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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4848 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 4848

 To save neighborhoods and keep families in their homes by encouraging 
 mortgage loan modifications and suspending foreclosures and evictions.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 26, 2012

Mr. Clarke of Michigan (for himself, Mr. Lewis of Georgia, Mr. Conyers, 
Mr. George Miller of California, Mr. Cleaver, Ms. Kaptur, Mr. Grijalva, 
Ms. Waters, Mr. Carson of Indiana, Mr. Jackson of Illinois, Ms. Clarke 
of New York, and Mr. Ellison) introduced the following bill; which was 
  referred to the Committee on the Judiciary, and in addition to the 
   Committee on Financial Services, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
 To save neighborhoods and keep families in their homes by encouraging 
 mortgage loan modifications and suspending foreclosures and evictions.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Save Our Neighborhoods Act of 
2012''.

SEC. 2. STAYS OF FORECLOSURES.

    (a) Cause of Action.--
            (1) In general.--A mortgagor of a property subject to a 
        federally related mortgage loan may file a motion before a 
        court in the jurisdiction in which the property is located for 
        an order under subsection (d).
            (2) Interim order.--The court shall, on the date of such 
        filing, enter an order that shall--
                    (A) stay any foreclosure proceedings (including 
                proceedings before a State court) that have been 
                brought against the property that is subject to the 
                federally related mortgage loan; and
                    (B) remain in effect for a period of 60 days, 
                beginning on the date that the order is entered.
            (3) Limitation.--The mortgagor of the property subject to a 
        federally related mortgage loan is only allowed to file one 
        motion under subsection (a)(1).
    (b) Consensual Revision of Mortgage.--The mortgagor and mortgagee 
shall meet not later than 30 days after the mortgagor files under 
subsection (a). Not later than 15 days prior to that meeting, the 
mortgagee shall provide the mortgagor with a list of local housing 
counseling agencies approved by the Secretary of Housing and Urban 
Development. The mortgagor may be accompanied by a counselor from such 
an agency. If the mortgagor and mortgagee execute a consensually 
modified mortgage agreement within 60 days of the court granting the 
stay, the order under subsection (a)(2) would terminate. If at the end 
of the 60 days an agreement has not been reached, the court may issue 
an order under subsection (d) in accordance with subsection (c). The 
mortgagor may request not more than 1 additional meeting after the 
first meeting and before the end of the period during which foreclosure 
proceedings are stayed pursuant to an order under subsection (a) or 
(d). The mortgagee shall comply with that request not later than 30 
days after that request.
    (c) Standard of Proof.--The court shall grant a motion under 
subsection (a)(1) for an order under subsection (d), if the mortgagor 
demonstrates by a preponderance of the evidence the following:
            (1) That the mortgagor has a reasonable ability to make 
        payments described under subsection (d)(5).
            (2) Financial hardship of the mortgagor.
            (3) That the property subject to the mortgage would be the 
        primary residence of the mortgagor.
    (d) Order Described.--An order under this subsection shall, 
beginning on the date that is 60 days after the filing of the motion 
under subsection (a)(1)--
            (1) stay any foreclosure proceedings that have been brought 
        against the property that is subject to the federally related 
        mortgage loan, including proceedings before a State court and 
        eviction or detainer proceedings in a non-judicial foreclosure 
        State;
            (2) remain in effect for a period of up to 3 years 
        beginning on the date that the order is entered, except that 
        the period shall terminate if an agreement under subsection (b) 
        is executed during such period;
            (3) prohibit the assessment or collection of any late fees 
        regarding payments on the federally related mortgage loan;
            (4) toll the statute of limitations for any other 
        applicable laws pertaining to the federally related mortgage 
        loan;
            (5) require that the mortgagor make payments in an amount 
        the court determines appropriate, which may include the fair 
        market rental value of the property (determined by the court in 
        accordance with subsection (f)), to the mortgagee at such times 
        as the court determines appropriate; and
            (6) require that the mortgagee apply such payments--
                    (A) first, to any taxes owed on the property;
                    (B) then, to any obligations relating to insurance, 
                including homeowner's insurance on the property;
                    (C) then, to any interest due on the mortgage for 
                that period under the terms of the mortgage; and
                    (D) finally, to the principal amount due on the 
