Kerry's work on getting an anti-predatory lending bill passed.

[beachmom]

Last night's debate was almost completely useless in learning much at all with one exception: Kerry mentioned working to get an anti-predatory lending bill passed. So I did a little research and found a Sarbanes bill from 2002:

http://www.govtrack.us/congress/bill.xpd?bill=s107-2438

John Kerry was indeed a co-sponosor, one of 14 Democrats to do so:

Cosponsors
Sen. Barbara Boxer
Sen. Jean Carnahan
Sen. Hillary Clinton
Sen. Jon Corzine
Sen. Mark Dayton
Sen. Christopher Dodd
Sen. Richard Durbin
Sen. Edward Kennedy
Sen. John Kerry
Sen. Carl Levin
Sen. Barbara Mikulski
Sen. Charles Schumer
Sen. Debbie Ann Stabenow
Sen. Robert Torricelli
Sen. Paul Wellstone

I also found that ACORN pushed big for this, which kind of undercuts the entire Republican premise that ACORN caused the financial crisis:

http://comm-org.wisc.edu/pipermail/colist/2001-June/001650.html

ACORN LOBBIES FOR ANTI-PREDATORY-LENDING BILL - With the Democrats now
controlling the U.S. Senate and Sen. Paul Sarbanes of Maryland the new chair of the Senate Banking Committee, the possibility of seeing legislation enacted against predatory lending is greatly improved. Sen. Sarbanes will soon introduce a bill, and ACORN has been lobbying senators to cosponsor it. The earliest cosponsors were: Chris Dodd (D., Conn.), Jon Corzine (D.,N.J.), John Kerry (D., Mass.), and Debbie Stabenow (D., Mich.). Following lobby visits by ACORN, five more senators have signed on, and others are considering doing so.

The Credit Unions supported this bill as well:

http://www.mywire.com/a/CreditUnionJournal/AntiPredatory-Lending-Bill-Gets/591977?extID=10051

CUNA has sent a letter to the Senate Banking Committee expressing its support for Predatory Lending Consumer Protection Act, which would amend the Home Ownership Equity Protection Act (HOEPA) to protect consumers against predatory practices.

In the letter to Senate Banking Committee Chair Paul Sarbanes (D-MD), CUNA President Dan Mica said CUNA supports the lower thresholds the bill would impose for additional restrictions and disclosure requirements on loans at certain interest rates, points and fees. For example, S.2438 would set the HOEPA thresholds for additional restrictions and disclosures at interest rates six percentage points above comparable Treasury securities for first-lien mortgages, and eight percentage points above Treasury securities for subordinate lien mortgages. Currently, the threshold for first lien mortgages is 8% above comparable Treasury securities..

The bill also prohibits creditors from financing points, fees or other changes greater than 3% of the total loan or $600; requires lenders to determine the borrower's ability to repay before making the loan; and requires lenders to provide borrowers with information onthe risks of high-cost loans and the availability of counseling.

As Kerry said last night, not one Republican supported this bill.

Here are my research questions, which I hope we can keep narrowed to Sen. Kerry. What other work was done on anti-predatory lending practices and are there any other areas where Sen. Kerry led that would have put the brakes on the storm that caused this financial crisis?

[karynnj]

1. I'll list the easy one

There was a plank in the 2004 Democratic platform:
http://query.nytimes.com/gst/fullpage.html?res=980DEFDF113EF934A1575BC0A9629C8B63&&scp=5&sq=business%20subprime%20Kerry&st=cse
This would have been part of his legislative agenda had he been elected.

The other was he voted for the Durbin amendment on Predatory lending - http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=109&session=1&vote=00022
again - a near straight party vote

[karynnj]

2. Here is the Sarbanes Senate speech upon the 2000 introduction

By Mr. SARBANES (for himself, Mr. DODD, Mr. SCHUMER, and Mr. KERRY):

S. 2415. A bill to amend the Home Ownership and Equity Protection Act of 1994 and other sections of the Truth in Lending Act to protect consumers against predatory practices in connection with high cost mortgage transactions, to strengthen the civil remedies available to consumers under existing law, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.

PREDATORY LENDING CONSUMER PROTECTION ACT OF 2000

Mr. SARBANES. Mr. President, today I am introducing the Predatory Lending Consumer Protection Act with Senators DODD, KERRY, and SCHUMER. This legislation is a companion to an identical bill being introduced by Representative LAFALCE in the House of Representatives, along with a number of his colleagues.

