I 

112TH CONGRESS 

1ST SESSION H. R. 1567 

To amend the Real Estate Settlement Procedures Act of 1974 to require 

mortgagees for mortgages in default to engage in reasonable loss mitigation activities, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 14, 2011 

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

Committee on Financial Services 

A BILL 

To amend the Real Estate Settlement Procedures Act of 

1974 to require mortgagees for mortgages in default 

to engage in reasonable loss mitigation activities, 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 ‘‘Foreclosure Prevention 

5 and Sound Mortgage Servicing Act of 2011’’. 


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1 SEC. 2. DUTY TO ENGAGE IN LOSS MITIGATION. 

2 (a) DUTY.—The Real Estate Settlement Procedures 

3 Act of 1974 is amended by inserting after section 6 (12 

4 U.S.C. 2605) the following new section: 

5 ‘‘SEC. 6A. DUTY TO ENGAGE IN LOSS MITIGATION. 

6 ‘‘(a) DUTY FOR COVERED FEDERALLY RELATED

7 MORTGAGE LOANS.— 

8 ‘‘(1) DUTY.—Upon default of any federally re9 lated mortgage loan that is secured by a lien on the 

10 principal residence of the borrower or mortgagor, 

11 the mortgagee shall engage in reasonable loss miti12 gation activities that provide for— 

13 ‘‘(A) the long-term affordability of the 

14 loan; and 

15 ‘‘(B) the maximum retention of home eq16 uity. 

17 ‘‘(2) RESPONSIBILITIES BY LIENHOLDERS.— 

18 With respect to a default referred to in paragraph 

19 (1): 

20 ‘‘(A) SENIOR LIEN.—The mortgagee of the 

21 senior lien on the residence shall have primary 

22 responsibility for the loss mitigation activities 

23 required under such paragraph. 

24 ‘‘(B) SUBORDINATE LIENS.—The mort25 gagee of any subordinate lien shall refrain from 

26 interfering with or inhibiting the modification of 


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1 the senior lien and shall comply with the rules 

2 prescribed in subsection (g) to modify the sub3 ordinate lien. 

4 ‘‘(b) NO FORECLOSURE WITHOUT LOSS MITIGA5 TION.— 

6 ‘‘(1) PROHIBITION.—No foreclosure of any cov7 ered federally related mortgage loan shall be initi8 ated, continued, or completed if the mortgagee or 

9 servicer has at any time failed to comply with the re10 quirements of this section with respect to such loan. 

11 ‘‘(2) CERTIFICATION OF LOSS MITIGATION AC12 TIVITIES.— 

13 ‘‘(A) PRECONDITION TO SALE.—The filing 

14 of a certification of loss mitigation activities 

15 with respect to a covered federally related mort16 gage loan shall be a condition precedent— 

17 ‘‘(i) to any valid sale pursuant to fore18 closure of the principal residence that is 

19 subject the lien securing the loan; and 

20 ‘‘(ii) to the filing of any action to re21 cover possession of the residence by the 

22 purchaser at such a sale. 

23 ‘‘(B) FILING.—In the case of a residence 

24 that is subject to a lien securing a covered fed25 erally related mortgage loan, after foreclosure 


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1 on such loan, the State or local government of2 ficial responsible for recording deeds and other 

3 transfers of real property in the jurisdiction in 

4 which the residence is located shall not record, 

5 nor permit the recordation of, any deed trans6 ferring title to such residence unless such offi7 cial certifies that— 

8 ‘‘(i) that this section does not apply to 

9 such federally related mortgage loan; or 

10 ‘‘(ii) the party conducting the sale or 

11 transfer has demonstrated that the re12 quirements of this section have been met. 

13 ‘‘(C) FORM AND CONTENT.—The Director 

14 of the Bureau of Consumer Financial Protec15 tion of the Federal Reserve System shall, by 

16 regulation, provide for the form and content of 

17 a certification pursuant to this paragraph. 

18 ‘‘(3) VOIDANCE OF SALE.—Notwithstanding 

19 any other provision of Federal or State law or any 

20 contract, a sale or other transfer of property in vio21 lation of this subsection shall be null and void. 

22 ‘‘(c) LOSS MITIGATION ACTIVITIES.— 

23 ‘‘(1) IN GENERAL.—For purposes of this sec24 tion, loss mitigation activities shall include— 


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1 ‘‘(A) priority loss mitigation activities 

2 under paragraph (5); 

3 ‘‘(B) secondary loss mitigation activities 

4 under paragraph (6); and 

5 ‘‘(C) last-resort loss mitigation activities 

6 under paragraph (7). 

7 ‘‘(2) ORDER OF PURSUIT.—In complying with 

8 subsection (a), the mortgagee or servicer shall pur9 sue loss mitigation activities in the following order: 

10 first priority loss mitigation activities, then sec11 ondary loss mitigation activities, and then last-resort 

12 loss mitigation activities. If any loss mitigation activ13 ity is taken, the mortgagee or servicer shall provide 

14 written notice of such activity to the borrower or 

15 mortgagor by mail not later than 7 business days 

16 after such action is taken. 

17 ‘‘(3) CONSIDERATION OF CIRCUMSTANCES IN

18 PROVISION OF LOSS MITIGATION ACTIVITIES.— 

19 ‘‘(A) DETERMINATION.—In determining 

20 the type of loss mitigation activity to provide 

21 with respect to a covered federally related mort22 gage loan, the mortgagee or servicer shall con23 sider the nature of the financial hardship expe24 rienced by the borrower or mortgagor and 

25 whether such hardship is a temporary hardship. 


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1 The Director shall, by regulation, define ‘hard2 ship’ and ‘temporary hardship’ for purposes of 

3 this subsection. 

4 ‘‘(B) ACTIONS BASED ON CIR5 CUMSTANCES.—The mortgagee or servicer shall 

6 provide— 

7 ‘‘(i) priority loss mitigation activities 

8 with respect to borrowers and mortga9 gees— 

10 ‘‘(I) who cannot make scheduled 

11 payments due under the loan or other 

12 payments due to financial hardship; 

13 and 

14 ‘‘(II) for whom providing such 

15 loss mitigation activities are con16 sistent with maximizing net present 

17 value of the loan (as determined in ac18 cordance with subsection (d)(4)); 

19 ‘‘(ii) secondary loss mitigation activi20 ties with respect to borrowers or mortga21 gors who have experienced a change in 

22 their financial condition that has resulted 

23 in temporary financial hardship; and 

24 ‘‘(iii) last-resort loss mitigation activi25 ties with respect to borrowers or mortgaVerDate Mar 15 2010 01:42 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1567.IH H1567

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1 gors who, notwithstanding priority or sec2 ondary loss mitigation activities taken with 

3 respect to the mortgage, will be unable to 

4 make payments due under the loan. 

