To ensure uniformity and fairness in deficiency judgments arising from foreclosures on mortgages for single family homes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness in Foreclosures Act of 
2011''.

SEC. 2. REQUIREMENTS FOR DEFICIENCY JUDGMENTS.

    No action for a deficiency judgment arising from an obligation 
under a residential mortgage may be brought except in accordance with 
this Act.

SEC. 3. TIMING.

    (a) Requirement.--An action for a deficiency judgment arising from 
an obligation under a residential mortgage may be brought only during 
whichever of the following periods terminates earlier:
            (1) The 12-month period that begins upon the date of the 
        foreclosure sale for the residential property securing the 
        obligation under the mortgage.
            (2) Such period as may be provided under the applicable 
        State law for bringing an action for such a deficiency 
        judgment.
    (b) Satisfaction of Mortgage Obligation.--In the case of any 
foreclosure on a residential mortgage, if no action for a deficiency 
judgment arising from the obligation under the mortgage is brought 
during the period provided in subsection (a), the proceeds of any 
foreclosure sale conducted with respect to the residential property 
securing repayment of the obligation owed under the mortgage, 
regardless of amount, shall be deemed to be in full satisfaction of the 
obligation under the mortgage and no action to recover a deficiency in 
such amount may be brought after the expiration of such period.

SEC. 4. REQUIREMENT OF COMMERCIALLY REASONABLE SALE.

    (a) Requirement.--No deficiency judgment arising from an obligation 
under a residential mortgage may be issued unless the court has 
determined that the foreclosure sale for the property securing 
repayment of the obligation under the mortgage was conducted in 
accordance with the following requirements:
            (1) The sale was conducted in a recognized market in the 
        manner that is usual with respect to such market.
            (2) The sale price of the property was current in a 
        recognized market at the time of disposition.
            (3) The sale was otherwise in conformity with reasonable 
        commercial practices among dealers in property of the type 
        sold.
    (b) Determination.--A party adversely affected by a deficiency 
judgment may submit to the court evidence contradicting the commercial 
reasonableness of the foreclosure sale and of any costs incurred in 
such sale.

SEC. 5. AMOUNT.

    (a) In General.--The total amount recovered by a plaintiff in a 
deficiency judgment arising from an obligation under a residential 
mortgage shall be the amount equal to--
            (1) the sum of--
                    (A) the amount of obligation owed under the 
                mortgage, as of the date of the foreclosure sale for 
                the property, as determined by the court, with interest 
                on such amount from the date of the foreclosure sale at 
                the rate provided in the mortgage or related contract;
                    (B) if applicable, the amount owing on all prior 
                mortgages, liens, and encumbrances, with interest; and
                    (C) any reasonable costs for, and disbursements of, 
                the action for the deficiency judgment; less
            (2) the greater of--
                    (A) the fair market value of the property, as 
                determined by an independent appraisal completed during 
                either of 10-day periods that begin and end upon the 
                date of the foreclosure sale; or
                    (B) the amount of the sale price of the property at 
                the foreclosure sale.
    (b) Determination of Fair Market Value.--A party adversely affected 
by a deficiency judgment may submit to the court evidence relevant to 
establishing the fair market value of the property for purposes of 
subsection (a)(2)(A).

SEC. 6. PROHIBITIONS ON DEFICIENCY JUDGMENTS.

    (a) Nonrecourse Mortgages.--No action for a deficiency judgment 
arising from the obligation under a residential mortgage may be brought 
if the terms of the mortgage prohibit the recovery of any amount of the 
obligation due under the mortgage after--
            (1) the residential property securing repayment of such 
        obligation is sold at foreclosure sale; or
            (2) the mortgage is foreclosed in the manner provided under 
        the law of the State in which the property is located.
    (b) Low-Income Mortgagors.--In the case of any residential mortgage 
under which the mortgagor is a member of a low-income family, the 
following shall apply:
            (1) Prohibition on action.--No action may be brought for a 
        deficiency judgment arising from the obligation under such 
        residential mortgage.
            (2) Prohibition on reporting deficiency to credit 
        agencies.--A deficiency in recovery, from a foreclosure sale 
        for the property securing repayment of the obligation due under 
        the mortgage, of the full amount of the obligation may not be 
        reported to any consumer reporting agency (as such term is 
        defined in section 603 of the Fair Credit Reporting Act (15 
        U.S.C. 1681a)) or disclosed to any person other than the 
        mortgagor or a personal representative of the mortgagor, unless 
        such disclosure is otherwise required by law.
A determination of whether a family is a low-income family for purposes 
of this subsection shall be based on the income of the family as of the 
date of the foreclosure sale or any other date during either of the 30-
day periods beginning and ending on the date of such sale, and shall be 
based upon information obtained from the mortgagor during the 
foreclosure process.

