Title 15, Commerce and TradeRelease 119-110
§1639b Residential Mortgage Loan Origination
Title 15 › CHAPTER 41 — CONSUMER CREDIT PROTECTION › SUBCHAPTER I — CONSUMER CREDIT COST DISCLOSURE › Part B — Credit Transactions › § 1639b
Summary
Requires mortgage rules that protect borrowers and keep loans fair and affordable. Lenders and loan originators must be qualified, licensed when the law requires, and put a unique ID from the national registry on loan papers. Banks and similar firms must have procedures to check that their staff and subsidiaries follow these rules. Stops pay that changes based on loan terms (except the loan amount). Loan officers generally can only get fees paid by the borrower, with narrow exceptions for certain third‑party charges. The rule bans steering people into loans they can’t reasonably repay or into loans with predatory features, and it bans misleading or discriminatory practices, fake appraisals, and pushing borrowers away from cheaper options. Loan officers may still be paid by volume and consumers may choose to finance allowed fees. If a loan officer breaks these rules, a borrower can sue. The officer’s penalty to the borrower is either the actual harm or up to three times the total compensation the officer made on that loan, plus the borrower’s legal costs and a reasonable lawyer’s fee. The federal rule‑making agency may make more rules to stop abusive or unfair mortgage practices, and these rules apply to all home loans. The rules do not apply to certain timeshare credit plans.
Full Legal Text
Title 15, §1639b
Commerce and Trade, Source: USLM XML via OLRC
(a)Finding and purpose
(1)Finding
The Congress finds that economic stabilization would be enhanced by the protection, limitation, and regulation of the terms of residential mortgage credit and the practices related to such credit, while ensuring that responsible, affordable mortgage credit remains available to consumers.
(2)Purpose
It is the purpose of this section and section 1639c of this title to assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive or abusive.
(b)Duty of care
(1)Standard
Subject to regulations prescribed under this subsection, each mortgage originator shall, in addition to the duties imposed by otherwise applicable provisions of State or Federal law—
(A)be qualified and, when required, registered and licensed as a mortgage originator in accordance with applicable State or Federal law, including the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 [12 U.S.C. 5101 et seq.]; and
(B)include on all loan documents any unique identifier of the mortgage originator provided by the Nationwide Mortgage Licensing System and Registry.
(2)Compliance procedures required
The Bureau shall prescribe regulations requiring depository institutions to establish and maintain procedures reasonably designed to assure and monitor the compliance of such depository institutions, the subsidiaries of such institutions, and the employees of such institutions or subsidiaries with the requirements of this section and the registration procedures established under section 1507 of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 [12 U.S.C. 5106].
(c)Prohibition on steering incentives
(1)In general
For any residential mortgage loan, no mortgage originator shall receive from any person and no person shall pay to a mortgage originator, directly or indirectly, compensation that varies based on the terms of the loan (other than the amount of the principal).
(2)Restructuring of financing origination fee
(A)In general
For any mortgage loan, a mortgage originator may not receive from any person other than the consumer and no person, other than the consumer, who knows or has reason to know that a consumer has directly compensated or will directly compensate a mortgage originator may pay a mortgage originator any origination fee or charge except bona fide third party charges not retained by the creditor, mortgage originator, or an affiliate of the creditor or mortgage originator.
(B)Exception
Notwithstanding subparagraph (A), a mortgage originator may receive from a person other than the consumer an origination fee or charge, and a person other than the consumer may pay a mortgage originator an origination fee or charge, if—
(i)the mortgage originator does not receive any compensation directly from the consumer; and
(ii)the consumer does not make an upfront payment of discount points, origination points, or fees, however denominated (other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or originator), except that the Bureau may, by rule, waive or provide exemptions to this clause if the Bureau determines that such waiver or exemption is in the interest of consumers and in the public interest.
(3)Regulations
The Bureau shall prescribe regulations to prohibit—
(A)mortgage originators from steering any consumer to a residential mortgage loan that—
(i)the consumer lacks a reasonable ability to repay (in accordance with regulations prescribed under section 1639c(a) of this title); or
(ii)has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms);
(B)mortgage originators from steering any consumer from a residential mortgage loan for which the consumer is qualified that is a qualified mortgage (as defined in section 1639c(b)(2) of this title) to a residential mortgage loan that is not a qualified mortgage;
(C)abusive or unfair lending practices that promote disparities among consumers of equal credit worthiness but of different race, ethnicity, gender, or age; and
(D)mortgage originators from—
(i)mischaracterizing the credit history of a consumer or the residential mortgage loans available to a consumer;
(ii)mischaracterizing or suborning the mischaracterization of the appraised value of the property securing the extension of credit; or
(iii)if unable to suggest, offer, or recommend to a consumer a loan that is not more expensive than a loan for which the consumer qualifies, discouraging a consumer from seeking a residential mortgage loan secured by a consumer’s principal dwelling from another mortgage originator.
