I 

112TH CONGRESS 

1ST SESSION H. R. 1587 

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 

APRIL 15, 2011 

Mr. CONYERS (for himself, Mr. NADLER, Mr. COHEN, and Mr. MILLER of 

North Carolina) introduced the following bill; which was referred to the 

Committee on the Judiciary 

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. 

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 ‘‘Home Foreclosure Re5 duction Act of 2011’’. 

6 SEC. 2. DEFINITION. 

7 Section 101 of title 11, United States Code, is 

8 amended by inserting after paragraph (43) the following 


pwalker on DSKD5P82C1PROD with BILLS
2 

•HR 1587 IH

1 (and make such technical and conforming changes as may 

2 be appropriate): 

3 ‘‘(43A) The term ‘qualified loan modification’ 

4 means a loan modification agreement made in ac5 cordance with the guidelines of the Obama Adminis6 tration’s Homeowner Affordability and Stability 

7 Plan as implemented March 4, 2009, that— 

8 ‘‘(A) reduces the debtor’s payment (includ9 ing principal and interest, and payments for 

10 real estate taxes, hazard insurance, mortgage 

11 insurance premium, homeowners’ association 

12 dues, ground rent, and special assessments) on 

13 a loan secured by a senior security interest in 

14 the principal residence of the debtor, to a per15 centage of the debtor’s income in accordance 

16 with such guidelines, without any period of neg17 ative amortization or under which the aggregate 

18 amount of the regular periodic payments would 

19 not fully amortize the outstanding principal 

20 amount of such loan; 

21 ‘‘(B) requires no fees or charges to be paid 

22 by the debtor in order to obtain such modifica23 tion; and 

24 ‘‘(C) permits the debtor to continue to 

25 make payments under the modification agreeVerDate Mar 15 2010 02:26 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1587.IH H1587

pwalker on DSKD5P82C1PROD with BILLS
3 

•HR 1587 IH

1 ment notwithstanding the filing of a case under 

2 this title, as if such case had not been filed.’’. 

3 SEC. 3. ELIGIBILITY FOR RELIEF. 

4 Section 109 of title 11, United States Code, is 

5 amended— 

6 (1) by adding at the end of subsection (e) the 

7 following: ‘‘For purposes of this subsection, the com8 putation of debts shall not include the secured or 

9 unsecured portions of— 

10 ‘‘(1) debts secured by the debtor’s principal res11 idence if the value of such residence as of the date 

12 of the order for relief under chapter 13 is less than 

13 the applicable maximum amount of noncontingent, 

14 liquidated, secured debts specified in this subsection; 

15 or 

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

17 was the debtor’s principal residence that was sold in 

18 foreclosure or that the debtor surrendered to the 

19 creditor if the value of such real property as of the 

20 date of the order for relief under chapter 13 was less 

21 than the applicable maximum amount of noncontin22 gent, liquidated, secured debts specified in this sub23 section.’’, and 

24 (2) by adding at the end of subsection (h) the 

25 following: 


pwalker on DSKD5P82C1PROD with BILLS
4 

•HR 1587 IH

1 ‘‘(5) Notwithstanding the 180-day period speci2 fied in paragraph (1), with respect to a debtor in a 

3 case under chapter 13 who submits to the court a 

4 certification that the debtor has received notice that 

5 the holder of a claim secured by the debtor’s prin6 cipal residence may commence a foreclosure on the 

7 debtor’s principal residence, the requirements of 

8 paragraph (1) shall be considered to be satisfied if 

9 the debtor satisfies such requirements not later than 

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

11 date of the filing of the petition.’’. 

12 SEC. 4. PROHIBITING CLAIMS ARISING FROM VIOLATIONS 

13 OF THE TRUTH IN LENDING ACT. 

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

15 amended— 

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

17 end, 

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

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

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

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

22 interest in the debtor’s principal residence is subject 

23 to a remedy for rescission under the Truth in Lend24 ing Act notwithstanding the prior entry of a fore25 closure judgment, except that nothing in this paraVerDate Mar 15 2010 02:26 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1587.IH H1587

pwalker on DSKD5P82C1PROD with BILLS
5 

•HR 1587 IH

1 graph shall be construed to modify, impair, or super2 sede any other right of the debtor.’’. 

