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HR 1106 EHRFSCommentsClose CommentsPermalink

111th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 1106CommentsClose CommentsPermalink

AN ACTCommentsClose CommentsPermalink

To prevent mortgage foreclosures and enhance mortgage credit availability.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; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as ‘Helping Families Save Their Homes Act of 2009’.CommentsClose CommentsPermalink





(b) Table of Contents- The table of contents of this Act is the following:CommentsClose CommentsPermalink





Sec. 1. Short title; table of contents.CommentsClose CommentsPermalink

TITLE I--PREVENTION OF MORTGAGE FORECLOSURES

Subtitle A--Modification of Residential Mortgages

Sec. 100. Definition.CommentsClose CommentsPermalink





Sec. 101. Eligibility for relief.CommentsClose CommentsPermalink





Sec. 102. Prohibiting claims arising from violations of the Truth in Lending Act.CommentsClose CommentsPermalink





Sec. 103. Authority to modify certain mortgages.CommentsClose CommentsPermalink





Sec. 104. Combating excessive fees.CommentsClose CommentsPermalink





Sec. 105. Confirmation of plan.CommentsClose CommentsPermalink





Sec. 106. Discharge.CommentsClose CommentsPermalink





Sec. 107. Standing trustee fees.CommentsClose CommentsPermalink





Sec. 108. Effective date; application of amendments.CommentsClose CommentsPermalink





Sec. 109. GAO study.CommentsClose CommentsPermalink





Sec. 110. Report to Congress.CommentsClose CommentsPermalink

Subtitle B--Related Mortgage Modification Provisions

Sec. 121. Adjustments as a result of modification in bankruptcy of housing loans guaranteed by the Department of Veterans Affairs.CommentsClose CommentsPermalink





Sec. 122. Payment of FHA mortgage insurance benefits.CommentsClose CommentsPermalink





Sec. 123. Adjustments as result of modification of rural single family housing loans in bankruptcy.CommentsClose CommentsPermalink





Sec. 124. Unenforceability of certain provision as being contrary to public policy.CommentsClose CommentsPermalink





Sec. 125. Mortgage modification data collecting and reporting.CommentsClose CommentsPermalink

TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITY

Sec. 201. Servicer safe harbor for mortgage loan modifications.CommentsClose CommentsPermalink





Sec. 202. Changes to HOPE for Homeowners Program.CommentsClose CommentsPermalink





Sec. 203. Requirements for FHA-approved mortgagees.CommentsClose CommentsPermalink





Sec. 204. Enhancement of liquidity and stability of insured depository institutions to ensure availability of credit and reduction of foreclosures.CommentsClose CommentsPermalink





Sec. 205. Application of GSE conforming loan limit to mortgages assisted with TARP funds.CommentsClose CommentsPermalink





Sec. 206. Mortgages on certain homes on leased land.CommentsClose CommentsPermalink





Sec. 207. Sense of Congress regarding mortgage revenue bond purchases.CommentsClose CommentsPermalink

TITLE III--MORTGAGE FRAUD

Sec. 301. Short title.CommentsClose CommentsPermalink





Sec. 302. Nationwide Mortgage Fraud Task Force.CommentsClose CommentsPermalink

TITLE IV--FORECLOSURE MORATORIUM PROVISIONS

Sec. 401. Sense of the Congress on foreclosures.CommentsClose CommentsPermalink

TITLE I--PREVENTION OF MORTGAGE FORECLOSURESCommentsClose CommentsPermalink

Subtitle A--Modification of Residential MortgagesCommentsClose CommentsPermalink

SEC. 100. DEFINITION.

Section 101 of title 11, United States Code, is amended by inserting after paragraph (43) the following (and make such technical and conforming changes as may be appropriate):CommentsClose CommentsPermalink





‘(43A) The term ‘qualified loan modification’ means a loan modification agreement made in accordance with the guidelines of the Obama Administration’s Homeowner Affordability and Stability Plan as implemented March 4, 2009, that--CommentsClose CommentsPermalink





‘(A) reduces the debtor’s payment (including principal and interest, and payments for real estate taxes, hazard insurance, mortgage insurance premium, homeowners’ association dues, ground rent, and special assessments) on a loan secured by a senior security interest in the principal residence of the debtor, to a percentage of the debtor’s income in accordance with such guidelines, without any period of negative amortization or under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal amount of such loan;CommentsClose CommentsPermalink





‘(B) requires no fees or charges to be paid by the debtor in order to obtain such modification; andCommentsClose CommentsPermalink





‘(C) permits the debtor to continue to make payments under the modification agreement notwithstanding the filing of a case under this title, as if such case had not been filed.’.CommentsClose CommentsPermalink

SEC. 101. ELIGIBILITY FOR RELIEF.

Section 109 of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) by adding at the end of subsection (e) the following: ‘For purposes of this subsection, the computation of debts shall not include the secured or unsecured portions of--CommentsClose CommentsPermalink





‘(1) debts secured by the debtor’s principal residence if the value of such residence as of the date of the order for relief under chapter 13 is less than the applicable maximum amount of noncontingent, liquidated, secured debts specified in this subsection; orCommentsClose CommentsPermalink





‘(2) debts secured or formerly secured by what was the debtor’s principal residence that was sold in foreclosure or that the debtor surrendered to the creditor if the value of such real property as of the date of the order for relief under chapter 13 was less than the applicable maximum amount of noncontingent, liquidated, secured debts specified in this subsection.’, andCommentsClose CommentsPermalink





(2) by adding at the end of subsection (h) the following:CommentsClose CommentsPermalink





‘(5) Notwithstanding the 180-day period specified in paragraph (1), with respect to a debtor in a case under chapter 13 who submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor’s principal residence may commence a foreclosure on the debtor’s principal residence, the requirements of paragraph (1) shall be considered to be satisfied if the debtor satisfies such requirements not later than the expiration of the 30-day period beginning on the date of the filing of the petition.’.CommentsClose CommentsPermalink

SEC. 102. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF THE TRUTH IN LENDING ACT.

Section 502(b) of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) in paragraph (8) by striking ‘or’ at the end,CommentsClose CommentsPermalink





(2) in paragraph (9) by striking the period at the end and inserting ‘; or’, andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(10) the claim for a loan secured by a security interest in the debtor’s principal residence is subject to a remedy for rescission under the Truth in Lending Act notwithstanding the prior entry of a foreclosure judgment, except that nothing in this paragraph shall be construed to modify, impair, or supersede any other right of the debtor.’.CommentsClose CommentsPermalink

SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

Section 1322 of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) in subsection (b)--CommentsClose CommentsPermalink





(A) by redesignating paragraph (11) as paragraph (12),CommentsClose CommentsPermalink





(B) in paragraph (10) by striking ‘and’ at the end, andCommentsClose CommentsPermalink





(C) by inserting after paragraph (10) the following:CommentsClose CommentsPermalink





‘(11) notwithstanding paragraph (2), with respect to a claim for a loan originated before the effective date of this paragraph and secured by a security interest in the debtor’s principal residence that is the subject of a notice that a foreclosure may be commenced with respect to such loan, modify the rights of the holder of such claim (and the rights of the holder of any claim secured by a subordinate security interest in such residence)--CommentsClose CommentsPermalink





‘(A) by providing for payment of the amount of the allowed secured claim as determined under section 506(a)(1);CommentsClose CommentsPermalink





‘(B) if any applicable rate of interest is adjustable under the terms of such loan by prohibiting, reducing, or delaying adjustments to such rate of interest applicable on and after the date of filing of the plan;CommentsClose CommentsPermalink





‘(C) by modifying the terms and conditions of such loan--CommentsClose CommentsPermalink





‘(i) to extend the repayment period for a period that is no longer than the longer of 40 years (reduced by the period for which such loan has been outstanding) or the remaining term of such loan, beginning on the date of the order for relief under this chapter; andCommentsClose CommentsPermalink





‘(ii) to provide for the payment of interest accruing after the date of the order for relief under this chapter at a fixed annual rate equal to the currently applicable average prime offer rate as of the date of the order for relief under this chapter, corresponding to the repayment term determined under the preceding paragraph, as published by the Federal Financial Institutions Examination Council in its table entitled ‘Average Prime Offer Rates--Fixed’, plus a reasonable premium for risk; andCommentsClose CommentsPermalink