5 ‘‘(4) PROHIBITIONS.—A mortgagee or servicer 

6 with respect to a covered federally related mortgage 

7 loan— 

8 ‘‘(A) may not limit the number of loss 

9 mitigation activities provided with respect to a 

10 borrower or mortgagor if such activities are 

11 provided in connection with financial hardships 

12 of differing natures, but may limit the number 

13 of loss mitigation activities provided with re14 spect to a borrower or mortgagor pursuant to 

15 recurring financial hardships of the same na16 ture; 

17 ‘‘(B) shall comply with the requirements of 

18 under this section with respect to the loan with19 out regard to whether there has been a previous 

20 default under the loan; and 

21 ‘‘(C) initiate foreclosure proceedings while 

22 simultaneously providing loss mitigation activi23 ties to a borrower or mortgagor; and 

24 ‘‘(D) assess fees for the provision of loss 

25 mitigation services, notwithstanding the fees 


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1 permitted under section 128B of the Truth in 

2 Lending Act. 

3 ‘‘(5) PRIORITY LOSS MITIGATION ACTIVITIES.— 

4 For purposes of this section, the term ‘priority loss 

5 mitigation activities’ includes, with respect to a cov6 ered federally related mortgage loan, activities that 

7 preserve the borrower’s or mortgagor’s ownership in8 terest in the property that is subject to the lien se9 curing the loan by modifying the contractual terms 

10 of the loan. Priority loss mitigation activities include 

11 modification of the loan terms that provide for the 

12 following: 

13 ‘‘(A) ALTERATION OF TERMS.—Reduction 

14 of the interest rate of the loan, forgiveness of 

15 loan principal or interest, conversion from an 

16 adjustable rate mortgage to a fixed rate mort17 gage, and reamortization of the loan in connec18 tion with an extension of the final maturity 

19 date of the loan such that the total term of the 

20 loan does not exceed 40 years. 

21 ‘‘(B) SHORT REFINANCING.—Short refi22 nancing of the loan consisting of acceptance of 

23 payment from or on behalf of the borrower or 

24 mortgagor of an amount that is less than the 

25 full amount alleged to be due and owing under 


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1 the loan, including principal, interest, and fees, 

2 in full satisfaction of the obligation under the 

3 loan and as part of a refinance transaction 

4 under which the property that is subject to the 

5 lien securing the loan is intended to remain the 

6 principal residence of the borrower or mort7 gagor. 

8 In the case of priority loss mitigation activities, the 

9 mortgagee or servicer shall waive any late payment 

10 charge, penalty interest, or any other fees or 

11 charges, including legal fees, or any combination 

12 thereof, that would otherwise apply to the loan. 

13 ‘‘(6) SECONDARY LOSS MITIGATION ACTIVI14 TIES.—For purposes of this section, the term ‘sec15 ondary loss mitigation activities’ includes, with re16 spect to a covered federally related mortgage loan, 

17 other activities that avoid foreclosure and preserve 

18 the borrower’s or mortgagor’s ownership interest in 

19 the property that is subject to the lien securing the 

20 loan, but do not change the contractual terms of the 

21 loan. Secondary loss mitigation activities include the 

22 following activities: 

23 ‘‘(A) Waiver of any late payment charge, 

24 penalty interest, or any other fees or charges, 

25 including legal fees, or any combination thereof. 


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1 ‘‘(B) Establishment of a repayment plan 

2 under which the borrower or mortgagor re3 sumes regularly scheduled payments and pays 

4 additional amounts at scheduled intervals to 

5 cure the delinquency. 

6 ‘‘(C) Forbearance under the loan that pro7 vides for a temporary reduction in, or cessation 

8 of, monthly payments followed by a reamortiza9 tion of the amounts due under the loan, includ10 ing arrearage, and a new schedule of repayment 

11 amounts. 

12 ‘‘(7) LAST-RESORT LOSS MITIGATION ACTIVI13 TIES.—For purposes of this section, the term ‘last14 resort loss mitigation activities’ includes, with re15 spect to a covered federally related mortgage loan, 

16 activities that avoid foreclosure but do not preserve 

17 the borrower’s or mortgagor’s ownership interest in 

18 the property that is subject to the lien securing the 

19 loan. Last-resort loss mitigation activities include 

20 the following activities: 

21 ‘‘(A) Short sale of the principal residence 

22 that is subject to the lien securing the loan, 

23 consisting of acceptance of payment from or on 

24 behalf of the borrower or mortgagor of an 

25 amount less than the amount alleged to be due 


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1 and owing under the loan, including principal, 

2 interest, and fees, in full satisfaction of the obli3 gation under such loan and as part of a sale 

4 transaction in which the property is not in5 tended to remain the principal residence of the 

6 borrower or mortgagor. 

7 ‘‘(B) Assumption of the borrower’s obliga8 tions under the loan by a third party. 

9 ‘‘(C) Cancellation or postponement of a 

10 foreclosure sale to allow the borrower or mort11 gagor additional time to sell the property. 

12 ‘‘(D) Acquisition of the property by the 

13 mortgagee or servicer by deed in lieu of fore14 closure. 

15 ‘‘(8) LIMITATIONS ON LOSS MITIGATION.— 

16 ‘‘(A) ANNUAL CERTIFICATIONS OF IN17 COME.—A borrower or mortgagor under a cov18 ered federally related mortgage loan who has 

19 received loss mitigation activities provided 

20 under this section shall annually provide a cer21 tification of the income of such borrower or 

22 mortgagor to the servicer or mortgagee of the 

23 loan. The servicer or mortgagee under the loan 

24 may increase the monthly payment due under 

25 the loan from the borrower or mortgagee if 


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1 such certification reveals that the income of 

2 such borrower or mortgagee has increased, ex3 cept such increase in payment due may not ex4 ceed an amount that is commensurate with 

5 such increase in income. 

6 ‘‘(B) NO OBLIGATION TO MODIFY FRAUDU7 LENT LOANS.—Subsections (a) and (b) shall 

8 not apply with respect to a covered federally re9 lated mortgage loan if the borrower or mort10 gagor under the loan committed fraud by pro11 viding false or misleading information in con12 nection with the loss mitigation activities for 

13 the loan. This subparagraph may not be con14 strued to exempt subsections (a) and (b) from 

15 applying to any loan because of any fraud com16 mitted by the originator of the loan during the 

17 application and approval process for the loan. 

