--The term `servicer' has the same
meaning as in section 6(i)(2) of the Real Estate
Settlement Procedures Act of 1974.''.
Page 38, beginning on line 12, strike ``, registered, and,
when required, licensed'' and insert ``and, when required,
registered and licensed''.
Page 40, line 22, strike ``to repay and'' and all that
follows through line 25 and insert ``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 129B.''
Page 41, line 20, insert ``, the Chairman of the State
Liaison Committee to the Financial Institutions Examination
Council,'' after ``Secretary''.
Page 43, line 13, strike ``ANTI-STEERING'' and insert
``PROHIBITION ON STEERING INCENTIVES''.
Page 43, line 18, strike ``In general'' and insert ``Amount
of originator compensation cannot vary based on terms''
Page 43, beginning on line 20, strike ``(including yield
spread premium)'' and insert ``, including yield spread premium
or any equivalent compensation or gain,''.
Page 44, line 1, strike ``Anti-steering regulations'' and
insert ``Regulations''.
Page 44, line 9, insert ``(in accordance with regulations
prescribed under section 129B(a))'' before the semicolon.
Page 44, line 10, insert ``in the case of a refinancing of a
residential mortgage loan,'' after (ii).
Page 44, line 11, insert ``(in accordance with regulations
prescribed under section 129B(b))'' before the semicolon.
Page 45, strike line 6 and all that follows through line 11
and insert the following new subparagraph:
``(B) restricting a consumer's ability to
finance, including through rate or principal,
any origination fees or costs permitted under
this subsection, or the 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 129A(a)(1)(C)(ii) and do
not vary based on the terms of the loan or the
consumer's decision about whether to finance
such fees or costs; or''.
Page 61, after line 15, insert the following new paragraph
(and redesignate subsequent paragraphs accordingly):
``(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 or
liquidating agent appointed, a consumer may
maintain a civil action against an assignee to
cure, but not rescind, 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 or liquidating agents appointed, the
consumer may maintain the civil action referred
to in subparagraph (A) against the
securitizer.''.
Page 61, line 23, insert ``and the payment of such additional
costs as the obligor may have incurred as a result of the
violation and in connection with obtaining a cure of the loan,
including a reasonable attorney's fee'' before the period.
Page 62, line 15, insert ``or obtain'' after ``provide''.
Page 62, line 16, insert ``, or a consumer cannot obtain,''
after ``cannot provide''.
Page 65, line 6, insert ``and the consumer would have had a
valid basis for such an action if it had been brought before
the end of such period'' after ``subsection (d)''.
Page 66, beginning on line 21, strike ``that insurance
premiums'' and insert ``that--
``(1) insurance premiums''.
Page 66, line 24, strike the period and insert ``; and''.
Page 66, after line 24, insert the following new paragraph:
``(2) this subsection shall not apply to credit
unemployment insurance for which the unemployment
insurance premiums are reasonable and at no additional
cost to the consumer, 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.''.
Page 69, strike line 1 and all that follows through line 9
and insert the following new subparagraphs:
``(A) the provision, by the successor in
interest, of a notice to vacate to any bona
fide tenant at least 90 days before the
effective date of the notice to vacate.
``(B) the rights of any bona fide tenant, as
of the date of such notice of foreclosure--
``(i) under any bona fide lease
entered into before the notice of
foreclosure to occupy the premises
until the end of the remaining term of
the lease or the end of the 6-month
period beginning on the date of the
notice of foreclosure, whichever occurs
first, subject to the receipt by the
tenant of the 90-day notice under
subparagraph (A); or
``(ii) without a lease or with a
lease terminable at will under State
law, subject to the receipt by the
tenant of the 90-day notice under
subparagraph (A); and''.
Page 69, after line 12, insert the following new subparagraph
(and redesignate subsequent subparagraphs accordingly):
``(A) the mortgagor under the contract is not
the tenant;''.
Page 69, beginning on line 15, strike ``tenant to pay'' and
insert ``receipt of''.
Page 69, line 19, strike ``first-time''.
Page 70, line 17, strike ``the consumer'' and insert ``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''.
Page 71, line 25, insert ``or application thereof'' after
``State law''.
Page 72, strike line 5 and all that follows through line 8,
and insert ``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 such section 129B.''.
