S 2438 IS

To amend 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.

May 1, 2002

Mr. SARBANES (for himself, Mr. DODD, Mr. SCHUMER, Ms. STABENOW, Mr. CORZINE, Mr. KERRY, Mr. KENNEDY, Mr. DURBIN, Ms. MIKULSKI, Mrs. CLINTON, Mrs. BOXER, Mr. WELLSTONE, Mr. TORRICELLI, Mr. DAYTON, and Mr. LEVIN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

To amend 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.

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 2002'.

SEC. 2. TRUTH IN LENDING ACT DEFINITIONS.

(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) 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 principal dwelling of the consumer, other than a reverse mortgage transaction; and

`(ii) the terms of which provide that--

`(I) the transaction is secured by a first mortgage on the principal dwelling of the consumer, 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 principal dwelling of the consumer, 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; or

`(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, excluding not more than 2 bona fide discount points.

`(B) INTRODUCTORY RATES NOT TAKEN INTO ACCOUNT- For purposes of subparagraph (A)(ii), the annual percentage rate of interest shall be determined--

`(i) in the case of a fixed-rate loan in which the annual percentage rate will not vary during the term of the loan, as the rate in effect on the date of consummation of the transaction;

`(ii) in the case of a loan in which the rate of interest varies according to an index, or is less than the rate of interest which will apply after the end of an initial or introductory period, by adding the index rate in effect on the date of consummation of the transaction to the maximum margin permitted at any time during the loan agreement; and

`(iii) in the case of any other loan in which the rate may vary at any time during the term of the loan for any reason, by including in the finance charge component of the annual percentage rate--

`(I) the interest charged on the loan at the maximum rate that may be charged during the term of the loan; and

`(II) any other applicable charges that would otherwise be included in accordance with section 106.'.

(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:

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

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

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

`(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) the maximum prepayment penalties that may be charged or collected under the terms of the loan documents;

`(F) all prepayment fees or penalties that are charged to the borrower if the loan refinances a previous loan made by the same creditor or an affiliate of that creditor; and'.

(c) HIGH COST MORTGAGE LENDER- 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.'.

(d) BONA FIDE DISCOUNT POINTS AND BENCHMARK RATE DEFINED- Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following:

`(cc) OTHER INTEREST RATE RELATED TERMS-

`(1) BENCHMARK RATE- The term `benchmark rate' means an interest rate that the borrower may reduce by paying bona fide discount points, not to exceed the weekly average yield of United States Treasury securities having a maturity of 5 years, on the 15th day of the month immediately preceding the month in which the loan is made, plus 5 percentage points.

`(2) BONA FIDE DISCOUNT POINTS- The term `bona fide discount points' means loan discount points which are--

`(A) knowingly paid by the borrower;

`(B) paid for the express purpose of lowering the benchmark rate;

`(C) in fact reducing the interest rate or time-price differential applicable to the loan from an interest rate which does not exceed the benchmark rate; and

`(D) recouped within the first 4 years of the scheduled loan payments.

`(3) RECOUPMENT- For purposes of paragraph (2)(D), loan discount points shall be considered to be recouped within the first 4 years of the scheduled loan payments if the reduction in the interest rate that is achieved by the payment of the loan discount points reduces the interest charged on the scheduled payments, such that the dollar amount of savings in payments made by the borrower over the first 4 years is equal to or exceeds the dollar amount of loan discount points paid by the borrower.'.

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:

`(C) `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.'.

`(D) `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 housing or consumer credit counseling agency, as well as to consult other lenders to find ways to get a cheaper loan.'.

`(E) `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 that the sum of the 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:

`(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 the current and expected income, current obligations, employment status, and other financial resources of any such obligor, 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 the ability of a consumer to make payments and the criteria to be considered in making that 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:

`(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- The consummation of a consumer credit transaction resulting in a mortgage referred to in section 103(aa) shall be treated as a failure to deliver the material disclosures required under this title for the purpose of section 125, if--

`(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.

`(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:

`(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 in connection with any such mortgage, whether paid directly by the consumer or financed by the consumer through such mortgage--

`(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.

`(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:

`(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:

`(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 sole discretion of the creditor.

`(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:

`(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:

`(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:

`(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--

`(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); and

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

`(2) 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:

`(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:

`(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:

`(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 second sentence the following: `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(a)) is amended--

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

(2) by inserting after the first sentence the following: `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:

`(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 term `credit' and `creditor' have the same meanings as in section 103 of the Truth in Lending Act (15 U.S.C. 1602).'.

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 enactment of this Act.

END