‘(D) by providing for payments of such modified loan directly to the holder of the claim or, at the discretion of the court, through the trustee during the term of the plan; and’, andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





‘(g) A claim may be reduced under subsection (b)(11)(A) only on the condition that if the debtor sells the principal residence securing such claim, before completing all payments under the plan (or, if applicable, before receiving a discharge under section 1328(b)) and receives net proceeds from the sale of such residence, then the debtor agrees to pay to such holder not later than 15 days after receiving such proceeds--CommentsClose CommentsPermalink





‘(1) if such residence is sold in the 1st year occurring after the effective date of the plan, 90 percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection (b)(11) (plus costs of sale and improvements), but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection;CommentsClose CommentsPermalink





‘(2) if such residence is sold in the 2d year occurring after the effective date of the plan, 70 percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection (b)(11) (plus costs of sale and improvements), but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection;CommentsClose CommentsPermalink





‘(3) if such residence is sold in the 3d year occurring after the effective date of the plan, 50 percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection (b)(11) (plus costs of sale and improvements), but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection;CommentsClose CommentsPermalink





‘(4) if such residence is sold in the 4th year occurring after the effective date of the plan, 30 percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection (b)(11) (plus costs of sale and improvements), but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection; andCommentsClose CommentsPermalink





‘(5) if such residence is sold in the 5th year occurring after the effective date of the plan, 10 percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection (b)(11) (plus costs of sale and improvements), but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection.CommentsClose CommentsPermalink





‘(h) With respect to a claim of the kind described in subsection (b)(11), the plan may not contain a modification under the authority of subsection (b)(11)--CommentsClose CommentsPermalink





‘(1) in a case commenced under this chapter after the expiration of the 30-day period beginning on the effective date of this subsection, unless--CommentsClose CommentsPermalink





‘(A) the debtor certifies that the debtor--CommentsClose CommentsPermalink





‘(i) not less than 30 days before the commencement of the case, contacted the holder of such claim (or the entity collecting payments on behalf of such holder) regarding modification of the loan that is the subject of such claim;CommentsClose CommentsPermalink





‘(ii) provided the holder of the claim (or the entity collecting payments on behalf of such holder) a written statement of the debtor’s current income, expenses, and debt substantially conforming with the schedules required under section 521(a) or such other form as is promulgated by the Judicial Conference of the United States for such purpose; andCommentsClose CommentsPermalink





‘(iii) considered any qualified loan modification offered to the debtor by the holder of the claim (or the entity collecting payments on behalf of such holder); orCommentsClose CommentsPermalink





‘(B) a foreclosure sale is scheduled to occur on a date in the 30-day period beginning on the date of case is commenced;CommentsClose CommentsPermalink





‘(2) in any other case pending under this chapter, unless the debtor certifies that the debtor attempted to contact the holder of such claim (or the entity collecting payments on behalf of such holder) regarding modification of the loan that is the subject of such claim, before--CommentsClose CommentsPermalink





‘(A) filing a plan under section 1321 that contains a modification under the authority of subsection (b)(11); orCommentsClose CommentsPermalink





‘(B) modifying a plan under section 1323 or 1329 to contain a modification under the authority of subsection (b)(11).CommentsClose CommentsPermalink





‘(i) In determining the holder’s allowed secured claim under section 506(a)(1) for purposes of subsection (b)(11)(A), the value of the debtor’s principal residence shall be the fair market value of such residence on the date such value is determined and, if the issue of value is contested, the court shall determine such value in accordance with the appraisal rules used by the Federal Housing Administration.’.CommentsClose CommentsPermalink

SEC. 104. COMBATING EXCESSIVE FEES.

Section 1322(c) of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) in paragraph (1) by striking ‘and’ at the end,CommentsClose CommentsPermalink





(2) in paragraph (2) by striking the period at the end and inserting a semicolon, andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(3) the debtor, the debtor’s property, and property of the estate are not liable for a fee, cost, or charge that is incurred while the case is pending and arises from a debt that is secured by the debtor’s principal residence except to the extent that--CommentsClose CommentsPermalink





‘(A) the holder of the claim for such debt files with the court and serves on the trustee, the debtor, and the debtor’s attorney (annually or, in order to permit filing consistent with clause (ii), at such more frequent periodicity as the court determines necessary) notice of such fee, cost, or charge before the earlier of--CommentsClose CommentsPermalink





‘(i) 1 year after such fee, cost, or charge is incurred; orCommentsClose CommentsPermalink





‘(ii) 60 days before the closing of the case; andCommentsClose CommentsPermalink





‘(B) such fee, cost, or charge--CommentsClose CommentsPermalink





‘(i) is lawful under applicable nonbankruptcy law, reasonable, and provided for in the applicable security agreement; andCommentsClose CommentsPermalink





‘(ii) is secured by property the value of which is greater than the amount of such claim, including such fee, cost, or charge;CommentsClose CommentsPermalink





‘(4) the failure of a party to give notice described in paragraph (3) shall be deemed a waiver of any claim for fees, costs, or charges described in paragraph (3) for all purposes, and any attempt to collect such fees, costs, or charges shall constitute a violation of section 524(a)(2) or, if the violation occurs before the date of discharge, of section 362(a); andCommentsClose CommentsPermalink





‘(5) a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor’s principal residence.’.CommentsClose CommentsPermalink

SEC. 105. CONFIRMATION OF PLAN.

(a) Section 1325(a) of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) in the matter preceding paragraph (1) strike ‘subsection (b)’ and insert ‘subsections (b) and (d)’.CommentsClose CommentsPermalink





(2) in paragraph (5)--CommentsClose CommentsPermalink





(A) by inserting ‘except as otherwise provided in section 1322(b)(11),’ after ‘(5)’, andCommentsClose CommentsPermalink





(B) in subparagraph (B)(iii)(I) by inserting ‘(including payments of a claim modified under section 1322(b)(11))’ after ‘payments’ the 1st place it appears,CommentsClose CommentsPermalink





(3) in paragraph (8) by striking ‘and’ at the end,CommentsClose CommentsPermalink





(4) in paragraph (9) by striking the period at the end and inserting a semicolon, andCommentsClose CommentsPermalink





(5) by inserting after paragraph (9) the following:CommentsClose CommentsPermalink





‘(10) notwithstanding subclause (I) of paragraph (5)(B)(i), whenever the plan modifies a claim in accordance with section 1322(b)(11), the holder of a claim whose rights are modified pursuant to section 1322(b)(11) shall retain the lien until the later of--CommentsClose CommentsPermalink





‘(A) the payment of such holder’s allowed secured claim; orCommentsClose CommentsPermalink





‘(B) completion of all payments under the plan (or, if applicable, receipt of a discharge under section 1328(b)); andCommentsClose CommentsPermalink





‘(11) whenever the plan modifies a claim in accordance with section 1322(b)(11), the court finds that such modification is in good faith (Lack of good faith exists if the debtor has no need for relief under this paragraph because the debtor can pay all of his or her debts and any future payment increases on such debts without difficulty for the foreseeable future, including the positive amortization of mortgage debt. In determining whether a reduction of the principal amount of the loan resulting from a modification made under the authority of section 1322(b)(11) is made in good faith, the court shall consider whether the holder of such claim (or the entity collecting payments on behalf of such holder) has offered to the debtor a qualified loan modification that would enable the debtor to pay such debts and such loan without reducing such principal amount.) and does not find that the debtor has been convicted of obtaining by actual fraud the extension, renewal, or refinancing of credit that gives rise to a modified claim.’.CommentsClose CommentsPermalink





(b) Section 1325 of title 11, United States Code, is amended by adding at the end the following (and make such technical and conforming changes as may be appropriate):CommentsClose CommentsPermalink





‘(d) Notwithstanding section 1322(b)(11)(C)(ii), the court, on request of the debtor or the holder of a claim secured by a senior security interest in the debtor’s principal residence, may confirm a plan proposing a reduction in the interest rate on the loan secured by such security interest and that does not reduce the principal, provided the total monthly mortgage payment is reduced to a percentage of the debtor’s income in accordance with the guidelines of the Obama Administration’s Homeowner Affordability and Stability Plan as implemented March 4, 2009, if, taking into account the debtor’s financial situation, after allowance of expenses that would be permitted for a debtor under this chapter subject to paragraph (3) of subsection (b), regardless of whether the debtor is otherwise subject to such paragraph, and taking into account additional debts and fees that are to be paid in this chapter and thereafter, the debtor would be able to prevent foreclosure and pay a fully amortizing 30-year loan at such reduced interest rate without such reduction in principal.’.CommentsClose CommentsPermalink

SEC. 106. DISCHARGE.

