IB 

Union Calendar No. 7 

111TH CONGRESS 

1ST SESSION H. R. 200 

[Report No. 111–19] 

To amend title 11 of the United States Code with respect to modification 

of certain mortgages on principal residences, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 6, 2009 

Mr. CONYERS (for himself, Ms. LINDA T. SA ́NCHEZ of California, Mr. NADLER of New York, Mr. DELAHUNT, Mr. SCOTT of Virginia, and Ms. WATERS) introduced the following bill; which was referred to the Committee 

on the Judiciary 

FEBRUARY 24, 2009 

Additional sponsors: Mr. GUTIERREZ, Mr. COHEN, Ms. EDWARDS of Maryland, Mr. GRIJALVA, Mr. JOHNSON of Georgia, Mr. WATT, Mr. KENNEDY, Ms. JACKSON-LEE of Texas, Mr. WU, Mr. BERMAN, Mr. 

KUCINICH, and Mr. LEWIS of Georgia 

FEBRUARY 24, 2009 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on January 6, 2009] 

A BILL 

To amend title 11 of the United States Code with respect 

to modification of certain mortgages on principal residences, and for other purposes. 


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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 ‘‘Helping Families Save 

5 Their Homes in Bankruptcy Act of 2009’’. 

6 SEC. 2. ELIGIBILITY FOR RELIEF. 

7 Section 109 of title 11, United States Code, is amend8 ed— 

9 (1) by adding at the end of subsection (e) the fol10 lowing: ‘‘For purposes of this subsection, the computa11 tion of debts shall not include the secured or unse12 cured portions of— 

13 ‘‘(1) debts secured by the debtor’s principal resi14 dence if the current value of such residence is less 

15 than the secured debt limit; or 

16 ‘‘(2) debts secured or formerly secured by real 

17 property that was the debtor’s principal residence 

18 that was sold in foreclosure or that the debtor surren19 dered to the creditor if the current value of such real 

20 property is less than the secured debt limit.’’, and 

21 (2) by adding at the end of subsection (h) the fol22 lowing: 

23 ‘‘(5) The requirements of paragraph (1) shall not 

24 apply in a case under chapter 13 with respect to a debtor 

25 who submits to the court a certification that the debtor has 


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1 received notice that the holder of a claim secured by the 

2 debtor’s principal residence may commence a foreclosure on 

3 the debtor’s principal residence.’’. 

4 SEC. 3. PROHIBITING CLAIMS ARISING FROM VIOLATIONS 

5 OF THE TRUTH IN LENDING ACT. 

6 Section 502(b) of title 11, United States Code, is 

7 amended— 

8 (1) in paragraph (8) by striking ‘‘or’’ at the end, 

9 (2) in paragraph (9) by striking the period at 

10 the end and inserting ‘‘; or’’, and 

11 (3) by adding at the end the following: 

12 ‘‘(10) the claim for a loan secured by a security 

13 interest in the debtor’s principal residence is subject 

14 to a remedy for rescission under the Truth in Lend15 ing Act notwithstanding the prior entry of a fore16 closure judgment, except that nothing in this para17 graph shall be construed to modify, impair, or super18 sede any other right of the debtor.’’. 

19 SEC. 4. AUTHORITY TO MODIFY CERTAIN MORTGAGES. 

20 Section 1322 of title 11, United States Code, is amend21 ed— 

22 (1) in subsection (b)— 

23 (A) by redesignating paragraph (11) as 

24 paragraph (12), 


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1 (B) in paragraph (10) by striking ‘‘and’’ at 

2 the end, and 

3 (C) by inserting after paragraph (10) the 

4 following: 

5 ‘‘(11) notwithstanding paragraph (2) and other6 wise applicable nonbankruptcy law, with respect to a 

7 claim for a loan originated before the effective date of 

8 this paragraph and secured by a security interest in 

9 the debtor’s principal residence that is the subject of 

10 a notice that a foreclosure may be commenced with 

11 respect to such loan, modify the rights of the holder 

12 of such claim (and the rights of the holder of any 

13 claim secured by a subordinate security interest in 

14 such residence)— 

15 ‘‘(A) by providing for payment of the 

16 amount of the allowed secured claim as deter17 mined under section 506(a)(1); 

18 ‘‘(B) if any applicable rate of interest is ad19 justable under the terms of such security interest 

20 by prohibiting, reducing, or delaying adjust21 ments to such rate of interest applicable on and 

22 after the date of filing of the plan; 

23 ‘‘(C) by modifying the terms and conditions 

24 of such loan— 


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1 ‘‘(i) to extend the repayment period for 