Representative LAFALCE has demonstrated his strong commitment to a banking system that takes into consideration the credit needs of all Americans, including those that have been traditionally locked out of the market or are less sophisticated. I thank him for his leadership.

Homeownership is the American Dream. It is the opportunity for all Americans to put down roots and start creating equity for themselves and their families. Homeownership has been the path to building wealth for generations of Americans; it has been the key to ensuring stable communities, good schools, and safe streets.

The predatory lending industry plays on these hopes and dreams to cheat people of their hard-earned wealth. These lenders target working and lower income families, the elderly, and, often, uneducated homeowners for their abusive practices. To my mind, nothing can be more cynical.

Let me briefly describe how predatory lenders operate. They target people with a lot of equity in their homes; they underwrite the property without regard to the ability of the borrower to pay the loan back. They make their money by charging extremely high origination fees, and by ``packing'' other products into the loan, including upfront premiums for credit life insurance, or credit unemployment insurance, and others, for which they get significant commissions but are of no value to the homeowner.

The premiums for these products get financed into the loan, greatly increasing the loan's total balance amount, sometimes by as much as 50 percent. As a result, the borrower is likely to find himself in extreme financial distress.

Then, when the trouble hits, the predatory lender will offer to refinance the loan. Unfortunately, another characteristic of these loans is that they have prepayment penalties. So, by the time the refinancing occurs, with all the fees repeated and the prepayment penalty included, the lender/broker makes a lot of money from the transaction, and the owner has been stripped of his or her equity and, oftentimes, his or her home.

The problem is, most of these practices, while unethical and clearly abusive, are legal. There is a widening sense that this is a serious problem. Alan Greenspan at the Federal Reserve Board has recognized this as an increasing problem, as have the other banking regulators. For example, the FDIC is considering raising capital standards for all subprime lending; the Office of Thrift Supervision (OTS) has published an Advanced Notice of Proposed Rulemaking (ANPR) asking for information and views on these very practices; HUD Secretary Cuomo and Treasury Secretary Summers have convened a Task Force on this issue. Both Fannie Mae and Freddie Mac have developed a number of products that are intended to reach out to homeowners with somewhat impaired credit in order to bring them into the financial mainstream. These companies have also announced that they will not buy loans with single premium credit insurance financed into the loan, one of the problems highlighted by this legislation.

Clearly, there is already some action to address the problem of predatory lending. But we need to do more. This legislation will outlaw the most abusive practices, and enable the marketplace to eliminate the others. This is a very important point. Let me give you an example. The bill prohibits the financing of more than 3% of a loan in fees for high cost loans, because it is the financing of fees and premiums on extraneous products that literally strip the equity out of a person's home. However, the bill would not prohibit additional fees from being charged, so we are not regulating profit.

We want to make sure that the loan is affordable to the borrower. Tying the lender's return to the loan's successful repayment is the best way to assure this. Now, some people have raised concerns that limiting the financing of fees will push up interest rates. This may be true, but it is also better to see the return to the lender reflected in the interest rate because it is much easier for people to shop on the basis of the interest rate. As a result, the market will help to keep rates down. Moreover, higher rate mortgages can always be refinanced as borrower's credit standing improves.

Mr. President, this legislation has the support of the Leadership Conference on Civil Rights, the American Association of Retired People, the National Consumer Law Center, the Self-Help Credit Union of North Carolina, Consumers Union, Consumers Federation, ACORN, the National Association of Consumer Advocates, U.S. PIRG and others.

I want to make clear that this bill is aimed at predatory practices. There are many people who may have had some credit problems who still need access to affordable credit. They may only be able to get subprime loans, which charge higher interest rates. Clearly, to get the credit, they will have to pay somewhat higher rates because of the greater risk they represent. We want them to be able to get these loans.

But these families should not be stripped of their home equity through financing of extremely high fees, credit insurance, or prepayment penalties. They should not be forced into constant refinancing, losing more and more of the wealth they've taken a lifetime to build to a new set of fees each and every time.

This legislation will keep credit available, while discouraging or prohibiting these worst practices. The bill allows lenders to recover the costs of making their loans, while always leaving the door open to borrowers to repair their credit and move to lower cost loans.

