I 

108TH CONGRESS 

1ST SESSION H. R. 1357

To establish a program to assist homeowners experiencing unavoidable, temporary difficulty making payments on mortgages insured under the National Housing Act. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 19, 2003

Mr. FATTAH introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL

To establish a program to assist homeowners experiencing 

unavoidable, temporary difficulty making payments on 

mortgages insured under the National Housing Act.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Homeowners’ Emer5 gency Mortgage Assistance Act’’. 

6 SEC. 2. MORTGAGE EMERGENCY ASSISTANCE PROGRAM. 

7 (a) IN GENERAL.—The Secretary shall establish a 

8 program to make payments on a mortgage insured under 
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1 the National Housing Act for a 1- to 4-family residence 

2 when—

3 (1) the mortgagee has given the mortgagor no4 tice in accordance with section 3(b) that it intends 

5 to foreclose the mortgage; 

6 (2) at least 2 full monthly installments due on 

7 the mortgage are unpaid after the application of any 

8 partial payments that may have been accepted but 

9 not yet applied to the mortgage account; 

10 (3) the mortgagor is suffering financial hard11 ship due to circumstances beyond the control of the 

12 mortgagor which render the mortgagor unable to 

13 correct the delinquency on the mortgage and unable 

14 to make full mortgage payments before the expira15 tion of the 60-day period beginning on the date that 

16 notice was sent to the mortgagor in accordance with 

17 section 3(b); 

18 (4) there is a reasonable prospect that the 

19 mortgagor will be able to resume full mortgage pay20 ments not later than 36 months after the beginning 

21 of the period for which assistance payments are pro22 vided and to pay the mortgage in full by its maturity 

23 date or by a later date agreed upon by the mort24 gagee; 
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1 (5) the property mortgaged is the mortgagor’s 

2 principal place of residence; 

3 (6) the mortgagor does not own other property 

4 which is subject to a mortgage insured or held by 

5 the Secretary; 

6 (7) the mortgagor has applied to the Secretary 

7 for assistance in accordance with section 4; and 

8 (8) the mortgagor has not been more than 60 

9 days in arrears on a residential mortgage within the 

10 2-year period preceding the delinquency for which 

11 assistance is requested, unless the mortgagor can 

12 demonstrate that the prior delinquency was the re13 sult of financial hardship due to circumstances be14 yond the control of the mortgagor. 

15 (b) EFFECT OF FINDING OF INELIGIBILITY.—If, 

16 after reviewing an application for assistance submitted in 

17 accordance with section 4, the Secretary determines that 

18 the mortgagor has not met the conditions of eligibility de19 scribed in subsection (a), the mortgagor shall be prohib20 ited from reapplying for assistance under this Act until 

21 the expiration of the 6-month period beginning on the date 

22 of such determination unless there is a material change 

23 in the financial circumstances of the mortgagor. 

24 (c) DETERMINATION RELATING TO FINANCIAL

25 HARDSHIP.—In determining whether a financial hardship 
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1 (which may be caused by a reduction in income or an in2 crease in expenses, or both) is due to circumstances be3 yond the control of a mortgagor, the Secretary may con4 sider information regarding the mortgagor’s employment 

5 record, credit history, and current income. Such cir6 cumstances shall include, but not be limited to—

7 (1) loss of job of a member of the household; 

8 (2) salary, wage or earnings reduction of a 

9 member of the household; 

10 (3) injury, disability or illness of a member of 

11 the household; 

12 (4) divorce or separation in the household; or 

13 (5) death of a member of the household. 

14 (d) HOUSING COUNSELING AGENCIES.—The Sec15 retary shall designate and approve nonprofit housing 

16 counseling agencies in each State to be available to assist 

17 the Secretary in implementing the program established 

18 pursuant to subsection (a) of this section and to section 

19 4(b)(1)(A). Nonprofit housing agencies designated and ap20 proved under this subsection shall provide assistance to 

21 an eligible mortgagor during the entire period that such 

22 mortgagor receives assistance under this Act. 