Section 1328(a) of title 11, United States Code, is amended--CommentsClose CommentsPermalink





(1) by inserting ‘(other than payments to holders of claims whose rights are modified under section 1322(b)(11))’ after ‘paid’, andCommentsClose CommentsPermalink





(2) in paragraph (1) by inserting ‘or, to the extent of the unpaid portion of an allowed secured claim, provided for in section 1322(b)(11)’ after ‘1322(b)(5)’.CommentsClose CommentsPermalink

SEC. 107. STANDING TRUSTEE FEES.

(a) Amendment to Title 28- Section 586(e)(1)(B)(i) of title 28, United States Code, is amended--CommentsClose CommentsPermalink





(1) by inserting ‘(I) except as provided in subparagraph (II)’ after ‘(i)’,CommentsClose CommentsPermalink





(2) by striking ‘or’ at the end and inserting ‘and’, andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(II) 4 percent with respect to payments received under section 1322(b)(11) of title 11 by the individual as a result of the operation of section 1322(b)(11)(D) of title 11, unless the bankruptcy court waives all fees with respect to such payments based on a determination that such individual has income less than 150 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved and payment of such fees would render the debtor’s plan infeasible.’.CommentsClose CommentsPermalink





(b) Conforming Provision- The amendments made by this section shall apply to any trustee to whom the provisions of section 302(d)(3) of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 (Public Law 99-554; 100 Stat. 3121) apply.CommentsClose CommentsPermalink

SEC. 108. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

(a) Effective Date- Except as provided in subsection (b), this subtitle and the amendments made by this subtitle shall take effect on the date of the enactment of this Act.CommentsClose CommentsPermalink





(b) Application of Amendments-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this subtitle shall apply with respect to cases commenced under title 11 of the United States Code before, on, or after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) LIMITATION- Paragraph (1) shall not apply with respect to cases closed under title 11 of the United States Code as of the date of the enactment of this Act that are neither pending on appeal in, nor appealable to, any court of the United States.CommentsClose CommentsPermalink

SEC. 109. GAO STUDY.

The Comptroller General shall carry out a study, and submit to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate, not later than 2 years after the date of the enactment of this Act a report containing--CommentsClose CommentsPermalink





(1) the results of such study of--CommentsClose CommentsPermalink





(A) the number of debtors who filed, during the 1-year period beginning on the date of the enactment of this Act, cases under chapter 13 of title 11 of the United States Code for the purpose of restructuring their principal residence mortgages,CommentsClose CommentsPermalink





(B) the number of mortgages restructured under the amendments made by this subtitle that subsequently resulted in default and foreclosure,CommentsClose CommentsPermalink





(C) a comparison between the effectiveness of mortgages restructured under programs outside of bankruptcy, such as Hope Now and Help for Homeowners, and mortgages restructured under the amendments made by this subtitle,CommentsClose CommentsPermalink





(D) the number of cases presented to the bankruptcy courts where mortgages were restructured under the amendments made by this subtitle that were appealed,CommentsClose CommentsPermalink





(E) the number of cases presented to the bankruptcy courts where mortgages were restructured under the amendments made by the subtitle that were overturned on appeal, andCommentsClose CommentsPermalink





(F) the number of bankruptcy judges disciplined as a result of actions taken to restructure mortgages under the amendments made by this subtitle, andCommentsClose CommentsPermalink





(2) a recommendation as to whether such amendments should be amended to include a sunset clause.CommentsClose CommentsPermalink

SEC. 110. REPORT TO CONGRESS.

Not later than 18 months after the date of the enactment of this Act, the Comptroller General, in consultation with the Federal Housing Administration, shall submit to the Congress, a report containing--CommentsClose CommentsPermalink





(1) a comprehensive review of the effects of the amendments made by this subtitle on bankruptcy court,CommentsClose CommentsPermalink





(2) a survey of whether the program should limit the types of homeowners eligible for the program, andCommentsClose CommentsPermalink





(3) a recommendation on whether such amendments should remain in effect.CommentsClose CommentsPermalink

Subtitle B--Related Mortgage Modification ProvisionsCommentsClose CommentsPermalink

SEC. 121. ADJUSTMENTS AS A RESULT OF MODIFICATION IN BANKRUPTCY OF HOUSING LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS AFFAIRS.

(a) In General- Section 3732 of title 38, United States Code, is amended--CommentsClose CommentsPermalink





(1) in subsection (a)--CommentsClose CommentsPermalink





(A) by redesignating paragraph (2) as subparagraph (A) of paragraph (2), andCommentsClose CommentsPermalink





(2) by inserting after subparagraph (A) the following new subparagraph:CommentsClose CommentsPermalink





‘(B) In the event that a housing loan guaranteed under this chapter is modified under the authority provided under section 1322(b) of title 11, United States Code, the Secretary may pay the holder of the obligation the unpaid balance of the obligation due as of the date of the filing of the petition under title 11, United States Code, plus accrued interest, but only upon the assignment, transfer, and delivery to the Secretary (in a form and manner satisfactory to the Secretary) of all rights, interest, claims, evidence, and records with respect to the housing loan.’.CommentsClose CommentsPermalink





(b) Maturity of Housing Loans- Paragraph (1) of section (d) of section 3703 of title 38, United States Code, is amended by inserting ‘at the time of origination’ after ‘loan’.CommentsClose CommentsPermalink





(c) Implementation- The Secretary of Veterans Affairs may implement the amendments made by this section through notice, procedure notice, or administrative notice.CommentsClose CommentsPermalink

SEC. 122. PAYMENT OF FHA MORTGAGE INSURANCE BENEFITS.

(a) In General- Subsection (a) of section 204 of the National Housing Act (12 U.S.C. 1710(a)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1), by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(E) MODIFICATION OF MORTGAGE IN BANKRUPTCY-CommentsClose CommentsPermalink





‘(i) AUTHORITY- If an order is entered under the authority provided under section 1322(b) of title 11, United States Code, that (a) determines the amount of an allowed secured claim under a mortgage in accordance with section 506(a)(1) of title 11, United States Code, and the amount of such allowed secured claim is less than the amount due under the mortgage as of the date of the filing of the petition under title 11, United States Code, or (b) reduces the interest to be paid under a mortgage in accordance with section 1325 of such title, the Secretary may pay insurance benefits for the mortgage as follows:CommentsClose CommentsPermalink





‘(I) FULL PAYMENT AND ASSIGNMENT- The Secretary may pay the insurance benefits for the mortgage, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage specified in clauses (i) through (iv) of paragraph (1)(A). The insurance benefits shall be paid in the amount equal to the original principal obligation of the mortgage (with such additions and deductions as the Secretary determines are appropriate) which was unpaid upon the date of the filing of by the mortgagor of the petition under title 11 of the United States Code. Nothing in this Act may be construed to prevent the Secretary from providing insurance under this title for a mortgage that has previously been assigned to the Secretary under this subclause. The decision of whether to utilize the authority under this subclause for payment and assignment shall be at the election of the mortgagee, subject to such terms and conditions as the Secretary may establish.CommentsClose CommentsPermalink





‘(II) ASSIGNMENT OF UNSECURED CLAIM- The Secretary may make a partial payment of the insurance benefits for any unsecured claim under the mortgage, but only upon the assignment to the Secretary of any unsecured claim of the mortgagee against the mortgagor or others arising out of such order. Such assignment shall be deemed valid irrespective of whether such claim has been or will be discharged under title 11 of the United States Code. The insurance benefits shall be paid in the amount specified in subclause (I) of this clause, as such amount is reduced by the amount of the allowed secured claim. Such allowed secured claim shall continue to be insured under section 203.CommentsClose CommentsPermalink





