S. 895 (111th): Helping Families Save Their Homes Act of 2009

111th Congress, 2009–2010. Text as of Apr 27, 2009 (Placed on Calendar in the Senate).

Status & Summary | PDF | Source: GPO

II

Calendar No. 51

111th CONGRESS

1st Session

S. 895

IN THE SENATE OF THE UNITED STATES

April 24, 2009

(for himself, Mr. Durbin, and Mr. Schumer) introduced the following bill; which was read the first time

April 27, 2009

Read the second time and placed on the calendar

A BILL

To prevent mortgage foreclosures and enhance mortgage credit availability.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as Helping Families Save Their Homes Act of 2009.

(b)

Table of contents

The table of contents of this Act is the following:

Sec. 1. Short title; table of contents.

Title I—Prevention of Mortgage Foreclosures

Subtitle A—Modification of Residential Mortgages

Sec. 100. Definition.

Sec. 101. Eligibility for relief.

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

Sec. 103. Authority to modify certain mortgages.

Sec. 104. Combating excessive fees.

Sec. 105. Confirmation of plan.

Sec. 106. Discharge.

Sec. 107. Standing trustee fees.

Sec. 108. Effective date; application of amendments.

Sec. 109. GAO study.

Sec. 110. Report to Congress.

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.

Sec. 122. Payment of FHA mortgage insurance benefits.

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

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

Sec. 125. Mortgage modification data collecting and reporting.

Title II—Foreclosure Mitigation and Credit Availability

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

Sec. 202. Changes to HOPE for Homeowners Program.

Sec. 203. Requirements for FHA-approved mortgagees.

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

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

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

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

Title III—Mortgage Fraud

Sec. 301. Short title.

Sec. 302. Nationwide Mortgage Fraud Task Force.

Title IV—Foreclosure moratorium provisions

Sec. 401. Sense of the Congress on foreclosures.

I

Prevention of Mortgage Foreclosures

A

Modification of Residential Mortgages

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):

(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—

(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;

(B)

requires no fees or charges to be paid by the debtor in order to obtain such modification; and

(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.

.

101.

Eligibility for relief

Section 109 of title 11, United States Code, is amended—

(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—

(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; or

(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.

, and

(2)

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

(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.

.

102.

Prohibiting claims arising from violations of the Truth in Lending Act

Section 502(b) of title 11, United States Code, is amended—

(1)

in paragraph (8) by striking or at the end,

(2)

in paragraph (9) by striking the period at the end and inserting ; or, and

(3)

by adding at the end the following:

(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.

.

103.

Authority to modify certain mortgages

Section 1322 of title 11, United States Code, is amended—

(1)

in subsection (b)—

(A)

by redesignating paragraph (11) as paragraph (12),

(B)

in paragraph (10) by striking and at the end, and

(C)

by inserting after paragraph (10) the following:

(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)—

(A)

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

(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;

(C)

by modifying the terms and conditions of such loan—

(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

(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; and

(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

, and

(2)

by adding at the end the following:

(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—

(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;

(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;

(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;

(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; and

(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.

(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)—

(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—

(A)

the debtor certifies that the debtor—

(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;

(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; and

(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); or

(B)

a foreclosure sale is scheduled to occur on a date in the 30-day period beginning on the date of case is commenced;

(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—

(A)

filing a plan under section 1321 that contains a modification under the authority of subsection (b)(11); or

(B)

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

(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.

.

104.

Combating excessive fees

Section 1322(c) of title 11, United States Code, is amended—

(1)

in paragraph (1) by striking and at the end,

(2)

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

(3)

by adding at the end the following:

(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—

(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—

(i)

1 year after such fee, cost, or charge is incurred; or

(ii)

60 days before the closing of the case; and

(B)

such fee, cost, or charge—

(i)

is lawful under applicable nonbankruptcy law, reasonable, and provided for in the applicable security agreement; and

(ii)

is secured by property the value of which is greater than the amount of such claim, including such fee, cost, or charge;

(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

(5)

a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor’s principal residence.

.

105.

Confirmation of plan

(a)

Section 1325(a) of title 11, United States Code, is amended—

(1)

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

(2)

in paragraph (5)—

(A)

by inserting except as otherwise provided in section 1322(b)(11), after (5), and

(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,

(3)

in paragraph (8) by striking and at the end,

(4)

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

(5)

by inserting after paragraph (9) the following:

(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—

(A)

the payment of such holder’s allowed secured claim; or

(B)

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

(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.

.

(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):

(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.

.

106.

Discharge

Section 1328(a) of title 11, United States Code, is amended—

(1)

by inserting (other than payments to holders of claims whose rights are modified under section 1322(b)(11)) after paid, and

(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).

107.

Standing trustee fees

(a)

Amendment to title 28

Section 586(e)(1)(B)(i) of title 28, United States Code, is amended—

(1)

by inserting (I) except as provided in subparagraph (II) after (i),

(2)

by striking or at the end and inserting and, and

(3)

by adding at the end the following:

(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.

.

(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.

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.

(b)

Application of amendments

(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.

