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S. 896 (111th): Helping Families Save Their Homes Act of 2009

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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

5/20/2009--Public Law. Division A: Preventing Mortgage Foreclosures - Helping Families Save Their Homes Act of 2009 - Title I: Prevention of Mortgage Foreclosures - (Sec. 101) Amends the Housing Act of 1949 with respect to guaranteed rural housing loans to require mortgagees, upon either actual or imminent default of a guaranteed mortgage, to engage in loss mitigation actions as an alternative to foreclosure (including special forbearance, loan modification, pre-foreclosure sale, deed in lieu of foreclosure, support for borrower housing counseling, subordinate lien resolution, and borrower relocation).

Permits the Secretary of Agriculture (USDA) (Secretary for purposes of this section), for mortgages either in default or facing imminent default, to: (1) authorize the modification of such mortgages; and (2) establish a program for payment of a partial claim to a mortgagee who agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence.

Permits the Secretary to: (1) authorize compensation to the mortgagee for lost income on monthly mortgage payments due to interest rate reduction; (2) reimburse the mortgagee from a guaranty fund in connection with activities that the mortgagee is required to undertake concerning repayment by the mortgagor of the amount owed to HUD; (3) authorize payments to the mortgagee on behalf of the borrower, under terms defined by HUD; and (4) authorize mortgage modification with terms extended up to 40 years from the modification date.

Grants the Secretary authority, upon mortgagee request, to establish a program for assignment to HUD of a guaranteed mortgage on a 1- to 4-family residence in or facing imminent default. Prescribes procedures for HUD payment of guarantee, disposition, and loan servicing.

Requires the mortgagee already to have modified the mortgage, or to have qualified it for modification sufficient to cure the default and provide for mortgage payments the mortgagor is reasonably able to pay, at interest rates not exceeding current market rates.

Authorizes the Secretary to pay the mortgage guaranty, 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.

Authorizes the Secretary to: (1) reassign the mortgage to the mortgagee; (2) act as a Government National Mortgage Association (GNMA, or Ginnie Mae) issuer, or contract with an entity for such purpose, in order to pool the mortgage into a Ginnie Mae security; or (3) resell the mortgage in accordance with any program established for purchase by the federal government of insured mortgages.

(Sec. 102) Revises the requirement that the maturity of any housing loan guaranteed by the Department of Veterans Affairs (VA) not be more than 30 years and 32 days. Specifies the maturity of a housing loan at the time of origination.

(Sec. 103) Authorizes additional appropriations for FY2010-FY2011 to the Department of Housing and Urban Development (HUD) for: (1) advertising to increase public awareness of mortgage scams and counseling assistance; (2) the Housing Counseling Assistance Program; and (3) personnel at the Office of Fair Housing and Equal Opportunity.

(Sec. 104) Requires the Comptroller of the Currency and the Director of the Office of Thrift Supervision (OTS) to report jointly to certain congressional committees on the volume of mortgage modifications reported to their agencies.

(Sec. 105) Amends the Foreclosure Prevention Act of 2008, with respect to emergency assistance for the redevelopment of abandoned and foreclosed homes (neighborhood stabilization), to authorize each state that has received certain minimum allocations and has fulfilled certain requirements, to distribute any remaining amounts to areas with homeowners at risk of foreclosure or in foreclosure without regard to the percentage of home foreclosures in such areas.

Title II: Foreclosure Mitigation and Credit Availability - (Sec. 201) Amends the the Truth in Lending Act (TILA) to modify the fiduciary duty requirements of servicers of pooled residential mortgages as duty requirements for any servicer of residential mortgages that agrees to enter into a qualified loss mitigation plan for residential mortgages originated before the date of enactment of this Act (including mortgages held in a securitization or other investment vehicle).

Shields from liability to any party owed a specified duty (as under existing law) a servicer who is deemed to be acting in the best interests of all investors and other parties. States that such a servicer shall not be subject to any equitable relief to such a party that is based solely upon implementation by the servicer of a qualified loss mitigation plan.

States that any person, including a trustee, issuer, and loan originator, shall not be liable for monetary damages or be subject to any equitable relief, based solely upon cooperation necessary for the servicer to implement a qualified loss mitigation plan in compliance with this Act.