                mortgage for that period under the terms of the 
                mortgage.
    (e) Result of Failure To Revise During Stay of Foreclosure.--If an 
order under subsection (d) terminates and the mortgagor and mortgagee 
have not submitted an agreement described in subsection (b) to the 
court on or before the date that the order terminates, the court shall 
enter an order--
            (1) ordering an appraisal to determine the fair market 
        value of the property to be performed by a licensed appraiser 
        approved by the Secretary of Housing and Urban Development;
            (2) if the fair market value of the property, as determined 
        by the appraiser is less than the principal remaining on the 
        mortgage loan, adjusting the principal amount to the fair 
        market value, giving consideration to the appraisal and any 
        other information the court determines appropriate;
            (3) ordering reasonable interest on the principal as 
        adjusted under paragraph (2) based on the average prime offer 
        rate (as such term is defined in section 129C of the Truth in 
        Lending Act (15 U.S.C. 1639c)) for mortgages; and
            (4) if the fair market value is greater than the principal 
        remaining on the mortgage loan, ordering payments set at a 
        reasonable interest rate on the remaining principal based on 
        the average prime offer rate for mortgages on that date.
    (f) Determination of Fair Market Rental Value.--In determining the 
fair market rental value of a property for purposes of subsection 
(d)(5), the court shall consider the following:
            (1) The fair market rents for the market area in which the 
        property is located for similar property calculated for other 
        Federal rental housing programs.
            (2) Any other information the court determines appropriate.
    (g) Authority of Magistrate Judges.--Any proceeding regarding a 
motion under subsection (a) may be heard by a magistrate judge of the 
United States, and that magistrate judge, notwithstanding section 
636(b)(1)(A) of title 28, United States Code, may issue an order in 
accordance with this section.
    (h) Limitation on Remedies.--The mortgagee's remedies shall be 
limited to those that would be available as if the proceeding were a 
foreclosure proceeding.
    (i) Definitions.--In this Act:
            (1) The term ``federally related mortgage loan'' has the 
        meaning given such term under section 3 of the Real Estate 
        Settlement Procedures Act of 1974 (12 U.S.C. 2602).
            (2) The term ``financial hardship'' means any financial 
        burden of a mortgagor that causes that mortgagor to be 
        reasonably unable to make a payment on that mortgage, 
        including--
                    (A) reduction in or loss of income that was 
                supporting the mortgage;
                    (B) change in household financial circumstances;
                    (C) recent or upcoming increase in the mortgagor's 
                monthly mortgage payment;
                    (D) an unavoidable increase in other expenses;
                    (E) a lack of cash reserves to maintain payment on 
                the mortgage and cover basic living expenses at the 
                same time (cash reserves include assets such as cash 
                savings, money market funds, stocks or bonds, but 
                exclude retirement accounts);
                    (F) excessive monthly debt payments, including if 
                the mortgagor has been using credit cards, a home 
                equity loan or other credit to make the mortgage 
                payment;
                    (G) the mortgagor has been subject to predatory 
                lending practices; and
                    (H) other reasons for hardship identified and 
                explained by the mortgagor.
            (3) In determining whether a lending practice is predatory, 
        the court shall consider whether the mortgagor has been subject 
        to practices including but not limited to: abusive collection 
        practices; balloon payments; encouragement of default; repeat 
        financing where the equity is depleted as a result of 
        financing; excessive fees; excessive interest rates; fraud, 
        deception, and abuse; high loan-to-value ratio; lending without 
        regard to ability to repay; loan flipping; mandatory 
        arbitration clauses; payday lending; pre-payment penalties; 
        refinancing of mortgages with a loan that does not provide a 
        tangible economic benefit to the borrower; refinancing 
        unsecured debt; payment of single-premium credit insurance; the 
        process of referring borrowers who qualify for lower-cost 
        financing to high-cost lenders; subprime lending; high yield-
        spread premiums.

SEC. 3. REGULATORY AUTHORITY OF THE CONSUMER FINANCIAL PROTECTION 
              BUREAU.

    The Director of the Bureau of Consumer Financial Protection of the 
Federal Reserve System may make rules or issue guidance to carry out 
this Act.

SEC. 4. DURATION OF THIS ACT.

    This Act shall be effective for 5 years, beginning on the date of 
enactment of this Act.
                                 <all>
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