[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[S. 2595 Introduced in Senate (IS)]
110th CONGRESS
2d Session
S. 2595
To create a national licensing system for residential mortgage loan
originators, to develop minimum standards of conduct to be enforced by
State regulators, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 6, 2008
Mrs. Feinstein (for herself and Mr. Martinez) introduced the following
bill; which was read twice and referred to the Committee on Banking,
Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To create a national licensing system for residential mortgage loan
originators, to develop minimum standards of conduct to be enforced by
State regulators, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Secure and Fair
Enforcement for Mortgage Licensing Act of 2008'' or ``S.A.F.E. Mortgage
Licensing Act of 2008''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes and methods for establishing a mortgage licensing
system and registry.
Sec. 3. Definitions.
Sec. 4. License or registration required.
Sec. 5. State license and registration application and issuance.
Sec. 6. Standards for State license renewal.
Sec. 7. System of registration administration by Federal banking
agencies.
Sec. 8. Secretary of Housing and Urban Development backup authority to
establish a loan originator licensing
system.
Sec. 9. Backup authority to establish a nationwide mortgage licensing
and registry system.
Sec. 10. Fees.
Sec. 11. Background checks of loan originators.
Sec. 12. Confidentiality of information.
Sec. 13. Liability provisions.
Sec. 14. Enforcement under HUD backup licensing system.
Sec. 15. Preemption of State law.
Sec. 16. Reports and recommendations to Congress.
Sec. 17. Study and reports on defaults and foreclosures
SEC. 2. PURPOSES AND METHODS FOR ESTABLISHING A MORTGAGE LICENSING
SYSTEM AND REGISTRY.
In order to increase uniformity, reduce regulatory burden, enhance
consumer protection, and reduce fraud, the States, through the
Conference of State Bank Supervisors and the American Association of
Residential Mortgage Regulators, are hereby encouraged to establish a
Nationwide Mortgage Licensing System and Registry for the residential
mortgage industry that accomplishes all of the following objectives:
(1) Provides uniform license applications and reporting
requirements for State-licensed loan originators.
(2) Provides a comprehensive licensing and supervisory
database.
(3) Aggregates and improves the flow of information to and
between regulators.
(4) Provides increased accountability and tracking of loan
originators.
(5) Streamlines the licensing process and reduces the
regulatory burden.
(6) Enhances consumer protections and supports anti-fraud
measures.
(7) Provides consumers with easily accessible information,
offered at no charge, utilizing electronic media, including the
Internet, regarding the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, loan
originators.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Federal banking agencies.--The term ``Federal banking
agencies'' means the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the National Credit Union
Administration, and the Federal Deposit Insurance Corporation.
(2) Depository institution.--The term ``depository
institution'' has the same meaning as in section 3 of the
Federal Deposit Insurance Act, and includes any credit union.
(3) Loan originator.--
(A) In general.--The term ``loan originator''--
(i) means an individual who--
(I) takes a residential mortgage
loan application;
(II) assists a consumer in
obtaining or applying to obtain a
residential mortgage loan; or
(III) offers or negotiates terms of
a residential mortgage loan, for direct
or indirect compensation or gain, or in
the expectation of direct or indirect
compensation or gain;
(ii) includes any individual who represents
to the public, through advertising or other
means of communicating or providing information
(including the use of business cards,
stationery, brochures, signs, rate lists, or
other promotional items), that such individual
can or will provide or perform any of the
activities described in clause (i);
(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; and
(iv) does not include a person or entity
that only performs real estate brokerage
activities and is licensed or registered in
accordance with applicable State law, unless
the person or entity is compensated by a
lender, a mortgage broker, or other loan
originator or by any agent of such lender,
mortgage broker, or other loan originator.
(B) Other definitions relating to loan
originator.--For purposes of this subsection, an
individual ``assists a consumer in obtaining or
applying to obtain a residential mortgage loan'' by,
among other things, advising on loan terms (including
rates, fees, other costs), preparing loan packages, or
collecting information on behalf of the consumer with
regard to a residential mortgage loan.
