IN THE SENATE OF THE UNITED STATES
February 16, 2012
Ms. Murkowski (for herself, Mr. Brown of Ohio, and Mr. Brown of Massachusetts) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale.
This Act may be cited as the
Prompt Notification of Short Sales
Prompt decision regarding short sale
Requirement for prompt decision
Written response to mortgagor requests required
Each servicer shall respond in writing to a mortgagor of a residential mortgage loan who has submitted a written request that meets the requirements of paragraph (2), not later than the end of the 75-calendar day period beginning on the date of receipt of such request, subject to subparagraphs (B) and (C).
Clause (i) shall apply, except as provided in subsection (b), and notwithstanding any other provision of law or of any contract, including a contract between a servicer of a residential mortgage loan and a securitization vehicle or other investment vehicle.
A written response by a servicer under subparagraph (A) shall specify—
a decision on whether such request has been denied, approved, or that such request has been approved subject to specified changes; or
that additional time is required, in which case the servicer shall provide a new decision date.
Single extension of new decision date authorized
A servicer may, upon written notice to the mortgagor, extend a new decision date provided under subparagraph (B)(ii) one single time, for a period of not longer than 21 additional calendar days.
Paragraph (1) shall apply in any case in which the mortgagor under a residential mortgage loan submits to the servicer thereof—
a written offer for a short sale of the dwelling or residential real property that is subject to the mortgage, deed of trust, or other security interest that secures the mortgage loan; and
all information required by the servicer in connection with such a request (including a copy of an executed contract between the owner of the dwelling or property and the prospective buyer that is subject to approval by the servicer).
Civil actions authorized
An aggrieved individual may bring an action in a court of competent jurisdiction, asserting a violation of this Act. Aggrieved individuals may be awarded all appropriate relief, including equitable relief, and a monetary award of $1,000 per violation, plus reasonable attorneys’ fees, or such higher amount as may be appropriate in the case of an established pattern or practice of such failures.
Inapplicability to certain existing mortgages
Subsection (a) shall not apply with respect to any residential mortgage with respect to which the mortgagor and the mortgagee or servicer have entered into a written agreement before the date of enactment of this Act explicitly providing a procedure or terms for approval of a short sale.
Treatment of other time limits
This section may not be construed to preempt, annul, or otherwise affect any other provision of law or of any contract or program that provides a shorter period than is provided under subsection (a) for a decision by the servicer of a residential mortgage loan regarding a short sale of the dwelling or residential real property that is subject to the mortgage, deed or trust, or other security interest that secures the mortgage loan.
For purposes of this Act, the following definitions shall apply:
Residential mortgage loan
The term residential mortgage loan means any consumer credit transaction that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real property that includes a dwelling, other than a consumer credit transaction under an open end credit plan or an extension of credit relating to a plan described in section 101(53D) of title 11, United States Code.
The term securitization vehicle means a trust, special purpose entity, or other legal structure that is used to facilitate the issuing of securities, participation certificates, or similar instruments backed by or referring to a pool of assets that includes residential mortgage loans (or instruments that are related to residential mortgage loans, such as credit-linked notes).
The term servicer has the same meaning as in section 129A, except that such term includes a person who makes or holds a residential mortgage loan (including a pool of residential mortgage loans), if such person also services the loan.
The term short sale means the sale of the dwelling or residential real property that is subject to the mortgage, deed or trust, or other security interest that secures a residential mortgage loan that—
will result in proceeds in an amount that is less than the remaining amount due under the mortgage loan; and
requires authorization by the securitization vehicle or other investment vehicle or holder of the mortgage loan, or the servicer acting on behalf of such a vehicle or holder.