Declares that nothing in this section shall be contrued as affecting the liability of any servicer or person (including a trustee, issuer, and loan originator) for actual fraud in the origination or servicing of a loan or in the implementation of a qualified loss mitigation plan, or for the violation of a state or federal law, including laws regulating the origination of mortgage loans, commonly referred to as predatory lending laws.

(Sec. 202) Amends the National Housing Act (NHA) to transfer to the Secretary of HUD (Secretary for the rest of this Act, unless otherwise noted) from the current Board of Directors of the HOPE for Homeowners Program all responsibility to establish HOPE requirements and standards and prescribe related regulations.

Replaces the Board of Directors with an Advisory Board for the HOPE for Homeowners Program.

Revises requirements for borrower certifications in applying for insurance of a refinanced eligible mortgage. Requires a mortgagor to certify to HUD that the mortgagor has neither intentionally defaulted on an existing mortgage or other substantial debt within the last five years (currently no period is mentioned). Requires that the mortgagor has not provided false information (as under current law), but also has not been convicted of fraud under federal or state law during the 10-year period ending upon the insurance of the mortgage.

Requires the mortgagor to agree in writing to 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 refinanced residence which is derived from misrepresentations in required mortgagor certifications and documentation.

States that the duty of the mortgagee to ensure that mortgagor is in compliance with the NHA shall be satisfied if the mortgagee makes a good faith effort to determine that the mortgagor has not been convicted of fraud during the specified 10-year period.

Prohibits a mortgagor from having a net worth exceeding $1 million as of the date of applying for mortgage insurance.

Authorizes the Secretary to: (1) establish a payment to the servicer of the existing senior mortgage for every loan insured under the HOPE for Homeowners Program, as well as to the originator of each new loan insured under such Program; and (2) establish and organize procedures, if feasible, for an auction to refinance eligible mortgages on a wholesale or bulk basis.

Reduces by $1.244 billion the $700 billion limit on the authority of the Secretary of the Treasury (Secretary) to purchase troubled assets under the Troubled Asset Relief Program (TARP).

(Sec. 203) Prohibits any state or federal law (except a federal law expressly limiting this prohibition) from precluding or limiting the power of the Mortgagee Review Board to take action against mortgagees.

Restricts participation in the origination of an FHA-insured loan to a Secretary-approved person or entity, except as authorized by the Secretary.

Prohibits approval of an applicant as a mortgagee if any of its officers, partners, directors, principals, managers, supervisors, loan processors, loan underwriters, or loan originators are: (1) currently suspended, debarred, otherwise restricted, indicted or convicted of certain offenses; (2) engaged in nonconforming business practices; (3) subject to unresolved findings of a HUD audit, investigation, or review; (4) convicted of real estate- or mortgage loan-related felonies during the preceding seven years, or at any preceding time of certain other felonies; or (5) in violation of specified laws or requirements.

Authorizes the Secretary to: (1) pay insurance benefits to the mortgagee for loss mitigation actions that provide an alternative to foreclosure of a mortgage that faces imminent default, including support for borrower housing counseling, partial claims, borrower incentives, and preforeclosure sale; and (2) establish a program for payment of a partial claim to a mortgagee that agrees to apply the claim amount to payment of a mortgage on a one- to four-family residence that is in default or faces imminent default.

Authorizes the Secretary to encourage loan modifications for either delinquent mortgages or those facing imminent default through the payment of insurance benefits and assignment of the mortgage to HUD and subsequent mortgage modification approved by the mortgagee.

Authorizes the Secretary to provide mortgage insurance following mortgage modification, and subsequently: (1) reassign the mortgage to the mortgagee; (2) act as a Government National Mortgage Association (GNMA, or Ginnie Mae) issuer in order to pool the mortgage into a GNMA security; or (3) resell the mortgage in accordance with certain federal programs established to purchase insured mortgages; and (4) coordinate standards for interest rate reductions available for loan modification.

Authorizes the Secretary to require the existing servicer of a mortgage assigned to HUD to continue servicing it as a HUD agent during the period that HUD acquires it to modify its terms if HUD compensates the existing servicer appropriately.

Repeals requirements relating to purchaser-broker arrangement payments for insurance purposes.