Page 72, strike line 9 and all that follows through line 17
and insert the following new subsection:
(b) Rules of Construction.--No provision of this section
shall be construed as limiting--
(1) the application of any State law against a
creditor;
(2) the availability of remedies based upon fraud,
misrepresentation, deception, false advertising, or
civil rights laws--
(A) against any assignee, securitizer, or
securitization vehicle for its own conduct
relating to the making of a residential
mortgage loan to a consumer; or
(B) against any assignee, securitizer, or
securitization vehicle in the sale or purchase
of residential mortgage loans or securities; or
(3) the application of any other State law against
any assignee, securitizer, or securitization vehicle
except as specifically provided in subsection (a) of
this section.
Page 79, after line 2, insert the following new section (and
redesignate the subsequent sections accordingly):
SEC. 212. 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:
``(e) 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.''.
Page 80, line 23, insert ``(10 percentage points, if the
dwelling is personal property and the transaction is for less
than $50,000)'' after ``8 percentage points''.
Page 81, beginning on line 19, strike ``(8 percent if the
dwelling is personal property)''.
Page 100, line 6, strike ``tangible net benefit'' and insert
``net tangible benefit (as determined in accordance with
regulations prescribed under section 129B(b))''.
Page 100, line 10, after the period, insert closing quotation
marks and a second period.
Page 100, strike line 11 and all that follows through line
14.
Page 102, line 23, insert ``at the end of the 6-month period
beginning'' before ``on the date of''.
Page 102, beginning on line 25, strike ``on or after the
date'' and insert ``after the end of such period''.
----------
2. An Amendment To Be Offered by Representative Kanjorski of
Pennsylvania, or His Designee, Debatable for 10 Minutes
Page 134, after line 13 insert the following new titles (and
conform the table of contents accordingly):
TITLE VI--MORTGAGE SERVICING
SEC. 601. 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 129B
(as added by section 201) the following new section:
``SEC. 129C. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.
``(a) In General.--Except as provided in subsection (b) or
(c), 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, at the time of 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 consumer's debt-to-income ratio at the time
the home mortgage is established taking into account
income from all sources including the consumer's
employment exceeds 50 percent;
``(4) 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 time of
consummation of the transaction, will exceed by more
than 3.0 percentage points the yield on Treasury
securities having comparable periods of maturity on the
15th day of the month immediately preceding the month
in which the application of the extension of credit is
received by the creditor;
``(5) a consumer obtains a mortgage referred to in
section 103(aa);
``(6) the original principal amount of such loan at
the time of consummation of the transaction is--
``(A) 90 percent or more of the sale price,
if the property involved is purchased with the
proceeds of the loan; or
``(B) 90 percent or more of the appraised
value of the property securing the loan;
``(7) the combined principal amount of all loans
secured by the real property exceeds 95 percent of the
appraised value of the property securing the loans at
the time of consummation of the last mortgage
transaction;
``(8) the consumer was the subject of a proceeding
under title 11, United States Code, at any time during
the 7-year period preceding the date of the transaction
(as determined on the basis of the date of entry of the
order for relief or the date of adjudication, as the
case may be, with respect to such proceeding and
included in a consumer report on the consumer under the
Fair Credit Reporting Act); or
``(9) so required by the Board 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
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) 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.
``(e) 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.
``(f) 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.
``(g) 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 129B (as added by section 201) the
following new item:
``129C. Escrow or impound accounts relating to certain consumer credit
transactions.''.
SEC. 602. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW
SERVICES.
(a) In General.--Section 129C of the Truth in Lending Act (as
added by section 601) is amended by adding at the end the
following new subsection:
``(h) 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, 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.''.
(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. 603. 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.
``(n) Prompt Crediting of Payments Required.--
``(1) In general.--All amounts received by a lender
or a servicer on a home loan at the address where the
borrower has been instructed to make payments shall be
accepted and credited, or treated as credited, on the
business day received, to the extent that the borrower
has made the full contractual payment and has provided
sufficient information to credit the account.
``(2) Scheduled method.--If a servicer uses the
scheduled method of accounting, any regularly scheduled
payment made prior to the scheduled due date shall be
credited no later than the due date.
``(3) Notice of noncredit.--If any payment is
received by a lender or a servicer on a home loan and
not credited, or treated as credited, the borrower
shall be notified within 10 business days by mail at
the borrower's last known address of the disposition of
the payment, the reason the payment was not credited,
or treated as credited to the account, and any actions
necessary by the borrower to make the loan current.''.
