I 

112TH CONGRESS 

1ST SESSION H. R. 3595 

To establish a mandatory mediation process for servicers of residential 

mortgages and borrowers. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 7, 2011 

Ms. WILSON of Florida introduced the following bill; which was referred to 

the Committee on Financial Services 

A BILL 

To establish a mandatory mediation process for servicers 

of residential mortgages and borrowers. 

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 ‘‘Mandatory Foreclosure 

5 Mediation Act’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act, the following definitions shall apply: 

8 (1) ALTERNATIVE TO FORECLOSURE.—The 

9 term ‘‘alternative to foreclosure’’— 


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1 (A) means a course of action with respect 

2 to a mortgage offered by a servicer to a bor3 rower as an alternative to a covered foreclosure 

4 action; and 

5 (B) includes a short sale and a deed in lieu 

6 of foreclosure. 

7 (2) BORROWER.—The term ‘‘borrower’’ means 

8 a mortgagor under a mortgage who is in default or 

9 at risk of imminent default, as determined by the 

10 Secretary through regulations. 

11 (3) FORECLOSURE ACTION.—The term ‘‘fore12 closure action’’ means a judicial or nonjudicial fore13 closure. 

14 (4) LOAN MODIFICATION PROGRAM.—The term 

15 ‘‘loan modification program’’ means a program or 

16 procedure designed to change the terms of a mort17 gage in the case of the default, delinquency, or im18 minent default or delinquency of a mortgagor, in19 cluding a loan modification program established by 

20 a servicer that reduces the principal owed by the 

21 mortgagor on the mortgage. 

22 (5) MORTGAGE.—The term ‘‘mortgage’’ means 

23 a federally related mortgage loan, as defined in sec24 tion 3(1) of the Real Estate Settlement Procedures 

25 Act of 1974 (12 U.S.C. 2602(1)), that is secured by 


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1 a first or subordinate lien on residential real prop2 erty. 

3 (6) SECRETARY.—The term ‘‘Secretary’’ means 

4 the Secretary of Housing and Urban Development. 

5 (7) SERVICER.—The term ‘‘servicer’’— 

6 (A) has the same meaning as in section 

7 6(i) of the Real Estate Settlement Procedures 

8 Act of 1974 (12 U.S.C. 2605(i)); and 

9 (B) includes a person responsible for serv10 icing a pool of mortgages. 

11 SEC. 3. MEDIATION REQUIRED BEFORE FORECLOSURE. 

12 (a) INITIATION OF FORECLOSURE ACTIONS.—A 

13 servicer may not initiate a foreclosure action against a 

14 borrower unless the servicer has— 

15 (1) made a reasonable effort to initiate medi16 ation proceedings in accordance with the process es17 tablished in regulations prescribed pursuant to sub18 section (c) to determine whether the borrower is eli19 gible for a loan modification or an alternative to 

20 foreclosure; and 

21 (2) offered the borrower a loan modification or 

22 an alternative to foreclosure, if the borrower is eligi23 ble for the loan modification or alternative to fore24 closure. 

25 (b) SUSPENSION OF FORECLOSURE ACTIONS.— 


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1 (1) IN GENERAL.—A servicer shall suspend a 

2 foreclosure action that was initiated before the date 

3 of enactment of this Act until the servicer— 

4 (A) completes a mediation proceeding in 

5 accordance with the process established in regu6 lations prescribed pursuant to subsection (c) to 

7 determine whether the borrower is eligible for a 

8 loan modification or an alternative to fore9 closure; and 

10 (B) offers the borrower a loan modification 

11 or an alternative to foreclosure, if the borrower 

12 is eligible for a loan modification or an alter13 native to foreclosure. 

14 (2) SUSPENSION.—During the period of the 

15 suspension under paragraph (1), a servicer may 

16 not— 

17 (A) send a notice of foreclosure to a bor18 rower; 

19 (B) conduct or schedule a sale of the real 

20 property securing the mortgage of the borrower; 

21 or 

22 (C) cause final judgment to be entered 

23 against the borrower. 


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1 (3) REASONABLE EFFORTS.—A servicer is not 

2 required to suspend a foreclosure action under para3 graph (1) if the servicer— 

4 (A) makes a reasonable effort to schedule 

5 a mediation proceeding to determine whether 

6 the borrower is eligible for a loan modification 

7 or an alternative to foreclosure; and 

8 (B) documents that the borrower has not 

9 agreed to a mediation proceeding to determine 

10 whether the borrower is eligible for a loan modi11 fication or an alternative to foreclosure. 

12 (4) RULE OF CONSTRUCTION.—Nothing in this 

13 section may be construed to require a servicer to 

14 delay an unavoidable foreclosure, such as foreclosure 

15 that results from a borrower abandoning the resi16 dential real property securing a mortgage. 

17 (c) ESTABLISHMENT OF MEDIATION PROCESS.—The 

18 Secretary shall establish through regulations a mediation 

19 process to determine whether the borrower is eligible for 

20 a loan modification or an alternative to foreclosure under 

21 this section. 

22 SEC. 4. BAR TO FORECLOSURE ACTIONS. 

23 (a) IN GENERAL.—Subject to subsection (b), a viola24 tion of this Act shall be a bar to a foreclosure action. 


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1 (b) EFFECT OF SUBSEQUENT COMPLIANCE.—If a 

2 servicer is in compliance with this Act, the servicer may 

3 bring or proceed with a foreclosure action, without regard 

4 to a prior violation of this Act by the servicer. 

5 SEC. 5. REGULATIONS. 

6 Not later than 90 days after the date of enactment 

7 of this Act, the Secretary shall issue regulations to carry 

8 out this Act. 

9 SEC. 6. REPORT. 

10 Each servicer that initiates mediation proceedings 

11 under section 3 shall submit to the Secretary a quarterly 

12 report at such time, in such manner, and containing such 

13 information, with respect to such proceedings, as the Sec14 retary may require. 

Æ 


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