3 SEC. 5. AUTHORITY TO MODIFY CERTAIN MORTGAGES. 

4 Section 1322 of title 11, United States Code, is 

5 amended— 

6 (1) in subsection (b)— 

7 (A) by redesignating paragraph (11) as 

8 paragraph (12), 

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

10 the end, and 

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

12 following: 

13 ‘‘(11) notwithstanding paragraph (2), with re14 spect to a claim for a loan originated before the ef15 fective date of this paragraph and secured by a secu16 rity interest in the debtor’s principal residence that 

17 is the subject of a notice that a foreclosure may be 

18 commenced with respect to such loan, modify the 

19 rights of the holder of such claim (and the rights of 

20 the holder of any claim secured by a subordinate se21 curity interest in such residence)— 

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

23 amount of the allowed secured claim as deter24 mined under section 506(a)(1); 


pwalker on DSKD5P82C1PROD with BILLS
6 

•HR 1587 IH

1 ‘‘(B) if any applicable rate of interest is 

2 adjustable under the terms of such loan by pro3 hibiting, reducing, or delaying adjustments to 

4 such rate of interest applicable on and after the 

5 date of filing of the plan; 

6 ‘‘(C) by modifying the terms and condi7 tions of such loan— 

8 ‘‘(i) to extend the repayment period 

9 for a period that is no longer than the 

10 longer of 40 years (reduced by the period 

11 for which such loan has been outstanding) 

12 or the remaining term of such loan, begin13 ning on the date of the order for relief 

14 under this chapter; and 

15 ‘‘(ii) to provide for the payment of in16 terest accruing after the date of the order 

17 for relief under this chapter at a fixed an18 nual rate equal to the currently applicable 

19 average prime offer rate as of the date of 

20 the order for relief under this chapter, cor21 responding to the repayment term deter22 mined under the preceding paragraph, as 

23 published by the Federal Financial Institu24 tions Examination Council in its table entiVerDate Mar 15 2010 02:26 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1587.IH H1587

pwalker on DSKD5P82C1PROD with BILLS
7 

•HR 1587 IH

1 tled ‘Average Prime Offer Rates—Fixed’, 

2 plus a reasonable premium for risk; and 

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

4 modified loan directly to the holder of the claim 

5 or, at the discretion of the court, through the 

6 trustee during the term of the plan; and’’, and 

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

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

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

10 the principal residence securing such claim, before com11 pleting all payments under the plan (or, if applicable, be12 fore receiving a discharge under section 1328(b)) and re13 ceives net proceeds from the sale of such residence, then 

14 the debtor agrees to pay to such holder not later than 15 

15 days after receiving such proceeds— 

16 ‘‘(1) if such residence is sold in the 1st year oc17 curring after the effective date of the plan, 90 per18 cent of the amount of the difference between the 

19 sales price and the amount of such claim as origi20 nally determined under subsection (b)(11) (plus 

21 costs of sale and improvements), but not to exceed 

22 the unpaid amount of the allowed secured claim de23 termined as if such claim had not been reduced 

24 under such subsection; 


pwalker on DSKD5P82C1PROD with BILLS
8 

•HR 1587 IH

1 ‘‘(2) if such residence is sold in the 2d year oc2 curring after the effective date of the plan, 70 per3 cent of the amount of the difference between the 

4 sales price and the amount of such claim as origi5 nally determined under subsection (b)(11) (plus 

6 costs of sale and improvements), but not to exceed 

7 the unpaid amount of the allowed secured claim de8 termined as if such claim had not been reduced 

9 under such subsection; 

10 ‘‘(3) if such residence is sold in the 3d year oc11 curring after the effective date of the plan, 50 per12 cent of the amount of the difference between the 

13 sales price and the amount of such claim as origi14 nally determined under subsection (b)(11) (plus 

15 costs of sale and improvements), but not to exceed 

16 the unpaid amount of the allowed secured claim de17 termined as if such claim had not been reduced 

18 under such subsection; 

19 ‘‘(4) if such residence is sold in the 4th year oc20 curring after the effective date of the plan, 30 per21 cent of the amount of the difference between the 

22 sales price and the amount of such claim as origi23 nally determined under subsection (b)(11) (plus 

24 costs of sale and improvements), but not to exceed 

25 the unpaid amount of the allowed secured claim deVerDate Mar 15 2010 02:26 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1587.IH H1587

pwalker on DSKD5P82C1PROD with BILLS
9 

•HR 1587 IH

1 termined as if such claim had not been reduced 

2 under such subsection; and 

3 ‘‘(5) if such residence is sold in the 5th year oc4 curring after the effective date of the plan, 10 per5 cent of the amount of the difference between the 

6 sales price and the amount of such claim as origi7 nally determined under subsection (b)(11) (plus 

8 costs of sale and improvements), but not to exceed 

9 the unpaid amount of the allowed secured claim de10 termined as if such claim had not been reduced 

11 under such subsection. 

