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To protect the property and security of homeowners who are subject to foreclosure proceedings, and for other purposes.CommentsClose CommentsPermalink

April 17, 2008

Mr. KOHL (for himself, Ms. COLLINS, and Mrs. LINCOLN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To protect the property and security of homeowners who are subject to foreclosure proceedings, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the `Foreclosure Rescue Fraud Act of 2008'.CommentsClose CommentsPermalink

SEC. 2. DEFINITIONS.

In this title:CommentsClose CommentsPermalink





(1) COMMISSION- The term `Commission' means the Federal Trade Commission.CommentsClose CommentsPermalink





(2) FORECLOSURE CONSULTANT- The term `foreclosure consultant'--CommentsClose CommentsPermalink





(A) means a person who directly or indirectly makes any solicitation, representation, or offer to a homeowner facing foreclosure on residential real property to perform, with or without compensation, or who performs, with or without compensation, any service that such person represents will prevent, postpone, or reverse the effect of such foreclosure; andCommentsClose CommentsPermalink





(B) does not include--CommentsClose CommentsPermalink





(i) an attorney licensed to practice law in the State in which the property is located who has established an attorney-client relationship with the homeowner;CommentsClose CommentsPermalink





(ii) a person licensed as a real estate broker or salesperson in the State where the property is located, and such person engages in acts permitted under the licensure laws of such State;CommentsClose CommentsPermalink





(iii) a housing counseling agency approved by the Secretary;CommentsClose CommentsPermalink





(iv) a depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813));CommentsClose CommentsPermalink





(v) a Federal credit union or a State credit union (as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752)); orCommentsClose CommentsPermalink





(vi) an insurance company organized under the laws of any State.CommentsClose CommentsPermalink





(3) HOMEOWNER- The term `homeowner', with respect to residential real property for which an action to foreclose on the mortgage or deed of trust on such real property is filed, means the person holding record title to such property as of the date on which such action is filed.CommentsClose CommentsPermalink





(4) LOAN SERVICER- The term `loan servicer' has the same meaning as the term `servicer' in section 6(i)(2) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(i)(2)).CommentsClose CommentsPermalink





(5) RESIDENTIAL MORTGAGE LOAN- The term `residential mortgage loan' means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act (15 U.S.C. 1602)(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling (as so defined).CommentsClose CommentsPermalink





(6) RESIDENTIAL REAL PROPERTY- The term `residential real property' has the meaning given the term `dwelling' in section 103 of the Consumer Credit Protection Act (15 U.S.C. 1602).CommentsClose CommentsPermalink





(7) SECRETARY- The term `Secretary' means the Secretary of Housing and Urban Development.CommentsClose CommentsPermalink

SEC. 3. MORTGAGE RESCUE FRAUD PROTECTION.

(a) Limits on Foreclosure Consultants- A foreclosure consultant may not--CommentsClose CommentsPermalink





(1) claim, demand, charge, collect, or receive any compensation from a homeowner for services performed by such foreclosure consultant with respect to residential real property until such foreclosure consultant has fully performed each service that such foreclosure consultant contracted to perform or represented would be performed with respect to such residential real property;CommentsClose CommentsPermalink





(2) hold any power of attorney from any homeowner, except to inspect documents, as provided by applicable law;CommentsClose CommentsPermalink





(3) receive any consideration from a third party in connection with services rendered to a homeowner by such third party with respect to the foreclosure of residential real property, unless such consideration is fully disclosed to such homeowner in writing before such services are rendered;CommentsClose CommentsPermalink





(4) accept any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation with respect to services provided by such foreclosure consultant in connection with the foreclosure of residential real property; orCommentsClose CommentsPermalink





(5) acquire any interest, directly or indirectly, in the residence of a homeowner with whom the foreclosure consultant has contracted.CommentsClose CommentsPermalink





(b) Contract Requirements-CommentsClose CommentsPermalink





(1) WRITTEN CONTRACT REQUIRED- Notwithstanding any other provision of law, a foreclosure consultant may not provide to a homeowner a service related to the foreclosure of residential real property--CommentsClose CommentsPermalink





(A) unless--CommentsClose CommentsPermalink





(i) a written contract for the purchase of such service has been signed and dated by the homeowner; andCommentsClose CommentsPermalink





(ii) such contract complies with the requirements described in paragraph (2); andCommentsClose CommentsPermalink





