article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Consumer Mortgage Protection Act of 2000.'' SEC. 2. FINDINGS AND PURPOSE. (a) Findings.--The Congress finds that-- (1) especially vulnerable consumers are not adequately protected by current Federal law from the abusive practices of a few participants in the residential mortgage industry; (2) additional legislation is necessary and appropriate to ensure that such consumers are better protected against abusive lending practices; and (3) there is a need to streamline the framework regulating mortgage originations. (b) Purpose.--The purpose of this Act is-- (1) to establish additional substantive protections for certain especially vulnerable consumers; (2) to ensure that such consumers are able to protect the equity in their homes; (3) to initiate the process of streamlining the regulatory framework for mortgage originations; and (4) to clarify mortgage broker compensation. SEC. 3. AMENDMENTS TO THE TRUTH IN LENDING ACT. (a) Section 103(aa)(1)(A).--Section 103(aa)(1)(A) of the Truth in Lending Act (15 U.S.C. 1602(aa)(1)(A)) is amended by striking ``by more than 10 percentage points'' and by striking ``creditor; or'' and inserting the following: ``creditor by more than-- ``(i) 8 percentage points, in the case of a transaction secured by a first-lien security interest in the property; or ``(ii) 9 percentage points, in the case of a transaction secured by a subordinate-lien security interest in the property; or''. (b) Section 103(aa)(1)(B)(i).--Section 103(aa)(1)(B)(i) of the Truth in Lending Act (15 U.S.C. 1602(aa)(1)(B)(i)) is amended by striking ``8 percent'' and inserting ``6 percent, in the case of a transaction secured by a first-lien security interest in the property, or 7 percent, in the case of a transaction secured by a subordinate- lien security interest in the property''. (c) Section 103(aa)(4).--Section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is amended by striking ``For purposes of paragraph (1)(B),'' and inserting ``For purposes of paragraph (1)(B) and section 129(h) of this Act''. (d) Section 103(aa)(5).--Section 103(aa)(5) of the Truth in Lending Act (15 U.S.C. 1602(aa)(5)) is amended by inserting after ``extension of credit'' the following: ``, except as provided in section 129(h) of this Act''. (e) Section 129.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by striking subsections (a) and (b), redesignating subsections (c) through (i) as subsections (a) through (g), respectively, and redesignating subsections (j) through (l) as subsections (m) through (o), respectively. (f)(1) Section 129(a)(2).--Section 129(a)(2) of the Truth in Lending Act (15 U.S.C. 1639(a)(2)), as redesignated by subsection (e), is amended by striking subparagraphs (A) and (B) and inserting the following: ``(A) the amount of the penalty does not exceed 3 percent of the total loan amount, if the prepayment occurs during the 1-year period beginning on the date on which the mortgage is consummated; ``(B) the amount of the penalty does not exceed 2 percent of the total loan amount, if the prepayment occurs during the 1-year period beginning on the date of expiration of the 1-year period identified in subparagraph (A); ``(C) the amount of the penalty does not exceed 1 percent of the total loan amount, if the prepayment occurs during the 1-year period beginning on the date of the expiration of the 1-year period identified in subparagraph (B);'', and by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively. (2) Section 129(a)(2)(D).--Section 129(a)(2)(D) of the Truth in Lending Act (15 U.S.C. 1639(a)(2)(D)), as redesignated by subsection (e) and paragraph (1), is amended by striking ``5-year period'' and inserting ``3-year period''. (g) Section 129(e).--Section 129(e) of the Truth in Lending Act (15 U.S.C. 1639(e)), as redesignated by subsection (e), is amended by striking ``more than 2'' and inserting ``any''. (h) Section 129(h).--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after section 129(g), as redesignated by subsection (e), the following: ``(h) Restrictions on the Charging of Closing Costs.--A creditor shall not make a mortgage referred to in section 103(aa) the proceeds of which will be used to pay the outstanding balance of an existing mortgage referred to in section 103(aa) within 1 year of the date of consummation of such existing mortgage, unless-- ``(1) all points and fees, imposed directly or indirectly by the creditor in connection with the transaction, are calculated solely on the basis of the new advances received by the borrower in connection with the refinancing; or ``(2) the annual percentage rate of the refinance loan is lower by 2 or more percentage points than the annual percentage rate of the existing mortgage.''. (i) Section 129(i).--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after section 129(h), as created by subsection (h), the following: ``(i) No Encouragement of Default.--A creditor shall not recommend to a consumer, at any time in connection with the making of a mortgage referred to in section 103(aa), that the consumer fail to make any payment as and when due and payable under the terms of any existing debt obligation of the consumer.''. (j) Section 129(j).--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after section 129(i), as created by subsection (i), the following: ``(j) Reporting of Payment History.--A creditor shall report both favorable and unfavorable payment history information relating to any consumer of a mortgage referred to in section 103(aa) to a nationally recognized credit bureau at least quarterly each year.''. (k) Section 129(k).--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after section 129(j), as created by subsection (j), the following: ``(k) No Profit From Foreclosure.--A creditor shall not profit monetarily from the sale at foreclosure of any property securing a mortgage referred to in section 103(aa), whether directly from such a foreclosure sale or indirectly through a resale after the purchase of the property by the creditor at such a foreclosure sale.''