(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.

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—

(1)

the results of such study of—

(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,

(B)

the number of mortgages restructured under the amendments made by this subtitle that subsequently resulted in default and foreclosure,

(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,

(D)

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

(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, and

(F)

the number of bankruptcy judges disciplined as a result of actions taken to restructure mortgages under the amendments made by this subtitle, and

(2)

a recommendation as to whether such amendments should be amended to include a sunset clause.

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—

(1)

a comprehensive review of the effects of the amendments made by this subtitle on bankruptcy court,

(2)

a survey of whether the program should limit the types of homeowners eligible for the program, and

(3)

a recommendation on whether such amendments should remain in effect.

B

Related Mortgage Modification Provisions

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—

(1)

in subsection (a)—

(A)

by redesignating paragraph (2) as subparagraph (A) of paragraph (2), and

(2)

by inserting after subparagraph (A) the following new subparagraph:

(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.

.

(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.

(c)

Implementation

The Secretary of Veterans Affairs may implement the amendments made by this section through notice, procedure notice, or administrative notice.

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—

(1)

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

(E)

Modification of mortgage in bankruptcy

(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:

(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.

(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.

(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.

(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.

;

(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),; and

(3)

by adding at the end the following new paragraph:

(10)

Loan modification program

(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.

(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).

(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—

(i)

re-assign the mortgage to the mortgagee under terms and conditions as are agreed to by the mortgagee and the Secretary;

(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; or

(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.

(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.

.

(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.

(c)

Implementation

The Secretary of Housing and Urban Development may implement the amendments made by this section through notice or mortgagee letter.

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—

(1)

in paragraph (7)—

(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; and

(B)

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

(2)

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

(3)

by inserting after paragraph (12) the following new paragraph:

(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.

.

(b)

Insured rural housing loans

Subsection (j) of section 517 of the Housing Act of 1949 (42 U.S.C. 1487(j)) is amended—

(1)

by redesignating paragraphs (2) through (7) as paragraphs (3) through (8), respectively; and

(2)

by inserting after paragraph (1) the following new paragraph:

(2)

to pay for losses incurred by holders or servicers in the event of a modification pursuant to a bankruptcy proceeding;

.

(c)

Implementation

The Secretary of Agriculture may implement the amendments made by this section through notice, procedure notice, or administrative notice.

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.

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:

(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.

(2)

The total number of mortgage modifications resulting in each of the following:

(A)

Additions of delinquent payments and fees to loan balances.

(B)

Interest rate reductions and freezes.

(C)

Term extensions.

(D)

Reductions of principal.

(E)

Deferrals of principal.

(F)

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

(3)

The total number of mortgage modifications in which the total monthly principal and interest payment resulted in the following:

(A)

An increase.

(B)

Remained the same.

(C)

Decreased less than 10 percent.

(D)

Decreased between 10 percent and 20 percent.

(E)

Decreased 20 percent or more.

(4)

The total number of loans that have been modified and then entered into default, where the loan modification resulted in—

(A)

higher monthly payments by the homeowner;

(B)

equivalent monthly payments by the homeowner;

(C)

lower monthly payments by the homeowner of up to 10 percent;

(D)

lower monthly payments by the homeowner of between 10 percent to 20 percent; or

(E)

lower monthly payments by the homeowner of more than 20 percent.

(b)

Data collection

(1)

Required

(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.

(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).

(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).

II

Foreclosure Mitigation and Credit Availability

201.

Servicer safe harbor for mortgage loan modifications

(a)

Safe Harbor

(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—

(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;

(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); or

(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.

(2)

Ability to modify mortgages

(A)

Ability

Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer—

(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; and

(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,

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

Criteria

The criteria under this subparagraph with respect to a mortgage are as follows:

(i)

Default on the payment of such mortgage has occurred or is reasonably foreseeable.

(ii)

The property securing such mortgage is occupied by the mortgagor of such mortgage.

(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.

(3)

Applicability

This subsection shall apply only with respect to modifications, workouts, and other loss mitigation plans initiated before January 1, 2012.

(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.

(c)

Definitions

For purposes of this section, the following definitions shall apply:

(1)

Secretary

The term Secretary means the Secretary of the Treasury.

(2)

Securitization vehicle

The term securitization vehicle means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that—

(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; and

(B)

holds such mortgages.

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—

(1)

in subsection (c)—

(A)

in the heading for paragraph (1), by striking the board and inserting secretary;

(B)

in paragraph (1), by striking Board inserting Secretary, after consultation with the Board,; and

(C)

by adding after paragraph (2) the following:

(3)

Duties of board

The Board shall advise the Secretary regarding the establishment and implementation of the HOPE for Homeowners Program.

.

(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;

(3)

in subsection (e)—

(A)

by striking paragraph (1) and inserting the following:

(1)

Borrower certification

(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.

(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.

;

(B)

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

(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;

(D)

in paragraph (9)—

(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; and

(ii)

by striking and by any other method, in accordance with procedures and standards that the Board shall establish;

(E)

by striking subparagraph (10);

(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;

(G)

by redesignating paragraph (11) as paragraph (10); and

(H)

by adding at the end:

(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.