Taken as a whole, predatory lending practices represent a frontal assault on homeowners all over America. Today,

GPO's PDF

we are coming to their defense. We must stop the American dream of homeownership from being distorted into a nightmare by these unscrupulous practices. We want to ensure that all borrowers, whether in the prime or subprime market, are treated fairly and responsibly. That is what this legislation is intended to do, and I urge my colleagues' consideration and support.

Mr. President, I ask unanimous consent that the bill and a summary of the legislation be printed in the RECORD.
S. 2415

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Predatory Lending Consumer Protection Act of 2000''.

SEC. 2. AMENDMENTS TO DEFINITIONS IN TRUTH IN LENDING ACT.

(a) HIGH COST MORTGAGES.--

(1) IN GENERAL.--The portion of section 103(aa) of the Truth in Lending Act (15 U.S.C. 1602(aa)) that precedes paragraph (2) of such section is amended to read as follows:

``(aa) MORTGAGE REFERRED TO IN THIS SUBSECTION.--

``(1) DEFINITION.--

``(A) IN GENERAL.--A mortgage referred to in this subsection means a consumer credit transaction--

``(i) that is secured by the consumer's principal dwelling, other than a reverse mortgage transaction; and

``(ii) the terms of which are described in at least 1 of the following subclauses:

``(I) The transaction is secured by a first mortgage on the consumer's principal dwelling and the annual percentage rate on the credit, at the consummation of the transaction, will exceed by more than 6 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 for the extension of credit is received by the creditor;

``(II) The transaction is secured by a junior or subordinate mortgage on the consumer's principal dwelling and the annual percentage rate on the credit, at the consummation of the transaction, will exceed by more than 8 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 for the extension of credit is received by the creditor.

``(III) The total points and fees payable on the transaction will exceed the greater of 5 percent of the total loan amount or $1,000.

``(B) INTRODUCTORY RATES NOT TAKEN INTO ACCOUNT.--If the terms of any consumer credit transaction that is secured by the consumer's principal dwelling offer, for any initial or introductory period, an annual percentage rate of interest which--

``(i) is less than the annual percentage rate of interest which will apply after the end of such initial or introductory period; or

``(ii) in the case of an annual percentage rate which varies in accordance with an index, which is less than the current annual percentage rate under the index which will apply after the end of such period,

the annual percentage rate of interest that shall be taken into account for purposes of subclauses (I) and (II) of subparagraph (A)(ii) shall be the rate described in clause (i) or (ii) of this subparagraph rather than any rate in effect during the initial or introductory period.''.

(2) TECHNICAL AND CONFORMING AMENDMENT.--Section 103(aa)(2) of the Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended--

(A) by striking subparagraph (B); and

(B) by redesignating subparagraph (C) as subparagraph (B).

(b) POINTS AND FEES.--Section 103(aa)(4) of the Truth in Lending Act (15 U.S.C. 1602(aa)(4)) is amended--

(1) by striking subparagraph (B) and inserting the following new subparagraph:

``(B) all compensation paid directly or indirectly by a consumer or a creditor to a mortgage broker;'';

(2) by redesignating subparagraph (D) as subparagraph (F); and

(3) by striking subparagraph (C) and inserting the following new subparagraphs:

``(C) each of the charges listed in section 106(e) (except an escrow for future payment of taxes and insurance);

``(D) the cost of all premiums financed by the lender, directly or indirectly, for any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance, or any payments financed by the lender, directly or indirectly, for any debt cancellation or suspension agreement or contract, except that, for purposes of this subparagraph, insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis shall not be considered financed by the lender;

``(E) any prepayment penalty (as defined in section 129(c)(5)) or other fee paid by the consumer in connection with an existing loan which is being refinanced with the proceeds of the consumer credit transaction; and''.

(c) HIGH COST MORTGAGE LENDER.--

(1) IN GENERAL.--Section 103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) is amended by striking the last sentence and inserting ``Any person who originates 2 or more mortgages referred to in subsection (aa) in any 12-month period, any person who originates 1 or more such mortgages through a mortgage broker or acted as a mortgage broker between originators and consumers on more than 5 mortgages referred to in subsection (aa) within the preceding 12-month period, and any creditor-affiliated party shall be considered to be a creditor for purposes of this title.''.