‘(III) INTEREST PAYMENTS- The Secretary may make periodic payments, or a one-time payment, of insurance benefits for interest payments that are reduced pursuant to such order, as determined by the Secretary, but only upon assignment to the Secretary of all rights and interest related to such payments.CommentsClose CommentsPermalink





‘(ii) DELIVERY OF EVIDENCE OF ENTRY OF ORDER- Notwithstanding any other provision of this paragraph, no insurance benefits may be paid pursuant to this subparagraph for a mortgage before delivery to the Secretary of evidence of the entry of the order issued pursuant to title 11, United States Code, in a form satisfactory to the Secretary.’;CommentsClose CommentsPermalink





(2) in paragraph (5), in the matter preceding subparagraph (A), by inserting after ‘section 520, and’ the following: ‘, except as provided in paragraph (1)(E),’; andCommentsClose CommentsPermalink





(3) by adding at the end the following new paragraph:CommentsClose CommentsPermalink





‘(10) LOAN MODIFICATION PROGRAM-CommentsClose CommentsPermalink





‘(A) AUTHORITY- The Secretary may carry out a program solely to encourage loan modifications for eligible delinquent mortgages through the payment of insurance benefits and assignment of the mortgage to the Secretary and the subsequent modification of the terms of the mortgage according to a loan modification approved by the mortgagee.CommentsClose CommentsPermalink





‘(B) PAYMENT OF BENEFITS AND ASSIGNMENT- Under the program under this paragraph, the Secretary may pay insurance benefits for a mortgage, in the amount determined in accordance with paragraph (5)(A), without reduction for any amounts modified, but only upon the assignment, transfer, and delivery to the Secretary of all rights, interest, claims, evidence, and records with respect to the mortgage specified in clauses (i) through (iv) of paragraph (1)(A).CommentsClose CommentsPermalink





‘(C) DISPOSITION- After modification of a mortgage pursuant to this paragraph, the Secretary may provide insurance under this title for the mortgage. The Secretary may subsequently--CommentsClose CommentsPermalink





‘(i) re-assign the mortgage to the mortgagee under terms and conditions as are agreed to by the mortgagee and the Secretary;CommentsClose CommentsPermalink





‘(ii) act as a Government National Mortgage Association issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Government National Mortgage Association security; orCommentsClose CommentsPermalink





‘(iii) re-sell the mortgage in accordance with any program that has been established for purchase by the Federal Government of mortgages insured under this title, and the Secretary may coordinate standards for interest rate reductions available for loan modification with interest rates established for such purchase.CommentsClose CommentsPermalink





‘(D) LOAN SERVICING- In carrying out the program under this section, the Secretary may require the existing servicer of a mortgage assigned to the Secretary under the program to continue servicing the mortgage as an agent of the Secretary during the period that the Secretary acquires and holds the mortgage for the purpose of modifying the terms of the mortgage. If the mortgage is resold pursuant to subparagraph (C)(iii), the Secretary may provide for the existing servicer to continue to service the mortgage or may engage another entity to service the mortgage.’.CommentsClose CommentsPermalink





(b) Amendment to Partial Claim Authority- Paragraph (1) of section 230(b) of the National Housing Act (12 U.S.C. 1715u(b)(1)) is amended by striking ‘12 of the monthly mortgage payments’ and inserting ‘30 percent of the unpaid principal balance of the mortgage’.CommentsClose CommentsPermalink





(c) Implementation- The Secretary of Housing and Urban Development may implement the amendments made by this section through notice or mortgagee letter.CommentsClose CommentsPermalink

SEC. 123. ADJUSTMENTS AS RESULT OF MODIFICATION OF RURAL SINGLE FAMILY HOUSING LOANS IN BANKRUPTCY.

(a) Guaranteed Rural Housing Loans- Subsection (h) of section 502 of the Housing Act of 1949 (42 U.S.C. 1472(h)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (7)--CommentsClose CommentsPermalink





(A) in subparagraph (A), by inserting before the period at the end the following: ‘, unless the maturity date of the loan is modified in a bankruptcy proceeding or at the discretion of the Secretary’; andCommentsClose CommentsPermalink





(B) in subparagraph (B), by inserting before the semicolon the following: ‘, unless such rate is modified in a bankruptcy proceeding’;CommentsClose CommentsPermalink





(2) by redesignating paragraphs (13) and (14) as paragraphs (14) and (15), respectively; andCommentsClose CommentsPermalink





(3) by inserting after paragraph (12) the following new paragraph:CommentsClose CommentsPermalink





‘(13) PAYMENT OF GUARANTEE- In addition to all other authorities to pay a guarantee claim, the Secretary may also pay the guaranteed portion of any losses incurred by the holder of a note or the servicer resulting from a modification of a note by a bankruptcy proceeding.’.CommentsClose CommentsPermalink





(b) Insured Rural Housing Loans- Subsection (j) of section 517 of the Housing Act of 1949 (42 U.S.C. 1487(j)) is amended--CommentsClose CommentsPermalink





(1) by redesignating paragraphs (2) through (7) as paragraphs (3) through (8), respectively; andCommentsClose CommentsPermalink





(2) by inserting after paragraph (1) the following new paragraph:CommentsClose CommentsPermalink





‘(2) to pay for losses incurred by holders or servicers in the event of a modification pursuant to a bankruptcy proceeding;’.CommentsClose CommentsPermalink





(c) Implementation- The Secretary of Agriculture may implement the amendments made by this section through notice, procedure notice, or administrative notice.CommentsClose CommentsPermalink

SEC. 124. UNENFORCEABILITY OF CERTAIN PROVISION AS BEING CONTRARY TO PUBLIC POLICY.

No provision in any investment contract between a servicer and a securitization vehicle or investor in effect as of the date of enactment of this Act that requires excess bankruptcy losses that exceed a certain dollar amount on residential mortgages to be borne by classes of certificates on a pro rata basis that refers to types of bankruptcy losses that could not have been incurred under the law in effect at the time such contract was entered into shall be enforceable, as such provision shall be contrary to public policy. Notwithstanding this section, such reference to types of bankruptcy losses that could have been incurred under the law in effect at the time such contract was entered into shall be enforceable.CommentsClose CommentsPermalink

SEC. 125. MORTGAGE MODIFICATION DATA COLLECTING AND REPORTING.

(a) Reporting Requirements- Not later than 120 days after the date of the enactment of this Act, and quarterly thereafter, the Comptroller of the Currency, in coordination with the Director of the Office of Thrift Supervision, shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, and the Joint Economic Committee on the volume of mortgage modifications reported to the Office of the Comptroller of the Currency and the Office of Thrift Supervision, under the mortgage metrics program of each such Office, during the previous quarter, including the following:CommentsClose CommentsPermalink





(1) A copy of the data collection instrument currently used by the Office of the Comptroller of the Currency and the Office of Thrift Supervision to collect data on loan modifications.CommentsClose CommentsPermalink





(2) The total number of mortgage modifications resulting in each of the following:CommentsClose CommentsPermalink





(A) Additions of delinquent payments and fees to loan balances.CommentsClose CommentsPermalink





(B) Interest rate reductions and freezes.CommentsClose CommentsPermalink





(C) Term extensions.CommentsClose CommentsPermalink





(D) Reductions of principal.CommentsClose CommentsPermalink





(E) Deferrals of principal.CommentsClose CommentsPermalink





(F) Combinations of modifications described in subparagraph (A), (B), (C), (D), or (E).CommentsClose CommentsPermalink





(3) The total number of mortgage modifications in which the total monthly principal and interest payment resulted in the following:CommentsClose CommentsPermalink





(A) An increase.CommentsClose CommentsPermalink





(B) Remained the same.CommentsClose CommentsPermalink





(C) Decreased less than 10 percent.CommentsClose CommentsPermalink





(D) Decreased between 10 percent and 20 percent.CommentsClose CommentsPermalink





(E) Decreased 20 percent or more.CommentsClose CommentsPermalink





(4) The total number of loans that have been modified and then entered into default, where the loan modification resulted in--CommentsClose CommentsPermalink





(A) higher monthly payments by the homeowner;CommentsClose CommentsPermalink





(B) equivalent monthly payments by the homeowner;CommentsClose CommentsPermalink





(C) lower monthly payments by the homeowner of up to 10 percent;CommentsClose CommentsPermalink





