H. R. 4848
IN THE HOUSE OF REPRESENTATIVES
April 26, 2012
Mr. Clarke of Michigan (for himself, Mr. Lewis of Georgia, Mr. Conyers, Mr. George Miller of California, Mr. Cleaver, Ms. Kaptur, Mr. Grijalva, Ms. Waters, Mr. Carson of Indiana, Mr. Jackson of Illinois, Ms. Clarke of New York, and Mr. Ellison) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
To save neighborhoods and keep families in their homes by encouraging mortgage loan modifications and suspending foreclosures and evictions.
This Act may be cited as the
Save Our Neighborhoods Act of
Stays of foreclosures
Cause of action
A mortgagor of a property subject to a federally related mortgage loan may file a motion before a court in the jurisdiction in which the property is located for an order under subsection (d).
The court shall, on the date of such filing, enter an order that shall—
stay any foreclosure proceedings (including proceedings before a State court) that have been brought against the property that is subject to the federally related mortgage loan; and
remain in effect for a period of 60 days, beginning on the date that the order is entered.
The mortgagor of the property subject to a federally related mortgage loan is only allowed to file one motion under subsection (a)(1).
Consensual revision of mortgage
The mortgagor and mortgagee shall meet not later than 30 days after the mortgagor files under subsection (a). Not later than 15 days prior to that meeting, the mortgagee shall provide the mortgagor with a list of local housing counseling agencies approved by the Secretary of Housing and Urban Development. The mortgagor may be accompanied by a counselor from such an agency. If the mortgagor and mortgagee execute a consensually modified mortgage agreement within 60 days of the court granting the stay, the order under subsection (a)(2) would terminate. If at the end of the 60 days an agreement has not been reached, the court may issue an order under subsection (d) in accordance with subsection (c). The mortgagor may request not more than 1 additional meeting after the first meeting and before the end of the period during which foreclosure proceedings are stayed pursuant to an order under subsection (a) or (d). The mortgagee shall comply with that request not later than 30 days after that request.
Standard of proof
The court shall grant a motion under subsection (a)(1) for an order under subsection (d), if the mortgagor demonstrates by a preponderance of the evidence the following:
That the mortgagor has a reasonable ability to make payments described under subsection (d)(5).
Financial hardship of the mortgagor.
That the property subject to the mortgage would be the primary residence of the mortgagor.
An order under this subsection shall, beginning on the date that is 60 days after the filing of the motion under subsection (a)(1)—
stay any foreclosure proceedings that have been brought against the property that is subject to the federally related mortgage loan, including proceedings before a State court and eviction or detainer proceedings in a non-judicial foreclosure State;
remain in effect for a period of up to 3 years beginning on the date that the order is entered, except that the period shall terminate if an agreement under subsection (b) is executed during such period;
prohibit the assessment or collection of any late fees regarding payments on the federally related mortgage loan;
toll the statute of limitations for any other applicable laws pertaining to the federally related mortgage loan;
require that the mortgagor make payments in an amount the court determines appropriate, which may include the fair market rental value of the property (determined by the court in accordance with subsection (f)), to the mortgagee at such times as the court determines appropriate; and
require that the mortgagee apply such payments—
first, to any taxes owed on the property;
then, to any obligations relating to insurance, including homeowner’s insurance on the property;
then, to any interest due on the mortgage for that period under the terms of the mortgage; and
finally, to the principal amount due on the mortgage for that period under the terms of the mortgage.
Result of failure To revise during stay of foreclosure
If an order under subsection (d) terminates and the mortgagor and mortgagee have not submitted an agreement described in subsection (b) to the court on or before the date that the order terminates, the court shall enter an order—
ordering an appraisal to determine the fair market value of the property to be performed by a licensed appraiser approved by the Secretary of Housing and Urban Development;
if the fair market value of the property, as determined by the appraiser is less than the principal remaining on the mortgage loan, adjusting the principal amount to the fair market value, giving consideration to the appraisal and any other information the court determines appropriate;
ordering reasonable interest on the principal as adjusted under paragraph (2) based on the average prime offer rate (as such term is defined in section 129C of the Truth in Lending Act (15 U.S.C. 1639c)) for mortgages; and
if the fair market value is greater than the principal remaining on the mortgage loan, ordering payments set at a reasonable interest rate on the remaining principal based on the average prime offer rate for mortgages on that date.
Determination of fair market rental value
In determining the fair market rental value of a property for purposes of subsection (d)(5), the court shall consider the following:
The fair market rents for the market area in which the property is located for similar property calculated for other Federal rental housing programs.
Any other information the court determines appropriate.
Authority of magistrate judges
Any proceeding regarding a motion under subsection (a) may be heard by a magistrate judge of the United States, and that magistrate judge, notwithstanding section 636(b)(1)(A) of title 28, United States Code, may issue an order in accordance with this section.
Limitation on remedies
The mortgagee’s remedies shall be limited to those that would be available as if the proceeding were a foreclosure proceeding.
In this Act:
federally related mortgage
loan has the meaning given such term under section 3 of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2602).
means any financial burden of a mortgagor that causes that mortgagor to be
reasonably unable to make a payment on that mortgage, including—
reduction in or loss of income that was supporting the mortgage;
change in household financial circumstances;
recent or upcoming increase in the mortgagor’s monthly mortgage payment;
an unavoidable increase in other expenses;
a lack of cash reserves to maintain payment on the mortgage and cover basic living expenses at the same time (cash reserves include assets such as cash savings, money market funds, stocks or bonds, but exclude retirement accounts);
excessive monthly debt payments, including if the mortgagor has been using credit cards, a home equity loan or other credit to make the mortgage payment;
the mortgagor has been subject to predatory lending practices; and
other reasons for hardship identified and explained by the mortgagor.
In determining whether a lending practice is predatory, the court shall consider whether the mortgagor has been subject to practices including but not limited to: abusive collection practices; balloon payments; encouragement of default; repeat financing where the equity is depleted as a result of financing; excessive fees; excessive interest rates; fraud, deception, and abuse; high loan-to-value ratio; lending without regard to ability to repay; loan flipping; mandatory arbitration clauses; payday lending; pre-payment penalties; refinancing of mortgages with a loan that does not provide a tangible economic benefit to the borrower; refinancing unsecured debt; payment of single-premium credit insurance; the process of referring borrowers who qualify for lower-cost financing to high-cost lenders; subprime lending; high yield-spread premiums.
Regulatory authority of the Consumer Financial Protection Bureau
The Director of the Bureau of Consumer Financial Protection of the Federal Reserve System may make rules or issue guidance to carry out this Act.
Duration of this Act
This Act shall be effective for 5 years, beginning on the date of enactment of this Act.