(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 ``10 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 30 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) Requests for Pay-Off Amounts.--Section 6(e) of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is
amended by inserting after paragraph (4) (as added by
subsection (c) of this section) the following new paragraph:
``(5) Requests for pay-off amounts.--A creditor or
servicer shall send a payoff balance within 7 business
days of the receipt of a written request for such
balance from or on behalf of the borrower.''.
(e) 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. 604. MORTGAGE SERVICING STUDIES REQUIRED.
(a) Mortgage Servicing Practices.--
(1) Study.--The Secretary of Housing and Urban
Development, in consultation with the Federal banking
agencies, and the Federal Trade Commission, shall
conduct a comprehensive study on mortgage servicing
practices and their potential for fraud and abuse.
(2) Issues to be included.--In addition to other
issues the Secretary of Housing and Urban Development,
the Federal banking agencies, and the Federal Trade
Commission may determine to be appropriate and possibly
pertinent to the study conducted under paragraph (1),
the study shall include the following issues:
(A) A survey of the industry in order to
examine the issue of the timely or effective
posting of payments by servicers.
(B) The employment of daily interest when
payments are made after a due date.
(C) The charging of late fees on the entire
outstanding principal.
(D) The charging of interest on servicing
fees.
(E) The utilization of collection practices
that failed to comply with the Fair Debt
Collection Practices Act.
(F) The charging of prepayment penalties when
not authorized by either the note or law.
(G) The employment of unconscionable
forbearance agreements.
(H) Foreclosure abuses.
(3) Report.--Before the end of the 12-month period
beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit
a report on the study conducted under this subsection
to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate.
(b) Mortgage Servicing Improvements.--
(1) Study.--The Secretary of Housing and Urban
Development, in consultation with the Federal banking
agencies, and the Federal Trade Commission, shall
conduct a comprehensive study on means to improve the
best practices of the mortgage servicing industry, and
Federal and State laws governing such industry.
(2) Report.--Before the end of the 18-month period
beginning on the date of the enactment of this Act, the
Secretary of Housing and Urban Development shall submit
a report on the study conducted under this subsection
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 as the Secretary, in consultation with the Board
and the Commission, may determine to be appropriate.
SEC. 605. 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:
``(4) 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 VII--APPRAISAL ACTIVITIES
SEC. 701. PROPERTY APPRAISAL REQUIREMENTS.
Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is
amended by inserting after subsection (u) (as added by section
303(f)) the following new subsection:
``(v) Property Appraisal Requirements.--
``(1) In general.--A creditor may not extend credit
in the form of a mortgage referred to in section
103(aa) 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 mortgage
referred to in section 103(aa) 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 mortgage referred to in section
103(aa) 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 consumer.--The cost
of any second appraisal required under
clause (i) may not be charged to the
consumer.
``(C) Qualified appraiser defined.--For
purposes of this subsection, the term
`qualified appraiser' means a person who--
``(i) is 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
mortgage referred to in section 103(aa) to the consumer
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 consumer 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 consumer 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
consumer for the sum of $2,000.''.
SEC. 702. 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 129C
(as added by section 601) the following new section:
``SEC. 129D. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO
CERTAIN CONSUMER CREDIT TRANSACTIONS.
``(a) In General.--It shall be unlawful, 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) failing to timely compensate an appraiser for a
completed appraisal regardless of whether the
transaction closes.
``(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, 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) 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 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), and (c).
``(e) 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 129C (as added by section 601) the
following new item:
``129D. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.''.
SEC. 703. APPRAISAL SUBCOMMITTEE OF FIEC, APPRAISER INDEPENDENCE, AND
APPROVED APPRAISER EDUCATION.
(a) Consumer Protection Mission.--
(1) Purpose.--A purpose for the establishment and
operation of the Appraisal Subcommittee of the
Financial Institutions Examination Council (hereafter
in this section referred to as the ``Appraisal
Subcommittee'') shall be to establish a consumer
protection mandate.
(2) Functions of appraisal subcommittee.--It shall be
a function of the Appraisal Subcommittee to protect the
consumer from improper appraisal practices and the
predations of unlicensed appraisers.
(3) Threshold levels.--In establishing a threshold
level under section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3341(b)), each agency shall determine
in writing that the threshold level provides reasonable
protection for consumers who purchase 1-4 unit single-
family residences.
(b) Annual Report of Appraisal Subcommittee.--The annual
report of the Appraisal Subcommittee under section 1103(a)(4)
of Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 shall 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.
(c) Open Meetings.--All meetings of the Appraisal
Subcommittee shall be held in public session after notice in
the Federal Register.
