Mortgage Origination Commission Act of 2008 - Establishes the Mortgage Origination Commission to develop criteria and a numerical rating system to evaluate, and periodically report to the public on, the effectiveness of: (1) state licensing, supervision, and enforcement systems regarding mortgage loan originators and mortgage companies; and (2) mechanisms to collect, evaluate, and respond to complaints against state-licensed mortgage loan originators and mortgage companies.
Amends the Truth in Lending Act to declare that its consumer credit protections shall be enforced by: (1) the Board of Governors of the Federal Reserve System (Board) under the Federal Deposit Insurance Act with respect to bank holding companies; and (2) the Director of the Office of Thrift Supervision with respect to savings and loan holding companies.
Authorizes state agencies to enforce compliance with respect to requirements for extensions of credit secured by a consumer's dwelling (including residential mortgage transactions) against state-regulated or -licensed mortgage companies and mortgage loan originators.
Amends the Bank Holding Company Act to grant the Board examination authority over bank holding companies and their mortgage company subsidiaries.
Amends the Home Owners Loan Act to grant the Director examination authority over savings and loan holding companies and their mortgage company subsidiaries.
[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[S. 3581 Introduced in Senate (IS)]
110th CONGRESS
2d Session
S. 3581
To establish a Federal Mortgage Origination Commission, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 25 (legislative day, September 17), 2008
Mr. Bond introduced the following bill; which was read twice and
referred to the Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To establish a Federal Mortgage Origination Commission, 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 ``Mortgage
Origination Commission 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.
Sec. 3. Definitions.
TITLE I--ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION
Sec. 101. Establishment of the Mortgage Origination Commission.
Sec. 102. Director of the Commission.
Sec. 103. Deputy Director of the Commission.
Sec. 104. Personnel, services, and facilities.
Sec. 105. Funding for Commission operations.
TITLE II--EVALUATION OF STATE MORTGAGE SUPERVISION AND ENFORCEMENT
Sec. 201. Evaluation criteria.
Sec. 202. Periodic assessment of State programs.
Sec. 203. Commission information.
TITLE III--SUPERVISION OF MORTGAGE COMPANIES AND MORTGAGE ORIGINATORS
Sec. 301. Clarification of Truth in Lending Act enforcement
responsibilities.
Sec. 302. Board of Governors examination authority.
Sec. 303. Office of Thrift Supervision examination authority.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to enhance protection and fair treatment of consumers
in the mortgage origination process by establishing uniform
State minimum licensing and qualification standards for
mortgage originators;
(2) to establish a method to evaluate the adequacy and
effectiveness of State licensing, supervision, and enforcement
programs for regulating mortgage originators other than
federally regulated depository institutions and their
subsidiaries and employees;
(3) to provide disclosure and transparency to consumers,
investors, and regulators on the adequacy of such State
programs; and
(4) to clarify oversight responsibilities and enforcement
authority under Federal laws governing mortgage origination and
lending activities conducted outside of federally regulated
depository institutions and their subsidiaries.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Commission.--The term ``Commission'' means the Mortgage
Origination Commission established under this Act.
(2) Company.--The term ``company'' means any corporation,
limited liability corporation, partnership, limited
partnership, business trust, business association, sole
proprietorship, or similar organization.
(3) Depository institution.--The term ``depository
institution'' has the same meaning as in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813) and includes any
credit union.
(4) Mortgage company.----
(A) In general.--The term ``mortgage company''
means a company that, through mortgage loan
originators, engages in the business of--
(i) extending residential mortgage loans to
others; or
(ii) underwriting or preparing residential
mortgage loan applications on behalf of or for
submission to others.
(B) Depository institutions and subsidiaries
excluded.--The term ``mortgage company'' does not
include a depository institution or subsidiary of a
depository institution.
(5) Mortgage loan originator.--
(A) In general.--The term ``mortgage loan
originator''--
(i) means an individual who--
(I) accepts from or prepares for a
consumer 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 as a
real estate broker in accordance with
applicable State law, unless the person or
entity is compensated by a lender, a mortgage
broker, or other mortgage loan originator or by
any agent of such lender, mortgage broker, or
other mortgage loan originator.
(B) Other definitions relating to mortgage loan
originator.--For purposes of this paragraph, 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, and other costs), preparing loan documents
or packages, or collecting information on behalf of the
consumer with regard to a residential mortgage loan.