(B) before the end of the 3-business-day period beginning on the date on which the contract is signed.CommentsClose CommentsPermalink





(2) TERMS AND CONDITIONS OF CONTRACT- The requirements described in this paragraph, with respect to a contract, are as follows:CommentsClose CommentsPermalink





(A) The contract includes, in writing--CommentsClose CommentsPermalink





(i) a full and detailed description of the exact nature of the contract and the total amount and terms of compensation;CommentsClose CommentsPermalink





(ii) the name, physical address, phone number, email address, and facsimile number, if any, of the foreclosure consultant to whom a notice of cancellation can be mailed or sent under subsection (d); andCommentsClose CommentsPermalink





(iii) a conspicuous statement in at least 12 point bold face type in immediate proximity to the space reserved for the homeowner's signature on the contract that reads as follows: `You may cancel this contract without penalty or obligation at any time before midnight of the 3rd business day after the date on which you sign the contract. See the attached notice of cancellation form for an explanation of this right.'.CommentsClose CommentsPermalink





(B) The contract is written in the principal language used by the homeowner.CommentsClose CommentsPermalink





(C) The contract is accompanied by the form required by subsection (c)(2).CommentsClose CommentsPermalink





(c) Right To Cancel Contract-CommentsClose CommentsPermalink





(1) IN GENERAL- With respect to a contract between a homeowner and a foreclosure consultant regarding the foreclosure on the residential real property of such homeowner, such homeowner may cancel such contract without penalty or obligation by mailing a notice of cancellation not later than midnight of the 3rd business day after the date on which such contract is executed or would become enforceable against the parties to such contract.CommentsClose CommentsPermalink





(2) CANCELLATION FORM AND OTHER INFORMATION- Each contract described in paragraph (1) shall be accompanied by a form, in duplicate, that--CommentsClose CommentsPermalink





(A) has the heading `Notice of Cancellation' in boldface type; andCommentsClose CommentsPermalink





(B) contains in boldface type the following statement:CommentsClose CommentsPermalink





`You may cancel this contract, without any penalty or obligation, at any time before midnight of the 3rd day after the date on which the contract is signed by you.CommentsClose CommentsPermalink





`To cancel this contract, mail or deliver a signed and dated copy of this cancellation notice or any other equivalent written notice to [insert name of foreclosure consultant] at [insert address of foreclosure consultant] before midnight on [insert date].CommentsClose CommentsPermalink





`I hereby cancel this transaction on [insert date] [insert homeowner signature].'.CommentsClose CommentsPermalink





(d) Waiver of Rights and Protections Prohibited-CommentsClose CommentsPermalink





(1) IN GENERAL- A waiver by a homeowner of any protection provided by this section or any right of a homeowner under this section--CommentsClose CommentsPermalink





(A) shall be treated as void; andCommentsClose CommentsPermalink





(B) may not be enforced by any Federal or State court or by any person.CommentsClose CommentsPermalink





(2) ATTEMPT TO OBTAIN A WAIVER- Any attempt by any person to obtain a waiver from any homeowner of any protection provided by this section or any right of the homeowner under this section shall be treated as a violation of this section.CommentsClose CommentsPermalink





(3) CONTRACTS NOT IN COMPLIANCE- Any contract that does not comply with the applicable provisions of this title shall be void and may not be enforceable by any party.CommentsClose CommentsPermalink

SEC. 4. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.

(a) In General- If a loan servicer finds that a homeowner has failed to make 2 consecutive payments on a residential mortgage loan and such loan is at risk of being foreclosed upon, the loan servicer shall notify such homeowner of the dangers of fraudulent activities associated with foreclosure.CommentsClose CommentsPermalink





(b) Notice Requirements- Each notice provided under subsection (a) shall--CommentsClose CommentsPermalink





(1) be in writing;CommentsClose CommentsPermalink





(2) be included with a mailing of account information;CommentsClose CommentsPermalink





(3) have the heading `Notice Required by Federal Law' in a 14-point boldface type in English and Spanish at the top of such notice; andCommentsClose CommentsPermalink





(4) contain the following statement in English and Spanish: `Mortgage foreclosure is a complex process. Some people may approach you about saving your home. You should be careful about any such promises. There are government and nonprofit agencies you may contact for helpful information about the foreclosure process. Contact your lender immediately at [XXXX], call the Department of Housing and Urban Development Housing Counseling Line at (800) 569-4287 to find a housing counseling agency certified by the Department to assist you in avoiding foreclosure, or visit the Department's Tips for Avoiding Foreclosure website at http://www.hud.gov/foreclosure for additional assistance.' (the blank space to be filled in by the loan servicer).CommentsClose CommentsPermalink

SEC. 5. CIVIL LIABILITY.

