Borrower's Bill of Rights Act - Amends Federal law to create the position of Assistant Secretary for Financial Education in the Department of the Treasury.
Amends the Financial Literacy and Education Improvement Act to direct such Secretary to establish a two-year financial literacy pilot program for middle and high school students.
Amends the Truth in Lending Act to require that mandatory disclosures governing a consumer credit transaction be simple, easy to understand, and in a language understood by the consumer.
Amends the Depository Institutions Deregulation and Monetary Control Act of 1980 to repeal the preemption of state mortgage usury laws.
Amends the Federal Deposit Insurance Act and the Federal Credit Union Act to provide that the constitution or the laws of any state expressly limiting the rate or amount of interest, discount points, finance charges, or other charges shall apply to all depository institutions and credit unions, respectively, that are located in, have any branch in, or do business in such state with respect to customers which reside in or are located in such state.
Amends the Truth in Lending Act to: (1) prohibit "flipping" practices and mandatory arbitration; (2) lower the interest rate threshold for high-cost mortgages; and (3) require creditors to receive certification that a consumer has successfully completed pre-loan counseling before extending the consumer credit under a high-cost mortgage. Sets limits governing rollovers or refinancing of payday loans with the same creditor.
Amends the Federal bankruptcy code to: (1) include within the fourth order of priority of claims against the estate the rights or interests in debtor's equity securities that are held in a pension plan; (2) increase the employee earnings and benefits included within such fourth order of priority; and (3) exempt such employee pension benefits from subordination agreement constraints.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1643 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 1643
To amend various banking laws to combat predatory lending, particularly
in regards to low and moderate income individuals, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 14, 2005
Mr. Ford introduced the following bill; which was referred to the
Committee on Financial Services, and in addition to the Committee on
the Judiciary, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend various banking laws to combat predatory lending, particularly
in regards to low and moderate income individuals, 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 ``Borrower's Bill of Rights Act''.
SEC. 2. ASSISTANT SECRETARY OF THE TREASURY FOR FINANCIAL EDUCATION.
Section 301(e) of title 31, United States Code, is amended--
(1) by striking ``7 Assistant Secretaries'' and inserting
``8 Assistant Secretaries''; and
(2) by inserting after the 2nd sentence the following new
sentence: ``One of the Assistant Secretaries shall be the
Assistant Secretary for Financial Education.''
SEC. 3. FINANCIAL LITERACY FOR MIDDLE AND HIGH SCHOOL STUDENTS.
The Financial Literacy and Education Improvement Act (20 U.S.C.
9701, et seq.) is amended--
(1) by redesignating section 519 as section 520; and
(2) by inserting after section 518 the following new
section:
``SEC. 519. FINANCIAL LITERACY FOR MIDDLE AND HIGH SCHOOL STUDENTS.
``(a) Pilot Program.--The Assistant Secretary for Financial
Education (hereafter in this section referred to as the `Assistant
Secretary' shall establish a 2-year pilot financial literacy pilot
program for middle and high school students.
``(b) Requirements.--The pilot program established by the Assistant
Secretary shall comply with the following requirements:
``(1) The pilot program shall be implemented in 10 middle
schools and 10 high schools, selected by the Assistant
Secretary based on such criteria as the Assistant Secretary may
determine to be appropriate, in 10 different school systems and
provided to 8th grade students at the middle schools selected
and 12th grade students at the high schools selected.
``(2) The program shall use as guidance the financial
education program in the secondary schools of the State of
Delaware called the `Keys to Financial Success'.
``(3) The program shall be funded by the Secretary of the
Treasury, out of funds appropriated to the Secretary, and
administered by the State and the local school administration
of each school selected, based on criteria established by the
Assistant Secretary, including an annual update of the
materials used in the curriculum.
``(c) Report.--Upon the completion of the 2-year pilot program, the
Assistant Secretary shall submit to the Secretary of the Treasury and
the Congress a report containing a detailed description of the findings
and conclusions of the Assistant Secretary with respect to the pilot
program.''.
SEC. 4. ``PLAIN LANGUAGE'' DISCLOSURES.
Section 122 of the Truth in Lending Act (15 U.S.C. 1632) is amended
by adding at the end the following new subsection:
``(d) Plain and Simple Language Disclosures Required for All
Disclosures.--The Board shall take such action as may be necessary to
ensure that all disclosures that are required to be provided under this
title with respect to any consumer credit transaction, including all
the disclosures required under section 129, shall be simple and easy to
understand and in a language understood by the consumer.''.
SEC. 5. LIMITATION ON USURIOUS INTEREST RATES AND UNFAIR PRACTICES.
