Mortgage Credit Repair Act of 2008 - Amends the Fair Credit Reporting Act to define "front end ratio" as a ratio that indicates what portion of an individual's income is used to make mortgage payments, calculated by dividing an individual's gross monthly income by their housing expenses, particularly the mortgage principal, interest, taxes, and insurance (PITI).
Prohibits a consumer reporting agency from making a consumer report containing cases under title 11 or under the Bankruptcy Act that antedate the report by more than three years when certain criteria are met. Includes among such criteria that a consumer's front-end debt ratio on a mortgage instrument originated or refinanced on or after January 1, 2003, was 37% or higher for at least six months before and continuing through the time that the bankruptcy is filed.
Prohibits a consumer reporting agency from making a consumer report containing any adverse information excluding bankruptcy, but including closed accounts, amounts in collections, accounts charged to profit or loss, repossessions, and foreclosures, if certain circumstances have occurred.
[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[H.R. 7267 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 7267
To amend the Fair Credit Reporting Act with respect to requirements
relating to information contained in consumer reports, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 3, 2008
Mr. Meek of Florida introduced the following bill; which was referred
to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Fair Credit Reporting Act with respect to requirements
relating to information contained in consumer reports, 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 ``Mortgage Credit Repair Act of
2008''.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) The United States housing bubble effectively burst
towards the end of 2005, when default rates on subprime and
adjustable rate mortgages increased dramatically.
(2) Mortgages with negative amelioration or any other
lending mechanism for which the loan payment on principal for
any period is less than the interest charged over that period
for some substantial period of time have high default and
foreclosure rates.
(3) Mortgages in which there are incidences of fraud or
lender misconduct have high foreclosure rates, including those
in which--
(A) a mortgage was obtained despite the lender
fraudulently encouraging or requiring the borrower to
falsify or omit information which was then used to call
back the loan and leading to foreclosure;
(B) a mortgage was obtained despite the failure by
the lender to give the borrower proper documentation,
including Good Faith Requirements and Truth-in-Lending
Disclosures;
(C) a mortgage was obtained despite occasions where
the borrower was given incomplete forms to sign, with
the required information added by the lender after the
borrower's signature was obtained; and
(D) a mortgage was obtained despite having terms
which was substantially or wholly different at closing
than what was previously agreed to.
(4) Standard, qualifying front-end debt ratios, that is the
monthly cost of a mortgage principal, interest, taxes, and
insurance (PITI) against the gross monthly income of the
borrower have historically been approximately 28%, increasing
for those with stellar credit histories.
(5) However, many foreclosures and mortgage-related
bankruptcies involve borrowers who were given mortgages with
flat or adjustable rates that caused front-end ratios well over
36% in many cases.
(6) The effects of foreclosure or a resulting bankruptcy
can have a negative impact on an individual's credit history
for up to 7 years (10 years for bankruptcy) for purchases under
$150,000 with related effects, and effects for purchases over
$150,000 lasting much longer.
(7) Borrowers who unknowingly obtained bad, improper or
fraudulent mortgages which subsequently led to foreclosure,
should be given the opportunity to rebuild their credit in a
responsible way without the substantial and lingering effects
of foreclosure outweighing present and past responsible
borrowing practices.
SEC. 3. AMENDMENT TO DEFINITIONS.
Section 603 of the Fair Credit Reporting Act (U.S.C. 1681a) is
amended by adding at the end the following new subsection:
``y Front End Ratio.--The term `front end ratio' means a ratio that
indicates what portion of an individual's income is used to make
mortgage payments, calculated by dividing an individual's gross monthly
income by their housing expenses, particularly the mortgage principal,
interest, taxes, and insurance (PITI).''.
SEC. 4. SPECIAL CIRCUMSTANCE RELIEF.
Section 605(a) of the Fair Credit Reporting Act (U.S.C. 1681c(a))
is amended--
(1) by redesignating paragraphs (2), (3), (4), (5), and (6)
as paragraphs (3), (4), (5), (7), and (8), respectively;
(2) by inserting after paragraph (1) the following new
paragraph:
``(2) Cases under title 11 or under the Bankruptcy Act
that, from the date of entry of the order for relief or the
date of the adjudication, as the case may be, antedate the
report by more than 3 years when each of the following are met:
``(A) During a period not less than 6 months prior
to and continuing through the time that the bankruptcy
is filed, a consumer's front-end debt ratio on a
mortgage instrument originated or refinanced on or
after January 1, 2003, was 37% or higher.
``(B) The consumer filed for bankruptcy no earlier
than January 1, 2004.
``(C) The consumer has not disputed the accuracy of
their report under paragraph (6) during the period
beginning January 1, 2004.
``(D) The consumer notifies the consumer reporting
agency directly and is able to submit documentation to
verify the above before March 31, 2009.''; and
(3) by inserting after paragraph (5) the following new
paragraph:
``(6) Any adverse information excluding bankruptcy, but
including closed accounts, accounts in collections, accounts
charged to profit or loss, repossessions, and foreclosures,
shall be excluded if all of the following circumstances have
occurred:
``(A) The adverse information in the consumer's
report was for new accounts and transactions added
after the first payment due date on the consumer's
mortgage note, where the front end ratio then became
37% or higher, but not earlier than January 1, 2004.
``(B) The adverse information in the consumer's
report was not added more than 6 months after a
foreclosure on that consumer's primary residence or
March 31, 2009, whichever is earlier.
``(C) The consumer notifies the consumer reporting
agency directly of their intent to seek relief under
this paragraph and is able to provide proper
documentation and verification before March 31,
2009.''.
SEC. 5. CONFORMING AMENDMENT.
Subsection (b) of section 605 of the Fair Credit Reporting Act
(U.S.C. 1681c(b)) is amended (in the matter preceding paragraph (1)) by
striking ``paragraphs (1) through (5)'' and inserting ``paragraphs (1),
(3), (4), (5), and (7)''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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