18 ‘‘(d) AFFORDABLE PAYMENTS.— 

19 ‘‘(1) CONSIDERATION IN REASONABILITY OF

20 LOSS MITIGATION ACTIVITIES.—The affordability of 

21 any scheduled payments due from the borrower or 

22 mortgagor under a covered federally related mort23 gage loan pursuant to loss mitigation activities for 

24 the loan and whether the activities are in the best 

25 financial interests of the borrower or mortgagor 


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1 shall be taken into consideration in determining 

2 whether a mortgagee has engaged, for purposes of 

3 subsection (a)(1), in reasonable loss mitigation ac4 tivities that provide for long-term affordability of the 

5 loan. 

6 ‘‘(2) AFFORDABILITY.— 

7 ‘‘(A) IN GENERAL.—Payments under a 

8 loan shall be considered to be affordable for a 

9 borrower or mortgagor for purposes of this sub10 section if such payments do not cause the total 

11 monthly debts of the borrower or mortgagor, in12 cluding amounts due under the loan, to ex13 ceed— 

14 ‘‘(i) a percentage established by the 

15 Director, by regulation, of the monthly 

16 gross income of the borrower or mort17 gagor; or 

18 ‘‘(ii) such other maximum percentage 

19 of such income as the Director may estab20 lish, by regulation, which regulations shall 

21 take into consideration the amount of in22 come of the borrower or mortgagor avail23 able to pay regular expenses after payment 

24 of all installment and revolving debt. 


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1 ‘‘(B) UNDERWATER LOANS.—Notwith2 standing subparagraph (A), payments under a 

3 loan having a loan-to-value ratio that exceeds 

4 100 percent shall not be considered to be af5 fordable for a borrower or mortgagor for pur6 poses of this subsection unless the amount of 

7 the remaining principal balance on such loan 

8 that exceeds 100 percent is reduced. 

9 ‘‘(3) INCOME USED IN DETERMINING AFFORD10 ABILITY.— 

11 ‘‘(A) DOCUMENTATION.—A mortgagee or 

12 servicer shall request documentation of the in13 come of a borrower or mortgagor before com14 mencing loss mitigation activities. 

15 ‘‘(B) VERIFICATION.—The borrower’s or 

16 mortgagor’s income shall be verified by— 

17 ‘‘(i) the Federal wage and tax state18 ment (Form W–2 of the Internal Revenue 

19 Service) of the borrower or mortgagor; or 

20 ‘‘(ii) tax returns, payroll receipts, fi21 nancial institution records, or other third22 party documents that provide reasonably 

23 reliable evidence of the income or assets of 

24 the borrower or mortgagor. 

25 ‘‘(4) STANDARD NET PRESENT VALUE TEST.— 


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1 ‘‘(A) TEST.—Upon the request of a bor2 rower or mortgagor under a covered federally 

3 related mortgage loan who is qualified for loss 

4 mitigation activities under this section, the 

5 mortgagee or servicer under the loan shall per6 form a standard test to compare the expected 

7 net present value of modifying the loan to the 

8 net present value of foreclosing on such loan. 

9 ‘‘(B) EFFECT.—If application of the 

10 standard test referred to in subparagraph (A) 

11 to a covered federally related mortgage loan 

12 shows that the net present value, to the mort13 gagee or in the aggregate, of modifying the loan 

14 exceeds the net present value of foreclosing on 

15 the loan, all persons that hold an interest in the 

16 mortgage agreement shall agree to modify such 

17 loan in a manner as the Bureau has prescribed. 

18 ‘‘(C) COMPONENTS.—The Director shall, 

19 by regulation, establish the components of the 

20 standard test for purposes of subparagraph (A), 

21 which shall not— 

22 ‘‘(i) prohibit the modification of nega23 tively amortizing loans; 

24 ‘‘(ii) prohibit the modification of loans 

25 with negative equity; or 


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1 ‘‘(iii) prohibit the modification of 

2 loans to minority and low-income bor3 rowers or mortgagors. 

4 ‘‘(5) DEBT-TO-INCOME RATIO.—In determining 

5 the debt-to-income ratio or residual income of a 

6 mortgagor or borrower under a covered federally re7 lated mortgage loan for purposes of this subsection, 

8 the amount of monthly payment under the loan shall 

9 include principal, interest, taxes, insurance, flood in10 surance, any homeowner’s association and condo11 minium fees, and any second or subordinate liens. 

12 ‘‘(6) MONTHLY INCOME.—In determining 

13 monthly income of a mortgagor or borrower for pur14 poses of this subsection, all wages, salary, overtime, 

15 fees, commissions, tips, Social Security benefits, pen16 sions, and all other income shall be considered. 

17 ‘‘(7) WRITTEN NOTIFICATION OF AFFORD18 ABILITY CALCULATION.—The mortgagee or servicer 

19 shall notify the borrower or mortgagor in writing of 

20 the results of the determination of affordability 

21 under this subsection and the income on which the 

22 determination was based. Such written notice shall 

23 be provided by mail not later than 7 business days 

24 after such action is taken or as part of the written 


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1 notice required under subsection (c)(2), whichever is 

2 earlier. 

3 ‘‘(e) EXPLANATION OF DENIAL.—A mortgagee or 

4 servicer under a covered federally related mortgage loan 

5 shall provide, to each borrower or mortgagor who has re6 quested loss mitigation activities under this section and 

7 been denied the provision of such activities by the mort8 gagee or servicer, an explanation of why such activities 

9 were denied and the eligibility standards used by such 

10 mortgagee or servicer in assessing the provision of loss 

11 mitigation activities. 

12 ‘‘(f) PRESUMPTION OF COMPLIANCE.—An offer, 

13 made by a mortgagee or servicer under a covered federally 

14 related mortgage loan to a borrower or mortgagor, of a 

15 priority loss mitigation alternative that is in compliance 

16 with the requirements under subsection (d) (relating to 

17 affordable payments) and any regulations carrying out 

18 such subsection shall be presumed to constitute compli19 ance with the requirement to perform reasonable loss miti20 gation under subsection (a) with respect to the loan. 

21 ‘‘(g) SUBORDINATE LIENS.— 

22 ‘‘(1) INFORMATION SHARING.—Each mortgagee 

23 with respect to a subordinate lien shall provide to 

24 any mortgagee holding a senior lien under a covered 

25 federally related mortgage loan information needed 


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1 by such senior mortgagees to engage in reasonable 

2 loss mitigation as required by this section with re3 spect. 

