I 

112TH CONGRESS 

2D SESSION H. R. 3789 

To amend the Truth in Lending Act to establish clear regulatory standards 

for mortgage servicers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 18, 2012 

Ms. DELAURO introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act to establish clear regulatory standards for mortgage servicers, and for other 

purposes. 

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 ‘‘Regulation of Mort5 gage Servicing Act of 2012’’. 

6 SEC. 2. STANDARDS FOR MORTGAGE SERVICERS. 

7 (a) IN GENERAL.—Chapter 2 of the Truth in Lend8 ing Act (15 U.S.C. 1631) is amended by adding at the 

9 end the following new section: 


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1 ‘‘SEC. 129I. STANDARDS FOR SERVICERS OF RESIDENTIAL 

2 MORTGAGES. 

3 ‘‘(a) DEFINITIONS.—In this section, the following 

4 definitions shall apply: 

5 ‘‘(1) ALTERNATIVE TO FORECLOSURE.—The 

6 term ‘alternative to foreclosure’— 

7 ‘‘(A) means a course of action with respect 

8 to a mortgage offered by a servicer to a bor9 rower as an alternative to a covered foreclosure 

10 action; and 

11 ‘‘(B) includes a short sale and a deed in 

12 lieu of foreclosure. 

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

14 a mortgagor under a mortgage who is in default or 

15 at risk of imminent default, as determined by the 

16 Director, by rule. 

17 ‘‘(3) COVERED FORECLOSURE ACTION.—The 

18 term ‘covered foreclosure action’ means a judicial or 

19 nonjudicial foreclosure. 

20 ‘‘(4) INDEPENDENT REVIEWER.—The term 

21 ‘independent reviewer’— 

22 ‘‘(A) means an entity that has the exper23 tise and capacity to determine whether a bor24 rower is eligible to participate in a loan modi25 fication program; and 

26 ‘‘(B) includes— 


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1 ‘‘(i) an entity that is not a servicer; or 

2 ‘‘(ii) a division within a servicer that 

3 is independent of, and not under the same 

4 immediate supervision as, any division that 

5 makes determinations with respect to ap6 plications for loan modifications or alter7 natives to foreclosure. 

8 ‘‘(5) LOAN MODIFICATION PROGRAM.—The 

9 term ‘loan modification program’— 

10 ‘‘(A) means a program or procedure de11 signed to change the terms of a mortgage in the 

12 case of the default, delinquency, or imminent 

13 default or delinquency of a mortgagor; and 

14 ‘‘(B) includes— 

15 ‘‘(i) a loan modification program es16 tablished by the Federal Government, in17 cluding the Home Affordable Modification 

18 Program of the Department of the Treas19 ury; and 

20 ‘‘(ii) a loan modification program es21 tablished by a servicer. 

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

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

25 of 1974 (12 U.S.C. 2602(3)), that is secured by a 


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1 first or subordinate lien on residential real property 

2 that is the primary residence of the borrower. 

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

4 ‘‘(A) has the same meaning as in section 

5 6(i) of the Real Estate Settlement Procedures 

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

7 ‘‘(B) includes a person responsible for 

8 servicing a pool of mortgages. 

9 ‘‘(b) SINGLE POINT OF CONTACT.— 

10 ‘‘(1) CASE MANAGER REQUIRED.—A servicer 

11 shall assign 1 case manager to each borrower that 

12 seeks a loan modification or an alternative to fore13 closure. 

14 ‘‘(2) DUTIES OF CASE MANAGER.—The case 

15 manager assigned under paragraph (1) shall be an 

16 individual who— 

17 ‘‘(A) manages the communications between 

18 the servicer and the borrower; 

19 ‘‘(B) has the authority to make decisions 

20 about the eligibility of the borrower for a loan 

21 modification or an alternative to foreclosure; 

22 ‘‘(C) is available to communicate with the 

23 borrower by telephone and email during busi24 ness hours; and 


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1 ‘‘(D) remains assigned to the borrower 

2 until the earliest of— 

3 ‘‘(i) the date on which the borrower 

4 accepts a loan modification or an alter5 native to foreclosure; 

6 ‘‘(ii) the date on which the servicer 

7 forecloses on the mortgage of the borrower; 

8 or 

9 ‘‘(iii) the date on which a release of 

10 the mortgage of the borrower is recorded 

11 in the appropriate land records office, as 

12 determined by the Director, by rule. 

13 ‘‘(3) ASSISTANCE FOR CASE MANAGERS.—A 

14 servicer may assign an employee to assist a case 

15 manager assigned under paragraph (1), if the case 

16 manager remains available to communicate with the 

17 borrower by telephone and email. 

