diff --git a/src/mzscheme/src/env.c b/src/mzscheme/src/env.c
index fb57d1fac1..dc1f01cf02 100644
--- a/src/mzscheme/src/env.c
+++ b/src/mzscheme/src/env.c
@@ -3950,10 +3950,9 @@ local_lift_expr(int argc, Scheme_Object *argv[])
   expr = scheme_make_pair(expr, SCHEME_VEC_ELS(vec)[0]);
   SCHEME_VEC_ELS(vec)[0] = expr;
 
-  id = scheme_add_remove_mark(id, local_mark);
-
   SCHEME_EXPAND_OBSERVE_LOCAL_LIFT(scheme_get_expand_observe(), id, orig_expr);
 
+  id = scheme_add_remove_mark(id, local_mark);
   return id;
 }
 
diff --git a/src/mzscheme/src/eval.c b/src/mzscheme/src/eval.c
index 79c3d29705..99a198b679 100644
--- a/src/mzscheme/src/eval.c
+++ b/src/mzscheme/src/eval.c
@@ -4826,6 +4826,7 @@ compile_expand_expr_lift_to_let(Scheme_Object *form, Scheme_Comp_Env *env,
 		      icons(o, scheme_null)));
     }
     form = scheme_datum_to_syntax(o, orig_form, scheme_false, 0, 0);
+    SCHEME_EXPAND_OBSERVE_LETLIFT_LOOP(rec[drec].observer, form);
     form = compile_expand_expr_lift_to_let(form, env, recs, 1);
     if (rec[drec].comp)
       scheme_merge_compile_recs(rec, drec, recs, 2);
diff --git a/src/mzscheme/src/module.c b/src/mzscheme/src/module.c
index 72fda4aae3..a7249fb159 100644
--- a/src/mzscheme/src/module.c
+++ b/src/mzscheme/src/module.c
@@ -4038,7 +4038,7 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
         fm = scheme_named_map_1(NULL, add_a_rename, fm, post_ex_et_rn);
         fm = scheme_named_map_1(NULL, add_a_rename, fm, post_ex_tt_rn);
 	fm = scheme_append(fst, scheme_make_pair(e, fm));
-        SCHEME_EXPAND_OBSERVE_LIFT_LOOP(observer, fst);
+        SCHEME_EXPAND_OBSERVE_MODULE_LIFT_LOOP(observer, fst);
       } else {
 	/* No lifts added... */
 	if (SCHEME_STX_PAIRP(e))
@@ -4056,7 +4056,7 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
 	  if (SCHEME_STX_NULLP(fm)) {
             fm = scheme_frame_get_end_statement_lifts(xenv);
             fm = scheme_reverse(fm);
-            SCHEME_EXPAND_OBSERVE_LIFT_END_LOOP(observer, fm);
+            SCHEME_EXPAND_OBSERVE_MODULE_LIFT_END_LOOP(observer, fm);
             maybe_has_lifts = 0;
             if (SCHEME_NULLP(fm)) {
               e = NULL;
@@ -4631,13 +4631,13 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
     if (SCHEME_STX_NULLP(fm) && maybe_has_lifts) {
       fm = scheme_frame_get_end_statement_lifts(xenv);
       fm = scheme_reverse(fm);
-      SCHEME_EXPAND_OBSERVE_LIFT_END_LOOP(observer, fm);
+      SCHEME_EXPAND_OBSERVE_MODULE_LIFT_END_LOOP(observer, fm);
       maybe_has_lifts = 0;
     }
   }
   /* first =  a list of (cons semi-expanded-expression normal?) */
 
-  /* Phase 2 */
+  /* Pass 2 */
   SCHEME_EXPAND_OBSERVE_NEXT_GROUP(observer);
   
   if (rec[drec].comp) {
@@ -4692,6 +4692,7 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
 	p = SCHEME_CDR(p);
       } else {
 	/* Lifts - insert them and try again */
+        SCHEME_EXPAND_OBSERVE_MODULE_LIFT_LOOP(observer, scheme_copy_list(l));
 	e = scheme_make_pair(e, scheme_false); /* don't re-compile/-expand */
 	SCHEME_CAR(p) = e;
 	for (ll = l; SCHEME_PAIRP(ll); ll = SCHEME_CDR(ll)) {
@@ -4704,7 +4705,6 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
 	} else {
 	  first = p;
 	}
-	SCHEME_EXPAND_OBSERVE_LIFT_LOOP(observer, first);
       }
     } else {
       SCHEME_CAR(p) = e;
@@ -4715,7 +4715,7 @@ static Scheme_Object *do_module_begin(Scheme_Object *form, Scheme_Comp_Env *env,
     /* If we're out of declarations, check for lifted-to-end: */
     if (SCHEME_NULLP(p) && maybe_has_lifts) {
       p = scheme_frame_get_end_statement_lifts(cenv);
-      SCHEME_EXPAND_OBSERVE_LIFT_END_LOOP(observer, scheme_reverse(p));
+      SCHEME_EXPAND_OBSERVE_MODULE_LIFT_END_LOOP(observer, scheme_reverse(p));
       p = scheme_reverse(p);
       for (ll = p; SCHEME_PAIRP(ll); ll = SCHEME_CDR(ll)) {
         e = scheme_make_pair(SCHEME_CAR(ll), scheme_true);
diff --git a/src/mzscheme/src/schexpobs.h b/src/mzscheme/src/schexpobs.h
index 53f78fff14..d6dc3b90f4 100644
--- a/src/mzscheme/src/schexpobs.h
+++ b/src/mzscheme/src/schexpobs.h
@@ -117,7 +117,11 @@ extern Scheme_Object *scheme_get_expand_observe();
 
 #define SCHEME_EXPAND_OBSERVE_LIFT_LOOP(observer,stx) \
         _SCHEME_EXPOBS(observer,128,stx)
-#define SCHEME_EXPAND_OBSERVE_LIFT_END_LOOP(observer,stx) \
+#define SCHEME_EXPAND_OBSERVE_LETLIFT_LOOP(observer,stx) \
+        _SCHEME_EXPOBS(observer,136,stx)
+#define SCHEME_EXPAND_OBSERVE_MODULE_LIFT_LOOP(observe,stxs) \
+        _SCHEME_EXPOBS(observer,137,stxs)
+#define SCHEME_EXPAND_OBSERVE_MODULE_LIFT_END_LOOP(observer,stx) \
         _SCHEME_EXPOBS(observer,135,stx)
 
 #define SCHEME_EXPAND_OBSERVE_LOCAL_LIFT(obs,id,stx) \