4 ‘‘(2) MAINTENANCE OF LIEN STATUS.—Any 

5 priority loss mitigation activity under subsection 

6 (c)(5) undertaken with respect to a senior lien as 

7 part of loss mitigation activity shall not impair the 

8 priority status of liens under the modified loan, to 

9 the extent that there are no additional funds ad10 vanced to the borrower in connection with such pri11 ority loss mitigation activity. 

12 ‘‘(3) AUTOMATIC MODIFICATION UPON MODI13 FICATION OF SENIOR LIEN.—Upon the provision of 

14 loss mitigation activities in accordance with this Act 

15 by the holder of a senior lien, a mortgagee with re16 spect to a subordinate lien shall modify such lien in 

17 proportion to the modification of the senior lien. 

18 ‘‘(4) UNDERWATER SUBORDINATE LIENS.—If 

19 the combined loan-to-value ratio under the covered 

20 federally related mortgage loan secured by the senior 

21 lien and any loans secured by subordinate liens ex22 ceeds 100 percent, the mortgagee of each such sub23 ordinate lien shall perform one or more of the fol24 lowing actions: 


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1 ‘‘(A) Reduce the principal amount on such 

2 lien to an amount that results in a total loan3 to-value ratio of not more than 100 percent 

4 when combined with the primary lien. 

5 ‘‘(B) Release the residential real property 

6 that is subject to such subordinate lien from the 

7 subordinate lien. 

8 ‘‘(h) DIRECT ACCESS TO AUTHORIZED LOSS MITIGA9 TION PERSONNEL.— 

10 ‘‘(1) PROVISION OF CONTACT INFORMATION.— 

11 The mortgagee or servicer of a covered federally re12 lated mortgage loan shall provide, on each regular 

13 account statement for the loan, a toll-free or collect14 call telephone number that provides the borrower 

15 with direct access to a person with the information 

16 and authority to answer questions and fully resolve 

17 issues related to loss mitigation activities for the 

18 loan. 

19 ‘‘(2) REQUIREMENT OF SINGLE POINT OF CON20 TACT.— 

21 ‘‘(A) REQUIREMENT.—For any borrower 

22 or mortgagor that contacts a mortgagee or 

23 servicer through the telephone number provided 

24 pursuant to paragraph (1) or through any other 

25 means, the mortgagee or servicer shall assign to 


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1 such borrower or mortgagor a single point of 

2 contact that will personally and primarily assist 

3 such borrower or mortgagor with the resolution 

4 or implementation of loss mitigation activities 

5 requested by such borrower or mortgagor. 

6 ‘‘(B) DEFINITION.—For purposes of this 

7 paragraph the term ‘single point of contact’ 

8 means an individual employed by a servicer 

9 with specialized training in loss mitigation and 

10 customer service who serves as the primary 

11 point of contact for any negotiations, questions, 

12 or other informational needs a for borrower or 

13 mortgagor who has requested loss mitigation. 

14 ‘‘(3) PROHIBITION ON OUTSOURCING.—In car15 rying out subsection (a) with respect to a covered 

16 federally related mortgage loan, any contact by or on 

17 behalf of a mortgagee or servicer with the home18 owner and any processing of any loss mitigation ac19 tivities shall be conducted only by agents of the 

20 mortgagee or servicer who are physically located in 

21 the United States. 

22 ‘‘(i) THIRD-PARTY LOAN MODIFICATIONS.—The 

23 mortgagee or servicer of a covered federally related mort24 gage loan shall not accept or provide loss mitigation activiVerDate Mar 15 2010 22:53 Apr 19, 2011 Jkt 099200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\H1567.IH H1567

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1 ties with respect to such loan at the request of any entity 

2 or individual that is not party to the loan unless— 

3 ‘‘(1) the entity or individual is authorized by 

4 the borrower or mortgagee to act on behalf of the 

5 borrower or mortgagor; and 

6 ‘‘(2)(A) is a representative of a housing coun7 seling agency approved by the Secretary of Housing 

8 and Urban Development; or 

9 ‘‘(B) provides documentation to the servicer or 

10 mortgagee that the entity or individual— 

11 ‘‘(i) has not charged any fee to the bor12 rower or mortgagor for such request; or 

13 ‘‘(ii)(I) has charged a nominal fee for such 

14 request; 

15 ‘‘(II) has entered into a written contract, 

16 in plain English or the primary language of the 

17 borrower or mortgagor, with the borrower or 

18 mortgagor, that includes provisions for cancella19 tion without penalty; and 

20 ‘‘(III) will refund any such fees to the bor21 rower or mortgagor in the event the request for 

22 loss mitigation is denied. 

23 ‘‘(j) DUTY TO REFER TO HUD-CERTIFIED HOUSING

24 COUNSELING AGENCY.— 


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1 ‘‘(1) REFERRAL BY SERVICER OR MORT2 GAGEE.—In the case of any payment due under a 

3 covered federally related mortgage loan that is more 

4 than 60 days late, the servicer or mortgagee shall 

5 forward to a housing counseling agency approved by 

6 the Secretary of Housing and Urban Development 

7 the contact information of the borrower. 

8 ‘‘(2) EXPRESSION OF BORROWER PREF9 ERENCE.—The borrower may communicate to the 

10 servicer or mortgagee a preference for a particular 

11 housing counseling agency approved by the Sec12 retary of Housing and Urban Development— 

13 ‘‘(A) in writing at the time of closing on 

14 the loan; or 

15 ‘‘(B) in writing at any time during the 

16 term of the loan, including by conveyance of 

17 signed authorization form from the approved 

18 housing counseling agency of the borrower’s 

19 choice, which shall be transmitted by such agen20 cy to the mortgagee or servicer. 

21 ‘‘(3) REFERRAL RELATIONSHIP.—A mortgagee 

22 or servicer may establish a referral relationship with 

23 a housing counseling agency approved by the Sec24 retary of Housing and Urban Development, but such 

25 relationship may not be exclusive and the mortgagee 


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1 or servicer may not refuse to respond to qualified 

2 written requests and other communications from an3 other housing counseling agency approved by the 

4 Secretary of Housing and Urban Development or 

5 any other agent that is authorized by the borrower. 

6 ‘‘(k) PROHIBITION ON WAIVER OF RIGHTS.—A mort7 gagee for a covered federally related mortgage loan may 

8 not— 

9 ‘‘(1) when engaging in loss mitigation activities 

10 pursuant to subsection (a), require a borrower to 

11 limit or waive the rights of such borrower to bring 

12 any claims, defenses, demands, proceedings, actions, 

13 or causes of action against the mortgagee or servicer 

14 as a condition of accepting an offer of any loss miti15 gation activities, including any activities under sub16 section (c); or 

17 ‘‘(2) require the borrower to agree to arbitra18 tion as a condition of receiving loan modification ac19 tivities. 