18 ‘‘(c) DETERMINATION OF ELIGIBILITY FOR LOAN

19 MODIFICATION PROGRAM OR ALTERNATIVE TO FORE20 CLOSURE REQUIRED BEFORE FORECLOSURE.— 

21 ‘‘(1) INITIATION OF COVERED FORECLOSURE

22 ACTIONS.—A servicer may not initiate a covered 

23 foreclosure action against a borrower unless the 

24 servicer has— 


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1 ‘‘(A) completed a full review of the file of 

2 the borrower to determine whether the borrower 

3 is eligible for a loan modification or an alter4 native to foreclosure; 

5 ‘‘(B) made a reasonable effort to obtain 

6 the information necessary to determine whether 

7 the borrower is eligible for a loan modification 

8 or an alternative to foreclosure, as described in 

9 paragraph (3); and 

10 ‘‘(C) offered the borrower a loan modifica11 tion or an alternative to foreclosure, if the bor12 rower is eligible for the loan modification or al13 ternative to foreclosure. 

14 ‘‘(2) SUSPENSION OF COVERED FORECLOSURE

15 ACTIONS.— 

16 ‘‘(A) IN GENERAL.—A servicer shall sus17 pend a covered foreclosure action that was initi18 ated before the date of enactment of this sec19 tion until the servicer— 

20 ‘‘(i) completes a full review of the file 

21 of the borrower to determine whether the 

22 borrower is eligible for a loan modification 

23 or an alternative to foreclosure; 

24 ‘‘(ii) notifies the borrower of the de25 termination under clause (i); and 


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1 ‘‘(iii) offers the borrower a loan modi2 fication or an alternative to foreclosure, if 

3 the borrower is eligible for a loan modifica4 tion or an alternative to foreclosure. 

5 ‘‘(B) SUSPENSION.—During the period of 

6 the suspension under subparagraph (A), a 

7 servicer may not— 

8 ‘‘(i) send a notice of foreclosure to a 

9 borrower; 

10 ‘‘(ii) conduct or schedule a sale of the 

11 residential real property securing the mort12 gage of the borrower; or 

13 ‘‘(iii) cause final judgment to be en14 tered against the borrower. 

15 ‘‘(C) REASONABLE EFFORTS.—A servicer 

16 is not required to suspend a covered foreclosure 

17 action under subparagraph (A) if the servicer— 

18 ‘‘(i) makes a reasonable effort to ob19 tain information necessary to determine 

20 whether the borrower is eligible for a loan 

21 modification or an alternative to fore22 closure, as described in paragraph (3); and 

23 ‘‘(ii) documents that the servicer has 

24 not received information necessary to de25 termine whether the borrower is eligible for 


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1 a loan modification or an alternative to 

2 foreclosure before the end of the applicable 

3 period under paragraph (3). 

4 ‘‘(D) RULE OF CONSTRUCTION.—Nothing 

5 in this section may be construed to require a 

6 servicer to delay an unavoidable foreclosure, 

7 such as foreclosure that results from a borrower 

8 abandoning the residential real property secur9 ing the mortgage of such borrower. 

10 ‘‘(3) REASONABLE EFFORT TO OBTAIN NEC11 ESSARY INFORMATION.—A servicer shall be deemed 

12 to have made a reasonable effort to obtain informa13 tion necessary to determine whether the borrower is 

14 eligible for a loan modification or an alternative to 

15 foreclosure if such servicer takes the following steps: 

16 ‘‘(A) 30-DAY PERIOD AFTER DELIN17 QUENCY.— 

18 ‘‘(i) IN GENERAL.—During the 30-day 

19 period beginning on the date of delin20 quency of the borrower, the servicer shall 

21 attempt to establish contact with the bor22 rower by— 

23 ‘‘(I) making not fewer than 4 

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1 ber on record for the borrower, at dif2 ferent times of the day; and 

3 ‘‘(II) sending not fewer than 2 

4 written notices to the borrower at the 

5 address on record for the borrower, at 

6 least 1 of which shall be delivered by 

7 certified mail, requesting that the bor8 rower contact the servicer. 

9 ‘‘(ii) CONTACT NOT ESTABLISHED.— 

10 In the case that a servicer is not able to 

11 establish contact with the borrower by tele12 phone under subclause (I) of clause (i) or 

13 such borrower does not respond to the no14 tices sent under subclause (II) of such 

15 clause, such servicer shall, following a 

16 third party review under subsection (d), 

17 notify the borrower that the servicer in18 tends to initiate or continue a covered fore19 closure action. 