(C) Administrative or clerical tasks.--The term
``administrative or clerical tasks'' means the receipt,
collection, and distribution of information common for
the processing or underwriting of a loan in the
mortgage industry and communication with a consumer to
obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(D) Real estate brokerage activity defined.--The
term ``real estate brokerage activity'' means any
activity that involves offering or providing real
estate brokerage services to the public, including--
(i) acting as a real estate agent or real
estate broker for a buyer, seller, lessor, or
lessee of real property;
(ii) listing or advertising real property
for sale, purchase, lease, rental, or exchange;
(iii) providing advice in connection with
sale, purchase, lease, rental, or exchange of
real property;
(iv) bringing together parties interested
in the sale, purchase, lease, rental, or
exchange of real property;
(v) negotiating, on behalf of any party,
any portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real
property (other than in connection with
providing financing with respect to any such
transaction);
(vi) engaging in any activity for which a
person engaged in the activity is required to
be registered or licensed as a real estate
agent or real estate broker under any
applicable law; and
(vii) offering to engage in any activity,
or act in any capacity, described in clause
(i), (ii), (iii), (iv), (v), or (vi).
(4) Loan processor or underwriter.--
(A) In general.--The term ``loan processor or
underwriter'' means an individual who performs clerical
or support duties at the direction of and subject to
the supervision and instruction of--
(i) a State-licensed loan originator; or
(ii) a registered loan originator.
(B) Clerical or support duties.--For purposes of
subparagraph (A), the term ``clerical or support
duties'' may include--
(i) the receipt, collection, distribution,
and analysis of information common for the
processing or underwriting of a residential
mortgage loan; and
(ii) communicating with a consumer to
obtain the information necessary for the
processing or underwriting of a loan, to the
extent that such communication does not include
offering or negotiating loan rates or terms, or
counseling consumers about residential mortgage
loan rates or terms.
(5) Nationwide mortgage licensing system and registry.--The
term ``Nationwide Mortgage Licensing System and Registry''
means a mortgage licensing system developed and maintained by
the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators for the State
licensing and registration of State-licensed loan originators
and the registration of registered loan originators or any
system established by the Secretary under section 9.
(6) Registered loan originator.--The term ``registered loan
originator'' means any individual who--
(A) meets the definition of loan originator and is
an employee of a depository institution or a wholly-
owned subsidiary of a depository institution; and
(B) is registered with, and maintains a unique
identifier through, the Nationwide Mortgage Licensing
System and Registry.
(7) Residential mortgage loan.--The term ``residential
mortgage loan'' means any loan primarily for personal, family,
or household use that is secured by a mortgage, deed of trust,
or other equivalent consensual security interest on a dwelling
(as defined in section 103(v) of the Truth in Lending Act) or
residential real estate upon which is constructed or intended
to be constructed a dwelling (as so defined).
(8) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(9) State-licensed loan originator.--The term ``State-
licensed loan originator'' means any individual who--
(A) is a loan originator;
(B) is not an employee of a depository institution
or any wholly-owned subsidiary of a depository
institution; and
(C) is licensed by a State or by the Secretary
under section 8 and registered as a loan originator
with, and maintains a unique identifier through, the
Nationwide Mortgage Licensing System and Registry.
(10) Subprime mortgage.--The term ``subprime mortgage''
means a residential mortgage loan--
(A) that is secured by real property that is used
or intended to be used as a principal dwelling;
(B) that is typically offered to borrowers having
weakened credit histories and reduced repayment
capacity, as measured by lower credit scores, debt-to-
income ratios, and other relevant criteria; and
(C) the characteristics of which may include--
(i) low initial payments based on a fixed
introductory rate that expires after a short
period and then adjusts to a variable index
rate plus a margin for the remaining term of
the loan;
(ii) very high or no limits on how much the
payment amount or the interest rate may
increase (referred to as ``payment caps'' or
``rate caps'') on reset dates;
(iii) limited or no documentation of the
income of the borrower;
(iv) product features likely to result in
frequent refinancing to maintain an affordable
monthly payment; and
(v) substantial prepayment penalties or
prepayment penalties that extend beyond the
initial fixed interest rate period.