Requires an approved mortgagee to notify HUD immediately if sanctions are applied to it or any of its personnel (including revocation of a state-issued mortgage loan originator license or similar declaration of ineligibility under state law).

Directs the Secretary, in order to identify applicants who represent a high risk to the Mutual Mortgage Insurance Fund, to: (1) expand the existing process for reviewing new applicants for participation in FHA-insured mortgages on one- to four-family residences; and (2) implement procedures that expand the number of mortgages originated for mortgagees that were approved during the 12 months before enactment of this Act.

(Sec. 204) Amends the Emergency Economic Stabilization Act of 2008 (EESA) to extend to December 31, 2013, the temporary increase in federal (bank) deposit insurance and in federal (credit union) share deposit insurance.

Amends the Federal Deposit Insurance Act (FDIA) to: (1) extend from five years to eight years the time period applicable to a Deposit Insurance Fund (DIF) restoration plan; and (2) increase the borrowing authority of the Federal Deposit Insurance Corporation (FDIC) from $30 billion to $100 billion.

Permits a temporary increase up to $500 billion, ending on December 31, 2010, in order to fund losses under TARP.

Prohibits the FDIC from using its borrowing authority to fund obligations incurred as part of a program established by the Secretary to purchase or guarantee assets pursuant to EESA.

Amends the Federal Credit Union Act (FCUA) to grant the National Credit Union Administration (NCUA) increased borrowing authority until December 31, 2010.

Amends the FDIA to revise requirements governing special assessments to recover losses to the DIF triggered by actions taken to contain systemic risk in connection with certain insured depository institutions. Applies assessment payment requirements to depository institution holding companies, as well as penalties for failure to make such payments.

Amends the FCUA to require the NCUA Board to: (1) establish a National Credit Union Share Insurance Fund Restoration Plan whenever it projects that the equity ratio of the National Credit Union Share Insurance Fund will fall below a designated minimum equity ratio; and (2) establish the Temporary Corporate Credit Union Stabilization Fund to make payments for the insurance and liquidation of insured credit unions. Authorizes such Fund to borrow from the Secretary of the Treasury under specified conditions.

(Sec. 205) Instructs the Secretary, when using certain EESA funds, to: (1) prevent and mitigate foreclosures on residential properties (including mortgage modifications); and (2) require that the limitation on the maximum original principal obligation of a mortgage eligible for assistance 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 (Freddie Mac) for the area in which the relevant property is located.

(Sec. 206) Amends the NHA regarding insurance of home equity conversion mortgages for elderly homeowners to redefine a mortgage on a leasehold to be one under a lease with 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 co-mortgagor. (Currently, it is a lease having a period of not less than 10 years to run beyond the maturity date of the mortgage.)

(Sec. 207) Expresses the sense of 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 local governments and their agencies.

Title III: Mortgage Fraud Task Force - (Sec. 301) Expresses the sense of Congress that the Department of Justice should establish a Nationwide Mortgage Fraud Task Force to address mortgage fraud in the United States.

Title IV: Foreclosure Moratorium Provisions - (Sec. 401) Expresses the sense of Congress that mortgage holders, institutions, and mortgage servicers should not initiate a foreclosure proceeding or a foreclosure sale on any homeowner until specified foreclosure mitigation provisions, like the Hope for Homeowners program and the President's Homeowner Affordability and Stability Plan, have been implemented and determined to be operational by the Secretary and the Secretary of the Treasury.

(Sec. 402) Public-Private Investment Program Improvement and Oversight Act of 2009 - Sets forth requirements for a federal program to create a public-private investment fund, including a requirement to impose strict conflict of interest rules on managers of such funds in order to ensure: (1) securities purchases are in arms-length transactions; (2) fiduciary duties to public and private investors are not violated; and (3) full disclosure of relevant facts and financial interests.

Requires each manager of a public-private fund to identify periodically for the Secretary each investor holding equity interests equal to at least 10% of the equity interest of the fund, including if such interests are held in a vehicle formed for the purpose of directly or indirectly investing in the fund.

Authorizes additional appropriations for the Special Inspector General of the Troubled Asset Relief Program.

Reduces by $1.259 billion (in addition to the $1.244 reduction in Section 202) the $700 billion limit on the authority of the Secretary of the Treasury to purchase troubled assets under the Troubled Asset Relief Program (TARP).