20 Any waiver or arbitration provision in a written agreement 

21 prohibited under this subsection shall be void and unen22 forceable. 

23 ‘‘(l) SHORT SALE AND DEED-IN-LIEU OF FORE24 CLOSURE PROTECTIONS.— 


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1 ‘‘(1) RIGHT TO SELL.—If a borrower or mort2 gagor under a covered federally related mortgage 

3 loan presents documentation to the mortgagee or 

4 servicer of such loan an objective circumstance 

5 under paragraph (2) that supports a request of the 

6 borrower or mortgagor for the immediate sale of the 

7 property subject to the loan, the mortgagee or 

8 servicer shall not prevent or otherwise interfere with 

9 the borrower or mortgagor from selling the property 

10 subject to such loan for an amount that is less than 

11 the amount owed to such mortgagee or servicer. 

12 ‘‘(2) OBJECTIVE CIRCUMSTANCE.—Only the fol13 lowing objective circumstances may be considered by 

14 the mortgagee or servicer, for purposes of paragraph 

15 (1), in determining whether an immediate sale of the 

16 property subject to the loan is required: 

17 ‘‘(A) A member of the household of the 

18 borrower or mortgagor has obtained a new job. 

19 ‘‘(B) A member of the household of the 

20 borrower or mortgagor is attending a new 

21 school. 

22 ‘‘(C) The health and well-being of a mem23 ber of the household of the borrower or mort24 gagor. 


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1 ‘‘(3) PROHIBITION ON DEMAND PAYMENTS.—In 

2 any case in which an immediate sale of a property 

3 is determined under paragraph (1) to be required, 

4 the mortgagee or servicer for the covered federally 

5 related mortgage loan, or any agent thereof, shall 

6 not demand an additional payment from the bor7 rower or mortgagor, or any agent thereof, or a po8 tential purchaser of the property as a condition of 

9 allowing the sale of the property to occur. 

10 ‘‘(4) RIGHT TO RECAPTURE.—This Act may not 

11 be construed to prevent, in the case of any imme12 diate sale pursuant to paragraph (1), a mortgagee 

13 or servicer from recovering after such sale from the 

14 mortgagee or borrower, to the extent provided under 

15 State law, the difference between the amount owed 

16 under the covered federally related mortgage loan 

17 and the sale price of the property. 

18 ‘‘(m) REPORTING ON LOSS MITIGATION ACTIVI19 TIES.— 

20 ‘‘(1) IN GENERAL.—Each mortgagee or servicer 

21 of a covered federally related mortgage loan shall re22 port monthly and comprehensively to the Comp23 troller of the Currency, the Director, and the Board 

24 of Governors of the Federal Reserve System on the 

25 extent and scope of the loss mitigation activities of 


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1 the mortgagee. Each such report shall include data 

2 on loss mitigation activities disaggregated according 

3 to the categories specified in each of the subpara4 graphs of paragraphs (5), (6), and (7) of subsection 

5 (c), any loss mitigation activities not covered by such 

6 categories, the number of loans receiving loss mitiga7 tion that have become performing loans, the number 

8 of loans receiving loss mitigation that have pro9 ceeded to foreclosure, the total number of fore10 closures initiated during the reporting period, and 

11 such other information as the Comptroller, the Di12 rector, or the Board of Governors determines to be 

13 relevant. 

14 ‘‘(2) COMPILATION OF AGGREGATE DATA.— 

15 ‘‘(A) COMMENCEMENT.—Beginning with 

16 data for calendar year 2012, the Comptroller of 

17 the Currency shall, in consultation with the Di18 rector and the Chairman of the Board of Gov19 ernors of the Federal Reserve System, compile 

20 for each year, for each primary metropolitan 

21 statistical area, metropolitan statistical area, 

22 and consolidated metropolitan statistical area 

23 that is not comprised of designated primary 

24 metropolitan statistical areas, aggregate data 

25 by census tract for each mortgagee or servicer 


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1 that is required to disclose data under this sub2 section. 

3 ‘‘(B) SCOPE.—Each such report shall in4 clude loan-level disclosures of outstanding loans 

5 with information related to— 

6 ‘‘(i) the location of the security prop7 erty; 

8 ‘‘(ii) the loan amount; 

9 ‘‘(iii) the value of such security prop10 erty; 

11 ‘‘(iv) the age of borrower or mort12 gagee; 

13 ‘‘(v) the date on which such loan was 

14 originated; 

15 ‘‘(vi) the type of entity owning such 

16 loan; 

17 ‘‘(vii) the performance status of such 

18 loan; 

19 ‘‘(viii) the monetary losses incurred by 

20 the investor in such loan in connection 

21 with the termination of such loan; 

22 ‘‘(ix) the loss mitigation activities pro23 vided in reference to such loan according 

24 to the categories specified in each of the 


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1 subparagraphs of paragraphs (5), (6), and 

2 (7) of subsection (c); 

3 ‘‘(x) the loss mitigation activities pro4 vided in reference to such loan that are not 

5 covered by such categories; 

6 ‘‘(xi) the magnitude of such modifica7 tion or loss mitigation activities; 

8 ‘‘(xii) the dates of consideration, ap9 proval, or rejection of such loss mitigation 

10 activities; 

11 ‘‘(xiii) the reasons for such rejection; 

12 and 

13 ‘‘(xiv) any other relevant information. 

14 Such reports shall also include information 

15 identical to that required upon loan origination 

16 by the Home Mortgage Disclosure Act of 1975. 

17 ‘‘(C) DATA TABLES.—The Comptroller, in 

18 consultation with the Director and the Chair19 man of the Board of Governors of the Federal 

20 Reserve System, shall also produce tables indi21 cating for each primary metropolitan statistical 

22 area, metropolitan statistical area, and consoli23 dated metropolitan statistical area that is not 

24 comprised of designated primary metropolitan 

25 statistical areas, aggregate loss mitigation patVerDate Mar 15 2010 22:53 Apr 19, 2011 Jkt 099200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H1567.IH H1567

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1 terns for various categories of census tracts 

2 grouped according to location, age of housing 

3 stock, income level, and racial and ethnic char4 acteristics. 

5 ‘‘(D) AVAILABILITY TO PUBLIC.—The data 

6 and tables required pursuant to this paragraph 

7 shall be made available to the public not later 

8 than 6 months after such data is reported pur9 suant to subparagraph (A). 