(11) Unique identifier.--The term ``unique identifier''
means a number or other identifier that--
(A) permanently identifies a loan originator; and
(B) is assigned by protocols established by the
Nationwide Mortgage Licensing System and Registry and
the Federal banking agencies to facilitate electronic
tracking of loan originators and uniform identification
of, and public access to, the employment history of and
the publicly adjudicated disciplinary and enforcement
actions against loan originators.
SEC. 4. LICENSE OR REGISTRATION REQUIRED.
(a) In General.--An individual may not engage in the business of a
loan originator without first--
(1) obtaining and maintaining, through an annual renewal--
(A) a registration as a registered loan originator;
or
(B) a license and registration as a State-licensed
loan originator; and
(2) obtaining a unique identifier.
(b) Loan Processors and Underwriters.--
(1) Supervised loan processors and underwriters.--A loan
processor or underwriter who does not represent to the public,
through advertising or other means of communicating or
providing information (including the use of business cards,
stationery, brochures, signs, rate lists, or other promotional
items), that such individual can or will perform any of the
activities of a loan originator shall not be required to be a
State-licensed loan originator or a registered loan originator.
(2) Independent contractors.--A loan processor or
underwriter may not work as an independent contractor unless
such processor or underwriter is a State-licensed loan
originator or a registered loan originator.
SEC. 5. STATE LICENSE AND REGISTRATION APPLICATION AND ISSUANCE.
(a) Background Checks.--In connection with an application to any
State for licensing and registration as a State-licensed loan
originator, the applicant shall, at a minimum, furnish to the
Nationwide Mortgage Licensing System and Registry information
concerning the applicant's identity, including--
(1) fingerprints for submission to the Federal Bureau of
Investigation, and any governmental agency or entity authorized
to receive such information for a State and national criminal
history background check; and
(2) personal history and experience, including
authorization for the System to obtain--
(A) an independent credit report obtained from a
consumer reporting agency described in section 603(p)
of the Fair Credit Reporting Act; and
(B) information related to any administrative,
civil or criminal findings by any governmental
jurisdiction.
(b) Issuance of License.--The minimum standards for licensing and
registration as a State-licensed loan originator shall include the
following:
(1) The applicant has never had a loan originator or
similar license revoked in any governmental jurisdiction.
(2) The applicant has never been convicted of, or pled
guilty or nolo contendere to, a felony in a domestic, foreign,
or military court.
(3) The applicant has demonstrated financial
responsibility, character, and general fitness such as to
command the confidence of the community and to warrant a
determination that the loan originator will operate honestly,
fairly, and efficiently within the purposes of this Act.
(4) The applicant has completed the pre-licensing education
requirement described in subsection (c).
(5) The applicant has passed a written test that meets the
test requirement described in subsection (d).
(c) Pre-Licensing Education of Loan Originators.--
(1) Minimum educational requirements.--In order to meet the
pre-licensing education requirement referred to in subsection
(b)(4), a person shall complete at least 20 hours of education
approved in accordance with paragraph (2), which shall include
at least--
(A) 3 hours of Federal law and regulations;
(B) 3 hours of ethics, which shall include
instruction on fraud, consumer protection, and fair
lending issues; and
(C) 2 hours of training related to lending
standards for the subprime mortgage marketplace.
(2) Approved educational courses.--For purposes of
paragraph (1), pre-licensing education courses shall be
reviewed, and approved by the Nationwide Mortgage Licensing
System and Registry.
(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.
(d) Testing of Loan Originators.--
(1) In general.--In order to meet the written test
requirement referred to in subsection (b)(5), an individual
shall pass, in accordance with the standards established under
this subsection, a qualified written test developed by the
Nationwide Mortgage Licensing System and Registry and
administered by an approved test provider.