(a) Repeal of Preemption of State Mortgage Usury Laws.--
(1) In general.--Sections 501, 511, 512, 525, 526, 527,
528, and 529 of the Depository Institutions Deregulation and
Monetary Control Act of 1980 are hereby repealed.
(2) Technical and conforming amendments.--
(A) Insured depository institutions.--Section 27 of
the Federal Deposit Insurance Act (12 U.S.C. 1831d) is
amended to read as follows:
``SEC. 27. UNIFORM APPLICABILITY OF STATE LAW.
``In order to prevent discrimination against State-chartered
insured depository institutions, including insured savings banks and
insured branches of foreign banks and notwithstanding any other
provision of Federal law, the provision of the constitution or the laws
of any State expressly limiting the rate or amount of interest,
discount points, finance charges, or other charges which may be
charged, taken, received, or reserved shall apply to all depository
institutions that are located in, have any branch in, or do business in
such State with respect to customers of any such institution which
reside in or are located in such State.''.
(B) Insured credit unions.--Section 205(g) of the
Federal Credit Union Act (12 U.S.C. 1785(g)) is amended
to read as follows:
``(g) Uniform Applicability of State Law.--In order to prevent
discrimination against State-chartered insured credit unions and
notwithstanding any other provision of Federal law, the provision of
the constitution or the laws of any State expressly limiting the rate
or amount of interest, discount points, finance charges, or other
charges which may be charged, taken, received, or reserved shall apply
to all credit unions that are located in, have any branch in, or do
business in such State with respect to customers of any such credit
union which reside in or are located in such State.''.
(b) Prohibition on Loan ``Flipping'' and Mandatory Arbitration.--
(1) In general.--Chapter 2 of the Truth in Lending Act (15
U.S.C. 1631 et seq.) is amended by inserting after section 129
the following new section:
``Sec. 129A. Protections for all loans
``(a) Flipping.--
``(1) In general.--No creditor may knowingly or
intentionally engage in the unfair act or practice of flipping.
``(2) Flipping defined.--For purposes of this subsection,
the term `flipping' means the making of a loan or extension of
credit to a consumer which refinances an existing loan or other
extension of credit when the new loan or extension of credit
does not have reasonable, tangible net benefit to the consumer
considering all of the circumstances, including the terms of
both the new and the refinanced loans or credit, the cost of
the new loan or credit, and the consumer's circumstances.
``(3) Tangible net benefit.--The Board may prescribe
regulations, in the discretion of the Board, defining the term
`tangible net benefit' for purposes of this subsection.
``(b) Arbitration.--
``(1) In general.--A loan or other extension of credit
subject to this title 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 loan or other extension of credit 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.''.
(2) Clerical amendment.--The table of sections for chapter
2 of the Truth in Lending Act is amended by inserting after the
item relating to section 129 the following new item:
``129A. Protections for all loans.''.
(3) Regulations.--The Board of Governors of the Federal
Reserve System shall publish regulations implementing the
amendments made by this section in final form before the end of
the 6-month period beginning on the date of enactment of this
Act.
(c) Amendment to Definition of High Cost Mortgages.--Subparagraph
(A) of section 103(aa)(1) of the Truth in Lending Act (15 U.S.C.
1602(aa)(1)(A)) is amended by striking ``10 percentage points'' and
inserting ``8 percentage points''.
(d) Pre-Loan Counseling Required for High Cost Mortgages.--Section
129 of the Truth in Lending Act (15 U.S.C. 1639) is amended by
inserting after subsection (l) the following new subsection:
``(m) Pre-Loan Counseling.--
``(1) In general.--A creditor may not extend credit to a
consumer under a mortgage referred to in section 103(aa)
without first receiving certification from a counselor that is
approved by the Secretary of Housing and Urban Development,
that the consumer has received--
``(A) and successfully completed counseling, in
person or by telephone, on the advisability of the loan
transaction; and
``(B) a general range of interest rates that the
applicant qualifies for given their credit score.
``(2) Nonaffiliation rule for counselors.--A counselor
providing a certification to a creditor under paragraph (1) may
not be employed by the creditor or an affiliate of the creditor
or be affiliated with the creditor in any other manner
(including any referral agreement).
``(3) Disclosures required prior to counseling.--No
counselor may certify that a borrower has received counseling
on the advisability of the loan transaction unless the
counselor can verify that the consumer has received each
statement required (in connection with such loan) by this
section, or by the Real Estate Settlement Procedures Act of
1974, with respect to the transaction.