(C) Administrative or clerical tasks.--For purposes
of this paragraph, the term ``administrative or
clerical tasks'' means the receipt, collection, or
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.--For
purposes of this paragraph, 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).
(6) Nationwide mortgage licensing system and registry.--The
term ``Nationwide Mortgage Licensing System and Registry''
means--
(A) a mortgage licensing system developed and
maintained by the Conference of State Banking
Supervisors and the American Association of Residential
Mortgage Regulators for the registration of, or State
licensing and registration of, mortgage loan
originators; or
(B) the alternate mortgage licensing system and
registry established by the Secretary of Housing and
Urban Development pursuant to section 1508 of the
Housing and Economic Recovery Act of 2008 (12 U.S.C.
5107).
(7) Residential mortgage loan.--The term ``residential
mortgage loan'' means any transaction in which a mortgage, deed
of trust, or other consensual security interest is created or
retained against a one-to-four family home, individual unit of
a condominium or cooperative, or a mobile home to secure credit
extended to an individual or individuals primarily for
personal, family, or household purposes.
(8) State.--The term ``State'' means any State of the
United States, the District of Columbia, Puerto Rico, and the
Virgin Islands.
TITLE I--ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION
SEC. 101. ESTABLISHMENT OF THE MORTGAGE ORIGINATION COMMISSION.
(a) Establishment; Composition.--There is established the Mortgage
Origination Commission which shall consist of the following:
(1) The Comptroller of the Currency, or designee.
(2) The Chairman of the Board of Directors of the Federal
Deposit Insurance Corporation, or designee.
(3) A Governor of the Board of Governors of the Federal
Reserve System designated by the Chairman of the Board.
(4) The Director, Office of Thrift Supervision, or
designee.
(5) The Chairman of the National Credit Union
Administration Board, or designee.
(6) The Chairman of the State Liaison Committee of the
Federal Financial Institutions Examination Council elected
pursuant to section 1007 of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3306).
(7) The Director of the Commission.
(b) Chairman.--The Director of the Commission shall serve as its
Chairman.
(c) Meetings; Quorum; Voting.--
(1) In general.--The Commission shall meet at least
semiannually and at the call of the Director of the Commission
or a majority of its members when there is business to be
conducted.
(2) Quorum.--A majority of the members of the Commission
shall constitute a quorum.
(3) Decisions.--Decisions of the Commission shall be made
by the vote of a majority of its members.
(d) Administration of the Act.--
(1) In general.--The Commission shall have the authority to
administer and interpret this Act, and to prescribe regulations
to carry out this Act.
(2) Rulemaking.--Rulemaking of the Commission shall be
subject to section 553 of the Administrative Procedure Act (5
U.S.C. 553).
SEC. 102. DIRECTOR OF THE COMMISSION.
(a) Appointment.--The Director of the Commission shall be appointed
by the President, by and with the advice and consent of the Senate,
from among individuals who are citizens of the United States, have
recognized and extensive experience in mortgage regulation or mortgage
markets, and have demonstrated expertise in the legal and regulatory
requirements and private sector standards governing the United States
primary and secondary mortgage markets. The Director shall not hold any
other appointed office during his or her term as Director.
(b) Term.--The Director shall be appointed for a term of 5 years.
(c) Vacancy.--A vacancy in the position of the Director shall be
filled in the manner in which the original appointment was made under
subsection (a) of this section.
(d) Service After End of Term.--The Director may serve after the
expiration of the term for which the Director was appointed until a
successor Director has been appointed.
(e) Authority.--The Director is authorized to carry out, and to
delegate to officers, employees, and agents the authority to carry out,
the internal administration of the Commission, including entering into
contracts, appointing and supervising employees, and distributing
business among members, employees, and administrative units.
SEC. 103. DEPUTY DIRECTOR OF THE COMMISSION.
(a) Appointment.--The Commission shall have a Deputy Director who
shall be appointed by the Director of the Commission from among
individuals who are citizens of the United States, have recognized and
extensive experience in mortgage regulation or mortgage markets, and
have demonstrated expertise in the legal and regulatory requirements
and private sector standards governing the United States primary and
secondary mortgage markets.