(2) Qualified test.--A written test shall not be treated as
a qualified written test for purposes of paragraph (1) unless--
(A) the test consists of a minimum of 100
questions; and
(B) the test adequately measures the applicant's
knowledge and comprehension in appropriate subject
areas, including--
(i) ethics;
(ii) Federal law and regulation pertaining
to mortgage origination;
(iii) State law and regulation pertaining
to mortgage origination; and
(iv) Federal and State law and regulation,
including instruction on fraud, consumer
protection, subprime mortgage marketplace, and
fair lending issues.
(3) Minimum competence.--
(A) Passing score.--An individual shall not be
considered to have passed a qualified written test
unless the individual achieves a test score of not less
than 75 percent correct answers to questions.
(B) Initial retests.--An individual may retake a
test 3 consecutive times with each consecutive taking
occurring in less than 14 days after the preceding
test.
(C) Subsequent retests.--After 3 consecutive tests,
an individual shall wait at least 14 days before taking
the test again.
(D) Retest after lapse of license.--A State-
licensed loan originator who fails to maintain a valid
license for a period of 5 years or longer shall retake
the test, not taking into account any time during which
such individual is a registered loan originator.
(e) Mortgage Call Reports.--Each mortgage licensee shall submit to
the Nationwide Mortgage Licensing System and Registry reports of
condition, which shall be in such form and shall contain such
information as the Nationwide Mortgage Licensing System and Registry
may require.
SEC. 6. STANDARDS FOR STATE LICENSE RENEWAL.
(a) In General.--The minimum standards for license renewal for
State-licensed loan originators shall include the following:
(1) The loan originator continues to meet the minimum
standards for license issuance.
(2) The loan originator has satisfied the annual continuing
education requirements described in subsection (b).
(b) Continuing Education for State-Licensed Loan Originators.--
(1) In general.--In order to meet the annual continuing
education requirements referred to in subsection (a)(2), a
State-licensed loan originator shall complete at least 8 hours
of education approved in accordance with paragraph (2), which
shall include at least--
(A) 3 hours of Federal law and regulations;
(B) 2 hours of ethics, which shall include
instruction on fraud, consumer protection, and fair
lending issues; and
(C) 2 hours of training related to lending
standards for the subprime mortgage marketplace.
(2) Approved educational courses.--For purposes of
paragraph (1), continuing education courses shall be reviewed,
and approved by the Nationwide Mortgage Licensing System and
Registry.
(3) Calculation of continuing education credits.--A State-
licensed loan originator--
(A) may only receive credit for a continuing
education course in the year in which the course is
taken; and
(B) may not take the same approved course in the
same or successive years to meet the annual
requirements for continuing education.
(4) Instructor credit.--A State-licensed loan originator
who is approved as an instructor of an approved continuing
education course may receive credit for the originator's own
annual continuing education requirement at the rate of 2 hours
credit for every 1 hour taught.
(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.
SEC. 7. SYSTEM OF REGISTRATION ADMINISTRATION BY FEDERAL BANKING
AGENCIES.
(a) Development.--
(1) In general.--The Federal banking agencies shall
jointly, through the Federal Financial Institutions Examination
Council, develop and maintain a system for registering
employees of depository institutions or subsidiaries of
depository institutions as registered loan originators with the
Nationwide Mortgage Licensing System and Registry. The system
shall be implemented before the end of the 1-year period
beginning on the date of the enactment of this Act.
(2) Registration requirements.--In connection with the
registration of any loan originator who is an employee of a
depository institution or a wholly-owned subsidiary of a
depository institution with the Nationwide Mortgage Licensing
System and Registry, the appropriate Federal banking agency
shall, at a minimum, furnish or cause to be furnished to the
Nationwide Mortgage Licensing System and Registry information
concerning the employees's identity, including--
(A) fingerprints for submission to the Federal
Bureau of Investigation, and any governmental agency or
entity authorized to receive such information for a
State and national criminal history background check;
and
(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.
