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HR 200 IHRHCommentsClose CommentsPermalink

To amend title 11 of the United States Code with respect to modification of certain mortgages on principal residences, and for other purposes.CommentsClose CommentsPermalink

January 6, 2009CommentsClose CommentsPermalink

Mr. CONYERS (for himself, Ms. LINDA T. SANCHEZ of California, Mr. NADLER of New York, Mr. DELAHUNT, Mr. SCOTT of Virginia, and Ms. WATERS) introduced the following bill; which was referred to the Committee on the JudiciaryCommentsClose CommentsPermalink

To amend title 11 of the United States Code with respect to modification of certain mortgages on principal residences, 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 ‘Helping Families Save Their Homes in Bankruptcy Act of 2009’. CommentsClose CommentsPermalink

SEC. 2. 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 current value of that residence is such residence is less than the secured debt limit; or CommentsClose CommentsPermalink





‘(2) debts secured or formerly secured by real property that was the debtor’s principal residence that was sold in foreclosure or that the debtor surrendered to the creditor if the current value of such real property is less than the secured debt limit.’;, and CommentsClose CommentsPermalink





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





‘(5) The requirements of paragraph (1) shall not apply in a case under chapter 13 with respect to a debtor 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.’. CommentsClose CommentsPermalink

SEC. 3. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF CONSUMER PROTECTION LAWSTHE 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’, and CommentsClose CommentsPermalink





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





‘(10) the claim is subject to anyfor a loan secured by a security interest in the debtor’s principal residence is subject to a remedy for damages or rescission due to failure to comply with any applicable requirementrescission under the Truth in Lending Act, or any other provision of applicable State or Federal consumer protection law that was in force when the noncompliance took place, 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. 4. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

Section 1322(b) 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





(2B) in paragraph (10) by striking ‘and’ at the end, and CommentsClose CommentsPermalink





(3C) by inserting after paragraph (10) the following: CommentsClose CommentsPermalink





‘(11) notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law, 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 security interest 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; and CommentsClose CommentsPermalink





‘(ii) to provide for the payment of interest accruing after the date of the order for relief under this chapter at an annual percentage rate calculated at a fixed annual percentage rate, in an amountrate equal to the then most recently published annual yield on conventional mortgagecurrently 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 Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the BoardFinancial Institutions Examination Council in its table entitled ‘Average Prime Offer Rates--Fixed’, plus a reasonable premium for risk; and CommentsClose CommentsPermalink





‘(D) by providing for payments of such modified loan directly to the holder of the claim; and’, and CommentsClose 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 receiving a discharge under this chapter and receives net proceeds from the sale of such residence, then the debtor agrees to pay to such holder-- CommentsClose CommentsPermalink





‘(1) if such residence is sold in the 1st year occurring after the effective date of the plan, 80 percent of the amount of the difference between the sales price and the amount of such claim (plus costs of sale and improvements), but not to exceed the 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, 60 percent of the amount of the difference between the sales price and the amount of such claim (plus costs of sale and improvements), but not to exceed the 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, 40 percent of the amount of the difference between the sales price and the amount of such claim (plus costs of sale and improvements), but not to exceed the amount of the allowed secured claim determined as if such claim had not been reduced under such subsection; and CommentsClose CommentsPermalink





‘(4) if such residence is sold in the 4th year occurring after the effective date of the plan, 20 percent of the amount of the difference between the sales price and the amount of such claim (plus costs of sale and improvements), but not to exceed the 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 15-day period beginning on the effective date of this subsection, unless-- CommentsClose CommentsPermalink





‘(A) the debtor certifies that the debtor attempted, not less than 15 days before the commencement of the case, 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; or CommentsClose CommentsPermalink





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





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

SEC. 5. COMBATING EXCESSIVE FEES.

Section 1322(c) of title 11, the 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, and CommentsClose 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 (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; or CommentsClose CommentsPermalink





‘(ii) 60 days before the closing of the case; and CommentsClose 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; and CommentsClose 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); and CommentsClose 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. 6. CONFIRMATION OF PLAN.

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





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





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





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





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





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





‘(B) discharge under section 1328; and CommentsClose CommentsPermalink





‘(11) whenever the plan modifies a claim in accordance with section 1322(b)(11), and the court finds that such modification is in good faith and that the debtor did not obtain the extension, renewal, or refinancing of credit that gives rise to a modified claim by the debtor’s material misrepresentation, false pretenses, or actual fraud.’. CommentsClose CommentsPermalink

SEC. 7. DISCHARGE.

Section 1328 of title 11, the United States Code, is amended-- CommentsClose CommentsPermalink





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





(A) by inserting ‘(other than payments to holders of claims whose rights are modified under section 1322(b)(11)’ after ‘paid’ the first place it appears)’ after ‘paid’, and CommentsClose CommentsPermalink





(B) 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)’, and CommentsClose CommentsPermalink





(2) in subsection (c)(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. 8. RULE OF CONSTRUCTION.

SEC. 9. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

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





(b) Application of Amendments- The amendments made by this Act 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