To amend title 11 of the United States Code with respect to modification of certain mortgages on principal residences, and for other purposes.

Summary: Homeowners' Protection Act of 2008 - Amends the federal bankruptcy code to eliminate the pre-petition credit counseling requirement for a debtor under chapter 13 (Adjustment of Debts of an Individual with Regular Income) who is facing foreclosure, if the debtor 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 foreclosure.

Allows modification of the rights of claim holders, in the event of a foreclosure notice for a chapter 13 debtor, among other means by: (1) reducing a claim to equal the value of the debtor's interest in the residence securing such claim, and any adjustments to a related adjustable rate of interest; (2) waiving early repayment or prepayment penalties; and (3) extending the repayment period.

Denies debtor liability for certain fees and charges incurred while the bankruptcy case is pending and arising from a debt secured by the debtor's principal residence, unless the claim holder observes specified requirements.

Adds to conditions for court confirmation of a plan in bankruptcy that: (1) the holder of a claim secured by the debtor's principal residence retain the lien securing the claim until the later of the payment of such claim as reduced and modified or the discharge of a debtor from all debts; and (2) the plan modifies the claim in good faith.

Excludes from final discharge of a debtor from all debts: (1) any payments to claim holders whose rights are modified under this Act; and (2) any unpaid portion of a claim as reduced.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeowners' Protection Act of 
2008''.

SEC. 2. WAIVER OF COUNSELING REQUIREMENT WHEN HOUSES ARE IN 
              FORECLOSURE.

    Section 109(h) of title 11, United States Code, is amended by 
adding at the end the following:
    ``(5) The requirements of paragraph (1) shall not apply in a case 
under chapter 13 with respect to a debtor 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.''.

SEC. 3. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

    Section 1322(b) of title 11, United States Code, is amended--
            (1) by redesignating paragraph (11) as paragraph (12),
            (2) in paragraph (10) by striking ``and'' at the end, and
            (3) by inserting after paragraph (10) the following:
            ``(11) notwithstanding paragraph (2) and otherwise 
        applicable nonbankruptcy law, with respect to a claim for a 
        debt for a loan secured by a security interest in the debtor's 
        principal residence that is the subject of a notice that a 
        foreclosure may be commenced, modify the rights of the holder 
        of such claim--
                    ``(A) by reducing such claim to equal the value of 
                the interest of the debtor in such residence securing 
                such claim;
                    ``(B) by waiving any otherwise applicable early 
                repayment or prepayment penalties;
                    ``(C) if any applicable rate of interest is 
                adjustable under the terms of such security interest by 
                prohibiting, reducing, or delaying adjustments to such 
                rate of interest applicable on and after the date of 
                filing of the plan; and
                    ``(D) by modifying the terms and conditions of such 
                loan--
                            ``(i) to extend the repayment period for a 
                        period that is 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 an annual 
                        percentage rate calculated at a fixed annual 
                        percentage rate, in an amount equal to the then 
                        most recently published annual yield on 
                        conventional mortgages published by the Board 
                        of Governors of the Federal Reserve System, as 
                        of the applicable time set forth in the rules 
                        of the Board, plus a reasonable premium for 
                        risk; and''.

SEC. 4. COMBATING EXCESSIVE FEES.

    Section 1322(c) of title 11, the 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 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.''.

SEC. 5. CONFIRMATION OF PLAN.

    Section 1325(a) of title 11, the United States Code, is amended--
            (1) in paragraph (8) by striking ``and'' at the end,
            (2) in paragraph (9) by striking the period at the end and 
        inserting a semicolon, and
            (3) by inserting after paragraph (9) the following:
            ``(10) notwithstanding subclause (I) of paragraph 
        (5)(B)(i), the plan provides that the holder of a claim whose 
        rights are modified pursuant to section 1322(b)(11) retain the 
        lien until the later of--
                    ``(A) the payment of such claim as reduced and 
                modified; or
                    ``(B) discharge under section 1328; and
            ``(11) the plan modifies a claim in accordance with section 
        1322(b)(11), and the court finds that such modification is in 
        good faith.''.

SEC. 6. DISCHARGE.

    Section 1328 of title 11, the United States Code, is amended--
            (1) in subsection (a)--
                    (A) by inserting ``(other than payments to holders 
                of claims whose rights are modified under section 
                1322(b)(11)'' after ``paid'' the 1st place it appears, 
                and
                    (B) in paragraph (1) by inserting ``or, to the 
                extent of the unpaid portion of the claim as reduced, 
                provided for in section 1322(b)(11)'' after 
                ``1322(b)(5)'', and
            (2) in subsection (c)(1) by inserting ``or, to the extent 
        of the unpaid portion of the claim as reduced, provided for in 
        section 1322(b)(11)'' after ``1322(b)(5)''.

SEC. 7. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date of 
the enactment of this Act.
    (b) Application of Amendments.--The amendments made by this Act 
shall apply only with respect to cases commenced under title 11 of the 
United States Code on or after the date of the enactment of this Act.