23 SEC. 3. LEGAL ACTION. 

24 (a) CONDITIONS UNDER WHICH LEGAL ACTION IS

25 PROHIBITED.—Except as otherwise provided in the Act, 
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1 a mortgagee of a mortgage which is insured under the Na2 tional Housing Act for a 1- to 4-family residence may not 

3 accelerate the maturity of or commence any legal action 

4 regarding such a mortgage (including, but not limited to, 

5 mortgage foreclosure to recover under such obligation) or 

6 take possession of any security of the mortgagor for such 

7 mortgage obligation unless the mortgagee has sent to the 

8 mortgagor notice pursuant to subsection (b). In addition, 

9 the mortgagee may not take such action—

10 (1) before the expiration of the 30-day period 

11 beginning on the date that notice of the intent to 

12 take such action was sent to the mortgagor in ac13 cordance with subsection (b); 

14 (2) before the expiration of the 30-day period 

15 beginning on the date of the initial meeting between 

16 the mortgagor and an approved counseling agency 

17 held in accordance with section 4(a); 

18 (3) if an application for such assistance under 

19 this Act has been submitted to the Secretary on be20 half of the mortgagor and such application—

21 (A) is pending; or 

22 (B) has been approved but payments have 

23 not yet been made toward the mortgage; or 

24 (4) if payment toward the mortgage is being 

25 made under this Act. 
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1 (b) REQUIREMENTS OF NOTICE.—The Secretary 

2 shall issue regulations that include, but are not limited 

3 to, a uniform notice under this section. Such notice shall 

4 be in plain language and shall—

5 (1) inform the mortgagor in large bold type 

6 that he or she may be eligible for temporary assist7 ance in making mortgage payments; 

8 (2) include an explanation of the mortgage as9 sistance program under this Act; 

10 (3) inform the mortgagor that to apply for 

11 mortgage assistance, he or she shall attend a meet12 ing in accordance with section 4(a) within 30 days 

13 of the date of the notice; 

14 (4) include the legal action intended and the 

15 basis therefore; 

16 (5) include a list of approved counseling agen17 cies located in the State in which the mortgagor re18 sides; 

19 (6) be sent via first class mail to the last known 

20 address of the mortgagor; and 

21 (7) be subject to such other requirements as 

22 prescribed by the Secretary. 

23 SEC. 4. APPLICATION FOR ASSISTANCE. 

24 (a) MEETING.—
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1 (1) IN GENERAL.—To apply for assistance 

2 under this Act, not later than 30 days after receiv3 ing notice in accordance with section 3(b), a mort4 gagor shall attend a face to face meeting with the 

5 mortgagee or an approved counseling agency to at6 tempt to prevent legal action for which the notice 

7 was sent by restructuring the mortgage payment 

8 schedule. A meeting under this paragraph may be 

9 conducted over the telephone under circumstances 

10 prescribed by the Secretary. 

11 (2) NOTICE.—If the mortgagor meets with the 

12 approved counseling agency within the period speci13 fied in paragraph (1), the approved counseling agen14 cy shall send notice of the meeting which includes, 

15 but is not limited to, the date of the meeting, to the 

16 mortgagee not later than 5 business days after the 

17 meeting. 

18 (b) PREPARATION; SUBMISSION.—

19 (1) IN GENERAL.—If the mortgagor is not able 

20 to resolve the default and prevent foreclosure before 

21 the expiration of the 30-day period beginning on the 

22 date of the meeting, the mortgagor may file an ap23 plication for mortgage assistance under this Act. At 

24 the request of the mortgagor, an approved coun25 seling agency shall—
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1 (A) assist the mortgagor in preparing an 

2 application for assistance under this Act; and 

3 (B) not later than 30 days after the mort4 gagor initially requests assistance in the prepa5 ration of the application, submit the completed 

6 application to the Secretary. 

7 (2) FEES.—The Secretary may pay approved 

8 counseling agencies a fee, in an amount determined 

9 by the Secretary, for rendering assistance pursuant 

10 to this Act. 

11 (c) NOTICE TO MORTGAGEE.—If the approved coun12 seling agency submits an application for assistance to the 

13 Secretary on behalf of a mortgagor, the approved coun14 seling agency shall, not later than 5 business days after 

15 submitting the application, inform the mortgagee of the 

16 date that the application was submitted. 

17 (d) FORM; CONTENTS.—An application for assistance 

18 under this Act shall be submitted on a form prescribed 

19 by the Secretary and shall include a financial statement 

20 disclosing all assets and liabilities of the mortgagor, 

21 whether singly or jointly held, and all household income 

22 regardless of source. 

23 (e) EFFECT OF MISREPRESENTATION.—A mortgagor 

24 who intentionally misrepresents any financial information 

25 in connection with the filing of an application for assist-
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1 ance under this Act may be denied assistance and required 

2 to immediately repay any amount of assistance received, 

3 and the mortgagee may, at any time thereafter, take any 

4 legal action to enforce the mortgage without any further 

5 restrictions or requirements under this Act. 

6 (f) AVAILABILITY.—An application for assistance 

7 under this Act may be obtained from an approved coun8 seling agency. 