(b) Functions.--The Deputy Director shall have such functions,
powers, and duties as the Director shall prescribe. In the event of the
death, resignation, sickness, or absence of the Director, the Deputy
Director shall serve as acting Director until the return of the
Director or the appointment of a successor pursuant to section 102.
SEC. 104. PERSONNEL, SERVICES, AND FACILITIES.
(a) Use of Regulatory Agency Personnel and Facilities.--In carrying
out its functions under this Act the Commission may, to the extent
practicable, utilize the personnel, services, and facilities of the
Office of the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Office of Thrift Supervision, and the National Credit Union
Administration, with their consent, with or without reimbursement.
(b) Compensation, Authority, and Duties of Officers and Employees;
Experts and Consultants.--In addition, the Commission may--
(1) subject to the provisions of title 5, United States
Code, relating to the competitive service, classification, and
General Schedule pay rates, appoint and fix the compensation of
such officers and employees as are necessary to carry the
provisions of this Act, and to prescribe the authority and
duties of such officers and employees; and
(2) obtain the services of experts and consultants as are
necessary to carry out the provisions of this Act.
SEC. 105. FUNDING FOR COMMISSION OPERATIONS.
(a) Annual Fee.--The Commission is authorized to assess a $25
annual fee from each mortgage loan originator during the period such
individual is licensed by a State as a condition to performing the
functions of a mortgage loan originator.
(b) Adjusting the Annual Fee.--The Commission may adjust the fee
assessed pursuant subsection (a) from time to time, as necessary to
carry out its functions under this Act, up to a maximum of $80 per
annum.
(c) Inflation Adjustments.--Ten years after the effective date of
this Act, and at the end of every 10-year period thereafter, the annual
fee the Commission is authorized to assess under subsection (a), and
the maximum fee authorized under subsection (b), shall be adjusted by a
percentage equal to the percentage by which the Consumer Price Index
(or its successor) for the month of June preceding the effective date
(of this Act for the first adjustment, or of the most recent adjustment
for subsequent adjustments) differs from the Consumer Price Index (or
its successor) for the month of June in the year of the adjustment.
(d) Notice of Adjustments.--The Commission shall publish a brief
notice describing each adjustment pursuant to subsection (b) or (c) in
the Federal Register concurrently with the effectiveness of such
adjustment.
(e) Fee Collection by States.--Each State that licenses individuals
to performs the functions of mortgage loan originators shall collect
the annual fee authorized under subsection (a) from each licensee,
except licensees who provide satisfactory evidence that another State
collects his or her annual Commission fee, and shall transmit such fees
to the Commission on an annual basis together with a reasonable
accounting thereof.
(f) Fee Collection by Nationwide Mortgage Licensing System and
Registry.----
(1) In general.--If the Commission, following consultation
with the Nationwide Mortgage Licensing System and Registry,
determines that the facilities of the Nationwide Mortgage
Licensing System and Registry offers a more convenient and
efficient method for collecting the annual fees authorized
pursuant to subsection (a) than collection by one or more
States pursuant to subsection (e), the Commission may notify
such States in writing that the Commission will collect fees
for mortgage loan originators licensed by that State through
the Nationwide Mortgage Licensing System and Registry, and the
Nationwide Mortgage Licensing System and Registry shall collect
such fees.
(2) Transmission.--Each State that receives a notice under
paragraph (1) shall promptly transmit to the Commission any
fees it has collected under subsection (e), and shall not
otherwise be obligated to collect fees on the Commission's
behalf under subsection (e) during the effective period of such
notice.
(3) Expenses.--The Nationwide Mortgage Licensing System and
Registry shall--
(A) develop reasonable methods to allocate its
existing and projected expenses to develop, operate,
maintain, and upgrade the Nationwide Mortgage Licensing
System and Registry between--
(i) registered mortgage loan originators
that are employees of depository institutions
or subsidiaries of depository institutions; and
(ii) other mortgage loan originators
registered or licensed through the System; and
(B) in establishing the amount of fees to be
collected to defray the costs to develop, operate,
maintain, and upgrade the System, the Nationwide
Mortgage Licensing System and Registry shall not charge
such mortgage loan originators described in clause (i)
or (ii) of subparagraph (A) fees that exceed amounts
reasonably necessary to defray the expenses
attributable to each such group.
(g) Startup Funding.--
(1) In general.--The Secretary of the Treasury shall pay to
the Commission a one-time payment of $10,000,000 within 30 days
after the effective date of this Act.