(b) Coordination.--
(1) Unique identifier.--The Federal banking agencies,
through the Financial Institutions Examination Council, shall
coordinate with the Nationwide Mortgage Licensing System and
Registry to establish protocols for assigning a unique
identifier to each registered loan originator that will
facilitate electronic tracking and uniform identification of,
and public access to, the employment history of and publicly
adjudicated disciplinary and enforcement actions against loan
originators.
(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.
(c) Consideration of Factors and Procedures.--In establishing the
registration procedures under subsection (a) and the protocols for
assigning a unique identifier to a registered loan originator, the
Federal banking agencies shall make such de minimis exceptions as may
be appropriate to paragraphs (1)(A) and (2) of section 4(a), shall make
reasonable efforts to utilize existing information to minimize the
burden of registering loan originators, and shall consider methods for
automating the process to the greatest extent practicable consistent
with the purposes of this Act.
SEC. 8. SECRETARY OF HOUSING AND URBAN DEVELOPMENT BACKUP AUTHORITY TO
ESTABLISH A LOAN ORIGINATOR LICENSING SYSTEM.
(a) Back up Licensing System.--If, by the end of the 1-year period,
or the 2-year period in the case of a State whose legislature meets
only biennially, beginning on the date of the enactment of this Act or
at any time thereafter, the Secretary determines that a State does not
have in place by law or regulation a system for licensing and
registering loan originators that meets the requirements of sections 5
and 6 and subsection (d) of this section, or does not participate in
the Nationwide Mortgage Licensing System and Registry, the Secretary
shall provide for the establishment and maintenance of a system for the
licensing and registration by the Secretary of loan originators
operating in such State as State-licensed loan originators.
(b) Licensing and Registration Requirements.--The system
established by the Secretary under subsection (a) for any State shall
meet the requirements of sections 5 and 6 for State-licensed loan
originators.
(c) Unique Identifier.--The Secretary shall coordinate with the
Nationwide Mortgage Licensing System and Registry to establish
protocols for assigning a unique identifier to each loan originator
licensed by the Secretary as a State-licensed loan originator that will
facilitate electronic tracking and uniform identification of, and
public access to, the employment history of and the publicly
adjudicated disciplinary and enforcement actions against loan
originators.
(d) State Licensing Law Requirements.--For purposes of this
section, the law in effect in a State meets the requirements of this
subsection if the Secretary determines the law satisfies the following
minimum requirements:
(1) A State loan originator supervisory authority is
maintained to provide effective supervision and enforcement of
such law, including the suspension, termination, or nonrenewal
of a license for a violation of State or Federal law.
(2) The State loan originator supervisory authority ensures
that all State-licensed loan originators operating in the State
are registered with Nationwide Mortgage Licensing System and
Registry.
(3) The State loan originator supervisory authority is
required to regularly report violations of such law, as well as
enforcement actions and other relevant information, to the
Nationwide Mortgage Licensing System and Registry.
(e) Temporary Extension of Period.--The Secretary may extend, by
not more than 12 months, the 1-year or 2-year period, as the case may
be, referred to in subsection (a) for the licensing of loan originators
in any State under a State licensing law that meets the requirements of
sections 5 and 6 and subsection (d) if the Secretary determines that
such State is making a good faith effort to establish a State licensing
law that meets such requirements, license mortgage originators under
such law, and register such originators with the Nationwide Mortgage
Licensing System and Registry.
(f) Limitation on HUD-Licensed Loan Originators.--Any loan
originator who is licensed by the Secretary under a system established
under this section for any State may not use such license to originate
loans in any other State.
(g) Contracting Authority.--The Secretary may enter into contracts
with qualified independent parties, as necessary to efficiently fulfill
the obligations of the Secretary under this Section.
SEC. 9. BACKUP AUTHORITY TO ESTABLISH A NATIONWIDE MORTGAGE LICENSING
AND REGISTRY SYSTEM.
