H. R. 421
IN THE HOUSE OF REPRESENTATIVES
January 9, 2009
Mr. Meek of Florida introduced the following bill; which was referred to the Committee on Financial Services
To amend the Emergency Economic Stabilization Act of 2008 to restrict which assets banks can write off as loss for purposes of the Troubled Assets Relief Program, and for other purposes.
This Act may be cited as the
Assets Relief Program Targeted Assets Act of 2009.
Section 3 of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110–343) is amended by striking paragraph (9) and inserting the following new paragraphs:
troubled assets means—
any residential mortgage, and any security, obligation, or other instrument that is based on or related to such mortgage—
is in pre-foreclosure;
with respect to which the borrower has missed at least 2 payments within the last 6 months; or
which is in forbearance; or
any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
rehabilitated mortgage means a
mortgage which has been restructured, refinanced or otherwise modified to lower
the borrower’s monthly payment—
creating a front-end debt ratio, including the cost of mortgage principal, interest, taxes, and insurance, of no more than 30 percent of the gross monthly income of the borrower; or
to a term deemed affordable by the borrower after full disclosure by the lender and pursuant to rules as may be established by the Secretary.
independent appraiser means a person who—
is licensed pursuant to the laws and regulations of the State where the person practices;
is disclosed to the borrower or buyer; and
is not coerced, extorted, induced, intimidated, bribed or otherwise influenced by or in collusion with the mortgage lender, mortgaged broker, mortgage banker, real estate broker, appraisal management company or other persons or companies having a vested interest in the transaction.
Limit on authority to write off losses
Section 101 of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110–343) is amended by striking subsection (a) and inserting the following new subsection:
The Secretary is authorized to establish the Troubled
Asset Restoration and Assistance Program (hereafter in this title referred to
TARAP) to allow the Treasury to purchase lender or
losses on rehabilitated mortgages, on such terms and
conditions as are defined in this Act and determined by the Secretary.
Authority to purchase
Through the TARAP, the Treasury shall pay up to 80 percent of the difference between the original asset and the rehabilitated asset to the lender or servicer under certain conditions.
Write off of remainder
That portion of the difference between the original asset and the rehabilitated asset to the lender or servicer that is not paid for by the Secretary under paragraph (2) may be written to loss.
Regulations and guidelines
Section 101(c) of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110–343) is amended by striking paragraph (5) and inserting the following new paragraphs:
Issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities or purposes of this title including determining qualifications for an independent appraiser, making the final determinations as to whether an asset is troubled, what the values are that will determine the amount of purchase, the amount of reductions in the purchase price for purposes of subsection (d)(2), and any other functionality issues required to operate the program.
Conforming to guidelines established in subsection (g), the Secretary is authorized to make all necessary rules and determinations regarding documented best efforts, required timelines, and other processes and procedures.
Section 101 of the Emergency Economic Stabilization Act of 2008 (division A of Public Law 110–343) is amended—
by striking subsection (d);
by redesignating subsection (e) as subsection (i); and
by inserting after subsection (c) the following new subsections:
An asset is eligible for TARAP if—
it is the borrower’s primary residence; and
is a troubled asset, as defined in section 3(9); or
it was a troubled asset but has been rehabilitated by the servicer or lender (as defined in section 3(10)) on or after October 3, 2008, and allowing the borrower to remain in the borrower’s home.
Assets not included
An asset is not eligible for TARAP if—
it was valued at more than 150 percent of the current fair market value; and
the original value was assessed solely by the lender’s appraiser,
Eligible lender or servicer
A lender or servicer is eligible for TARAP assistance if—
the lender or servicer has agreed to full disclosure requirements as may be established by the Secretary; or
the lender or servicer has agreed to use an independent appraiser and standard appraisal practices as may be established by the Secretary;
TARAP shall pay a servicer or lender up to 80 percent of the difference between the original asset and rehabilitated asset pursuant to such regulations as may be prescribed by the Secretary.
The servicer or lender shall use documented best efforts, prior to foreclosure, to work with the borrower to create an affordable front-end debt ratio of up to 30 percent of the borrower’s gross monthly income.
The Secretary may establish mechanisms to provide for those assets which cannot be rehabilitated under the preceding guidelines.
All authority under this section ceases no later than December 31, 2009.
Deferral of all foreclosures on any principal dwelling of a consumer for a 90-day period
Notwithstanding any provision of any State or Federal law, after the date of the enactment of this Act, no creditor, servicer, or holder of such mortgage, or any other person acting on behalf of any such creditor, servicer, or holder, may take any action to initiate a foreclosure, whether judicial or nonjudicial, or any action in connection with a foreclosure already instituted other than to suspend such foreclosure, with respect to any eligible mortgage of a consumer, until the end of the 90-day period beginning on the date of the enactment of this Act.
Action by consumer
After the date of the enactment of this Act, any consumer shall have the right to defer any initiation of a foreclosure, whether judicial or nonjudicial, or any action in connection with a foreclosure already instituted, including any foreclosure sale, with respect to any eligible mortgage by any creditor, servicer, or holder of such mortgage, or any other person acting on behalf of any such creditor, servicer, or holder, until the end of the 90-day period beginning on the date of the enactment of this Act.
Enforcement of right
Any consumer may defend against a foreclosure or bring an action in any court of competent or general jurisdiction to compel compliance with the right of the consumer under paragraph (1) to defer any initiation of a foreclosure or any action in connection with a foreclosure already instituted, including any foreclosure sale, with respect to any eligible mortgage.
Rule of construction
No provision of this section shall be construed as affecting or altering the obligations of the consumer under the terms of the eligible mortgage notwithstanding any deferral of foreclosure.
Eligible mortgage defined
of this section, the term
eligible mortgage means any
residential mortgage loan to any consumer that constitutes a first lien on the
dwelling or real property securing the loan which constitutes, or on which is
located, the principal residence of the consumer.