(2) CREDITOR-AFFILIATED PARTY DEFINED.--Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following new subsection:

``(cc) CREDITOR-AFFILIATED PARTY.--The term ``creditor-affiliated party'' means--

(1) any director, officer, employee, or controlling stockholder of, or agent for, a creditor;

(2) in the case of a creditor which is an insured depository institution, any other person who has filed or is required to file a change-in-control notice with the appropriate Federal banking agency under section 7(j) of the Federal Deposit Insurance Act; and

(3) any shareholder, consultant, joint venture partner, and any other person, including any independent contractor (such as an attorney, appraiser, or accountant), who participates in the conduct of the affairs of, or controls the lending practices of, a creditor, as determined (by regulation or on a case-by-case) by the appropriate Federal agency under subsection (a) or (c) of section 108 with respect to the creditor.''.

SEC. 3. AMENDMENTS TO EXISTING REQUIREMENTS FOR HIGH COST CONSUMER MORTGAGES.

(a) ADDITIONAL DISCLOSURES.--Section 129(a)(1) of the Truth in Lending Act (15 U.S.C. 1639(a)(1)) is amended by adding at the end the following new subparagraphs:

``(D) `The interest rate on this loan is much higher than most people pay. This means the chance that you will lose your home is much higher if you do not make all payments under the loan.'.

``(E) `You may be able to get a loan with a much lower interest rate. Before you sign any papers, you have the right to go see a credit and debt counseling service and to consult other lenders to find ways to get a cheaper loan.'.

``(F) `If you are taking out this loan to repay other loans, look to see how many months it will take to pay for this loan and what the total amount is that you will have to pay before this loan is repaid. Even though the total amount you will have to pay each month for this loan may be less than the total amount you are paying each month for those other loans, you may have to pay on this loan for many more months than those other loans which will cost you more money in the end.' ''.

(b) PREPAYMENT PENALTY PROVISIONS.--Section 129(c) of the Truth in Lending Act (15 U.S.C. 1639(c)) is amended to read as follows:

``(c) PREPAYMENT PENALTY PROVISIONS.--

``(1) NO PREPAYMENT PENALTIES AFTER END OF 24-MONTH PERIOD.--A mortgage referred to in section 103(aa) may not contain terms under which a consumer must pay any prepayment penalty for any payment made after the end of the 24-month period beginning on the date the mortgage is consummated.

``(2) NO PREPAYMENT PENALTIES IF MORE THAN 3 PERCENT OF POINTS AND FEES WERE FINANCED.--Subject to subsection (l)(1), a mortgage referred to in section 103(aa) may not contain terms under which a consumer must pay any prepayment penalty for any payment made at or before the end of the 24-month period referred to in paragraph (1) if the creditor financed points or fees in connection with the consumer credit transaction in an amount equal to or greater than 3 percent of the total amount of credit extended in the transaction.

``(3) LIMITED PREPAYMENT PENALTY FOR EARLY REPAYMENT UNDER CERTAIN CIRCUMSTANCES.--Subject to paragraph (2), the terms of a mortgage referred to in section 103(aa) may contain terms under which a consumer must pay a prepayment penalty for any payment made at or before the end of the 24-month period referred to in paragraph (1) to the extent the sum of total amount of points or fees financed by the creditor, if any, in connection with the consumer credit transaction and the total amount payable as a prepayment penalty does not exceed the amount which is equal to 3 percent of the total amount of credit extended in the transaction.

``(4) CONSTRUCTION.--For purposes of this subsection, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is less favorable to the consumer than the actuarial method (as that term is defined in section 933(d) of the Housing and Community Development Act of 1992).

``(5) PREPAYMENT PENALTY DEFINED.--The term `prepayment penalty' means any monetary penalty imposed on a consumer for paying all or part of the principal with respect to a consumer credit transaction before the date on which the principal is due.''.

(c) ALL BALLOON PAYMENTS PROHIBITED.--Section 129(e) of the Truth in Lending Act (15 U.S.C. 1639(e)) is amended by striking ``having a term of less than 5 years''.

(d) ASSESSMENT OF ABILITY TO REPAY.--Section 129(h) of the Truth in Lending Act (15 U.S.C. 1639(h)) is amended--

(1) by striking ``CONSUMER.--A creditor'' and inserting ``CONSUMER.--

1) PROHIBITION ON PATTERNS AND PRACTICES.--A creditor''; and

(2) by adding at the end the following new paragraphs:

``(2) CASE-BY-CASE ASSESSMENTS OF CONSUMER ABILITY TO PAY REQUIRED.--

``(A) IN GENERAL.--In addition to the prohibition in paragraph (1) on engaging in certain patterns and practices, a creditor may not extend any credit in connection with any mortgage referred to in section 103(aa) unless the creditor has determined, at the time such credit is extended, that 1 or more of the resident obligors, when considered individually and collectively, will be able to make the scheduled payments under the terms of the transaction based on a consideration of their current and expected income, current obligations, employment status, and other financial resources, without taking into account any equity of any such obligor in the dwelling which is the security for the credit.

