S.Amdt. 3805

SA 3805. Mrs. BOXER submitted an amendment intended to be proposed to
amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd (for himself and
Mrs. Lincoln)) to the bill S. 3217, to promote the financial stability
of the United States by improving accountability and transparency in
the financial system, to end ``too big to fail'', to protect the
American taxpayer by ending bailouts, to protect consumers from abusive
financial services practices, and for other purposes; which was ordered
to lie on the table; as follows:

On page 1435, line 19, strike ``(g)''and insert the
following:
``(g) Prohibition on Steering Incentives.--
``(1) In general.--For any loan secured by real property or
a dwelling, the total amount of direct and indirect
compensation from any source permitted to a mortgage
originator may not vary based on the terms or conditions of
the loan.
``(2) Limitations on financing of origination fees and
costs.--
``(A) In general.--For any loan secured by real property or
a dwelling, a mortgage originator may not arrange for a
consumer to finance through the rate any origination fee or
cost except bona fide third party settlement charges not
retained by the creditor or mortgage originator.
``(B) Exception.--Notwithstanding subparagraph (A), a
mortgage originator may arrange for a consumer to finance an
origination fee or cost through the rate, if--
``(i) the mortgage originator receives no other
compensation, however denominated, directly or indirectly,
from the consumer or any other person;
``(ii) the loan does not include discount points,
origination points, or rate reduction points, however
denominated, or any payment reduction fee, however
denominated;
``(iii) the loan does not contain a prepayment penalty;
``(iv) the total points and fees payable in connection with
the loan do not exceed 2 percent of the total loan amount,
where the term `points and fees' has the same meaning as in
section 103(aa)(4);
``(v) the loan does not allow a consumer to defer repayment
of principal or interest, or is not otherwise deemed a `non-
traditional mortgage' under guidance, advisories, or
regulations prescribed by the Federal banking agencies; and
``(vi) there is no other conflict of interest between the
mortgage originator and the consumer.
``(3) Mortgage originator.--As used in this subsection, the
term `mortgage originator'--
``(A) means any person who, for direct or indirect
compensation or gain, or in the expectation of direct or
indirect compensation or gain--
``(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;
``(B) includes any person 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 person can or will provide any
of the services or perform any of the activities described in
subparagraph (A);
``(C) does not include any person who is--
``(i) not otherwise described in subparagraph (A) or (B),
and who performs purely administrative or clerical tasks on
behalf of a person who is described in any such subparagraph;
or
``(ii) an employee of a retailer of manufactured homes who
is not described in clause (i) or (iii) of subparagraph (A),
and who does not advise a consumer on loan terms (including
rates, fees, and other costs);
``(D) 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
such person or entity is compensated for performing such
brokerage activities by a lender, a mortgage broker, or other
mortgage originator or by any agent of such lender, mortgage
broker, or other mortgage originator;
``(E) does not include, with respect to a residential
mortgage loan, a person, estate, or trust that provides
mortgage financing for the sale of 1 property in any 36-month
period, provided that such loan--
``(i) is fully amortizing;
``(ii) is with respect to a sale for which the seller
determines in good faith and documents that the buyer has a
reasonable ability to repay the loan;
``(iii) has a fixed rate or an adjustable rate that is
adjustable after 5 or more years, subject to reasonable
annual and lifetime limitations on interest rate increases;
and
``(iv) meets any other criteria that the Federal banking
agencies may prescribe; and
``(F) does not include a servicer or servicer employees,
agents and contractors, including but not limited to those
who offer or negotiate terms of a residential mortgage loan

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for purposes of renegotiating, modifying, replacing and
subordinating principal of existing mortgages where borrowers
are behind in their payments, in default or have a reasonable
likelihood of being in default or falling behind.
``(h)''.
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