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

13 in subsection (b)(11), the plan may not contain a modi14 fication under the authority of subsection (b)(11)— 

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

16 after the expiration of the 30-day period beginning 

17 on the effective date of this subsection, unless— 

18 ‘‘(A) the debtor certifies that the debtor— 

19 ‘‘(i) not less than 30 days before the 

20 commencement of the case, contacted the 

21 holder of such claim (or the entity col22 lecting payments on behalf of such holder) 

23 regarding modification of the loan that is 

24 the subject of such claim; 


pwalker on DSKD5P82C1PROD with BILLS
10 

•HR 1587 IH

1 ‘‘(ii) provided the holder of the claim 

2 (or the entity collecting payments on be3 half of such holder) a written statement of 

4 the debtor’s current income, expenses, and 

5 debt substantially conforming with the 

6 schedules required under section 521(a) or 

7 such other form as is promulgated by the 

8 Judicial Conference of the United States 

9 for such purpose; and 

10 ‘‘(iii) considered any qualified loan 

11 modification offered to the debtor by the 

12 holder of the claim (or the entity collecting 

13 payments on behalf of such holder); or 

14 ‘‘(B) a foreclosure sale is scheduled to 

15 occur on a date in the 30-day period beginning 

16 on the date of case is commenced; 

17 ‘‘(2) in any other case pending under this chap18 ter, unless the debtor certifies that the debtor at19 tempted to contact the holder of such claim (or the 

20 entity collecting payments on behalf of such holder) 

21 regarding modification of the loan that is the subject 

22 of such claim, before— 

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

24 contains a modification under the authority of 

25 subsection (b)(11); or 


pwalker on DSKD5P82C1PROD with BILLS
11 

•HR 1587 IH

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

2 or 1329 to contain a modification under the au3 thority of subsection (b)(11). 

4 ‘‘(i) In determining the holder’s allowed secured claim 

5 under section 506(a)(1) for purposes of subsection 

6 (b)(11)(A), the value of the debtor’s principal residence 

7 shall be the fair market value of such residence on the 

8 date such value is determined and, if the issue of value 

9 is contested, the court shall determine such value in ac10 cordance with the appraisal rules used by the Federal 

11 Housing Administration.’’. 

12 SEC. 6. COMBATING EXCESSIVE FEES. 

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

14 amended— 

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

16 end, 

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

18 the end and inserting a semicolon, and 

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

20 ‘‘(3) the debtor, the debtor’s property, and 

21 property of the estate are not liable for a fee, cost, 

22 or charge that is incurred while the case is pending 

23 and arises from a debt that is secured by the debt24 or’s principal residence except to the extent that— 


pwalker on DSKD5P82C1PROD with BILLS
12 

•HR 1587 IH

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

2 files with the court and serves on the trustee, 

3 the debtor, and the debtor’s attorney (annually 

4 or, in order to permit filing consistent with 

5 clause (ii), at such more frequent periodicity as 

6 the court determines necessary) notice of such 

7 fee, cost, or charge before the earlier of— 

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

9 charge is incurred; or 

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

11 case; and 

12 ‘‘(B) such fee, cost, or charge— 

13 ‘‘(i) is lawful under applicable non14 bankruptcy law, reasonable, and provided 

15 for in the applicable security agreement; 

16 and 

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

18 of which is greater than the amount of 

19 such claim, including such fee, cost, or 

20 charge; 

21 ‘‘(4) the failure of a party to give notice de22 scribed in paragraph (3) shall be deemed a waiver 

23 of any claim for fees, costs, or charges described in 

24 paragraph (3) for all purposes, and any attempt to 

25 collect such fees, costs, or charges shall constitute a 


pwalker on DSKD5P82C1PROD with BILLS
13 

•HR 1587 IH

1 violation of section 524(a)(2) or, if the violation oc2 curs before the date of discharge, of section 362(a); 

3 and 

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

5 prepayment penalty on a claim secured by the debt6 or’s principal residence.’’. 

7 SEC. 7. CONFIRMATION OF PLAN. 

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

9 is amended— 

10 (1) in the matter preceding paragraph (1) 

11 strike ‘‘subsection (b)’’ and insert ‘‘subsections (b) 

12 and (d)’’. 