(a) Liability Established- Any foreclosure consultant who fails to comply with any provision of section 3 or 4 with respect to any other person shall be liable to such person in an amount equal to the sum of the amounts determined under each of the following paragraphs:CommentsClose CommentsPermalink





(1) ACTUAL DAMAGES- The greater of--CommentsClose CommentsPermalink





(A) the amount of any actual damage sustained by such person as a result of such failure; orCommentsClose CommentsPermalink





(B) any amount paid by the person to the foreclosure consultant.CommentsClose CommentsPermalink





(2) PUNITIVE DAMAGES- In the case of any action by an individual, such amount (in addition to damages described in paragraph (1)) as the court may allow.CommentsClose CommentsPermalink





(3) Attorneys' FEES- In the case of any successful action to enforce any liability under paragraph (1) or (2), the costs of the action, together with reasonable attorneys' fees.CommentsClose CommentsPermalink





(b) Factors To Be Considered in Awarding Punitive Damages- In determining the amount of any liability of any foreclosure consultant under subsection (a)(2), the court shall consider, among other relevant factors--CommentsClose CommentsPermalink





(1) the frequency and persistence of noncompliance by the foreclosure consultant;CommentsClose CommentsPermalink





(2) the nature of the noncompliance; andCommentsClose CommentsPermalink





(3) the extent to which such noncompliance was intentional.CommentsClose CommentsPermalink

SEC. 6. ADMINISTRATIVE ENFORCEMENT.

(a) Enforcement by Federal Trade Commission-CommentsClose CommentsPermalink





(1) UNFAIR OR DECEPTIVE ACT OR PRACTICE- A violation of a prohibition described in section 3 or a failure to comply with any provision of section 3 or 4 shall be treated as a violation of a rule defining an unfair or deceptive act or practice described under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).CommentsClose CommentsPermalink





(2) ACTIONS BY THE FEDERAL TRADE COMMISSION- The Federal Trade Commission shall enforce the provisions of sections 3 and 4 in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made part of this title.CommentsClose CommentsPermalink





(b) State Action for Violations-CommentsClose CommentsPermalink





(1) AUTHORITY OF STATES- In addition to such other remedies as are provided under State law, whenever the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating the provisions of section 3 or 4, the State--CommentsClose CommentsPermalink





(A) may bring an action to enjoin such violation;CommentsClose CommentsPermalink





(B) may bring an action on behalf of its residents to recover damages for which the person is liable to such residents under section 5 as a result of the violation; andCommentsClose CommentsPermalink





(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees, as determined by the court.CommentsClose CommentsPermalink





(2) RIGHTS OF FEDERAL TRADE COMMISSION-CommentsClose CommentsPermalink





(A) NOTICE TO COMMISSION- The State shall serve prior written notice of any civil action under paragraph (1) upon the Commission and provide the Commission with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action.CommentsClose CommentsPermalink





(B) INTERVENTION- The Commission shall have the right--CommentsClose CommentsPermalink





(i) to intervene in any action referred to in subparagraph (A);CommentsClose CommentsPermalink





(ii) upon so intervening, to be heard on all matters arising in the action; andCommentsClose CommentsPermalink





(iii) to file petitions for appeal in such actions.CommentsClose CommentsPermalink





(3) INVESTIGATORY POWERS- For purposes of bringing any action under this subsection, nothing in this subsection shall prevent the chief law enforcement officer, or an official or agency designated by a State, from exercising the powers conferred on the chief law enforcement officer or such official by the laws of such State to conduct investigations or to administer oaths or affirmations, or to compel the attendance of witnesses or the production of documentary and other evidence.CommentsClose CommentsPermalink





(4) LIMITATION- Whenever the Federal Trade Commission has instituted a civil action for a violation of section 3 or 4, no State may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of the Commission for any violation of section 3 or 4 that is alleged in that complaint.CommentsClose CommentsPermalink

SEC. 7. PREEMPTION.

Nothing in this title affects any provision of State or local law respecting any foreclosure consultant, residential mortgage loan, or residential real property that provides equal or greater protection to homeowners than what is provided under this title.CommentsClose CommentsPermalink