. (l) Section 129(l).--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after section 129(k), as created by subsection (k), the following: ``(l) Providing a Statement of the Amount of Satisfaction.--Upon receipt of a written or oral request, a creditor or any subsequent assignee who holds a mortgage referred to in section 103(aa) shall provide a written statement setting forth the amounts necessary to pay in full and satisfy the debt obligation of a mortgage referred to in section 103(aa) within 3 business days of receipt of the request.''. (n) Section 130(b).--Section 130(b) of the Truth in Lending Act (15 U.S.C. 1640(b)) is amended by striking all after ``the creditor or assignee notifies the person concerned of the error and'' and inserting ``the creditor or assignee-- ``(1) in the case of a failure to comply consisting of a finance charge or annual percentage rate actually disclosed that is lower than that which should have been disclosed, makes whatever adjustments in the appropriate account are necessary to ensure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower; or ``(2) in the case of any other failure to comply, executes and offers to the person for execution a legally effective instrument that modifies the underlying transaction such that the failure to comply is eliminated.''. SEC. 4. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT. (a) Section 4(a).--The second sentence of section 4(a) of the Real Estate Settlement Procedures Act (12 U.S.C. 2603(a)) is amended by striking ``Such form shall conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and'' and inserting ``Such form shall conspicuously and clearly itemize all charges imposed directly upon the borrower and all charges imposed directly upon the seller (whether paid outside of closing or otherwise) in connection with the settlement. This subsection shall not be construed to require that the standard form shall itemize fees earned by any settlement service provider in connection with the transaction to the extent such fees are paid by the lender and reflect the present value of interest yielded by the federally related mortgage loan. Such form also''. (b) Section 5(b).--Section 5(b) of the Real Estate Settlement Procedures Act (12 U.S.C. 2604(b)) is amended by striking ``and'' at the end of paragraph (4), striking the period at the end of paragraph (5) and inserting ``; and'' and by adding after paragraph (5) the following: ``(6) an explanation of the fact that a mortgage broker may be compensated for its services provided in connection with the federally related mortgage loan with funds derived from (A) direct payments made by the borrower, (B) payments made by the lender that reflect the present value of interest yielded by the federally related mortgage loan, or (C) a combination of both the foregoing sources.''. (c)(1) Section 5(c).--Section 5(c) of the Real Estate Settlement Procedures Act (12 U.S.C. 2604(c)) is amended by striking ``the borrower is likely to incur'' and inserting ``likely to be imposed directly upon the borrower''. (2) Section 5(c).--Section 5(c) of the Real Estate Settlement Procedures Act (12 U.S.C. 2604(c)) is amended by inserting after paragraph (6) at the end thereof the following: ``The good faith estimate required by this subsection shall include the following statement in conspicuous type size: `If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.'''. SEC. 5. FEDERAL PREEMPTION. (a) In General.--No requirement or prohibition may be imposed under the laws of any State with respect to the subject matter covered by the amendments made by this Act, including limitations or prohibitions in connection with high-cost or high-fee mortgage loans for which it is perceived that consumers should be afforded additional substantive protections. (b) Interpretation.--In response to a request from any person, the Board of Governors of the Federal Reserve System or any official or employee of the Board of Governors of the Federal Reserve System duly authorized by the Board, shall promptly issue an interpretation which determines whether the specific State laws that are identified in such request are preempted by operation of subsection (a). Any interpretation issued under this subsection shall have the effect of law. SEC. 6. EFFECTIVE DATE; IMPLEMENTING REGULATIONS. (a) Effective Date.--This Act and the amendments made by this Act shall take effect 6 months after the date of its enactment. (b) Regulations by the Board.--The Board of Governors of the Federal Reserve System shall make such regulations as are necessary to implement the amendments made by section 3 within 120 days after the date of its enactment. (c) Regulations by the Secretary of Housing and Urban Development.--The Secretary of Housing and Urban Development shall make such regulations as are necessary to implement the amendments made by section 4 within 120 days after the date of its enactment.
summary: (Sec. 3) Requires a creditor to report a consumer's mortgage payment history to a nationally recognized credit bureau at least quarterly. Prohibits creditor profit from the sale at foreclosure of property securing a high-cost mortgage. Requires a high-cost mortgage creditor to respond within three business days to a request for a written statement setting forth the amounts necessary to fully satisfy the debt obligation. Redraws creditor liability guidelines. (Sec. 4) Amends the Real Estate Settlement Procedures Act to revise guidelines for: (1) standard Federal forms for the statement of settlement costs; and (2) information booklets that advise the consumer of certain sources of mortgage broker compensation. (Sec. 5) Establishes Federal preemption of State law concerning subject matter under this Act. Empowers the Board of Governors of the Federal Reserve System to interpret Federal preemption issues under this Act.