If at any time the Secretary determines that the Nationwide
Mortgage Licensing System and Registry is failing to meet the
requirements and purposes of this Act for a comprehensive licensing,
supervisory, and tracking system for loan originators, the Secretary
shall establish and maintain such a system to carry out the purposes of
this Act and the effective registration and regulation of loan
originators.
SEC. 10. FEES.
The Federal banking agencies, the Secretary, and the Nationwide
Mortgage Licensing System and Registry may charge reasonable fees to
cover the costs of maintaining and providing access to information from
the Nationwide Mortgage Licensing System and Registry, to the extent
that such fees are not charged to consumers for access to such system
and registry.
SEC. 11. BACKGROUND CHECKS OF LOAN ORIGINATORS.
(a) Access to Records.--Notwithstanding any other provision of law,
in providing identification and processing functions, the Attorney
General shall provide access to all criminal history information to the
appropriate State officials responsible for regulating State-licensed
loan originators to the extent criminal history background checks are
required under the laws of the State for the licensing of such loan
originators.
(b) Agent.--For the purposes of this section and in order to reduce
the points of contact which the Federal Bureau of Investigation may
have to maintain for purposes of subsection (a), the Conference of
State Bank Supervisors or a wholly owned subsidiary may be used as a
channeling agent of the States for requesting and distributing
information between the Department of Justice and the appropriate State
agencies.
SEC. 12. CONFIDENTIALITY OF INFORMATION.
(a) System Confidentiality.--Except as otherwise provided in this
section, any requirement under Federal or State law regarding the
privacy or confidentiality of any information or material provided to
the Nationwide Mortgage Licensing System and Registry or a system
established by the Secretary under section 9, and any privilege arising
under Federal or State law (including the rules of any Federal or State
court) with respect to such information or material, shall continue to
apply to such information or material after the information or material
has been disclosed to the system. Such information and material may be
shared with all State and Federal regulatory officials with mortgage
industry oversight authority without the loss of privilege or the loss
of confidentiality protections provided by Federal and State laws.
(b) Nonapplicability of Certain Requirements.--Information or
material that is subject to a privilege or confidentiality under
subsection (a) shall not be subject to--
(1) disclosure under any Federal or State law governing the
disclosure to the public of information held by an officer or
an agency of the Federal Government or the respective State; or
(2) subpoena or discovery, or admission into evidence, in
any private civil action or administrative process, unless with
respect to any privilege held by the Nationwide Mortgage
Licensing System and Registry or the Secretary with respect to
such information or material, the person to whom such
information or material pertains waives, in whole or in part,
in the discretion of such person, that privilege.
(c) Coordination With Other Law.--Any State law, including any
State open record law, relating to the disclosure of confidential
supervisory information or any information or material described in
subsection (a) that is inconsistent with subsection (a) shall be
superseded by the requirements of such provision to the extent State
law provides less confidentiality or a weaker privilege.
(d) Public Access to Information.--This section shall not apply
with respect to the information or material relating to the employment
history of, and publicly adjudicated disciplinary and enforcement
actions against, loan originators that is included in Nationwide
Mortgage Licensing System and Registry for access by the public.
SEC. 13. LIABILITY PROVISIONS.
The Secretary, any State official or agency, any Federal banking
agency, or any organization serving as the administrator of the
Nationwide Mortgage Licensing System and Registry or a system
established by the Secretary under section 9, or any officer or
employee of any such entity, shall not be subject to any civil action
or proceeding for monetary damages by reason of the good-faith action
or omission of any officer or employee of any such entity, while acting
within the scope of office or employment, relating to the collection,
furnishing, or dissemination of information concerning persons who are
loan originators or are applying for licensing or registration as loan
originators.
SEC. 14. ENFORCEMENT UNDER HUD BACKUP LICENSING SYSTEM.
