124 STAT. 2149 PUBLIC LAW 111–203—JULY 21, 2010 mortgage loan or anyone acting on behalf of such creditor, assignee, or holder, initiates a judicial or nonjudicial foreclosure of the residential mortgage loan, or any other action to collect the debt in connection with such loan, a consumer may assert a violation by a creditor of paragraph (1) or (2) of section 129B(c), or of section 129C(a), as a matter of defense by recoupment or set off without regard for the time limit on a private action for damages under subsection (e). ‘‘(2) AMOUNT OF RECOUPMENT OR SETOFF.— ‘‘(A) IN GENERAL.—The amount of recoupment or set- off under paragraph (1) shall equal the amount to which the consumer would be entitled under subsection (a) for damages for a valid claim brought in an original action against the creditor, plus the costs to the consumer of the action, including a reasonable attorney’s fee. ‘‘(B) SPECIAL RULE.—Where such judgment is rendered after the expiration of the applicable time limit on a private action for damages under subsection (e), the amount of recoupment or set-off under paragraph (1) derived from damages under subsection (a)(4) shall not exceed the amount to which the consumer would have been entitled under subsection (a)(4) for damages computed up to the day preceding the expiration of the applicable time limit.’’. SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS. (a) IN GENERAL.—Section 129C of the Truth in Lending Act is amended by inserting after subsection (b) (as added by this title) the following new subsections: ‘‘(c) PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.— ‘‘(1) PROHIBITED ON CERTAIN LOANS.— ‘‘(A) IN GENERAL.—A residential mortgage loan that is not a ‘qualified mortgage’, as defined under subsection (b)(2), may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal after the loan is consummated. ‘‘(B) EXCLUSIONS.—For purposes of this subsection, a ‘qualified mortgage’ may not include a residential mortgage loan that— ‘‘(i) has an adjustable rate; or ‘‘(ii) has an annual percentage rate that exceeds the average prime offer rate for a comparable trans- action, as of the date the interest rate is set— ‘‘(I) by 1.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is equal to or less than the amount of the maximum limita- tion on the original principal obligation of mort- gage in effect for a residence of the applicable size, as of the date of such interest rate set, pursu- ant to the 6th sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)); ‘‘(II) by 2.5 or more percentage points, in the case of a first lien residential mortgage loan having a original principal obligation amount that is more than the amount of the maximum limitation on the original principal obligation of mortgage in