10 ‘‘(n) DEFINITIONS.—For purposes of this section, the 

11 following definitions shall apply: 

12 ‘‘(1) COVERED FEDERALLY RELATED MORT13 GAGE LOAN.—The term ‘covered federally related 

14 mortgage loan’ means a federally related mortgage 

15 loan described in subsection (a). 

16 ‘‘(2) DIRECTOR.—The term ‘Director’ means 

17 the Director of the Bureau of Consumer Financial 

18 Protection of the Federal Reserve System. 

19 ‘‘(3) MORTGAGEE.—The term ‘mortgagee’ 

20 means, with respect to a federally related mortgage 

21 loan, the original lender under the loan and any af22 filiates, agents, subsidiaries, successors, or assignees 

23 of such lender, and any subsequent purchaser, trust24 ee, or transferee of the loan or credit instrument 

25 issued by such lender. 


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1 ‘‘(4) SERVICER.—The term ‘servicer’ has the 

2 meaning given such term in section 6(i). 

3 ‘‘(5) SUBORDINATE LIEN.—The term ‘subordi4 nate lien’ means, with respect to a covered federally 

5 related mortgage loan, a lien that— 

6 ‘‘(A) is an interest on the same property 

7 that is subject to the lien that secures the cov8 ered federally related mortgage loan; and 

9 ‘‘(B) has subordinate priority to the lien 

10 that secures the covered federally related mort11 gage loan. 

12 ‘‘(o) REPORT TO CONGRESS.—Not later than the ex13 piration of the 12-month period beginning upon the date 

14 of the enactment of the Foreclosure Prevention and Sound 

15 Mortgage Servicing Act of 2011, and of each consecutive 

16 12-month period thereafter, the Comptroller of the Cur17 rency, in consultation with the Director and the Chairman 

18 of the Board of Governors of the Federal Reserve System, 

19 shall provide a report to the Congress on the extent of 

20 compliance by mortgagees and servicers with the require21 ments of this section and paragraphs (4) through (7) of 

22 section 6(e). 

23 ‘‘(p) COORDINATION WITH STATE LAW.— 

24 ‘‘(1) IN GENERAL.—No provision of this section 

25 shall be construed as annulling, altering, or affecting 


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1 the laws of any State relating to deferment of fore2 closures, except to the extent that such State laws 

3 are inconsistent with the provisions of this section, 

4 and then only to the extent of such inconsistency. 

5 ‘‘(2) STANDARD FOR INCONSISTENCY.—A State 

6 law shall not be considered to be inconsistent with 

7 this section if the protection such State law affords 

8 any consumer is greater than the protection afforded 

9 by this section. 

10 ‘‘(q) RULE OF CONSTRUCTION.—Nothing in this sec11 tion may be construed to prohibit any mortgagee or 

12 servicer of a covered federally related mortgage loan from 

13 providing a loan modification that exceeds the standards 

14 established by the regulations issued pursuant to sub15 section (r). 

16 ‘‘(r) REGULATIONS.—The Director shall issue regula17 tions to carry out this section. Such regulations shall be 

18 issued not later than the expiration of the 180-day period 

19 beginning upon the date of the enactment of the Fore20 closure Prevention and Sound Mortgage Servicing Act of 

21 2011.’’. 

22 (b) DUTY OF LOAN SERVICER TO RESPOND TO BOR23 ROWER INQUIRIES.—Section 6(e) of the Real Estate Set24 tlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is 

25 amended— 


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1 (1) in paragraph (1), by striking subparagraph 

2 (A) and inserting the following: 

3 ‘‘(A) IN GENERAL.—If any servicer of a 

4 federally related mortgage loan receives a quali5 fied written request from the borrower, an 

6 agent of the borrower, or a housing counseling 

7 agency approved by the Secretary of Housing 

8 and Urban Development for information relat9 ing to the servicing of such loan (including doc10 uments executed at the time the loan was con11 summated or other documents related to the 

12 loan), the servicer shall take action with respect 

13 to such inquiry as specified in paragraph (2).’’; 

14 (2) in paragraph (2), in the matter preceding 

15 subparagraph (A), by striking ‘‘60 days’’ and all 

16 that follows through ‘‘any borrower’’ and inserting 

17 the following: ‘‘14 calendar days after the receipt 

18 from any borrower, borrower’s agent, or housing 

19 counseling agency approved by the Secretary of 

20 Housing and Urban Development’’; and 

21 (3) in paragraph (3), by striking ‘‘60-day’’ and 

22 inserting ‘‘14-day’’. 

23 (c) COMPREHENSIVE DISCLOSURE AND FAIR PROC24 ESSING OF QUALIFIED WRITTEN REQUESTS.—Section 

25 6(e) of the Real Estate Settlement Procedures Act of 1974 


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1 (12 U.S.C. 2605(e)) is amended by adding at the end the 

2 following new paragraphs: 

3 ‘‘(4) PROVISION OF INFORMATION REGARDING

4 MORTGAGE.—The servicer of a covered federally re5 lated mortgage loan (as such term is defined in sec6 tion 6A(n)) shall have available at all times the fol7 lowing information, which shall be provided to the 

8 borrower or borrower’s agent in response to a quali9 fied written request by the borrower submitted in ac10 cordance with the deadlines set forth in paragraph 

11 (1)(A): 

12 ‘‘(A) Whether the account relating to such 

13 loan is current, or if not, the date the account 

14 went into default. 

15 ‘‘(B) The current balance due on the loan, 

16 including the amount of principal due, an 

17 itemization of all fees due, an explanation of the 

18 escrow balance, and whether there are any es19 crow deficiencies or shortages. 

20 ‘‘(C) A full payment history that shows, in 

21 a clear and easily understandable manner, all of 

22 the activity on the loan since the origination of 

23 the loan, including the escrow account, and the 

24 application of payments made under the loan. 

25 ‘‘(D) The initial terms of the loan. 


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1 ‘‘(E) A copy of the original note and secu2 rity instrument. 

3 ‘‘(F) Identification of the owner of the 

4 mortgage note and any investors in the note. 

5 ‘‘(G) Any documents that limit, explain, or 

6 modify the loss mitigation activities offered by 

7 the servicer. 

8 ‘‘(H) Any other information requested by 

9 the borrower that is reasonably related to loss 

10 mitigation activities. 

11 ‘‘(I) Documents executed at the time the 

12 loan was consummated or other documents re13 lated to the loan. 