(2) Repayment.--The Commission shall repay the Secretary of
the Treasury for such $10,000,000, in full, no later than the
10th anniversary of this Act's effective date.
(h) Commission Expenditure Authority.--
(1) In general.--The Commission shall have the power to
enter into contracts, and determine its necessary expenditures
under this Act and the manner in which such expenditures shall
be incurred, allowed, and paid out of funds available to the
Commission under this section.
(2) Account.--Funds available to the Commission under this
section shall be deposited in an account in the Treasury of the
United States, but shall not be construed to be Government
funds or appropriated monies, or subject to apportionment for
the purposes of chapter 15 of title 31, United States Code, or
any other authority.
TITLE II--EVALUATION OF STATE MORTGAGE SUPERVISION AND ENFORCEMENT
SEC. 201. EVALUATION CRITERIA.
(a) Criteria for Evaluation of State Oversight.--The Commission
shall develop criteria and a numerical rating system corresponding to
descriptive categories indicative of a State program's strength or
weakness to evaluate the effectiveness of--
(1) systems for licensing, supervision, and enforcement
with respect to mortgage loan originators and mortgage
companies operating in the State, including but not limited
to--
(A) implementation of licensing requirements that
take into account conduct and disciplinary history;
establishment of minimum educational requirements,
testing standards, and continuing education;
establishment of appropriate license denial,
suspension, or revocation procedures;
(B) ongoing supervision and periodic examination of
the activities of mortgage loan originators and
mortgage companies to review their compliance with
applicable law, and to address any deficiencies
therein; and
(C) administrative and judicial enforcement
programs to take corrective action against mortgage
loan originators and mortgage companies and deter
future violations of licensing requirements and
applicable law;
(2) mechanisms to collect, evaluate and respond to
complaints against State-licensed mortgage loan originators and
mortgage companies; and
(3) such other matters as the Commission determines
appropriate in light of the purposes of this Act.
(b) Publication of Criteria.--The criteria developed by the
Commission pursuant to subsection (a)--
(1) may be formulated through such processes as the
Commission in its discretion determines are appropriate in
light of the purposes of this Act; and
(2) shall be made available to the public in accordance
with section 203 of this Act.
SEC. 202. PERIODIC ASSESSMENT OF STATE PROGRAMS.
(a) Evaluation and Reporting.--The Commission shall conduct an
evaluation of each State's programs for licensing, regulation, and
enforcement with respect to mortgage loan originators and mortgage
companies under the criteria developed pursuant to section 201, and
prepare a report containing a narrative evaluation of the adequacy of
the State's programs, including a summary numerical rating for each
class of criteria and an overall composite rating.
(b) Publication of Reports.--The reports prepared by the Commission
pursuant to subsection (a) shall be made available to the public in
accordance with section 203 of this Act.
(c) Evaluation Frequency.--
(1) The Commission shall complete its first evaluation and
report for every State no later than 4 years after the
effective date of this Act, and thereafter shall complete an
evaluation and report for each State not less than once every
36 months.
(2) If a State makes significant changes to its programs
after the Commission has issued its report, and the State
submits a written certification to the Commission describing
the reasons why the State believes changes made are material
and likely to persuade the Commission to increase one or more
of the State's summary numerical ratings, the Commission shall
review the submission and determine whether to re-evaluate the
State's program, in part or in full, in advance of the State's
next scheduled evaluation.
(3) If the Commission does not commence a re-evaluation
within 6 months of a State's submission under paragraph (2),
the Commission shall issue a written statement briefly
describing the basis for its decision.
(4) Requests for re-evaluation under paragraph (2) shall be
determined by the Commission, without delegation to the
Director of the Commission.
SEC. 203. COMMISSION INFORMATION.
(a) Commission To Make Information Publicly Available.--The
Commission shall make its evaluation criteria developed pursuant to
section 201(a) and its evaluation reports prepared pursuant to section
202(a) publicly available by--
(1) posting such material on the Commission's Internet
website; and
(2) delivering copies free of charge upon each request to
an email address and toll-free telephone number maintained by
the Commission for such requests.