``(4) Regulations.--The Secretary of Housing and Urban
Development may prescribe such regulations as the Secretary
determines to be appropriate to carry out the requirements of
paragraph (1).''.
SEC. 6. LIMITATION ON ROLLOVERS OF PAYDAY LOANS.
Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended
by adding at the end the following new subsection:
``(e) Limitations on Rollovers or Refinancing of Payday Loans With
the Same Creditor.--
``(1) In general.--A payday lender--
``(A) may not refinance or roll over any payday
loan made by such lender, or any affiliate or other
associate of the payday lender, to any consumer with
another payday loan more than 3 times; and
``(B) shall provide a consumer who seeks to
refinance or roll over any payday loan made by such
lender, or any affiliate or other associate of the
payday lender, to the consumer with another payday loan
more than 2 times with a disclosure notice, which the
Board shall prescribe by regulation, regarding the
hazards of payday lending and the benefits of banking
traditionally, in prominent format and type-size, that
is separate from the disclosures required under
subsection (a) with regard to such extension of credit.
``(2) Definitions.--
``(A) Check.--The term `check' means any negotiable
demand draft drawn on or payable through an office of a
depository institution (as defined in section
19(b)(1)(A) of the Federal Reserve Act) located in any
State.
``(B) Payday lender.--The term `payday lender'
means any person who extends credit to any other person
through a payday loan.
``(C) Payday loan.--The term `payday loan' means
means a transaction in which credit is extended by a
payday lender, for a specified period of time, upon
receipt by the lender of--
``(i) a check made by the borrower for the
amount of the credit extended, the presentment
or negotiation of which, by mutual agreement of
the lender and borrower, will be deferred for
such specified period; or
``(ii) authorization from the borrower for
the payday lender to initiate an electronic
fund transfer at the end of the specified
period from the account of the borrower for the
amount of the credit extended.''.
SEC. 7. FAIR TREATMENT OF EMPLOYEE BENEFITS.
(a) Definition of Claim.--Section 101(5) of title 11, United States
Code, is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by inserting ``or'' after the
semicolon; and
(3) by adding at the end the following:
``(C) right or interest in equity securities of the
debtor, or an affiliate of the debtor, held in a
pension plan (within the meaning of section 3(2) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(2))) for the benefit of an individual who
is not an officer or director of the debtor, if such
securities were attributable to--
``(i) employer contributions by the debtor
or an affiliate of the debtor other than
elective deferrals (within the meaning of
section 402(g) of the Internal Revenue Code of
1986), and any earnings thereon; and
``(ii) elective deferrals (and any earnings
thereon) that are required to be invested in
such securities under the terms of the plan or
at the direction of a person other than the
individual or any beneficiary,
except that this subparagraph shall not apply to any
such securities during any period during which the
individual or any beneficiary has the right to direct
the plan to divest such securities and to reinvest an
equivalent amount in other investment options of the
plan;''.
(b) Priorities.--Section 507(a)(4) of title 11, United States Code,
is amended--
(1) in subparagraph (B), by indenting the left margin of
clauses (i) and (ii) 2 ems to the right and redesignating such
clauses as subclauses (I) and (II), respectively;
(2) by indenting the left margin of subparagraphs (A) and
(B) 2 ems to the right and redesignating such subparagraphs as
clauses (i) and (ii), respectively;
(3) in the matter preceding clause (i), as so redesignated,
by striking ``Fourth'' and all that follows through ``plan--''
and inserting the following: ``Fourth--
``(A) allowed unsecured claims for contributions to
an employee benefit plan--''.
(4) by striking the period at the end and inserting the
following: ``or''; and
(5) by adding at the end the following:
``(B) allowed unsecured claims with respect to
rights or interests in equity securities of the debtor,
or an affiliate of the debtor, that are held in a
pension plan (within the meaning of section 3(2) of the
Employee Retirement Income Security Act of 1974),
without regard to when services were rendered or
limitation in amount, and measured by the market value
of the stock at the time the stock was contributed to,
or purchased by, the plan.''.
SEC. 8. WAGE PRIORITY AND EMPLOYEE BENEFIT CAP.
Section 507(a) of title 11, United States Code, is amended--
(1) in paragraph (3), by striking ``$4,000'' and inserting
``$13,500''; and
(2) in paragraph (4)(B)(i), by striking ``$4,000'' and
inserting ``$13,500''.
SEC. 9. SUBORDINATION.
Section 510(b) of title 11, United States Code, is amended by
inserting ``, other than a claim described in section 105(5)(C).''
after ``claim'' the 1st place it appears.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Commercial and Administrative Law.
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