``(B) REGULATIONS.--The Board shall prescribe, by regulation the appropriate format for determining a consumer's ability to pay and the criteria to be considered in making any such determination.

``(C) RESIDENT OBLIGOR.--For purposes of this paragraph, the term `resident obligor' means an obligor for whom the dwelling securing the extension of credit is, or upon the consummation of the transaction will be, the principal residence.

``(3) VERIFICATION.--The requirements of paragraphs (1) and (2) shall not be deemed to have been met unless any information relied upon by the creditor for purposes of any such paragraph has been verified by the creditor independently of information provided by any resident obligor.''.

(e) REQUIREMENTS RELATING TO HOME IMPROVEMENT CONTRACTS.--Section 129(i) of the Truth in Lending Act (15 U.S.C. 1639(i)) is amended--

(1) by striking ``IMPROVEMENT CONTRACTS.--A creditor'' and inserting ``IMPROVEMENT CONTRACTS.--

``(1) IN GENERAL.--A creditor''; and

(2) by adding at the end the following new paragraph:

``(2) AFFIRMATIVE CLAIMS AND DEFENSES.--Notwithstanding any other provision of law, any assignee or holder, in any capacity, of a mortgage referred to in section 103(aa) which was made, arranged, or assigned by a person financing home improvements to the dwelling of a consumer shall be subject to all affirmative claims and defenses which the consumer may have against the seller, home improvement contractor, broker, or creditor with respect to such mortgage or home improvements.''.

(f) CLARIFICATION OF RESCISSION RIGHTS.--Section 129(j) of the Truth in Lending Act (15 U.S.C. 1639(j)) is amended to read as follows:

``(j) CONSEQUENCE OF FAILURE TO COMPLY.--

``(1) IN GENERAL.--If, in the case of a mortgage referred to in section 103(aa)--

``(A) the mortgage contains a provision prohibited by this section or does not contain a provision required by this section; or

``(B) a creditor or other person fails to comply with the provisions of this section, whether by an act or omission, with regard to such mortgage at any time,

the consummation of the consumer credit transaction resulting in such mortgage shall be treated as a failure to deliver the material disclosures required under this title for the purpose of section 125.

``(2) RULE OF APPLICATION.--In any application of section 125 to a mortgage described in section 103(aa) under circumstances described in paragraph (1), paragraphs (2) and (4) of section 125(e) shall not apply or be taken into account.''.

SEC. 4. ADDITIONAL REQUIREMENTS FOR HIGH COST CONSUMER MORTGAGES.

(a) SINGLE PREMIUM CREDIT INSURANCE.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended--

(1) by redesignating subsections (k) and (l) as subsections (s) and (t), respectively; and

(2) by inserting after subsection (j), the following new subsection:

``(k) SINGLE PREMIUM CREDIT INSURANCE.--

``(1) IN GENERAL.--The terms of a mortgage referred to in section 103(aa) may not require, and no creditor or other person may require or allow--

``(A) the advance collection of a premium, on a single premium basis, for any credit life, credit disability, credit unemployment, or credit property insurance, and any analogous product; or

``(B) the advance collection of a fee for any debt cancellation or suspension agreement or contract,

in connection with any such mortgage, whether such premium or fee is paid directly by the consumer or is financed by the consumer through such mortgage.

``(2) RULE OF CONSTRUCTION.--Paragraph (1) shall not be construed as affecting the right of a creditor to collect premium payments on insurance or debt cancellation or suspension fees referred to in paragraph (1) that are calculated and paid on a regular monthly basis, if the insurance transaction is conducted separately from the mortgage transaction, the insurance may be canceled by the consumer at any time, and the insurance policy is automatically canceled upon repayment or other termination of the mortgage referred to in paragraph (1).''.