(b) Commission's Access to Records.--The Commission shall assign
the lowest possible summary numerical rating to any State program for
which the responsible State agencies and officials do not cooperate in
the Commission's evaluation process under section 202(a) or allow
complete access to information, records, and personnel the Commission
deems relevant to its evaluation.
(c) Confidentiality Retained.--Submission of information to the
Commission pursuant to subsection (b) does not waive or alter its
treatment as confidential, privileged, or protected information under
State or Federal law, and information submitted or obtained--
(1) is not subject to Federal laws requiring the disclosure
of information held by federal officers or agencies; and
(2) is not subject to discovery through proceedings
against, or subpoenas naming, the Commission or its officers or
employees.
(d) Freedom of Information Act.--The Commission shall be deemed an
``agency responsible for the regulation or supervision of financial
institutions'' for purposes of section 552(b)(8) of title 5, United
States Code, and Commission records relating to the evaluation of a
State pursuant to section 202 of this Act shall, with the exception of
the public report prepared by the Commission, be deemed related to
``examination, operating, or condition reports'' for purposes of such
section.
TITLE III--SUPERVISION OF MORTGAGE COMPANIES AND MORTGAGE ORIGINATORS
SEC. 301. CLARIFICATION OF TRUTH IN LENDING ACT ENFORCEMENT
RESPONSIBILITIES.
Section 108 of the Truth in Lending Act (15 U.S.C. 1607) is
amended--
(1) in subsection (b), by striking each reference to
``subsection (a)'' and inserting ``subsection (a) or (f)''; and
(2) by adding at the end the following:
``(f) Holding Company Affiliates.--Compliance with the requirements
imposed under this subchapter shall be enforced under section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818) in the case of--
``(1) bank holding companies, and subsidiaries (other than
depository institutions or subsidiaries of depository
institutions) of bank holding companies, by the Board; and
``(2) savings and loan holding companies, and subsidiaries
(other than depository institutions or subsidiaries of
depository institutions) of savings and loan holding companies,
by the Director of the Office of Thrift Supervision.
``(g) State Enforcement Authority.--(1) State agencies are
authorized to enforce compliance with the requirements imposed under
this subchapter with respect to extensions of credit secured by a
consumer's dwelling (including residential mortgage transactions)
against mortgage companies and mortgage loan originators regulated or
licensed by each such State agency.
``(2) No State agency shall have the authority under paragraph (1)
of this subsection to take any action against any person covered under
subsection (a) of this section, or any subsidiary of such person, or
any mortgage loan originators employed by the foregoing.
``(3) The authority granted to State agencies under paragraph (1)
of this subsection does not affect the authority conferred under
subsection (c) or subsection (f) of this section.
``(4) For purposes of this subsection, the terms `mortgage company'
and `mortgage loan originator' have the meanings given the terms by
section 3 of the Mortgage Origination Commission Act of 2008.''.
SEC. 302. BOARD OF GOVERNORS EXAMINATION AUTHORITY.
Section 5 of the Bank Holding Company Act (12 U.S.C. 1844) is
amended--
(1) in section 5(c)(2)(C)(ii), by striking ``any
subsidiary'' and inserting ``except as provided in subparagraph
(F), any subsidiary,''; and
(2) in section 5(c)(2), by adding at the end the following:
``(F) Mortgage company examinations.--(i) The Board
may make examinations of each bank holding company, and
each subsidiary of such holding company, that is a
mortgage company.
``(ii) The Board shall conduct such examinations
not less than once every 18 months.
``(iii) For purposes of this subparagraph, the term
`mortgage company' has the meaning given the term by
section 3 of the Mortgage Origination Commission Act of
2008.''.
SEC. 303. OFFICE OF THRIFT SUPERVISION EXAMINATION AUTHORITY.
Section 10 of the Home Owners Loan Act (12 U.S.C. 1467a) is amended
by adding at the end the following:
``(u) Mortgage Company Examinations.--
``(1) The Director may examine each savings and loan
holding company, and each subsidiary of such savings and loan
holding company, that is a mortgage company.
``(2) The Director shall conduct such examinations not less
than once every 18 months.
``(3) For purposes of this subsection, the term `mortgage
company' has the meaning given the term by section 3 of the
Mortgage Origination Commission Act of 2008.''.
<all>
Sponsor introductory remarks on measure. (CR S8969-8971)
Introduced in Senate
Sponsor introductory remarks on measure. (CR S9497-9498)
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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