(a) Summons Authority.--The Secretary may--
(1) examine any books, papers, records, or other data of
any loan originator operating in any State which is subject to
a licensing system established by the Secretary under section
8; and
(2) summon any loan originator referred to in paragraph (1)
or any person having possession, custody, or care of the
reports and records relating to such loan originator, to appear
before the Secretary or any delegate of the Secretary at a time
and place named in the summons and to produce such books,
papers, records, or other data, and to give testimony, under
oath, as may be relevant or material to an investigation of
such loan originator for compliance with the requirements of
this Act.
(b) Examination Authority.--
(1) In general.--If the Secretary establishes a licensing
system under section 8 for any State, the Secretary shall
appoint examiners for the purposes of administering such
section.
(2) Power to examine.--Any examiner appointed under
paragraph (1) shall have power, on behalf of the Secretary, to
make any examination of any loan originator operating in any
State which is subject to a licensing system established by the
Secretary under section 8 whenever the Secretary determines an
examination of any loan originator is necessary to determine
the compliance by the originator with this Act.
(3) Report of examination.--Each examiner appointed under
paragraph (1) shall make a full and detailed report of
examination of any loan originator examined to the Secretary.
(4) Administration of oaths and affirmations; evidence.--In
connection with examinations of loan originators operating in
any State which is subject to a licensing system established by
the Secretary under section 8, or with other types of
investigations to determine compliance with applicable law and
regulations, the Secretary and examiners appointed by the
Secretary may administer oaths and affirmations and examine and
take and preserve testimony under oath as to any matter in
respect to the affairs of any such loan originator.
(5) Assessments.--The cost of conducting any examination of
any loan originator operating in any State which is subject to
a licensing system established by the Secretary under section 8
shall be assessed by the Secretary against the loan originator
to meet the Secretary's expenses in carrying out such
examination.
(c) Cease and Desist Proceeding.--
(1) Authority of secretary.--If the Secretary finds, after
notice and opportunity for hearing, that any person is
violating, has violated, or is about to violate any provision
of this Act, or any regulation thereunder, with respect to a
State which is subject to a licensing system established by the
Secretary under section 8, the Secretary may publish such
findings and enter an order requiring such person, and any
other person that is, was, or would be a cause of the
violation, due to an act or omission the person knew or should
have known would contribute to such violation, to cease and
desist from committing or causing such violation and any future
violation of the same provision, rule, or regulation. Such
order may, in addition to requiring a person to cease and
desist from committing or causing a violation, require such
person to comply, or to take steps to effect compliance, with
such provision or regulation, upon such terms and conditions
and within such time as the Secretary may specify in such
order. Any such order may, as the Secretary deems appropriate,
require future compliance or steps to effect future compliance,
either permanently or for such period of time as the Secretary
may specify, with such provision or regulation with respect to
any loan originator.
(2) Hearing.--The notice instituting proceedings pursuant
to paragraph (1) shall fix a hearing date not earlier than 30
days nor later than 60 days after service of the notice unless
an earlier or a later date is set by the Secretary with the
consent of any respondent so served.
(3) Temporary order.--Whenever the Secretary determines
that the alleged violation or threatened violation specified in
the notice instituting proceedings pursuant to paragraph (1),
or the continuation thereof, is likely to result in significant
dissipation or conversion of assets, significant harm to
consumers, or substantial harm to the public interest prior to
the completion of the proceedings, the Secretary may enter a
temporary order requiring the respondent to cease and desist
from the violation or threatened violation and to take such
action to prevent the violation or threatened violation and to
prevent dissipation or conversion of assets, significant harm
to consumers, or substantial harm to the public interest as the
Secretary deems appropriate pending completion of such
proceedings. Such an order shall be entered only after notice
and opportunity for a hearing, unless the Secretary determines
that notice and hearing prior to entry would be impracticable
or contrary to the public interest. A temporary order shall
become effective upon service upon the respondent and, unless
set aside, limited, or suspended by the Secretary or a court of
competent jurisdiction, shall remain effective and enforceable
pending the completion of the proceedings.