(b) RESTRICTION ON FINANCING POINTS AND FEES.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (k) (as added by subsection (a) of this section) the following new subsection:

``(l) RESTRICTION ON FINANCING POINTS AND FEES.--

``(1) LIMIT ON AMOUNT OF POINTS AND FEES THAT MAY BE FINANCED.--Subject to paragraphs (2) and (3) of subsection (c), no creditor may, in connection with the formation or consummation of a mortgage referred to in section 103(aa), finance, directly or indirectly, any portion of the points, fees, or other charges payable to the creditor or any third party in an amount in excess of the greater of 3 percent of the total loan amount or $600.

``(2) PROHIBITION ON FINANCING CERTAIN POINTS, FEES, OR CHARGES.--No creditor may, in connection with the formation or consummation of a mortgage referred to in section 103(aa), finance, directly or indirectly, any of the following fees or other charges payable to the creditor or any third party:

``(A) Any prepayment fee or penalty required to be paid by the consumer in connection with a loan or other extension of credit which is being refinanced by such mortgage if the creditor, with respect to such mortgage, or any affiliate of the creditor, is the creditor with respect to the loan or other extension of credit being refinanced.

``(B) Any points, fees, or other charges required to be paid by the consumer in connection with such mortgage if--

``(i) the mortgage is being entered into in order to refinance an existing mortgage of the consumer that is referred to in section 103(aa); and

``(ii) if the creditor, with respect to such new mortgage, or any affiliate of the creditor, is the creditor with respect to the existing mortgage which is being refinanced.''.

(c) CREDITOR CALL PROVISION.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (l) (as added by subsection (b) of this section) the following new subsection:

``(m) CREDITOR CALL PROVISION.--

``(1) IN GENERAL.--A mortgage referred to in section 103(aa) may not include terms under which the indebtedness may be accelerated by the creditor, in the creditor's sole discretion.

``(2) EXCEPTION.--Paragraph (1) shall not apply when repayment of the loan has been accelerated as a result of a bona fide default.''.

(d) PROHIBITION ON ACTIONS ENCOURAGING DEFAULT.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (m) (as added by subsection (c) of this section) the following new subsection:

``(n) PROHIBITION ON ACTIONS ENCOURAGING DEFAULT.--No creditor may make any statement, take any action, or fail to take any action before or in connection with the formation or consummation of any mortgage referred to in section 103(aa) to refinance all or any portion of an existing loan or other extension of credit, if the statement, action, or failure to act has the effect of encouraging or recommending the consumer to default on the existing loan or other extension of credit at any time before, or in connection with, the closing or any scheduled closing on such mortgage.''.

(e) MODIFICATION OR DEFERRAL FEES.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (n) (as added by subsection (d) of this section) the following new subsection:

``(o) MODIFICATION OR DEFERRAL FEES.--

``(1) IN GENERAL.--Except as provided in paragraph (2), a creditor may not charge any consumer with respect to a mortgage referred to in section 103(aa) any fee or other charge--

``(A) to modify, renew, extend, or amend such mortgage, or any provision of the terms of the mortgage; or

``(B) to defer any payment otherwise due under the terms of the mortgage.

``(2) EXCEPTION FOR MODIFICATIONS FOR THE BENEFIT OF THE CONSUMER.--Paragraph (1) shall not apply with respect to any fee imposed in connection with any action described in subparagraph (A) or (B) if--

``(A) the action provides a material benefit to the consumer; and

``(B) the amount of the fee or charge does not exceed--

``(i) an amount equal to 0.5 percent of the total loan amount; or

``(ii) in any case in which the total loan amount of the mortgage does not exceed $60,000, an amount in excess of $300.''.

(f) CONSUMER COUNSELING REQUIREMENTS.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (o) (as added by subsection (e) of this section) the following new subsection:

``(p) CONSUMER COUNSELING REQUIREMENT.--

``(1) IN GENERAL.--A creditor may not extend any credit in the form of a mortgage referred to in section 103(aa) to any consumer, unless the creditor has provided to the consumer, at such time before the consummation of the mortgage and in such manner as the Board shall provide by regulation, all of the following:

``(A) All warnings and disclosures regarding the risks of the mortgage to the consumer.

``(B) A separate written statement recommending that the consumer take advantage of available home ownership or credit counseling services before agreeing to the terms of any mortgage referred to in section 103(aa).

``(C) A written statement containing the names, addresses, and telephone numbers of

GPO's PDF

counseling agencies or programs reasonably available to the consumer that have been certified or approved by the Secretary of Housing and Urban Development, a State housing finance authority (as defined in section 1301 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989), or the agency referred to in subsection (a) or (c) of section 108 with jurisdiction over the creditor as qualified to provide counseling on--

``(i) the advisability of a high cost loan transaction; and

``(ii) the appropriateness of a high cost loan for the consumer.

