H.R. 3595 (112th): Mandatory Foreclosure Mediation Act

112th Congress, 2011–2013. Text as of Dec 07, 2011 (Introduced).

Status & Summary | PDF | Source: GPO

I

112th CONGRESS

1st Session

H. R. 3595

IN THE HOUSE OF REPRESENTATIVES

December 7, 2011

introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To establish a mandatory mediation process for servicers of residential mortgages and borrowers.

1.

Short title

This Act may be cited as the Mandatory Foreclosure Mediation Act.

2.

Definitions

In this Act, the following definitions shall apply:

(1)

Alternative to foreclosure

The term alternative to foreclosure

(A)

means a course of action with respect to a mortgage offered by a servicer to a borrower as an alternative to a covered foreclosure action; and

(B)

includes a short sale and a deed in lieu of foreclosure.

(2)

Borrower

The term borrower means a mortgagor under a mortgage who is in default or at risk of imminent default, as determined by the Secretary through regulations.

(3)

Foreclosure action

The term foreclosure action means a judicial or nonjudicial foreclosure.

(4)

Loan modification program

The term loan modification program means a program or procedure designed to change the terms of a mortgage in the case of the default, delinquency, or imminent default or delinquency of a mortgagor, including a loan modification program established by a servicer that reduces the principal owed by the mortgagor on the mortgage.

(5)

Mortgage

The term mortgage means a federally related mortgage loan, as defined in section 3(1) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602(1)), that is secured by a first or subordinate lien on residential real property.

(6)

Secretary

The term Secretary means the Secretary of Housing and Urban Development.

(7)

Servicer

The term servicer

(A)

has the same meaning as in section 6(i) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(i)); and

(B)

includes a person responsible for servicing a pool of mortgages.

3.

Mediation required before foreclosure

(a)

Initiation of foreclosure actions

A servicer may not initiate a foreclosure action against a borrower unless the servicer has—

(1)

made a reasonable effort to initiate mediation proceedings in accordance with the process established in regulations prescribed pursuant to subsection (c) to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; and

(2)

offered the borrower a loan modification or an alternative to foreclosure, if the borrower is eligible for the loan modification or alternative to foreclosure.

(b)

Suspension of foreclosure actions

(1)

In general

A servicer shall suspend a foreclosure action that was initiated before the date of enactment of this Act until the servicer—

(A)

completes a mediation proceeding in accordance with the process established in regulations prescribed pursuant to subsection (c) to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; and

(B)

offers the borrower a loan modification or an alternative to foreclosure, if the borrower is eligible for a loan modification or an alternative to foreclosure.

(2)

Suspension

During the period of the suspension under paragraph (1), a servicer may not—

(A)

send a notice of foreclosure to a borrower;

(B)

conduct or schedule a sale of the real property securing the mortgage of the borrower; or

(C)

cause final judgment to be entered against the borrower.

(3)

Reasonable efforts

A servicer is not required to suspend a foreclosure action under paragraph (1) if the servicer—

(A)

makes a reasonable effort to schedule a mediation proceeding to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; and

(B)

documents that the borrower has not agreed to a mediation proceeding to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure.

(4)

Rule of construction

Nothing in this section may be construed to require a servicer to delay an unavoidable foreclosure, such as foreclosure that results from a borrower abandoning the residential real property securing a mortgage.

(c)

Establishment of mediation process

The Secretary shall establish through regulations a mediation process to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure under this section.

4.

Bar to foreclosure actions

(a)

In general

Subject to subsection (b), a violation of this Act shall be a bar to a foreclosure action.

(b)

Effect of subsequent compliance

If a servicer is in compliance with this Act, the servicer may bring or proceed with a foreclosure action, without regard to a prior violation of this Act by the servicer.

5.

Regulations

Not later than 90 days after the date of enactment of this Act, the Secretary shall issue regulations to carry out this Act.

6.

Report

Each servicer that initiates mediation proceedings under section 3 shall submit to the Secretary a quarterly report at such time, in such manner, and containing such information, with respect to such proceedings, as the Secretary may require.