2 a period that is no longer than the longer 

3 of 40 years (reduced by the period for which 

4 such loan has been outstanding) or the re5 maining term of such loan, beginning on 

6 the date of the order for relief under this 

7 chapter; and 

8 ‘‘(ii) to provide for the payment of in9 terest accruing after the date of the order for 

10 relief under this chapter at a fixed annual 

11 rate equal to the currently applicable aver12 age prime offer rate as of the date of the 

13 order for relief under this chapter, cor14 responding to the repayment term deter15 mined under the preceding paragraph, as 

16 published by the Federal Financial Institu17 tions Examination Council in its table enti18 tled ‘Average Prime Offer Rates—Fixed’, 

19 plus a reasonable premium for risk; and 

20 ‘‘(D) by providing for payments of such 

21 modified loan directly to the holder of the claim; 

22 and’’, and 

23 (2) by adding at the end the following: 

24 ‘‘(g) A claim may be reduced under subsection 

25 (b)(11)(A) only on the condition that if the debtor sells the 


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1 principal residence securing such claim, before receiving a 

2 discharge under this chapter and receives net proceeds from 

3 the sale of such residence, then the debtor agrees to pay to 

4 such holder— 

5 ‘‘(1) if such residence is sold in the 1st year oc6 curring after the effective date of the plan, 80 percent 

7 of the amount of the difference between the sales price 

8 and the amount of such claim (plus costs of sale and 

9 improvements), but not to exceed the amount of the 

10 allowed secured claim determined as if such claim 

11 had not been reduced under such subsection; 

12 ‘‘(2) if such residence is sold in the 2d year oc13 curring after the effective date of the plan, 60 percent 

14 of the amount of the difference between the sales price 

15 and the amount of such claim (plus costs of sale and 

16 improvements), but not to exceed the amount of the 

17 allowed secured claim determined as if such claim 

18 had not been reduced under such subsection; 

19 ‘‘(3) if such residence is sold in the 3d year oc20 curring after the effective date of the plan, 40 percent 

21 of the amount of the difference between the sales price 

22 and the amount of such claim (plus costs of sale and 

23 improvements), but not to exceed the amount of the 

24 allowed secured claim determined as if such claim 

25 had not been reduced under such subsection; and 


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1 ‘‘(4) if such residence is sold in the 4th year oc2 curring after the effective date of the plan, 20 percent 

3 of the amount of the difference between the sales price 

4 and the amount of such claim (plus costs of sale and 

5 improvements), but not to exceed the amount of the 

6 allowed secured claim determined as if such claim 

7 had not been reduced under such subsection. 

8 ‘‘(h) With respect to a claim of the kind described in 

9 subsection (b)(11), the plan may not contain a modification 

10 under the authority of subsection (b)(11)— 

11 ‘‘(1) in a case commenced under this chapter 

12 after the expiration of the 15-day period beginning on 

13 the effective date of this subsection, unless— 

14 ‘‘(A) the debtor certifies that the debtor at15 tempted, not less than 15 days before the com16 mencement of the case, to contact the holder of 

17 such claim (or the entity collecting payments on 

18 behalf of such holder) regarding modification of 

19 the loan that is the subject of such claim; or 

20 ‘‘(B) a foreclosure sale is scheduled to occur 

21 on a date in the 30-day period beginning on the 

22 date the case is commenced; and 

23 ‘‘(2) in any other case pending under this chap24 ter, unless the debtor certifies that the debtor at25 tempted to contact the holder of such claim (or the enVerDate Nov 24 2008 23:58 Feb 24, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H200.RH H200

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1 tity collecting payments on behalf of such holder) re2 garding modification of the loan that is the subject of 

3 such claim, before— 

4 ‘‘(A) filing a plan under section 1321 that 

5 contains a modification under the authority of 

6 subsection (b)(11); or 

7 ‘‘(B) modifying a plan under section 1323 

8 or 1329 to contain a modification under the au9 thority of subsection (b)(11).’’. 