(Sec. 403) Amends EESA to change from mandatory to discretionary the authority to liquidate warrants under TARP.

(Sec. 404) Amends TILA to require additional disclosures which the new owner or assignee of a debt must furnish to the borrower within 30 days after the date on which a mortgage loan is transferred or assigned to a third party.

Title V: Farm Loan Restructuring - (Sec. 501) Amends EESA to instruct the Congressional Oversight Panel to submit a special report on farm loan restructuring that: (1) analyzes the state of the commercial farm credit markets and the use of loan restructuring as an alternative to foreclosure by recipients of TARP financial assistance; and (2) includes an examination and recommendation on different farm loan restructuring methods that could be used as part of a foreclosure mitigation program for farm loans made by TARP recipients.

Title VI: Enhanced Oversight of the Troubled Asset Relief Program - (Sec. 601) Amends EESA to direct the Comptroller General to oversee the performance of the TARP in meeting EESA purposes of public accountability for the exercise of TARP authority, including with respect to actions taken by EESA program participants.

Requires every contract, term sheet, or other agreement between the Secretary of the Treasury or the TARP (or any TARP vehicle, officer, director, employee, independent public accountant, financial advisor, or other TARP agent or representative) and a non-governmental entity participating in an EESA program to provide for access by the Comptroller General.

Title VII: Protecting Tenants at Foreclosure Act - Protecting Tenants at Foreclosure Act of 2009 - (Sec. 702) Declares that, in the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this Act, the immediate successor in interest in the property pursuant to the foreclosure shall assume such interest subject to: (1) provision by such successor of a notice to vacate to a bona fide (non-mortgagor) tenant at least 90 days before the effective date of such notice; and (2) specified rights of such tenant to occupy the property until the end of the remaining lease term.

(Sec. 703) Amends the United States Housing Act of 1937 to declare that, in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the initial term of a lease, the tenant's vacating of the property prior to sale shall not constitute other good cause for terminating the tenancy or occupancy rights of the victim of domestic or similar violence or stalking. Allows the owner to terminate such a tenancy, however, effective on the date of the unit's transfer to the owner if the owner: (1) will occupy the unit as a primary residence; and (2) has given the tenant a notice to vacate at least 90 days before the effective date of such notice.

Declares also that, in the case of foreclosure on any federally-related mortgage loan or on any residential real property in which a recipient of public housing assistance resides, the immediate successor in interest assumes such interest subject to: (1) the lease between the prior owner and the tenant, and (2) the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit.

(Sec. 704) Terminates this title on December 31, 2012.

Title VIII: Comptroller General Additional Audit Authorities - (Sec. 801) Prohibits personnel from the Government Accountability Office (GAO) from disclosing to any person outside GAO any information obtained in audits or examinations and maintained as confidential by the Board of Governors of the Federal Reserve System (Board) or the Federal reserve banks.

Grants the Comptroller General access to officers, employees, contractors, agents, and representatives of an agency (including any entity established by the agency). Authorizes the Comptroller General to make and retain copies of agency records.

Authorizes the Comptroller General to conduct audits, including onsite examinations of specified actions taken by the Board with respect to a single and specific partnership or corporation.

Division B: Homelessness Reform - Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 - (Sec. 1002) Amends the McKinney-Vento Homeless Assistance Act (Act) to consolidate housing assistance programs for homeless persons.

(Sec. 1003) Redefines homelessness to include victims of domestic violence and other dangerous or life-threatening conditions, among other persons.

(Sec. 1004) Declares that the mission of the U.S. Interagency Council on Homelessness is to coordinate the federal response to homelessness and to create a national partnership at every level of government and with the private sector to reduce and end homelessness in the nation while maximizing the effectiveness of federal contributions to end homelessness.

Requires the Executive Director of the Council to submit to the President and and to Congress a National Strategic Plan to End Homelessness, and to update it annually.

Authorizes appropriations for FY2010-FY2011.

Title I: Housing Assistance General Provisions - (Sec. 1102) Prescribes requirements for the selection of community homeless assistance planning boards, particularly for collaborative applicants.