SEC. 7. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Deficiency judgment.--The term ``deficiency judgment'' 
        means a judgment, lien, or court order, as provided for under 
        State law, for recovery in whole or in part, as determined by a 
        court as just and equitable, after a foreclosure or foreclosure 
        sale of the property securing repayment of the obligation owed 
        under a residential mortgage, of the portion of the obligation 
        that remains unsatisfied after application of the proceeds of 
        such sale to the obligation.
            (2) Foreclosure sale.--The term ``foreclosure sale'' means, 
        with respect to the residential property securing repayment of 
        the obligation under a residential mortgage, the sale of the 
        property pursuant to foreclosure on the mortgage, whether 
        judicial or nonjudicial, undertaken in accordance with the laws 
        of the State in which the property is located, under which the 
        proceeds of such sale are applied to such obligation.
            (3) Low-income family.--The term ``low-income family'' has 
        the meaning given such term in section 3(b) of the United 
        States Housing Act of 1937 (42 U.S.C. 1437a(b)).
            (4) Mortgage.--
                    (A) In general.--The term ``mortgage'' means a deed 
                of trust, mortgage, deed to secure debt, security 
                agreement, or any other form of instrument under which 
                any property (real, personal, or mixed), or any 
                interest in property (including leaseholds, life 
                estates, reversionary interests, and any other estates 
                under applicable State law), is conveyed in trust, 
                mortgaged, encumbered, pledged, or otherwise rendered 
                subject to a lien for the purpose of securing the 
                payment of money or the performance of an obligation.
                    (B) Condominiums and cooperatives.--Such term 
                includes a first mortgage given to secure--
                            (i) the unpaid purchase price of a fee 
                        interest in, or a long-term leasehold interest 
                        in, a one-family unit in a multifamily project, 
                        including a project in which the dwelling units 
                        are attached or are manufactured housing units, 
                        semi-detached, or detached, and an undivided 
                        interest in the common areas and facilities 
                        that serve the project; or
                            (ii) repayment of a loan made to finance 
                        the purchase of stock or membership in a 
                        cooperative housing corporation the permanent 
                        occupancy of dwelling units of which is 
                        restricted to members of such corporation, 
                        where the purchase of such stock or membership 
                        entitles the purchaser to the permanent 
                        occupancy of one of such units.
            (5) Residential mortgage.--
                    (A) In general.--The term ``residential mortgage'' 
                means a mortgage the primary purpose of which is the 
                purchase or financing of a permanent 1- to 4-family 
                dwelling that is used as the principal residence of the 
                mortgagor.
                    (B) Determination.--A determination of whether a 
                mortgage is a residential mortgage for purposes of this 
                Act shall be made based on the purpose of the mortgage 
                as of the time the loan was made, as determined based 
                upon information obtained during the application 
                process for the mortgage.

SEC. 8. APPLICABILITY AND PREEMPTION.

    (a) Applicability.--This Act shall apply with respect to any action 
for a deficiency judgment arising from an obligation under a 
residential mortgage brought in any State or Federal court.
    (b) Preemption.--The provisions of this Act shall preempt any State 
law to the extent that such law is inconsistent with the limitations 
contained in such provisions. The provisions of this Act shall not 
preempt any State law that provides for defenses or places limitations 
on a person's liability in addition to those contained in this Act or 
otherwise imposes greater restrictions that those provided in this Act.

Summary: Fairness in Foreclosures Act of 2011 - Declares that no action for a deficiency judgment arising from an obligation under a residential mortgage may be brought except in accordance with this Act. Declares that no such deficiency judgment may be issued unless the court has determined that the foreclosure sale for the property securing repayment was conducted in accordance with specified requirements. Specifies a formula for determining the total amount a plaintiff may recover in such a deficiency judgment. Declares that no action for a deficiency judgment may be brought if the (nonrecourse) mortgage terms prohibit recovery after: (1) the residential property securing repayment of such obligation is sold at foreclosure sale, or (2) the mortgage is foreclosed in the manner provided under the law of the state in which the property is located. Declares that if the mortgagor is a member of a low-income family: (1) no action may be brought for a deficiency judgment. And (2) a deficiency in recovery, from a foreclosure sale, of the full amount of the mortgage obligation may not be reported to any consumer reporting agency or disclosed to any person other than the mortgagor or the mortgagor's personal representative, unless such disclosure is otherwise required by law.