(D) lower monthly payments by the homeowner of between 10 percent to 20 percent; orCommentsClose CommentsPermalink





(E) lower monthly payments by the homeowner of more than 20 percent.CommentsClose CommentsPermalink





(b) Data Collection-CommentsClose CommentsPermalink





(1) REQUIRED-CommentsClose CommentsPermalink





(A) IN GENERAL- Not later than 60 days after the date of the enactment of this Act, the Comptroller of the Currency and the Director of the Office of Thrift Supervision, shall issue mortgage modification data collection and reporting requirements to institutions covered under the reporting requirement of the mortgage metrics program of the Comptroller or the Director.CommentsClose CommentsPermalink





(B) INCLUSIVENESS OF COLLECTIONS- The requirements under subparagraph (A) shall provide for the collection of all mortgage modification data needed by the Comptroller of the Currency and the Director of the Office of Thrift Supervision to fulfill the reporting requirements under subsection (a).CommentsClose CommentsPermalink





(2) REPORT- The Comptroller of the Currency shall report all requirements established under paragraph (1) to each committee receiving the report required under subsection (a).CommentsClose CommentsPermalink

TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITYCommentsClose CommentsPermalink

SEC. 201. SERVICER SAFE HARBOR FOR MORTGAGE LOAN MODIFICATIONS.

(a) Safe Harbor-CommentsClose CommentsPermalink





(1) LOAN MODIFICATIONS AND WORKOUT PLANS- Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer that acts consistent with the duty set forth in section 129A(a) of Truth in Lending Act (15 U.S.C. 1639a) shall not be liable for entering into a loan modification, workout, or other loss mitigation plan, including, but not limited to, disposition, including any modification or refinancing undertaken pursuant to standard loan modification, sale, or disposition guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008, with respect to any such mortgage that meets all of the criteria set forth in paragraph (2)(B) to--CommentsClose CommentsPermalink





(A) any person, based on that person’s ownership of a residential mortgage loan or any interest in a pool of residential mortgage loans or in securities that distribute payments out of the principal, interest and other payments in loans on the pool;CommentsClose CommentsPermalink





(B) any person who is obligated pursuant to a derivatives instrument to make payments determined in reference to any loan or any interest referred to in subparagraph (A); orCommentsClose CommentsPermalink





(C) any person that insures any loan or any interest referred to in subparagraph (A) under any law or regulation of the United States or any law or regulation of any State or political subdivision of any State.CommentsClose CommentsPermalink





(2) ABILITY TO MODIFY MORTGAGES-CommentsClose CommentsPermalink





(A) ABILITY- Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer--CommentsClose CommentsPermalink





(i) shall not be limited in the ability to modify mortgages, the number of mortgages that can be modified, the frequency of loan modifications, or the range of permissible modifications; andCommentsClose CommentsPermalink





(ii) shall not be obligated to repurchase loans from or otherwise make payments to the securitization vehicle on account of a modification, workout, or other loss mitigation plan for a residential mortgage or a class of residential mortgages that constitute a part or all of the mortgages in the securitization vehicle,CommentsClose CommentsPermalink





if any mortgage so modified meets all of the criteria set forth in subparagraph (B).CommentsClose CommentsPermalink





(B) CRITERIA- The criteria under this subparagraph with respect to a mortgage are as follows:CommentsClose CommentsPermalink





(i) Default on the payment of such mortgage has occurred or is reasonably foreseeable.CommentsClose CommentsPermalink





(ii) The property securing such mortgage is occupied by the mortgagor of such mortgage.CommentsClose CommentsPermalink





(iii) The servicer reasonably and in good faith believes that the anticipated recovery on the principal outstanding obligation of the mortgage under the particular modification or workout plan or other loss mitigation action will exceed, on a net present value basis, the anticipated recovery on the principal outstanding obligation of the mortgage to be realized through foreclosure.CommentsClose CommentsPermalink





(3) APPLICABILITY- This subsection shall apply only with respect to modifications, workouts, and other loss mitigation plans initiated before January 1, 2012.CommentsClose CommentsPermalink





(b) Reporting- Each servicer that engages in loan modifications or workout plans subject to the safe harbor in subsection (a) shall report to the Secretary on a regular basis regarding the extent, scope and results of the servicer’s modification activities. The Secretary shall prescribe regulations specifying the form, content, and timing of such reports.CommentsClose CommentsPermalink





(c) Definitions- For purposes of this section, the following definitions shall apply:CommentsClose CommentsPermalink





(1) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.CommentsClose CommentsPermalink





(2) SECURITIZATION VEHICLE- The term ‘securitization vehicle’ means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that--CommentsClose CommentsPermalink





(A) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; andCommentsClose CommentsPermalink





(B) holds such mortgages.CommentsClose CommentsPermalink

SEC. 202. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM.

(a) Program Changes- Section 257 of the National Housing Act (12 U.S.C. 1715z-23) is amended--CommentsClose CommentsPermalink





(1) in subsection (c)--CommentsClose CommentsPermalink





(A) in the heading for paragraph (1), by striking ‘THE BOARD’ and inserting ‘SECRETARY’;CommentsClose CommentsPermalink





(B) in paragraph (1), by striking ‘Board’ inserting ‘Secretary, after consultation with the Board,’; andCommentsClose CommentsPermalink





(C) by adding after paragraph (2) the following:CommentsClose CommentsPermalink





‘(3) DUTIES OF BOARD- The Board shall advise the Secretary regarding the establishment and implementation of the HOPE for Homeowners Program.’.CommentsClose CommentsPermalink





(2) by striking ‘Board’ each place such term appears in subsections (e), (h)(1), (h)(3), (j), (l), (n), (s)(3), and (v) and inserting ‘Secretary’;CommentsClose CommentsPermalink





(3) in subsection (e)--CommentsClose CommentsPermalink





(A) by striking paragraph (1) and inserting the following:CommentsClose CommentsPermalink





‘(1) BORROWER CERTIFICATION-CommentsClose CommentsPermalink





‘(A) NO INTENTIONAL DEFAULT OR FALSE INFORMATION- The mortgagor shall provide a certification to the Secretary that the mortgagor has not intentionally defaulted on the existing mortgage or mortgages and has not knowingly, or willfully and with actual knowledge, furnished material information known to be false for the purpose of obtaining the eligible mortgage to be insured and has not been convicted under Federal or State law for fraud during the 10-year period ending upon the insurance of the mortgage under this section.CommentsClose CommentsPermalink





‘(B) LIABILITY FOR REPAYMENT- The mortgagor shall agree in writing that the mortgagor shall be liable to repay to the Secretary any direct financial benefit achieved from the reduction of indebtedness on the existing mortgage or mortgages on the residence refinanced under this section derived from misrepresentations made by the mortgagor in the certifications and documentation required under this paragraph, subject to the discretion of the Secretary.’;CommentsClose CommentsPermalink





(B) in paragraph (4)(A), by striking ‘; subject to standards established by the Board under subparagraph (B),’;CommentsClose CommentsPermalink





(C) in paragraph (7), by striking ‘and provided that’ and all that follows through ‘new second lien’ and inserting ‘and except that the Secretary may, under such terms and conditions as the Secretary may establish, permit the establishment of a second lien on a property under an eligible mortgage to be insured, for the purpose of facilitating payment of closing or refinancing costs by a State or locality using funds provided under the HOME Investment Partnerships program under title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12721 et seq.) or the community development block grants program under title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.) or by a State or local housing finance agency’;CommentsClose CommentsPermalink





(D) in paragraph (9)--CommentsClose CommentsPermalink





(i) by striking ‘by procuring (A) an income tax return transcript of the income tax return of the mortgagor, or (B)’ and inserting ‘in accordance with procedures and standards that the Secretary shall establish, which may include requiring the mortgagee to procure’; andCommentsClose CommentsPermalink





(ii) by striking ‘and by any other method, in accordance with procedures and standards that the Board shall establish’;CommentsClose CommentsPermalink





(E) by striking subparagraph (10);CommentsClose CommentsPermalink





(F) in paragraph (11), by inserting before the period at the end the following: ‘, except that the Secretary may provide exceptions to such latter requirement (relating to present ownership interest) for any mortgagor who has inherited a property or for any mortgagor who has relocated to a new jurisdiction, and is in the process of trying to sell such property or has been unable to sell such property due to adverse market conditions’;CommentsClose CommentsPermalink