14 ‘‘(5) PROHIBITION OF ‘WRONG DOOR’ ACTIONS

15 FOR QUALIFIED WRITTEN REQUESTS.—All written 

16 communications from the mortgagee or servicer of a 

17 federally related mortgage loan to the borrower shall 

18 include the address for receipt and handling of 

19 qualified written requests. Any qualified written re20 quest received by the mortgagee or servicer shall be 

21 valid notwithstanding receipt at any address other 

22 than that designated by the mortgagee or servicer 

23 for receipt and handling of such requests. 

24 ‘‘(6) PROHIBITION OF FEE FOR RESPONSE TO

25 QUALIFIED WRITTEN REQUESTS.—A mortgagee or 


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1 servicer for a federally related mortgage loan may 

2 not impose any fee for, or on account of, the prepa3 ration and submission by such mortgagee or servicer 

4 of any response or statement required by this sub5 section. 

6 ‘‘(7) PROHIBITION OF FORECLOSURE PENDING

7 DISCLOSURE.—In the case of a covered federally re8 lated mortgage loan (as such term is defined in sec9 tion 6A(n)), no foreclosure proceeding may be initi10 ated or continued against the borrower or the prin11 cipal residence of the borrower during any period in 

12 which a qualified written request under this sub13 section is pending and the mortgagee or servicer has 

14 not complied with the requirements of this sub15 section regarding the request.’’. 

16 (d) DAMAGES AND COSTS.—Section 6(f) of the Real 

17 Estate Settlement Procedures Act of 1974 (12 U.S.C. 

18 2605(f)) is amended— 

19 (1) in the matter preceding paragraph (1), by 

20 inserting ‘‘or of section 6A’’ after ‘‘this section’’; 

21 (2) in paragraphs (1)(B) and (2)(B)— 

22 (A) by striking ‘‘a pattern or practice’’ 

23 each place such term appears; and 


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1 (B) by striking ‘‘$1,000’’ each place such 

2 term appears and inserting ‘‘$2,000 for each 

3 violation’’; and 

4 (3) in paragraph (2)(B)(i), by striking 

5 ‘‘$500,000’’ and inserting ‘‘$1,000,000’’. 

6 (e) CONFORMING AMENDMENT.—Section 17 of the 

7 Real Estate Settlement Procedures Act of 1974 (12 

8 U.S.C. 2615) is amended by striking ‘‘Nothing’’ and in9 serting ‘‘Except as provided in sections 6(e)(7) and 6A, 

10 nothing’’. 

11 SEC. 3. DUTIES OF LENDERS AND LOAN SERVICERS. 

12 The Truth in Lending Act is amended by inserting 

13 before section 130 (15 U.S.C. 1640) the following new sec14 tion: 

15 ‘‘SEC. 129I. DUTIES OF LENDERS AND LOAN SERVICERS. 

16 ‘‘(a) STANDARD OF CARE.— 

17 ‘‘(1) AGENCY RELATIONSHIP.—In the case of 

18 any home loan serviced by a loan servicer on behalf 

19 of a lender, the loan servicer shall be deemed an 

20 agent of that lender, and shall be subject to all re21 quirements of agents otherwise applicable under 

22 Federal or State law. 

23 ‘‘(2) FAIR DEALING.—Each lender and loan 

24 servicer shall, in addition to the duties imposed by 

25 otherwise applicable provisions of Federal or State 


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1 law, with respect to each home mortgage loan, in2 cluding any home mortgage loan in default or in 

3 which the homeowner has filed for bankruptcy— 

4 ‘‘(A) act with reasonable skill, care, dili5 gence, and in accordance with the highest 

6 standards; and 

7 ‘‘(B) act in good faith and with fair deal8 ing in any transaction, practice, or course of 

9 business associated with the home mortgage 

10 loan. 

11 ‘‘(3) TRAINING AND COMPETENCY.—Each lend12 er and loan servicer shall institute training, proce13 dures, and standards to ensure that borrowers are 

14 treated fairly and competently. 

15 ‘‘(b) RULES FOR ASSESSMENT OF FEE.— 

16 ‘‘(1) IN GENERAL.—No home mortgage loan 

17 contract may require, nor may any lender or loan 

18 servicer assess or receive, any fees or charges other 

19 than interest, late fees as specifically authorized in 

20 this section, or fees assessed for nonsufficient funds, 

21 and charges allowed pursuant to subsection 

22 (h)(1)(B), until the home mortgage loan is the sub23 ject of a foreclosure proceeding and the debt on such 

24 loan has been accelerated. 


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1 ‘‘(2) FEE LIMITATIONS.—Any permissible fee or 

2 charge described under paragraph (1) shall be— 

3 ‘‘(A) reasonable; 

4 ‘‘(B) for services actually rendered; and 

5 ‘‘(C) specifically authorized by the terms of 

6 the home mortgage loan contract and State law. 

7 ‘‘(3) ASSESSMENT AND DISCLOSURE.— 

8 ‘‘(A) IN GENERAL.—Any permissible fee or 

9 charge described under paragraph (1) shall 

10 be— 

11 ‘‘(i) assessed not later than 30 days 

12 after the date on which the fee was ac13 crued; and 

14 ‘‘(ii) explained clearly and conspicu15 ously in the next monthly accounting state16 ment provided to the borrower designated 

17 in the home mortgage loan contract. 

18 ‘‘(B) FAILURE TO COMPLY.—Failure by a 

19 lender or loan servicer to comply with the re20 quirements set forth under subparagraph (A) 

21 shall result in the waiver of the fee. 

22 ‘‘(4) REQUIRED STATEMENTS.—Each month a 

23 lender or loan servicer shall provide to each borrower 

24 designated in a home mortgage loan contract en25 tered into by such lender or loan servicer a periodic 


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1 statement that clearly and in plain English ex2 plains— 

3 ‘‘(A) the application of the prior month’s 

4 payment by the borrower, including the alloca5 tion of the payment to interest, principal, es6 crow, and fees; 

7 ‘‘(B) the status of the escrow account held 

8 on behalf of the borrower, including the pay9 ments into and from the escrow account; and 

10 ‘‘(C) the assessment of fees accruing in the 

11 previous month, including the reason that such 

12 fee accrued and the date such fee accrued. 

13 ‘‘(c) MAXIMUM ALLOWABLE LATE FEES CHARGED

14 AFTER LOAN CLOSING.— 

15 ‘‘(1) IN GENERAL.—No lender or loan servicer 

16 may impose a charge or fee for late payment of any 

17 amount due on a home mortgage loan— 

18 ‘‘(A) unless the home mortgage loan con19 tract specifically authorizes the charge or fee; 

20 ‘‘(B) in an amount in excess of 5 percent 

21 of the amount of the payment past due; 

22 ‘‘(C) before the end of the 15-day period 

23 after the date the payment is due, or in the 

24 case of a home mortgage loan on which interest 

25 on each installment is paid in advance, before 


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1 the end of the 30-day period after the date the 

2 payment is due; or 

3 ‘‘(D) more than once with respect to a sin4 gle late payment. 