(4)Rules of construction
No provision of this subsection shall be construed as—
(A)permitting any yield spread premium or other similar compensation that would, for any residential mortgage loan, permit the total amount of direct and indirect compensation from all sources permitted to a mortgage originator to vary based on the terms of the loan (other than the amount of the principal);
(B)limiting or affecting the amount of compensation received by a creditor upon the sale of a consummated loan to a subsequent purchaser;
(C)restricting a consumer’s ability to finance, at the option of the consumer, including through principal or rate, any origination fees or costs permitted under this subsection, or the mortgage originator’s right to receive such fees or costs (including compensation) from any person, subject to paragraph (2)(B), so long as such fees or costs do not vary based on the terms of the loan (other than the amount of the principal) or the consumer’s decision about whether to finance such fees or costs; or
(D)prohibiting incentive payments to a mortgage originator based on the number of residential mortgage loans originated within a specified period of time.
(d)Liability for violations
(1)In general
For purposes of providing a cause of action for any failure by a mortgage originator, other than a creditor, to comply with any requirement imposed under this section and any regulation prescribed under this section, section 1640 of this title shall be applied with respect to any such failure by substituting “mortgage originator” for “creditor” each place such term appears in each such subsection.
(2)Maximum
The maximum amount of any liability of a mortgage originator under paragraph (1) to a consumer for any violation of this section shall not exceed the greater of actual damages or an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortgage originator in connection with the residential mortgage loan involved in the violation, plus the costs to the consumer of the action, including a reasonable attorney’s fee.
(e)Discretionary regulatory authority
(1)In general
The Bureau shall, by regulations, prohibit or condition terms, acts or practices relating to residential mortgage loans that the Bureau finds to be abusive, unfair, deceptive, predatory, necessary or proper to ensure that responsible, affordable mortgage credit remains available to consumers in a manner consistent with the purposes of this section and section 1639c of this title, necessary or proper to effectuate the purposes of this section and section 1639c of this title, to prevent circumvention or evasion thereof, or to facilitate compliance with such sections, or are not in the interest of the borrower.
(2)Application
The regulations prescribed under paragraph (1) shall be applicable to all residential mortgage loans and shall be applied in the same manner as regulations prescribed under section 1604 of this title.
(f)Timeshare plans
This section and any regulations promulgated thereunder do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Secure and Fair
Enforcement
for Mortgage Licensing Act of 2008, referred to in subsec. (b)(1)(A), is title V of div. A of Pub. L. 110–289, July 30, 2008, 122 Stat. 2810, also known as the S.A.F.E. Mortgage Licensing Act of 2008, which is classified generally to chapter 51 (§ 5101 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see
Short Title
note set out under section 5101 of Title 12 and Tables.
Amendments
2010—Pub. L. 111–203, § 1100A(2), substituted “Bureau” for “Board” wherever appearing. Subsec. (c). Pub. L. 111–203, § 1403, added subsec. (c). Subsec. (d). Pub. L. 111–203, § 1404, added subsec. (d). Subsecs. (e), (f). Pub. L. 111–203, § 1405(a), added subsecs. (e) and (f).
Effective Date
of 2010 AmendmentAmendment by section 1100A(2) of Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. Amendment by section 1403–1405(a) of Pub. L. 111–203 effective on the date on which final
Regulations
implementing that amendment take effect, or on the date that is 18 months after the designated transfer date if such
Regulations
have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as a note under section 1601 of this title.
Statutory Notes and Related Subsidiaries
Effective Date
Section effective on the date on which final
Regulations
implementing such section take effect, or on the date that is 18 months after the designated transfer date if such
Regulations
have not been issued by that date, see section 1400(c) of Pub. L. 111–203, set out as an
Effective Date
of 2010 Amendment note under section 1601 of this title. Rule of
Construction
Pub. L. 111–203, title XIV, § 1415, July 21, 2010, 124 Stat. 2153, provided that: “Except as otherwise expressly provided in section 129B or 129C of the Truth in Lending Act [15 U.S.C. 1639b, 1639c] (as added by this title), no provision of such section 129B or 129C shall be construed as superseding, repealing, or affecting any duty, right, obligation, privilege, or remedy of any person under any other provision of the Truth in Lending Act [15 U.S.C. 1601 et seq.] or any other provision of Federal or State law.” [For definition of “State” as used in section 1415 of Pub. L. 111–203, set out above, see section 5301 of Title 12, Banks and Banking.]
Reference
Citations & Metadata
Citation
15 U.S.C. § 1639b
Title 15, Commerce and Trade
Last Updated
Sep 23, 2026
Release point: 119-110