(G) by redesignating paragraph (11) as paragraph (10); andCommentsClose CommentsPermalink





(H) by adding at the end:CommentsClose CommentsPermalink





‘(11) BAN ON MILLIONAIRES- The mortgagor shall not have a net worth, as of the date the mortgagor first applies for a mortgage to be insured under the Program under this section, that exceeds $1,000,000.’;CommentsClose CommentsPermalink





(4) in subsection (h)(2)--CommentsClose CommentsPermalink





(A) by striking ‘The Board shall prohibit the Secretary from paying’ and inserting ‘The Secretary shall not pay’; andCommentsClose CommentsPermalink





(B) by inserting after the period at the end the following: ‘In implementing this provision with respect to a failure by a mortgagor to make a first payment, the Secretary shall establish policies and timing of endorsements as consistent as is possible with endorsement policies established with respect to mortgages insured under section 203(b)’;CommentsClose CommentsPermalink





(5) in subsection (i)--CommentsClose CommentsPermalink





(A) by inserting ‘, after weighing maximization of participation with consideration of collection of premiums,’ after ‘Secretary shall’;CommentsClose CommentsPermalink





(B) in paragraph (1), by striking ‘equal to 3 percent’ and inserting ‘not more than 2 percent’; andCommentsClose CommentsPermalink





(C) in paragraph (2), by striking ‘equal to 1.5 percent’ and inserting ‘not more than 1 percent’;CommentsClose CommentsPermalink





(6) in subsection (k)--CommentsClose CommentsPermalink





(A) by striking the subsection heading and inserting ‘Exit Fee’;CommentsClose CommentsPermalink





(B) in paragraph (1), in the matter preceding subparagraph (A), by striking ‘such sale or refinancing’ and inserting ‘the mortgage being insured under this section’; andCommentsClose CommentsPermalink





(C) in paragraph (2), by striking ‘and the mortgagor’ and all that follows through the end and inserting ‘may, upon any sale or disposition of the property to which the mortgage relates, be entitled to up to 50 percent of appreciation, up to the appraised value of the home at the time when the mortgage being refinanced under this section was originally made. The Secretary may share any amounts received under this paragraph with the holder of the eligible mortgage refinanced under this section.’;CommentsClose CommentsPermalink





(7) in the heading for subsection (n), by striking ‘the Board’ and inserting ‘Secretary’;CommentsClose CommentsPermalink





(8) in subsection (p), by striking ‘Under the direction of the Board, the’ and inserting ‘The’;CommentsClose CommentsPermalink





(9) in subsection (s)--CommentsClose CommentsPermalink





(A) in the first sentence of paragraph (2), by striking ‘Board of Directors of’ and inserting ‘Advisory Board for’; andCommentsClose CommentsPermalink





(B) in paragraph (3)(A)(ii), by striking ‘subsection (e)(1)(B) and such other’ and inserting ‘such’;CommentsClose CommentsPermalink





(10) in subsection (v), by inserting after the period at the end the following: ‘The Secretary shall conform documents, forms, and procedures for mortgages insured under this section to those in place for mortgages insured under section 203(b) to the maximum extent possible consistent with the requirements of this section.’; andCommentsClose CommentsPermalink





(11) by adding at the end the following new subsections:CommentsClose CommentsPermalink





‘(x) Payment to Existing Loan Servicer- The Secretary may establish a payment to the servicer of the existing senior mortgage for every loan insured under the HOPE for Homeowners Program in an amount, for each such loan, that does not exceed $1,000.CommentsClose CommentsPermalink





‘(y) Auctions- The Secretary, with the concurrence of the Board, shall, if feasible, establish a structure and organize procedures for an auction to refinance eligible mortgages on a wholesale or bulk basis.’.CommentsClose CommentsPermalink





(b) Reducing TARP Funds To Offset Costs of Program Changes- Paragraph (3) of section 115(a) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5225) is amended by inserting ‘, as such amount is reduced by $2,316,000,000,’ after ‘$700,000,000,000’.CommentsClose CommentsPermalink

SEC. 203. REQUIREMENTS FOR FHA-APPROVED MORTGAGEES.

(a) Mortgagee Review Board- Paragraph (2) of section 202(c) of the National Housing Act (12 U.S.C. 1708(c)) is amended--CommentsClose CommentsPermalink





(1) in subparagraph (E), by inserting ‘and’ after the semicolon;CommentsClose CommentsPermalink





(2) in subparagraph (F), by striking ‘; and’ and inserting a period; andCommentsClose CommentsPermalink





(3) by striking subparagraph (G).CommentsClose CommentsPermalink





(b) Limitations on Participation and Mortgagee Approval and Use of Name- Section 202 of the National Housing Act (12 U.S.C. 1708) is amended--CommentsClose CommentsPermalink





(1) by redesignating subsections (d), (e), and (f) as subsections (e), (f), and (g), respectively;CommentsClose CommentsPermalink





(2) by inserting after subsection (c) the following new subsection:CommentsClose CommentsPermalink





‘(d) Limitations on Participation in Origination and Mortgagee Approval-CommentsClose CommentsPermalink





‘(1) REQUIREMENT- Any person or entity that is not approved by the Secretary to serve as a mortgagee, as such term is defined in subsection (c)(7), shall not participate in the origination of an FHA-insured loan except as authorized by the Secretary.CommentsClose CommentsPermalink





‘(2) ELIGIBILITY FOR APPROVAL- In order to be eligible for approval by the Secretary, an applicant mortgagee shall not be, and shall not have any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the applicant mortgagee who is--CommentsClose CommentsPermalink





‘(A) currently suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under part 24 or 25 of title 24 of the Code of Federal Regulations, or any successor regulations to such parts, or under similar provisions of any other Federal agency;CommentsClose CommentsPermalink





‘(B) under indictment for, or has been convicted of, an offense that reflects adversely upon the applicant’s integrity, competence or fitness to meet the responsibilities of an approved mortgagee;CommentsClose CommentsPermalink





‘(C) subject to unresolved findings contained in a Department of Housing and Urban Development or other governmental audit, investigation, or review;CommentsClose CommentsPermalink





‘(D) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility;CommentsClose CommentsPermalink





‘(E) convicted of, or who has pled guilty or nolo contendre to, a felony related to participation in the real estate or mortgage loan industry--CommentsClose CommentsPermalink





‘(i) during the 7-year period preceding the date of the application for licensing and registration; orCommentsClose CommentsPermalink





‘(ii) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering;CommentsClose CommentsPermalink





‘(F) in violation of provisions of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any applicable provision of State law; orCommentsClose CommentsPermalink





‘(G) in violation of any other requirement as established by the Secretary.CommentsClose CommentsPermalink





‘(3) RULEMAKING AND IMPLEMENTATION- The Secretary shall conduct a rulemaking to carry out this subsection. The Secretary shall implement this subsection not later than the expiration of the 60-day period beginning upon the date of the enactment of this subsection by notice, mortgagee letter, or interim final regulations, which shall take effect upon issuance.’; andCommentsClose CommentsPermalink





(3) by adding at the end the following new subsection:CommentsClose CommentsPermalink





‘(h) Use of Name- The Secretary shall, by regulation, require each mortgagee approved by the Secretary for participation in the FHA mortgage insurance programs of the Secretary--CommentsClose CommentsPermalink





‘(1) to use the business name of the mortgagee that is registered with the Secretary in connection with such approval in all advertisements and promotional materials, as such terms are defined by the Secretary, relating to the business of such mortgagee in such mortgage insurance programs; andCommentsClose CommentsPermalink





‘(2) to maintain copies of all such advertisements and promotional materials, in such form and for such period as the Secretary requires.’.CommentsClose CommentsPermalink





(c) Change of Status- The National Housing Act is amended by striking section 532 (12 U.S.C. 1735f-10) and inserting the following new section:CommentsClose CommentsPermalink

‘SEC. 532. CHANGE OF MORTGAGEE STATUS.