``(B) COMPLETE AND UPDATED LISTS REQUIRED.--Any failure to provide as complete or updated a list under paragraph (1)(C) as is reasonably possible shall constitute a violation of this section.''.

(g) ARBITRATION.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as added by subsection (f) of this section) the following new subsection:

``(q) ARBITRATION.--

``(1) IN GENERAL.--A mortgage referred to in section 103(aa) may not include terms which require arbitration or any other nonjudicial procedure as the method for resolving any controversy or settling any claims arising out of the transaction.

``(2) POST-CONTROVERSY AGREEMENTS.--Subject to paragraph (3), paragraph (1) shall not be construed as limiting the right of the consumer and the creditor to agree to arbitration or any other nonjudicial procedure as the method for resolving any controversy at any time after a dispute or claim under the transaction arises.

``(3) NO WAIVER OF STATUTORY CAUSE OF ACTION.--No provision of any mortgage referred to in section 103(aa) or any agreement between the consumer and the creditor shall be applied or interpreted so as to bar a consumer from bringing an action in an appropriate district court of the United States, or any other court of competent jurisdiction, pursuant to section 130 or any other provision of law, for damages or other relief in connection with any alleged violation of this section, any other provision of this title, or any other Federal law.''.

(h) PROHIBITION ON EVASIONS.--Section 129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as added by subsection (g) of this section) the following new subsection:

``(r) PROHIBITIONS ON EVASIONS, STRUCTURING OF TRANSACTIONS, AND RECIPROCAL ARRANGEMENTS.--

``(1) IN GENERAL.--A creditor may not take any action--

``(A) for the purpose or with the intent to circumvent or evade any requirement of this title, including entering into a reciprocal arrangement with any other creditor or affiliate of another creditor or dividing a transaction into separate parts, for the purpose of evading or circumventing any such requirement; or

``(B) with regard to any other loan or extension of credit for the purpose or with the intent to evade the requirements of this title, including structuring or restructuring a consumer credit transaction as another form of loan, such as a business loan.

``(2) OTHER ACTIONS.--In addition to the actions prohibited under paragraph (1), a creditor may not take any action which the Board determines, by regulation, constitutes a bad faith effort to evade or circumvent any requirement of this section with regard to a consumer credit transaction.

``(3) REGULATIONS.--The Board shall prescribe such regulations as the Board determines to be appropriate to prevent circumvention or evasion of the requirements of this section or to facilitate compliance with the requirements of this section.''.

SEC. 5. AMENDMENTS RELATING TO RIGHT OF RESCISSION.

(a) TIMING OF WAIVER BY CONSUMER.--Section 125(a) of the Truth in Lending Act (15 U.S.C. 1635(a)) is amended--

(1) by striking ``(a) Except as otherwise provided'' and inserting ``(a) RIGHT ESTABLISHED.--

``(1) IN GENERAL.--Except as otherwise provided''; and

(2) by adding at the end the following new paragraph:

``(2) TIMING OF ELECTION OF WAIVER BY CONSUMER.--No election by a consumer to waive the right established under paragraph (1) to rescind a transaction shall be effective if--

``(A) the waiver was required by the creditor as a condition for the transaction;

``(B) the creditor advised or encouraged the consumer to waive such right of the consumer; or

``(C) the creditor had any discussion with the consumer about a waiver of such right during the period beginning when the consumer provides written acknowledgement of the receipt of the disclosures and the delivery of forms and information required to be provided to the consumer under paragraph (1) and ending at such time as the Board determines, by regulation, to be appropriate.''.

(b) NONCOMPLIANCE WITH REQUIREMENTS AS RECOUPMENT IN FORECLOSURE PROCEEDING.--Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is amended by inserting after the 2d sentence the following new sentence: ``This subsection also does not bar a person from asserting a rescission under section 125, in an action to collect the debt as a defense to a judicial or nonjudicial foreclosure after the expiration of the time periods for affirmative actions set forth in this section and section 125.''.

SEC. 6. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.