Requires a collaborative applicant to: (1) design a collaborative process to develop homeless assistance grant applications and evaluate project outcomes; (2) establish priorities for funding projects; (3) participate in the Consolidated Plan for the geographic area served by the applicant; (4) ensure operation of, and consistent participation by, project sponsors in a community-wide homeless management information system (HMIS); and (5) act as a unified funding agency to distribute HUD funds to other project sponsors in the applicable geographic area funds for their projects.

(Sec. 1103) Prohibits any project sponsor receiving funds to provide emergency shelter, transitional housing, or permanent housing to families with children under age 18 from denying admission to a family based on the age of any such child.

(Sec. 1104) Requires the Secretary to instruct any victim service provider that is either a recipient or subgrantee not to disclose for purposes of the Homeless Management Information System (HMIS) any personally identifying information about any client.

(Sec. 1105) Authorizes appropriations for FY2010-FY2011.

Title II: Emergency Solutions Grants Program - (Sec. 1201) Prescribes requirements for a program of emergency solutions grants to states, local governments, and private nonprofit organizations providing assistance to persons experiencing homelessness or at risk of homelessness.

(Sec. 1202) Specifies activities eligible for assistance under such grants, including: (1) renovation, major rehabilitation, or conversion of buildings to be used as emergency shelters; (2) essential services related to emergency shelter or street outreach; (3) provision of related utilities and furnishings; (4) rental assistance to provide short-term or medium-term housing to homeless individuals or families or those at risk of homelessness; and (5) housing relocation or stabilization services.

(Sec. 1203) Requires the Secretary to ensure that recipients of housing assistance funds ensure the consistent participation by emergency shelters and homelessness prevention and rehousing programs in any applicable communitywide homeless management information system.

(Sec. 1204) Increases from 5% to 7.5% the amount of any emergency solutions grant a recipient may use for administrative purposes.

(Sec. 1205) Directs the Comptroller General to study and report to Congress on the costs of administering the emergency shelter grants program.

Title III: Continuum of Care Program - (Sec. 1301) Prescribes requirements for a continuum of care grants program to support efforts to rehouse homeless individuals and families quickly while minimizing the trauma and dislocation caused.

(Sec. 1302) Specifies activities eligible for project assistance under such grants, including: (1) construction of new housing units to provide transitional or permanent housing; (2) acquisition or rehabilitation of a structure to provide non-emergency transitional or permanent housing or supportive services; (3) property leasing; (4) rental assistance to provide transitional or permanent housing; (5) payment of operating costs for assisted or preserved housing units; (6) supportive services for currently homeless individuals and families; (7) rehousing services; (8) a communitywide homeless management information system; and (9) payment of various specified administrative costs.

(Sec. 1303) Directs the Secretary to designate annually which collaborative applicants represent high-performing communities meeting certain criteria for short terms of homelessness, low recurring rates of homelessness, and specified community action.

(Sec. 1304) Revises supportive housing program requirements.

(Sec. 1305) Requires the Secretary to award funds to recipients through a national competition between geographic areas based on criteria meeting specified requirements.

Prescribes a minimum allocation for permanent housing for homeless individuals and families with disabilities.

(Sec. 1306) Authorizes appropriations for FY2010-FY2011 for research into the efficacy of interventions for homeless families, to be expended over the two years at three different sites to provide services for homeless families and evaluate the effectiveness of such services.

Title IV: Rural Housing Stability Assistance Program - (Sec. 1401) Renames the rural homelessness grant program the rural housing stability assistance program. Revises program requirements.

Adds to eligible activities: (1) construction of new housing units to provide transitional or permanent housing; (2) acquisition or rehabilitation of a structure to provide non-emergency transitional or permanent housing or supportive services; (3) property leasing; (4) rental assistance to provide transitional or permanent housing; and (5) payment of operating costs for assisted housing units.

(Sec. 1402) Requires the Comptroller General to study and report to Congress on homelessness and homeless assistance in rural areas.

Title V: Repeals and Conforming Amendments - (Sec. 1501) Amends the Act to repeal the mandates for: (1) the Safe Havens for Homeless Individuals demonstration program about the feasibility of providing very low-cost housing to homeless persons that do not participate in mental health treatment programs; (2) financial assistance for single room occupancy dwellings; and (3) the Shelter Plus Care program of rental housing assistance to homeless persons with certain disabilities and their families.