(d) Regulations.--The Appraisal Subcommittee may prescribe
regulations after notice and opportunity for comment. Any
regulations prescribed by the Appraisal Subcommittee shall
(unless otherwise provided in this section or title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989) 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 regular meetings.
(e) Field Appraisals and Appraisal Reviews.--All field
appraisals performed at a property within a State shall be
prepared by appraisers licensed in the State where the property
is located. All Uniform Standards of Professional Appraisal
Practice-compliant appraisal reviews shall be performed by an
appraiser who is duly licensed by a State appraisal board.
(f) State Agency Reporting Requirement.--Each State with an
appraiser certifying and licensing agency whose certifications
and licenses comply with title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 shall 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.
(g) Registry Fees Modified.--
(1) In general.--The annual registry fees for persons
performing appraisals in federally related transactions
shall be increased from $25 to $40. The maximum amount
up to which the Appraisal Subcommittee may adjust any
registry fees shall be increased from $50 to $80 per
annum. 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.
(2) Incremental revenues.--Incremental revenues
collected pursuant to the increases required by this
section shall be placed in a separate account at the
United States Treasury, entitled the Appraisal
Subcommittee Account.
(h) Grants and Reports.--
(1) In general.--Amounts appropriated for or
collected by the Appraisal Subcommittee after the date
of the enactment of this Act shall, in addition to
other uses authorized, be used--
(A) to make grants to State appraiser
regulatory agencies to help defray those costs
relating to enforcement activities; and
(B) to report to all State appraiser
certifying and licensing agencies when a
license or certification is surrendered,
revoked, or suspended.
(2) Limitation on obligations.--Obligations
authorized under this section 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 section 703(g) of this
Act.
(i) Criteria.--
(1) Definition.--For purposes of this section and
title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (notwithstanding
section 1116(c) of such title), 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.
(2) 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.
(j) Monitoring of State Appraiser Certifying and Licensing
Agencies.--The Appraisal Subcommittee shall monitor State
appraiser certifying and licencing agencies for the purpose of
determining whether a State agency's funding and staffing are
consistent with the requirements of title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989,
whether a State agency processes complaints and completes exams
in a reasonable time period, and whether a State agency reports
claims and disciplinary actions on a timely basis to the
national registry maintained by the Appraisal Subcommittee. The
Appraisal Subcommittee shall have the authority to impose
interim sanctions and suspensions.
(k) 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.
(l) Consideration of Professional Appraisal Designations.--No
provision of section 1122(d) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 shall be
construed as prohibiting consideration of designations
conferred by recognized national professional appraisal
organizations, such as sponsoring organizations of The
Appraisal Foundation.
(m) Appraiser Independence.--
(1) Prohibitions on interested parties in a real
estate transaction.--No mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, nor any other person with an interest in a
real estate transaction involving an appraisal shall
improperly influence, or attempt to improperly
influence, through coercion, extortion, collusion,
compensation, instruction, inducement, intimidation,
non-payment for services rendered, or bribery, the
development, reporting, result, or review of a real
estate appraisal sought in connection with a mortgage
loan.
(2) Exceptions.--The requirements of paragraph (1)
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, 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:
(A) Consider additional, appropriate property
information, including the consideration of
additional comparable properties to make or
support an appraisal.
(B) Provide further detail, substantiation,
or explanation for the appraiser's value
conclusion.
(C) Correct errors in the appraisal report.
(3) Prohibitions on conflicts of interest.--No
certified or licensed appraiser conducting an appraisal
may have a direct or indirect interest, financial or
otherwise, in the property or transaction involving the
appraisal.
(4) 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 with an
interest in a real estate transaction involving an
appraisal who has a reasonable basis to believe an
appraiser is violating applicable laws, or is otherwise
engaging in unethical conduct, shall refer the matter
to the applicable State appraiser certifying and
licensing agency.
(5) Regulations.--The Federal financial institutions
regulatory agencies (as defined in section 1003(1) of
the Federal Financial Institutions Examination Council
Act of 1978) shall prescribe such regulations as may be
necessary to carry out the provisions of this
subsection.
(6) Penalties.--Any person who violates any provision
of this subsection shall be subject to civil penalties
under section 8(i)(2) of the Federal Deposit Insurance
Act or section 206(k)(2) of the Federal Credit Union
Act, as appropriate.
(7) Proceeding.--A proceeding with respect to a
violation of this subsection shall be an administrative
proceeding which may be conducted by a Federal
financial institutions regulatory agency in accordance
with the procedures set forth in subchapter II of
chapter 5 of title 5, United States Code.