;

(4)

in subsection (h)(2)—

(A)

by striking The Board shall prohibit the Secretary from paying and inserting The Secretary shall not pay; and

(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);

(5)

in subsection (i)—

(A)

by inserting , after weighing maximization of participation with consideration of collection of premiums, after Secretary shall;

(B)

in paragraph (1), by striking equal to 3 percent and inserting not more than 2 percent; and

(C)

in paragraph (2), by striking equal to 1.5 percent and inserting not more than 1 percent;

(6)

in subsection (k)—

(A)

by striking the subsection heading and inserting Exit Fee;

(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; and

(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.;

(7)

in the heading for subsection (n), by striking the Board and inserting secretary;

(8)

in subsection (p), by striking Under the direction of the Board, the and inserting The;

(9)

in subsection (s)—

(A)

in the first sentence of paragraph (2), by striking Board of Directors of and inserting Advisory Board for; and

(B)

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

(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.; and

(11)

by adding at the end the following new subsections:

(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.

(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.

.

(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.

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—

(1)

in subparagraph (E), by inserting and after the semicolon;

(2)

in subparagraph (F), by striking ; and and inserting a period; and

(3)

by striking subparagraph (G).

(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—

(1)

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

(2)

by inserting after subsection (c) the following new subsection:

(d)

Limitations on participation in origination and mortgagee approval

(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.

(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—

(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;

(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;

(C)

subject to unresolved findings contained in a Department of Housing and Urban Development or other governmental audit, investigation, or review;

(D)

engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility;

(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—

(i)

during the 7-year period preceding the date of the application for licensing and registration; or

(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;

(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; or

(G)

in violation of any other requirement as established by the Secretary.

(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.

; and

(3)

by adding at the end the following new subsection:

(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—

(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; and

(2)

to maintain copies of all such advertisements and promotional materials, in such form and for such period as the Secretary requires.

.

(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:

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.

(b)

Actions

The actions described in this subsection are as follows:

(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.

(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.

.

(d)

Civil money penalties

Section 536 of the National Housing Act (12 U.S.C. 1735f–14) is amended—

(1)

in subsection (b)—

(A)

in paragraph (1)—

(i)

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

(ii)

in subparagraph (H), by striking title I and all that follows through Act of 1989) and inserting “title I or II”; and

(iii)

by inserting after subparagraph (J) the following:

(K)

Violation of section 202(d) of this Act (12 U.S.C. 1708(d)).

; and

(B)

in paragraph (2)—

(i)

in subparagraph (B), by striking or at the end;

(ii)

in subparagraph (C), by striking the period at the end and inserting ; or; and

(iii)

by adding at the end the following new subparagraph:

(D)

causing or participating in any of the violations set forth in paragraph (1) of this subsection.

; and

(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..

(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—

(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; and

(2)

implement procedures that, for mortgagees approved during the 12-month period ending upon such date of enactment—

(A)

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

(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.

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

(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—

(A)

in paragraph (1)(E), by striking $100,000 and inserting $250,000;

(B)

in paragraph (1)(F)(i), by striking 2010 and inserting 2015;

(C)

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

(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; and

(E)

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

(2)

Amendment to Federal Credit Union Act

Section 207(k) of the Federal Credit Union Act (12 U.S.C. 1787(k)) is amended—

(A)

in paragraph (3)—

(i)

by striking the opening quotation mark before $250,000;

(ii)

by striking , except that $250,000 shall be substituted for $100,000 wherever such term appears in such section; and

(iii)

by striking the closing quotation mark after the closing parenthesis; and

(B)

in paragraph (5), by striking $100,000 and inserting $250,000.

(3)

Repeal of EESA provision

Section 136 of the Emergency Economic Stabilization Act (12 U.S.C. 5241) is hereby repealed.

(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.

(c)

FDIC and NCUA borrowing authority

(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.

(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.

(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:

(ii)

Repayment of loss

(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.

(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.

(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.

.

(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:

(D)

Fund restoration plans

(i)

In general

Whenever—

(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; or

(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,

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.
(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).

(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.

.

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.

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:

(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.

.

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.

III

Mortgage Fraud

301.

Short title

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

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.

(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.

(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.

(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.

(e)

Mandatory functions

The Task Force, including the branches of the Task Force established under subsection (d), shall—

(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;

(2)

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

(3)

collect and disseminate data with respect to mortgage fraud, including Federal, State, and local data relating to mortgage fraud investigations and prosecutions; and

(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.

(f)

Optional functions

The Task Force, including the branches of the Task Force established under subsection (d), may—

(1)

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

(2)

establish a toll-free hotline for—

(A)

reporting mortgage fraud;

(B)

providing the public with access to information and resources with respect to mortgage fraud; and

(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);

(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;

(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; and

(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.

(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.

IV

Foreclosure moratorium provisions

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.

(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.

(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.

(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.

(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.

April 27, 2009

Read the second time and placed on the calendar