20 ‘‘(B) CONTACT ESTABLISHED WITH BOR21 ROWER.—In the case that a servicer is able to 

22 establish contact with the borrower under sub23 paragraph (A)(i), the servicer shall— 

24 ‘‘(i) notify the borrower, in writing, 

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1 essary to determine whether the borrower 

2 is eligible for a loan modification or an al3 ternative to foreclosure; and 

4 ‘‘(ii) send the borrower a written re5 quest that the borrower transmit to the 

6 servicer, not later than 30 days after the 

7 date on which such request sent by the 

8 servicer is postmarked, all information nec9 essary to determine whether the borrower 

10 is eligible for a loan modification or an al11 ternative to foreclosure. 

12 ‘‘(C) NECESSARY INFORMATION NOT RE13 CEIVED.—In the case that the servicer does not 

14 receive from the borrower all information re15 quested under clause (ii) of subparagraph (B) 

16 within the time period described in such sub17 paragraph, the servicer shall send the borrower 

18 an additional written request that the borrower 

19 transmit to the servicer, not later than 15 days 

20 after the date on which such request sent by 

21 the servicer is postmarked, all information nec22 essary to determine whether the borrower is eli23 gible for a loan modification or an alternative to 

24 foreclosure. 


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1 ‘‘(D) NOTIFICATION OF FORECLOSURE.— 

2 In the case that the servicer does not receive 

3 from the borrower all information requested 

4 under subparagraph (C) within the time period 

5 described in such subparagraph, the servicer 

6 shall, following a third party review under sub7 section (d), notify the borrower that the servicer 

8 intends to initiate or continue a covered fore9 closure action. 

10 ‘‘(d) THIRD PARTY REVIEW.— 

11 ‘‘(1) IN GENERAL.—Unless otherwise provided 

12 for in this subsection, before a servicer notifies a 

13 borrower that the borrower is not eligible for a loan 

14 modification or an alternative to foreclosure, the 

15 servicer shall obtain the services of an independent 

16 reviewer to— 

17 ‘‘(A) review the file of the borrower; and 

18 ‘‘(B) determine whether the borrower is el19 igible for a loan modification or an alternative 

20 to foreclosure. 

21 ‘‘(2) EXEMPTION.—Paragraph (1) shall not 

22 apply to a servicer that is a community financial in23 stitution, as defined in section 2(10) of the Federal 

24 Home Loan Bank Act (12 U.S.C. 1422(10)). 

25 ‘‘(e) BAR TO FORECLOSURE ACTIONS.— 


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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), a 

2 violation of this Act shall be a bar to a covered fore3 closure action. 

4 ‘‘(2) EFFECT OF SUBSEQUENT COMPLIANCE.— 

5 If a servicer is in compliance with this section, the 

6 servicer may bring or proceed with a covered fore7 closure action, without regard to a prior violation of 

8 this section by the servicer. 

9 ‘‘(f) LIABILITY.— 

10 ‘‘(1) IN GENERAL.—A servicer that fails to 

11 comply with any requirement imposed under this 

12 section shall be liable to a borrower in the same 

13 manner that a creditor who fails to comply with any 

14 requirement under this chapter is liable to a person 

15 under section 130. 

16 ‘‘(2) JOINT AND SEVERAL LIABILITY.—A cred17 itor or assignee that is connected to a mortgage 

18 serviced by a servicer that fails to comply with any 

19 requirement imposed under this section shall, with 

20 respect to that mortgage, have joint and several li21 ability with such servicer for such failure to com22 ply.’’. 

23 (b) TABLE OF CONTENTS.—The table of contents of 

24 chapter 2 of such Act is amended by adding at the end 

25 the following new item: 

‘‘129I. Standards for servicers of residential mortgages.’’. 


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1 SEC. 3. REGULATIONS. 

2 Not later than 90 days after the date of enactment 

3 of this Act, the Director of the Bureau of Consumer Fi4 nancial Protection, in consultation with the Secretary of 

5 Housing and Urban Development and the Secretary of the 

6 Treasury, shall issue regulations to carry out the amend7 ments made by this Act. 

8 SEC. 4. REPORT. 

9 Not later than 1 year after the date of enactment 

10 of this Act, the Director of the Bureau of Consumer Fi11 nancial Protection shall submit to Congress a report that 

12 contains— 

13 (1) an evaluation of the effect of the amend14 ments made by this Act on— 

15 (A) State law; and 

16 (B) communication between servicers and 

17 borrowers; and 

18 (2) a description of any problems concerning 

19 the implementation of this Act. 

Æ 


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