9 (g) DETERMINATION ON APPLICATION.—

10 (1) TIME PERIOD.—The Secretary shall deter11 mine eligibility of a mortgagor for assistance under 

12 this Act not later than 60 days after receipt of the 

13 application of the mortgagor. 

14 (2) NOTIFICATION.—Not later than 5 business 

15 days after making the determination on an applica16 tion for assistance, the Secretary shall notify the 

17 mortgagor and the mortgagee as to whether the ap18 plication has been approved or disapproved. 

19 SEC. 5. ASSISTANCE PAYMENTS BY SECRETARY. 

20 (a) AMOUNT TO BRING MORTGAGE CURRENT.—If 

21 the Secretary determines that a mortgagor is eligible for 

22 assistance under this Act, the Secretary shall pay to the 

23 mortgagee from the Mutual Mortgage Insurance Fund the 

24 full amount due to the mortgagee pursuant to the terms 

25 of the mortgage without regard to any acceleration under 
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1 the mortgage, or the full amount of any alternative mort2 gage payments agreed to by the mortgagee and mortgagor 

3 on the date that the application is approved by the Sec4 retary. This amount shall include the amount of principal, 

5 interest, taxes, assessments, ground rents, hazard insur6 ance, any mortgage insurance or credit insurance pre7 miums, and reasonable attorneys’ fees incurred by such 

8 mortgagee in relation to the arrearage. 

9 (b) MONTHLY ASSISTANCE PAYMENTS.—

10 (1) IN GENERAL.—The Secretary shall make 

11 monthly mortgage assistance payments to the mort12 gagee on behalf of the mortgagor pursuant to this 

13 Act. 

14 (2) OBLIGATION OF THE MORTGAGOR.—A 

15 mortgagor on whose behalf the Secretary is making 

16 the mortgage assistance payments shall pay monthly 

17 payments to the Secretary. Such payments shall be 

18 in an amount which will cause the mortgagor’s total 

19 housing expense not to exceed 35 percent of the 

20 mortgagor’s net effective income. This shall be the 

21 maximum amount the mortgagor can be required to 

22 pay during the 36 months a mortgagor is eligible for 

23 mortgage assistance. 

24 (3) OBLIGATION OF THE SECRETARY.—Upon 

25 receipt of this payment from the mortgagor, the Sec-
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1 retary or the Secretary’s duly authorized agent shall 

2 send the total mortgage payment directly to the 

3 mortgagee. 

4 (c) REVIEW UPON DELINQUENCY.—If the mortgagor 

5 fails to pay to the Secretary any amounts due directly 

6 from the mortgagor under this section not later than 15 

7 days after such due date, the Secretary or its designated 

8 agent shall review the mortgagor’s financial circumstances 

9 to determine whether a delinquency in payments due from 

10 the mortgagor under this section or section 6 is the result 

11 of a change in the mortgagor’s financial circumstances 

12 since the payment amount was last determined. If the de13 linquency is not the result of a change in the mortgagor’s 

14 financial circumstances, the Secretary shall terminate fu15 ture mortgage assistance payments and the mortgagee 

16 may, at any time thereafter, take any legal action to en17 force its mortgage without any further restriction or re18 quirement. If the delinquency is the result of such a 

19 change, the Secretary shall modify the mortgagor’s re20 quired payments to the Secretary as the Secretary shall 

21 determine. 

22 (d) PERIOD FOR ASSISTANCE.—Payments under this 

23 Act shall be provided for a period not to exceed 36 months, 

24 either consecutively or nonconsecutively. The Secretary 

25 shall establish procedures for periodic review of the mort-
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1 gagor’s financial circumstances for the purpose of deter2 mining the necessity for continuation, termination, or ad3 justment of the amount of the payments. 

4 SEC. 6. REPAYMENT OF ASSISTANCE. 

5 (a) ASSISTANCE LOAN.—The amount by which the 

6 assistance payments made by the Secretary to the mort7 gagee exceeds the amount of payments made by the mort8 gagor to the Secretary shall be a loan by the Secretary 

9 to the mortgagor. The loan shall be evidenced by such doc10 uments as the Secretary shall determine necessary to pro11 tect the interests of the United States. 