10 SEC. 5. COMBATING EXCESSIVE FEES. 

11 Section 1322(c) of title 11, United States Code, is 

12 amended— 

13 (1) in paragraph (1) by striking ‘‘and’’ at the 

14 end, 

15 (2) in paragraph (2) by striking the period at 

16 the end and inserting a semicolon, and 

17 (3) by adding at the end the following: 

18 ‘‘(3) the debtor, the debtor’s property, and prop19 erty of the estate are not liable for a fee, cost, or 

20 charge that is incurred while the case is pending and 

21 arises from a debt that is secured by the debtor’s prin22 cipal residence except to the extent that— 

23 ‘‘(A) the holder of the claim for such debt 

24 files with the court (annually or, in order to per25 mit filing consistent with clause (ii), at such 


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1 more frequent periodicity as the court determines 

2 necessary) notice of such fee, cost, or charge be3 fore the earlier of— 

4 ‘‘(i) 1 year after such fee, cost, or 

5 charge is incurred; or 

6 ‘‘(ii) 60 days before the closing of the 

7 case; and 

8 ‘‘(B) such fee, cost, or charge— 

9 ‘‘(i) is lawful under applicable non10 bankruptcy law, reasonable, and provided 

11 for in the applicable security agreement; 

12 and 

13 ‘‘(ii) is secured by property the value 

14 of which is greater than the amount of such 

15 claim, including such fee, cost, or charge; 

16 ‘‘(4) the failure of a party to give notice de17 scribed in paragraph (3) shall be deemed a waiver of 

18 any claim for fees, costs, or charges described in para19 graph (3) for all purposes, and any attempt to collect 

20 such fees, costs, or charges shall constitute a violation 

21 of section 524(a)(2) or, if the violation occurs before 

22 the date of discharge, of section 362(a); and 

23 ‘‘(5) a plan may provide for the waiver of any 

24 prepayment penalty on a claim secured by the debt25 or’s principal residence.’’. 


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1 SEC. 6. CONFIRMATION OF PLAN. 

2 Section 1325(a) of title 11, United States Code, is 

3 amended— 

4 (1) in paragraph (8) by striking ‘‘and’’ at the 

5 end, 

6 (2) in paragraph (9) by striking the period at 

7 the end and inserting a semicolon, and 

8 (3) by inserting after paragraph (9) the fol9 lowing: 

10 ‘‘(10) notwithstanding subclause (I) of para11 graph (5)(B)(i), whenever the plan modifies a claim 

12 in accordance with section 1322(b)(11), the plan pro13 vides that the holder of such claim retain the lien 

14 until the later of— 

15 ‘‘(A) the payment of such holder’s allowed 

16 secured claim; or 

17 ‘‘(B) discharge under section 1328; and 

18 ‘‘(11) whenever the plan modifies a claim in ac19 cordance with section 1322(b)(11), the court finds 

20 that such modification is in good faith and that the 

21 debtor did not obtain the extension, renewal, or refi22 nancing of credit that gives rise to a modified claim 

23 by the debtor’s material misrepresentation, false pre24 tenses, or actual fraud.’’. 


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1 SEC. 7. DISCHARGE. 

2 Section 1328 of title 11, United States Code, is amend3 ed— 

4 (1) in subsection (a)— 

5 (A) by inserting ‘‘(other than payments to 

6 holders of claims whose rights are modified 

7 under section 1322(b)(11))’’ after ‘‘paid’’, and 

8 (B) in paragraph (1) by inserting ‘‘or, to 

9 the extent of the unpaid portion of an allowed se10 cured claim, provided for in section 1322(b)(11)’’ 

11 after ‘‘1322(b)(5)’’, and 

12 (2) in subsection (c)(1) by inserting ‘‘or, to the 

13 extent of the unpaid portion of an allowed secured 

14 claim, provided for in section 1322(b)(11)’’ after 

15 ‘‘1322(b)(5)’’. 

16 SEC. 8. RULE OF CONSTRUCTION. 

17 Nothing in this Act or the amendments made by this 

18 Act shall be construed to modify any obligation of the Fed19 eral Housing Administration, the Veterans Administration, 

20 or the Department of Agriculture under a contract that 

21 guarantees or insures the payment of any part of a loan 

22 secured by a security interest in a principal residence. 

23 SEC. 9. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

24 (a) EFFECTIVE DATE.—Except as provided in sub25 section (b), this Act and the amendments made by this Act 

26 shall take effect on the date of the enactment of this Act. 


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1 (b) APPLICATION OF AMENDMENTS.—The amendments 

2 made by this Act shall apply with respect to cases com3 menced under title 11 of the United States Code before, on, 

4 or after the date of the enactment of this Act. 


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Union Calendar No. 7 

111TH CONGRESS 

1ST SESSION H. R. 200 

[Report No. 111–19] 

A BILL 

To amend title 11 of the United States Code with 

principal residences, and for other purposes. respect to modification of certain mortgages on 

FEBRUARY 24, 2009 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


wwoods2 on PRODPC68 with BILLS