‘(a) Notification- Upon the occurrence of any action described in subsection (b), an approved mortgagee shall immediately submit to the Secretary, in writing, notification of such occurrence.CommentsClose CommentsPermalink





‘(b) Actions- The actions described in this subsection are as follows:CommentsClose CommentsPermalink





‘(1) The debarment, suspension of a Limited Denial of Participation (LDP), or application of other sanctions, fines, or penalties applied to the mortgagee or to any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the mortgagee pursuant to applicable provisions of State or Federal law.CommentsClose CommentsPermalink





‘(2) The revocation of a State-issued mortgage loan originator license issued pursuant to the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any other similar declaration of ineligibility pursuant to State law.’.CommentsClose CommentsPermalink





(d) Civil Money Penalties- Section 536 of the National Housing Act (12 U.S.C. 1735f-14) is amended--CommentsClose CommentsPermalink





(1) in subsection (b)--CommentsClose CommentsPermalink





(A) in paragraph (1)--CommentsClose CommentsPermalink





(i) in the matter preceding subparagraph (A), by inserting ‘or any of its owners, officers, or directors’ after ‘mortgagee or lender’;CommentsClose CommentsPermalink





(ii) in subparagraph (H), by striking ‘title I’ and all that follows through ‘Act of 1989)’ and inserting ‘title I or II’; andCommentsClose CommentsPermalink





(iii) by inserting after subparagraph (J) the following:CommentsClose CommentsPermalink





‘(K) Violation of section 202(d) of this Act (12 U.S.C. 1708(d)).’; andCommentsClose CommentsPermalink





(B) in paragraph (2)--CommentsClose CommentsPermalink





(i) in subparagraph (B), by striking ‘or’ at the end;CommentsClose CommentsPermalink





(ii) in subparagraph (C), by striking the period at the end and inserting ‘; or’; andCommentsClose CommentsPermalink





(iii) by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) causing or participating in any of the violations set forth in paragraph (1) of this subsection.’; andCommentsClose CommentsPermalink





(2) in subsection (g), by striking ‘The term’ and all that follows through the end of the sentence and inserting ‘For purposes of this section, a person acts knowingly when a person has actual knowledge of acts or should have known of the acts.’.CommentsClose CommentsPermalink





(e) Expanded Review of FHA Mortgagee Applicants and Newly Approved Mortgagees- Not later than the expiration of the 3-month period beginning upon the date of the enactment of this Act, the Secretary of Housing and Urban Development shall--CommentsClose CommentsPermalink





(1) expand the existing process for reviewing new applicants for approval for participation in the mortgage insurance programs of the Secretary for mortgages on 1- to 4-family residences for the purpose of identifying applicants who represent a high risk to the Mutual Mortgage Insurance Fund; andCommentsClose CommentsPermalink





(2) implement procedures that, for mortgagees approved during the 12-month period ending upon such date of enactment--CommentsClose CommentsPermalink





(A) expand the number of mortgages originated by such mortgagees that are reviewed for compliance with applicable laws, regulations, and policies; andCommentsClose CommentsPermalink





(B) include a process for random reviews of such mortgagees and a process for reviews that is based on volume of mortgages originated by such mortgagees.CommentsClose CommentsPermalink

SEC. 204. ENHANCEMENT OF LIQUIDITY AND STABILITY OF INSURED DEPOSITORY INSTITUTIONS TO ENSURE AVAILABILITY OF CREDIT AND REDUCTION OF FORECLOSURES.

(a) Permanent Increase in Deposit Insurance-CommentsClose CommentsPermalink





(1) AMENDMENTS TO FEDERAL DEPOSIT INSURANCE ACT- Effective upon the date of the enactment of this Act, section 11(a) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is amended--CommentsClose CommentsPermalink





(A) in paragraph (1)(E), by striking ‘$100,000’ and inserting ‘$250,000’;CommentsClose CommentsPermalink





(B) in paragraph (1)(F)(i), by striking ‘2010’ and inserting ‘2015’;CommentsClose CommentsPermalink





(C) in subclause (I) of paragraph (1)(F)(i), by striking ‘$100,000’ and inserting ‘$250,000’;CommentsClose CommentsPermalink





(D) in subclause (II) of paragraph (1)(F)(i), by striking ‘the calendar year preceding the date this subparagraph takes effect under the Federal Deposit Insurance Reform Act of 2005’ and inserting ‘calendar year 2008’; andCommentsClose CommentsPermalink





(E) in paragraph (3)(A), by striking ‘, except that $250,000 shall be substituted for $100,000 wherever such term appears in such paragraph’.CommentsClose CommentsPermalink





(2) AMENDMENT TO FEDERAL CREDIT UNION ACT- Section 207(k) of the Federal Credit Union Act (12 U.S.C. 1787(k)) is amended--CommentsClose CommentsPermalink





(A) in paragraph (3)--CommentsClose CommentsPermalink





(i) by striking the opening quotation mark before ‘$250,000’;CommentsClose CommentsPermalink





(ii) by striking ‘, except that $250,000 shall be substituted for $100,000 wherever such term appears in such section’; andCommentsClose CommentsPermalink





(iii) by striking the closing quotation mark after the closing parenthesis; andCommentsClose CommentsPermalink





(B) in paragraph (5), by striking ‘$100,000’ and inserting ‘$250,000’.CommentsClose CommentsPermalink





(3) REPEAL OF EESA PROVISION- Section 136 of the Emergency Economic Stabilization Act (12 U.S.C. 5241) is hereby repealed.CommentsClose CommentsPermalink





(b) Extension of Restoration Plan Period- Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ‘5-year period’ and inserting ‘8-year period’.CommentsClose CommentsPermalink





(c) FDIC and NCUA Borrowing Authority-CommentsClose CommentsPermalink





(1) FDIC- Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C. 1824(a)) is amended by striking ‘$30,000,000,000’ and inserting ‘$100,000,000,000’.CommentsClose CommentsPermalink





(2) NCUA- Section 203(d)(1) of the Federal Credit Union Act (12 U.S.C. 1783(d)(1)) is amended by striking ‘$100,000,000’ and inserting ‘$6,000,000,000’.CommentsClose CommentsPermalink





(d) Expanding Systemic Risk Special Assessments- Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:CommentsClose CommentsPermalink





‘(ii) REPAYMENT OF LOSS-CommentsClose CommentsPermalink





‘(I) IN GENERAL- The Corporation shall recover the loss to the Deposit Insurance Fund arising from any action taken or assistance provided with respect to an insured depository institution under clause (i) from 1 or more special assessments on insured depository institutions, depository institution holding companies (with the concurrence of the Secretary of the Treasury with respect to holding companies), or both, as the Corporation determines to be appropriate.CommentsClose CommentsPermalink





‘(II) TREATMENT OF DEPOSITORY INSTITUTION HOLDING COMPANIES- For purposes of this clause, sections 7(c)(2) and 18(h) shall apply to depository institution holding companies as if they were insured depository institutions.CommentsClose CommentsPermalink





‘(III) REGULATIONS- The Corporation shall prescribe such regulations as it deems necessary to implement this clause. In prescribing such regulations, defining terms, and setting the appropriate assessment rate or rates, the Corporation shall establish rates sufficient to cover the losses incurred as a result of the actions of the Corporation under clause (i) and shall consider: the types of entities that benefit from any action taken or assistance provided under this subparagraph; economic conditions, the effects on the industry, and such other factors as the Corporation deems appropriate and relevant to the action taken or the assistance provided. Any funds so collected that exceed actual losses shall be placed in the Deposit Insurance Fund.’.CommentsClose CommentsPermalink





(e) Establishment of a National Credit Union Share Insurance Fund Restoration Plan Period- Section 202(c)(2) of the Federal Credit Union Act (12 U.S.C. 1782(c)(2)) is amended by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





‘(D) FUND RESTORATION PLANS-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Whenever--CommentsClose CommentsPermalink





‘(I) the Board projects that the equity ratio of the Fund will, within 6 months of such determination, fall below the minimum amount specified in subparagraph (C) for the designated equity ratio; orCommentsClose CommentsPermalink





‘(II) the equity ratio of the Fund actually falls below the minimum amount specified in subparagraph (C) for the equity ratio without any determination under sub-clause (I) having been made,CommentsClose CommentsPermalink





the Board shall establish and implement a Share Insurance Fund restoration plan within 90 days that meets the requirements of clause (ii) and such other conditions as the Board determines to be appropriate.CommentsClose CommentsPermalink





‘(ii) REQUIREMENTS OF RESTORATION PLAN- A Share Insurance Fund restoration plan meets the requirements of this clause if the plan provides that the equity ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (C) for the designated equity ratio before the end of the 5-year period beginning upon the implementation of the plan (or such longer period as the Board may determine to be necessary due to extraordinary circumstances).CommentsClose CommentsPermalink





‘(iii) TRANSPARENCY- Not more than 30 days after the Board establishes and implements a restoration plan under clause (i), the Board shall publish in the Federal Register a detailed analysis of the factors considered and the basis for the actions taken with regard to the plan.’.CommentsClose CommentsPermalink

SEC. 205. APPLICATION OF GSE CONFORMING LOAN LIMIT TO MORTGAGES ASSISTED WITH TARP FUNDS.