13 (2) in paragraph (5)— 

14 (A) by inserting ‘‘except as otherwise pro15 vided in section 1322(b)(11),’’ after ‘‘(5)’’, and 

16 (B) in subparagraph (B)(iii)(I) by insert17 ing ‘‘(including payments of a claim modified 

18 under section 1322(b)(11))’’ after ‘‘payments’’ 

19 the 1st place it appears, 

20 (3) in paragraph (8) by striking ‘‘and’’ at the 

21 end, 

22 (4) in paragraph (9) by striking the period at 

23 the end and inserting a semicolon, and 

24 (5) by inserting after paragraph (9) the fol25 lowing: 


pwalker on DSKD5P82C1PROD with BILLS
14 

•HR 1587 IH

1 ‘‘(10) notwithstanding subclause (I) of para2 graph (5)(B)(i), whenever the plan modifies a claim 

3 in accordance with section 1322(b)(11), the holder 

4 of a claim whose rights are modified pursuant to 

5 section 1322(b)(11) shall retain the lien until the 

6 later of— 

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

8 secured claim; or 

9 ‘‘(B) completion of all payments under the 

10 plan (or, if applicable, receipt of a discharge 

11 under section 1328(b)); and 

12 ‘‘(11) whenever the plan modifies a claim in ac13 cordance with section 1322(b)(11), the court finds 

14 that such modification is in good faith (Lack of good 

15 faith exists if the debtor has no need for relief under 

16 this paragraph because the debtor can pay all of his 

17 or her debts and any future payment increases on 

18 such debts without difficulty for the foreseeable fu19 ture, including the positive amortization of mortgage 

20 debt. In determining whether a reduction of the 

21 principal amount of the loan resulting from a modi22 fication made under the authority of section 

23 1322(b)(11) is made in good faith, the court shall 

24 consider whether the holder of such claim (or the en25 tity collecting payments on behalf of such holder) 


pwalker on DSKD5P82C1PROD with BILLS
15 

•HR 1587 IH

1 has offered to the debtor a qualified loan modifica2 tion that would enable the debtor to pay such debts 

3 and such loan without reducing such principal 

4 amount.) and does not find that the debtor has been 

5 convicted of obtaining by actual fraud the extension, 

6 renewal, or refinancing of credit that gives rise to a 

7 modified claim.’’. 

8 (b) Section 1325 of title 11, United States Code, is 

9 amended by adding at the end the following (and make 

10 such technical and conforming changes as may be appro11 priate): 

12 ‘‘(d) Notwithstanding section 1322(b)(11)(C)(ii), the 

13 court, on request of the debtor or the holder of a claim 

14 secured by a senior security interest in the debtor’s prin15 cipal residence, may confirm a plan proposing a reduction 

16 in the interest rate on the loan secured by such security 

17 interest and that does not reduce the principal, provided 

18 the total monthly mortgage payment is reduced to a per19 centage of the debtor’s income in accordance with the 

20 guidelines of the Obama Administration’s Homeowner Af21 fordability and Stability Plan as implemented March 4, 

22 2009, if, taking into account the debtor’s financial situa23 tion, after allowance of expenses that would be permitted 

24 for a debtor under this chapter subject to paragraph (3) 

25 of subsection (b), regardless of whether the debtor is othVerDate Mar 15 2010 02:26 Apr 20, 2011 Jkt 099200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H1587.IH H1587

pwalker on DSKD5P82C1PROD with BILLS
16 

•HR 1587 IH

1 erwise subject to such paragraph, and taking into account 

2 additional debts and fees that are to be paid in this chap3 ter and thereafter, the debtor would be able to prevent 

4 foreclosure and pay a fully amortizing 30-year loan at 

5 such reduced interest rate without such reduction in prin6 cipal.’’. 

7 SEC. 8. DISCHARGE. 

8 Section 1328(a) of title 11, United States Code, is 

9 amended— 

10 (1) by inserting ‘‘(other than payments to hold11 ers of claims whose rights are modified under sec12 tion 1322(b)(11))’’ after ‘‘paid’’, and 

13 (2) in paragraph (1) by inserting ‘‘or, to the ex14 tent of the unpaid portion of an allowed secured 

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

16 ‘‘1322(b)(5)’’. 