(a) INCREASE IN AMOUNT OF CIVIL MONEY PENALTIES FOR CERTAIN VIOLATIONS.--Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640) is amended--

(1) in (2)(A)(iii), by striking ``$2,000'' and inserting ``$10,000''; and

(2) in paragraph (2)(B), by striking `` lesser of $500,000 or 1 percentum of the net worth of the creditor'' and inserting ``the greater of--

``(i) the amount determined by multiplying the maximum amount of liability under subparagraph (A) for such failure to comply in an individual action by the number of members in the certified class; or

``(ii) the amount equal to 2 percent of the net worth of the creditor.''.

(b) STATUTE OF LIMITATIONS EXTENDED FOR SECTION 129 VIOLATIONS.--Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) (as amended by section 5(b) of this Act) is amended--

(1) in the 1st sentence, by striking ``Any action'' and inserting ``Except as provided in the subsequent sentence, any action''; and

(2) by inserting after the 1st sentence the following new sentence: ``Any action under this section with respect to any violation of section 129 may be brought in any United States district court, or in any other court of competent jurisdiction, before the end of the 3-year period beginning on the date of the occurrence of the violation.''.

SEC. 7. AMENDMENT TO FAIR CREDIT REPORTING ACT.

Section 623 of the Fair Credit Reporting Act (15 U.S.C. 1681s-2) is amended by adding at the end the following new subsection:

``(e) DUTY OF CREDITORS WITH RESPECT TO HIGH COST MORTGAGES.--

``(1) IN GENERAL.--Each creditor who enters into a consumer credit transaction which is a mortgage referred to in section 103(aa), and each successor to such creditor with respect to such transaction, shall report the complete payment history, favorable and unfavorable, of the obligor with respect to such transaction to a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis at least quarterly, or more frequently as required by regulation or in guidelines established by participants in the secondary mortgage market, while such transaction is in effect.

``(2) DEFINITIONS.--For purposes of paragraph (1), the terms `credit' and `creditor' have the same meanings as in section 103.''.

SEC. 8. REGULATIONS.

The Board of Governors of the Federal Reserve System shall publish regulations implementing this Act, and the amendments made by this Act, in final form before the end of the 6-month period beginning on the date of the enactment of this Act.

[karynnj]

3. Complements of DU 2004 from skinner - lots of stuff on the Kerry platform plank

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x678560

This has the full Kerry press release including a statement by a group of state district attorneys - there is quite a bit of detail here.

[karynnj]

4. Slightly ot - a view of who would regulate from insiders - 2004

"Several surveyed executives expressed dismay at the proliferation of state abusive lending laws and are hoping for a single, national standard that pre-empts state and local laws. However, it appears that the leading antipredatory lending bill in Congress that could do just that: H.R. 833--the Ney-Lucas Responsible Lending Act, introduced late in 2002--is unlikely to pass until 2005 at the earliest, assuming a Bush victory in November's presidential election.

(Democratic presidential candidate Sen. John Kerry co-sponsored a tough antipredatory lending bill last year--the Predatory Lending Consumer Protection Act of 2003--generally opposed by the industry, and his running mate, Sen. John Edwards , introduced legislation earlier this year designed to overturn the OCC's pre-emption of state law. These actions are strong indications of things to come if they are elected.)

When and if the Ney bill becomes law, the timing of its enforcement is very uncertain, in part due to the promises made by many states to challenge any such law by suing the federal government, which will undoubtedly cause substantial delays.

State challenges to federal law are not new, as evidenced by a recent challenge against the OCC's pre-emption of state law by New York Attorney General Eliot Spitzer. Regardless of what happens, the bottom line is that enforcement of a single, national standard may not happen until 2006 or beyond. Even then, lenders will still need to take proactive steps to comply with the provisions of the new standards."

This is a report for lending companies - http://goliath.ecnext.com/coms2/gi_0199-4363792/The-predatory-lending-compliance-trap.html

From this, Kerry also co-sponsored that legislation in 2003 - http://thomas.loc.gov/cgi-bin/bdquery/D?d108:1:./temp/~bdeNUv:@@@D&summ2=m&|/bss/d108query.html|

(So - Sabanes and 4 sponsors in 2000, Sarbanes and 14 sponsors in 2002, Sarbanes and 15 sponsors in 2003 - 3 Congresses in a row - and not one Republican sponsor in any)

[TayTay]

5. THANK YOU!!!!!!!!!!

There is also this from the 106th

http://www.govtrack.us/congress/bill.xpd?bill=s106-2415

Same bill as in 2002, but this was the earlier version that died in committee.