(4) Review of temporary orders.--
(A) Review by secretary.--At any time after the
respondent has been served with a temporary cease-and-
desist order pursuant to paragraph (3), the respondent
may apply to the Secretary to have the order set aside,
limited, or suspended. If the respondent has been
served with a temporary cease-and-desist order entered
without a prior hearing before the Secretary, the
respondent may, within 10 days after the date on which
the order was served, request a hearing on such
application and the Secretary shall hold a hearing and
render a decision on such application at the earliest
possible time.
(B) Judicial review.--Within--
(i) 10 days after the date the respondent
was served with a temporary cease-and-desist
order entered with a prior hearing before the
Secretary; or
(ii) 10 days after the Secretary renders a
decision on an application and hearing under
paragraph (1), with respect to any temporary
cease-and-desist order entered without a prior
hearing before the Secretary,
the respondent may apply to the United States district
court for the district in which the respondent resides
or has its principal place of business, or for the
District of Columbia, for an order setting aside,
limiting, or suspending the effectiveness or
enforcement of the order, and the court shall have
jurisdiction to enter such an order. A respondent
served with a temporary cease-and-desist order entered
without a prior hearing before the Secretary may not
apply to the court except after hearing and decision by
the Secretary on the respondent's application under
subparagraph (A).
(C) No automatic stay of temporary order.--The
commencement of proceedings under subparagraph (B)
shall not, unless specifically ordered by the court,
operate as a stay of the Secretary's order.
(5) Authority of the secretary to prohibit persons from
serving as loan originators.--In any cease-and-desist
proceeding under paragraph (1), the Secretary may issue an
order to prohibit, conditionally or unconditionally, and
permanently or for such period of time as the Secretary shall
determine, any person who has violated this Act or regulations
thereunder, from acting as a loan originator if the conduct of
that person demonstrates unfitness to serve as a loan
originator.
(d) Authority of the Secretary To Assess Money Penalties.--
(1) In general.--The Secretary may impose a civil penalty
on a loan originator operating in any State which is subject to
licensing system established by the Secretary under section 8,
if the Secretary finds, on the record after notice and
opportunity for hearing, that such loan originator has violated
or failed to comply with any requirement of this Act or any
regulation prescribed by the Secretary under this Act or order
issued under subsection (c).
(2) Maximum amount of penalty.--The maximum amount of
penalty for each act or omission described in paragraph (1)
shall be $5,000 for each day the violation continues.
SEC. 15. PREEMPTION OF STATE LAW.
Nothing in this Act may be construed to preempt the law of any
State, to the extent that such State law provides greater protection to
consumers than is provided under this Act.
SEC. 16. REPORTS AND RECOMMENDATIONS TO CONGRESS.
(a) Annual Reports.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the Secretary shall
submit a report to Congress on the effectiveness of the provisions of
this Act, including legislative recommendations, if any, for
strengthening consumer protections, enhancing examination standards,
and streamlining communication between all stakeholders involved in
residential mortgage loan origination and processing.
(b) Legislative Recommendations.--Not later than 6 months after the
date of enactment of this Act, the Secretary shall make recommendations
to Congress on legislative reforms to the Real Estate Settlement
Procedures Act of 1974, that the Secretary deems appropriate to promote
more transparent disclosures, allowing consumers to better shop and
compare mortgage loan terms and settlement costs.
SEC. 17. STUDY AND REPORTS ON DEFAULTS AND FORECLOSURES.
(a) Study Required.--The Secretary shall conduct an extensive study
of the root causes of default and foreclosure of home loans, using as
much empirical data as is available.
(b) Preliminary Report to Congress.--Not later than 6 months after
the date of enactment of this Act, the Secretary shall submit to
Congress a preliminary report regarding the study required by this
section.
(c) Final Report to Congress.--Not later than 12 months after the
date of enactment of this Act, the Secretary shall submit to Congress a
final report regarding the results of the study required by this
section, which shall include any recommended legislation relating to
the study, and recommendations for best practices and for a process to
provide targeted assistance to populations with the highest risk of
potential default or foreclosure.
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