17 SEC. 9. STANDING TRUSTEE FEES. 

18 (a) AMENDMENT TO TITLE 28.—Section 

19 586(e)(1)(B)(i) of title 28, United States Code, is amend20 ed— 

21 (1) by inserting ‘‘(I) except as provided in sub22 paragraph (II)’’ after ‘‘(i)’’, 

23 (2) by striking ‘‘or’’ at the end and inserting 

24 ‘‘and’’, and 

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


pwalker on DSKD5P82C1PROD with BILLS
17 

•HR 1587 IH

1 ‘‘(II) 4 percent with respect to pay2 ments received under section 1322(b)(11) 

3 of title 11 by the individual as a result of 

4 the operation of section 1322(b)(11)(D) of 

5 title 11, unless the bankruptcy court 

6 waives all fees with respect to such pay7 ments based on a determination that such 

8 individual has income less than 150 per9 cent of the income official poverty line (as 

10 defined by the Office of Management and 

11 Budget, and revised annually in accord12 ance with section 673(2) of the Omnibus 

13 Budget Reconciliation Act of 1981) appli14 cable to a family of the size involved and 

15 payment of such fees would render the 

16 debtor’s plan infeasible.’’. 

17 (b) CONFORMING PROVISION.—The amendments 

18 made by this section shall apply to any trustee to whom 

19 the provisions of section 302(d)(3) of the Bankruptcy 

20 Judges, United States Trustees, and Family Farmer 

21 Bankruptcy Act of 1986 (Public Law 99–554; 100 Stat. 

22 3121) apply. 

23 SEC. 10. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

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


pwalker on DSKD5P82C1PROD with BILLS
18 

•HR 1587 IH

1 subtitle shall take effect on the date of the enactment of 

2 this Act. 

3 (b) APPLICATION OF AMENDMENTS.— 

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendments made by this subtitle 

6 shall apply with respect to cases commenced under 

7 title 11 of the United States Code before, on, or 

8 after the date of the enactment of this Act. 

9 (2) LIMITATION.—Paragraph (1) shall not 

10 apply with respect to cases closed under title 11 of 

11 the United States Code as of the date of the enact12 ment of this Act that are neither pending on appeal 

13 in, nor appealable to, any court of the United 

14 States. 

15 SEC. 11. GAO STUDY. 

16 The Comptroller General shall carry out a study, and 

17 submit to the Committee on the Judiciary of the House 

18 of Representatives and the Committee on the Judiciary 

19 of the Senate, not later than 2 years after the date of 

20 the enactment of this Act a report containing— 

21 (1) the results of such study of— 

22 (A) the number of debtors who filed, dur23 ing the 1-year period beginning on the date of 

24 the enactment of this Act, cases under chapter 

25 13 of title 11 of the United States Code for the 


pwalker on DSKD5P82C1PROD with BILLS
19 

•HR 1587 IH

1 purpose of restructuring their principal resi2 dence mortgages, 

3 (B) the number of mortgages restructured 

4 under the amendments made by this subtitle 

5 that subsequently resulted in default and fore6 closure, 

7 (C) a comparison between the effectiveness 

8 of mortgages restructured under programs out9 side of bankruptcy, such as Hope Now and 

10 Help for Homeowners, and mortgages restruc11 tured under the amendments made by this sub12 title, 

13 (D) the number of cases presented to the 

14 bankruptcy courts where mortgages were re15 structured under the amendments made by this 

16 subtitle that were appealed, 

17 (E) the number of cases presented to the 

18 bankruptcy courts where mortgages were re19 structured under the amendments made by the 

20 subtitle that were overturned on appeal, and 

21 (F) the number of bankruptcy judges dis22 ciplined as a result of actions taken to restruc23 ture mortgages under the amendments made by 

24 this subtitle, and 


pwalker on DSKD5P82C1PROD with BILLS
20 

•HR 1587 IH

1 (2) a recommendation as to whether such 

2 amendments should be amended to include a sunset 

3 clause. 

4 SEC. 12. REPORT TO CONGRESS. 

5 Not later than 18 months after the date of the enact6 ment of this Act, the Comptroller General, in consultation 

7 with the Federal Housing Administration, shall submit to 

8 the Congress, a report containing— 

9 (1) a comprehensive review of the effects of the 

10 amendments made by this subtitle on bankruptcy 

11 court, 

12 (2) a survey of whether the program should 

13 limit the types of homeowners eligible for the pro14 gram, and 

15 (3) a recommendation on whether such amend16 ments should remain in effect. 

Æ 


pwalker on DSKD5P82C1PROD with BILLS