12 (b) REPAYMENT OF ASSISTANCE LOAN.—Before 

13 making assistance payments under this Act on behalf of 

14 a mortgagor, the Secretary shall enter into an agreement 

15 with the mortgagor for repayment of all mortgage assist16 ance made by the Secretary under section 5, plus interest 

17 as provided in subsection (c). The agreement shall provide 

18 for monthly payments by the mortgagor to the Secretary 

19 which (1) shall begin once the Secretary has determined 

20 that continuation of mortgage assistance payments to the 

21 mortgagee is unnecessary, and (2) shall be in an amount 

22 determined as follows: 

23 (1) HOUSING EXPENSE LESS THAN 35 PER24 CENT.—If the mortgagor’s total housing expense is 

25 less than 35 percent of the mortgagor’s net effective 
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1 income, the mortgagor shall pay to the Secretary the 

2 difference between 35 percent of the mortgagor’s net 

3 effective income and the mortgagor’s total housing 

4 expense unless otherwise determined by the Sec5 retary after examining the mortgagor’s financial cir6 cumstances and ability to contribute to repayment of 

7 the mortgage assistance. 

8 (2) HOUSING EXPENSE GREATER THAN 35 PER9 CENT.—If the mortgagor’s total housing expense is 

10 more than 35 percent of the mortgagor’s net effec11 tive income, repayment of the mortgage assistance 

12 shall be deferred until the mortgagor’s total housing 

13 expense is less than 35 percent of the mortgagor’s 

14 net effective income. 

15 (3) WHEN MORTGAGE PAID IN FULL.—Notwith16 standing paragraphs (1) and (2), if repayment of 

17 mortgage assistance is not made by the date that 

18 the mortgage is paid in full, the mortgagor shall 

19 make mortgage assistance repayments in an amount 

20 not less than the previous regular mortgage payment 

21 until the mortgage assistance is repaid. 

22 (c) INTEREST.—Interest shall accrue on all mortgage 

23 assistance made under this Act at the rate determined 

24 monthly by the Secretary of the Treasury to be equal to 

25 the then current average yield on outstanding 30-year 
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1 bonds issued by the Secretary of the Treasury under sec2 tion 3102 of title 31, United States Code, and shall accrue 

3 only during the period in which the mortgagor is required 

4 to make repayment under this section. 

5 (d) LIEN TO SECURE REPAYMENT OF ASSIST6 ANCE.—Repayment of amounts owed to the Secretary 

7 from a mortgagor shall be secured by a mortgage lien on 

8 the property and by such other obligation as the Secretary 

9 may require. The lien or other security interest of the Sec10 retary shall not be deemed to take priority over any other 

11 secured lien or secured interest in effect against the mort12 gagor’s property on the date assistance payments begin. 

13 The Secretary may allow subordination of the mortgage 

14 assistance lien only if such subordination is necessary to 

15 permit the mortgagor to obtain a home improvement loan 

16 for repairs necessary to preserve the property. 

17 (e) TIME FOR REPAYMENT.—Payments under this 

18 section shall be made by the mortgagor to the Secretary 

19 not later than 14 days after each mortgage payment is 

20 due under the mortgage (or in the case of repayment after 

21 the mortgage has been paid in full, not later than the date 

22 the mortgage payments were due under the mortgage). 

23 SEC. 7. DEFINITIONS. 

24 For the purposes of this Act, the following definitions 

25 apply: 
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1 (1) APPROVED COUNSELING AGENCY.—The 

2 term ‘‘approved counseling agency’’ means a non3 profit housing counseling agency approved by the 

4 Secretary pursuant to section 2(e). 

5 (2) GROSS HOUSEHOLD INCOME.—The term 

6 ‘‘gross household income’’ means the total income of 

7 a mortgagor, the mortgagor’s spouse, children resid8 ing in the same residence as the mortgagor, and any 

9 other person living in such residence that is declared 

10 by the mortgagor as a dependent for Federal income 

11 tax purposes. 

12 (3) HOUSEHOLD.—The term ‘‘household’’ 

13 means a mortgagor, the mortgagor’s spouse, chil14 dren residing in the same residence as the mort15 gagor, and any other person living in such residence 

16 that is declared by the mortgagor as a dependent for 

17 Federal income tax purposes. 

18 (4) HOUSING EXPENSE.—The term ‘‘housing 

19 expense’’ means the sum of the mortgagor’s monthly 

20 maintenance, utility, and hazard insurance expense, 

21 taxes, and required mortgage payments, including 

22 escrows. 

23 (5) MORTGAGEE; MORTGAGOR.—The terms 

24 ‘‘mortgagee’’ and ‘‘mortgagor’’ have the meanings 
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1 given such terms in section 201 of the National 

2 Housing Act (12 U.S.C. 1707). 

3 (6) NET EFFECTIVE INCOME.—The term ‘‘net 

4 effective income’’ means the gross household income 

5 of the mortgagor, less city, State, and Federal in6 come and social security taxes. 

7 (7) SECRETARY.—The term ‘‘Secretary’’ means 

8 the Secretary of Housing and Urban Development.

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