5 ‘‘(2) RULE OF CONSTRUCTION.—For purposes 

6 of this subsection, payments on any amount due on 

7 a home mortgage loan shall be applied first to cur8 rent installments, then to delinquent payments, and 

9 then to delinquency charges. 

10 ‘‘(3) COORDINATION WITH SUBSEQUENT LATE

11 FEES.—If a home loan mortgage payment is other12 wise a full payment for the applicable period and is 

13 paid on its due date or within an applicable grace 

14 period, and the only delinquency or insufficiency of 

15 payment is attributable to a late fee or delinquency 

16 charge assessed on an earlier payment, no late fee 

17 or delinquency charge may be imposed on such pay18 ment. 

19 ‘‘(d) PAYOFF STATEMENTS.— 

20 ‘‘(1) PROHIBITION ON FEES.— 

21 ‘‘(A) IN GENERAL.—No lender or loan 

22 servicer (or any third party acting on behalf of 

23 such lender or loan servicer) may charge a fee 

24 for transmitting to any borrower the amount 


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1 due to pay off the outstanding balance on the 

2 home mortgage loan of such borrower. 

3 ‘‘(B) EXCEPTION.—After a lender or loan 

4 servicer (or any third party acting on behalf of 

5 such lender or loan servicer) has provided the 

6 information described in subparagraph (A) 

7 without charge on 4 occasions during a cal8 endar year, the lender or loan servicer (or any 

9 third party acting on behalf of such lender or 

10 loan servicer) may thereafter charge a reason11 able fee for providing such information during 

12 the remainder of the calendar year. 

13 ‘‘(2) TIMING.—The information described in 

14 subparagraph (A) shall be provided to the borrower 

15 within a reasonable period of time but in any event 

16 not more than 5 business days after the receipt of 

17 the request by the lender or loan servicer. 

18 ‘‘(e) CIVIL LIABILITY.— 

19 ‘‘(1) IN GENERAL.—Any lender or loan servicer 

20 who fails to comply with any requirement of this sec21 tion with respect to a borrower designated in a home 

22 mortgage loan contract, is liable to such borrower in 

23 an amount equal to the sum of— 

24 ‘‘(A) any actual damages sustained by 

25 such borrower as a result of the failure; 


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1 ‘‘(B) an amount not less than $5,000; or 

2 ‘‘(C) in the case of any successful action to 

3 enforce the foregoing liability the costs of the 

4 action, together with a reasonable attorney’s fee 

5 as determined by the court. 

6 ‘‘(2) JURISDICTION.—Any action by a borrower 

7 for a failure to comply with the requirements of this 

8 section may be brought in any United States district 

9 court, or in any other court of competent jurisdic10 tion, not later than 3 years from the date of the oc11 currence of such violation. This subsection does not 

12 bar a person from asserting a violation of this sec13 tion in an action by a lender or loan servicer to col14 lect the debt owed on a home mortgage loan, or fore15 close upon the home securing a home mortgage loan, 

16 or to stop a foreclosure upon that home, which was 

17 brought more than 3 years after the date of the oc18 currence of the violation as a matter of defense by 

19 recoupment or set-off in such action. An action 

20 under this section does not create an independent 

21 basis for removal of an action to a United States 

22 district court. 

23 ‘‘(3) STATE ATTORNEY GENERAL ENFORCE24 MENT.—An action to enforce a violation of this sec25 tion may also be brought by the appropriate State 


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1 attorney general in any appropriate United States 

2 district court, or any other court of competent juris3 diction, not later than 3 years after the date on 

4 which the violation occurs. An action under this sec5 tion does not create an independent basis for re6 moval of an action to a United States district court. 

7 ‘‘(f) DEFINITIONS.—In this section, the following 

8 definitions shall apply: 

9 ‘‘(1) LENDER.—The term ‘lender’ has the same 

10 meaning as in section 3500.2 of title 24, Code of 

11 Federal Regulations, as in effect on the date of en12 actment of this section. 

13 ‘‘(2) LOAN SERVICER.—The term ‘loan servicer’ 

14 has the same meaning as the term ‘servicer’ in sec15 tion 6(i)(2) of the Real Estate Settlement Proce16 dures Act of 1974 (12 U.S.C. 2605(i)(2)).’’. 

17 SEC. 4. NOTICE OF TRANSFER OF LOAN SERVICING. 

18 Paragraph (3) of section 6(b) of the Real Estate Set19 tlement Procedures Act of 1974 (12 U.S.C. 2605(b)(3)) 

20 is amended by adding at the end the following new sub21 paragraph: 

22 ‘‘(H) A statement explaining— 

23 ‘‘(i) whether the account of the bor24 rower is current, or if the account is not 


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1 current, an explanation of the reason and 

2 date the account went into default; 

3 ‘‘(ii) the current balance due on the 

4 loan, including the principal due, an expla5 nation of the escrow balance, and whether 

6 there are any escrow deficiencies or short7 ages; and 

8 ‘‘(iii) a full payment history of the 

9 borrower which shows in a clear and easily 

10 understandable manner, all of the activity 

11 on the home mortgage loan since the origi12 nation of the loan or the prior transfer of 

13 servicing, including the escrow account, 

14 and the application of payments.’’. 

15 SEC. 5. SERVICER COMPENSATION. 

16 Not later than the expiration of the 6-month period 

17 beginning on the date of the enactment of this Act, the 

18 Director of the Bureau of Consumer Financial Protection 

19 of the Federal Reserve System and the Federal banking 

20 regulatory agencies shall issue regulations to ensure that 

21 the means and manner of compensation of servicers of fed22 erally related mortgage loans is consistent with the pur23 poses of this Act and the amendments made by this Act, 

24 and to the extent possible, does not provide incentives for 


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1 foreclosure of such mortgages or disincentives to engaging 

2 in reasonable loss mitigation activities for such mortgages. 

3 SEC. 6. EFFECTIVE DATE. 

4 This Act and the amendments made by this Act shall 

5 take effect on the later of the date of the enactment of 

6 this Act or the designated transfer date established under 

7 section 1062 of the Dodd-Frank Wall Street Reform and 

8 Consumer Protection Act (12 U.S.C. 5582). 

Æ 


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