In making any assistance available to prevent and mitigate foreclosures on residential properties, including any assistance for mortgage modifications, using any amounts made available to the Secretary of the Treasury under title I of the Emergency Economic Stabilization Act of 2008, the Secretary shall provide that the limitation on the maximum original principal obligation of a mortgage that may be modified, refinanced, made, guaranteed, insured, or otherwise assisted, using such amounts shall not be less than the dollar amount limitation on the maximum original principal obligation of a mortgage that may be purchased by the Federal Home Loan Mortgage Corporation that is in effect, at the time that the mortgage is modified, refinanced, made, guaranteed, insured, or otherwise assisted using such amounts, for the area in which the property involved in the transaction is located.CommentsClose CommentsPermalink

SEC. 206. MORTGAGES ON CERTAIN HOMES ON LEASED LAND.

Section 255(b)(4) of the National Housing Act (12 U.S.C. 1715z-20(b)(4)) is amended by striking subparagraph (B) and inserting:CommentsClose CommentsPermalink





‘(B) under a lease that has a term that ends no earlier than the minimum number of years, as specified by the Secretary, beyond the actuarial life expectancy of the mortgagor or comortgagor, whichever is the later date.’.CommentsClose CommentsPermalink

SEC. 207. SENSE OF CONGRESS REGARDING MORTGAGE REVENUE BOND PURCHASES.

It is the sense of the Congress that the Secretary of the Treasury should use amounts made available in this Act to purchase mortgage revenue bonds for single-family housing issued through State housing finance agencies and through units of local government and agencies thereof.CommentsClose CommentsPermalink

TITLE III--MORTGAGE FRAUDCommentsClose CommentsPermalink

SEC. 301. SHORT TITLE.

This title may be cited as the ‘Nationwide Mortgage Fraud Task Force Act of 2009’.CommentsClose CommentsPermalink

SEC. 302. NATIONWIDE MORTGAGE FRAUD TASK FORCE.

(a) Establishment- There is established in the Department of Justice the Nationwide Mortgage Fraud Task Force (hereinafter referred to in this section as the ‘Task Force’) to address mortgage fraud in the United States.CommentsClose CommentsPermalink





(b) Support- The Attorney General shall provide the Task Force with the appropriate staff, administrative support, and other resources necessary to carry out the duties of the Task Force.CommentsClose CommentsPermalink





(c) Executive Director- The Attorney General shall appoint one staff member provided to the Task Force to be the Executive Director of the Task Force and such Executive Director shall ensure that the duties of the Task Force are carried out.CommentsClose CommentsPermalink





(d) Branches- The Task Force shall establish, oversee, and direct branches in each of the 10 States determined by the Attorney General to have the highest concentration of mortgage fraud.CommentsClose CommentsPermalink





(e) Mandatory Functions- The Task Force, including the branches of the Task Force established under subsection (d), shall--CommentsClose CommentsPermalink





(1) establish coordinating entities, and solicit the voluntary participation of Federal, State, and local law enforcement and prosecutorial agencies in such entities, to organize initiatives to address mortgage fraud, including initiatives to enforce State mortgage fraud laws and other related Federal and State laws;CommentsClose CommentsPermalink





(2) provide training to Federal, State, and local law enforcement and prosecutorial agencies with respect to mortgage fraud, including related Federal and State laws;CommentsClose CommentsPermalink





(3) collect and disseminate data with respect to mortgage fraud, including Federal, State, and local data relating to mortgage fraud investigations and prosecutions; andCommentsClose CommentsPermalink





(4) perform other functions determined by the Attorney General to enhance the detection of, prevention of, and response to mortgage fraud in the United States.CommentsClose CommentsPermalink





(f) Optional Functions- The Task Force, including the branches of the Task Force established under subsection (d), may--CommentsClose CommentsPermalink





(1) initiate and coordinate Federal mortgage fraud investigations and, through the coordinating entities established under subsection (e), State and local mortgage fraud investigations;CommentsClose CommentsPermalink





(2) establish a toll-free hotline for--CommentsClose CommentsPermalink





(A) reporting mortgage fraud;CommentsClose CommentsPermalink





(B) providing the public with access to information and resources with respect to mortgage fraud; andCommentsClose CommentsPermalink





(C) directing reports of mortgage fraud to the appropriate Federal, State, and local law enforcement and prosecutorial agency, including to the appropriate branch of the Task Force established under subsection (d);CommentsClose CommentsPermalink





(3) create a database with respect to suspensions and revocations of mortgage industry licenses and certifications to facilitate the sharing of such information by States;CommentsClose CommentsPermalink





(4) make recommendations with respect to the need for and resources available to provide the equipment and training necessary for the Task Force to combat mortgage fraud; andCommentsClose CommentsPermalink





(5) propose legislation to Federal, State, and local legislative bodies with respect to the elimination and prevention of mortgage fraud, including measures to address mortgage loan procedures and property appraiser practices that provide opportunities for mortgage fraud.CommentsClose CommentsPermalink





(g) Definition- In this section, the term ‘mortgage fraud’ means a material misstatement, misrepresentation, or omission relating to the property or potential mortgage relied on by an underwriter or lender to fund, purchase, or insure a loan.CommentsClose CommentsPermalink

TITLE IV--FORECLOSURE MORATORIUM PROVISIONSCommentsClose CommentsPermalink

SEC. 401. SENSE OF THE CONGRESS ON FORECLOSURES.

(a) In General- It is the sense of the Congress that mortgage holders, institutions, and mortgage servicers should not initiate a foreclosure proceeding or a foreclosure sale on any homeowner until the foreclosure mitigation provisions, like the Hope for Homeowners program, as required under title II, and the President’s ‘Homeowner Affordability and Stability Plan’ have been implemented and determined to be operational by the Secretary of Housing and Urban Development and the Secretary of the Treasury.CommentsClose CommentsPermalink





(b) Scope of Moratorium- The foreclosure moratorium referred to in subsection (a) should apply only for first mortgages secured by the owner’s principal dwelling.CommentsClose CommentsPermalink





(c) FHA-Regulated Loan Modification Agreements- If a mortgage holder, institution, or mortgage servicer to which subsection (a) applies reaches a loan modification agreement with a homeowner under the auspices of the Federal Housing Administration before any plan referred to in such subsection takes effect, subsection (a) shall cease to apply to such institution as of the effective date of the loan modification agreement.CommentsClose CommentsPermalink





(d) Duty of Consumer to Maintain Property- Any homeowner for whose benefit any foreclosure proceeding or sale is barred under subsection (a) from being instituted, continued , or consummated with respect to any homeowner mortgage should not, with respect to any property securing such mortgage, destroy, damage, or impair such property, allow the property to deteriorate, or commit waste on the property.CommentsClose CommentsPermalink





(e) Duty of Consumer to Respond to Reasonable Inquiries- Any homeowner for whose benefit any foreclosure proceeding or sale is barred under subsection (a) from being instituted, continued, or consummated with respect to any homeowner mortgage should respond to reasonable inquiries from a creditor or servicer during the period during which such foreclosure proceeding or sale is barred.CommentsClose CommentsPermalink

Passed the House of Representatives March 5, 2009.CommentsClose CommentsPermalink

Attest:CommentsClose CommentsPermalink

Clerk.

111th CONGRESS

1st Session

H. R. 1106

AN ACT

To prevent mortgage foreclosures and enhance mortgage credit availability LORRAINE C. MILLER, CommentsClose CommentsPermalink

Clerk.CommentsClose CommentsPermalink