(n) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the
Appraiser Qualification Board's Course Approval Program.
SEC. 704. 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
de minimis loan levels 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.
(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. 705. CONSUMER APPRAISAL DISCLOSURE.
(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 702) the following new section:
``SEC. 129E. CONSUMER APPRAISAL DISCLOSURE.
``In any case in which an appraisal is performed in
connection with an extension of credit secured by an interest
in real property, the creditor or other mortgage originator
shall make available to the applicant for the extension of
credit a copy of all appraisal valuation reports upon
completion but no later than 3 business days prior to the
transaction closing date.''.
(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 702) the
following new item:
``129E. Consumer appraisal disclosure.''.
____________________________________________________
3. An Amendment To Be Offered by Representative Maloney of New York, or
Her Designee, Debatable for 10 Minutes
Page 66, after line 3, insert the following new paragraph
(and redesignate the subsequent paragraph accordingly):
``(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.''.
Page 66, after line 11, insert the following new paragraph:
``(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.''.
----------
4. An Amendment To Be Offered by Representative Watt of North Carolina,
or His Designee, Debatable for 10 Minutes
Page 46, line 7, insert ``the greater of actual damages or''
after ``shall not exceed''.
----------
5. An Amendment To Be Offered by Representative Watt of North Carolina,
or His Designee, Debatable for 10 Minutes
Page 60, line 3, strike ``or'' and insert ``and''.
----------
6. An Amendment To Be Offered by Representative Watt of North Carolina,
or His Designee, Debatable for 10 Minutes
Page 52, strike lines 13 and 14 and insert the following new
subparagraph:
``(B) if such loan is--
``(i) a qualified safe harbor
mortgage; or
``(ii) a nontraditional mortgage.''.
Page 56, after line 3, insert the following new subparagraph:
``(D) Nontraditional mortgage.--The term
`nontraditional mortgage' means any residential
mortgage loan that allows a borrower to defer
payment of principal or interest.''.
----------
7. An Amendment To Be Offered by Representative Hensarling of Texas, or
His Designee, Debatable for 10 Minutes
Page 73, after line 25, insert the following new section (and
redesignate subsequent sections accordingly):
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:
``(j) 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 furnished material information known to be false
for the purpose of obtaining such residential mortgage loan.''.
----------
8. An Amendment to the Amendment Numbered 7 by Representative
Hensarling To Be Offered by Representative Watt of North Carolina or a
Designee, Debatable for 10 Minutes
In the amendment, insert ``and with actual knowledge'' after
``willfully''.
----------
9. An Amendment To Be Offered by Representative Meeks of New York, or
His Designee, Debatable for 10 Minutes
Page 15, line 10, strike ``reviewed, approved, and'' and
insert ``reviewed, and''.
Page 15, after line 12, insert the following new paragraph:
(3) Limitation and standards.--
(A) Limitation.--To maintain the independence
of the approval process, the Nationwide
Mortgage Licensing System and Registry shall
not directly or indirectly offer pre-licensure
educational courses for loan originators.
(B) Standards.--In approving courses under
this section, the Nationwide Mortgage Licensing
System and Registry shall apply reasonable
standards in the review and approval of
courses.
Page 15, line 13, strike ``and administered''.
Page 15, line 14, insert ``and administered by an approved
test provider'' before the period.
Page 17, line 23, strike ``reviewed, approved, and'' and
insert ``reviewed, and''.
Page 18, after line 14, insert the following new paragraph:
(5) Limitation and standards.--
(A) Limitation.--To maintain the independence
of the approval process, the Nationwide
Mortgage Licensing System and Registry shall
not directly or indirectly offer any continuing
education courses for loan originators.
(B) Standards.--In approving courses under
this section, the Nationwide Mortgage Licensing
System and Registry shall apply reasonable
standards in the review and approval of
courses.
----------
10. An Amendment To Be Offered by Representative Putnam of Florida, or
His Designee, Debatable for 10 Minutes
Page 79, after line 20, insert the following new section (and
amend the table of contents accordingly):
SEC. 214. 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).
----------
11. An Amendment To Be Offered by Representative Brown-Waite of
Florida, or Her Designee, Debatable for 10 Minutes
Page 54, line 14, strike ``and''.
Page 54, line 16, strike the period and insert ``; and''.
Page 54, after line 16, insert the following new clause:
``(iv) a mortgage insured under title
II of the National Housing Act (12
U.S.C. 1707 et seq.).''.
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12. An Amendment To Be Offered by Representative Garrett of New Jersey,
or His Designee, Debatable for 10 Minutes
Page 52, strike line 9 and all that follows through line 15
(and redesignate subsequent paragraphs accordingly).
----------
13. An Amendment To Be Offered by Representative Miller of North
Carolina, or His Designee, Debatable for 10 Minutes
Page 64, line 12, strike the closing quotation marks and the
second period.
Page 64, after line 12, insert the following new paragraphs:
``(10) Pattern or practice of violations.--
``(A) In general.--In addition to any money
penalty that may be imposed by any agency
referred to in subsection (a) or (c) of section
108 under any provision of law referred to in
such section in connection with such agency or
any other enforcement action taken by such
agency under such section, any creditor,
assignee, or securitizer which engages in a
pattern or practice of originating, assigning,
or securitizing residential mortgage loans that
violate subsection (a) or (b) shall forfeit and
pay a civil penalty of--
``(i) not less than $25,000 for each
such loan; and
``(ii) $1,000,000 for engaging in
such pattern or practice.
``(B) Information.--Any person may submit
information to any agency referred to in
subparagraph (A) regarding any pattern or
practice of violating subsection (a) or (b) and
such agency shall promptly bring such complaint
to the attention of any other such agency which
may have jurisdiction over any person involved
in the alleged violation.
``(11) Trust fund for consumers without remedy.--
``(A) In general.--Any civil money penalty
collected under paragraph (10) shall be
transferred to the Secretary of the Treasury to
be held in trust in the Consumers Rescission
and Cure Remedial Fund for the benefit of
borrowers with residential mortgage loans that
were originated in violation of subsection (a)
or (b) for which the consumers are eligible for
rescission or cure but have no party against
whom to assert such remedies.
``(B) Regulations.--The Secretary of the
Treasury shall prescribe regulations
establishing--
``(i) a claims process for consumers
described in subparagraph (A) to file
claims against the Consumers Rescission
and Cure Remedial Fund for rescission
or cure of a residential mortgage loan
that was originated in violation of
subsection (a) or (b);
``(ii) a procedure for administrative
determination of claims, and the
allowance or disallowance of any such
claim, and a review of such
determination; and
``(iii) a process for payment of any
claim allowed against the Fund to
effectuate a rescission or cure as part
of a final settlement entered into by
the consumer with the Secretary with
respect to such claim.
``(C) Finality.--Any determination by the
Secretary under this paragraph shall be final
and not subject to judicial review.''.
----------
14. An Amendment To Be Offered by Representative Al Green of Texas, or
His Designee, Debatable for 10 Minutes
Page 15, line 7, insert ``which shall include instruction on
fraud, consumer protection and fair lending issues'' before the
period.
Page 16, line 6, strike ``and'' after the semicolon.
Page 16, line 8, strike the period and insert ``; and''.
Page 16, after line 8, insert the following new clause:
(iv) Federal and State law and
regulation, including instruction on
fraud, consumer protection, and fair
lending issues.
Page 17, line 20, insert ``, including education on fraud,
consumer protection, and fair lending issues.''.
----------
15. An Amendment To Be Offered by Representative McHenry of North
Carolina, or His Designee, Debatable for 10 Minutes
Page 80, strike line 1 and all that follows through page 102,
line 26 (all of title III) (and redesignate the subsequent
title and sections and conform the table of contents
accordingly).
----------
16. An Amendment To Be Offered by Representative Tom Price of Georgia,
or His Designee, Debatable for 10 Minutes
Page 36, line 25, insert ``or a qualified mortgage (as
defined in section 129B(c)(3)(B))'' before the period at the
end.
----------
17. An Amendment To Be Offered by Representative Van Hollen of
Maryland, or His Designee, Debatable for 10 Minutes
Page 71, line 5, strike the closing quotation marks and the
second period.
Page 71, after line 5, insert the following new subsection:
``(m) Closing Costs.--In the case of a residential mortgage
loan, any costs incurred in connection with the consummation of
the loan may not exceed by more than 10 percent the estimate of
the amount of such costs disclosed to the consumer in advance
of the consummation of the loan.''.
----------
18. An Amendment To Be Offered by Representative Sutton of Ohio, or Her
Designee, Debatable for 10 Minutes
After section 211, insert the following new section (and
redesignate the subsequent sections accordingly):
SEC. 212. 6-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, 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.''.