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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1106 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 1106

     To prevent mortgage foreclosures and enhance mortgage credit 
                             availability.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                           February 23, 2009

 Mr. Conyers (for himself, Mr. Frank of Massachusetts, Mr. Berman, Mr. 
   Blumenauer, Mr. Cohen, Mr. Delahunt, Ms. Edwards of Maryland, Mr. 
  Ellison, Mr. Gonzalez, Mr. Gutierrez, Ms. Jackson-Lee of Texas, Mr. 
     Johnson of Georgia, Mr. Lewis of Georgia, Ms. Zoe Lofgren of 
 California, Mr. Miller of North Carolina, Mr. Nadler of New York, Ms. 
Linda T. Sanchez of California, Ms. Wasserman Schultz, Ms. Waters, and 
Mr. Marshall) introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committees on 
 the Judiciary and Veterans' Affairs, 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 prevent mortgage foreclosures and enhance mortgage credit 
                             availability.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as ``Helping Families Save 
Their Homes Act of 2009''.
    (b) Table of Contents.--The table of contents of this Act is the 
following:

Sec. 1. Short title; table of contents.
              TITLE I--PREVENTION OF MORTGAGE FORECLOSURES

           Subtitle A--Modification of Residential Mortgages

Sec. 101. Eligibility for relief.
Sec. 102. Prohibiting claims arising from violations of the Truth in 
                            Lending Act.
Sec. 103. Authority to modify certain mortgages.
Sec. 104. Combating excessive fees.
Sec. 105. Confirmation of plan.
Sec. 106. Discharge.
Sec. 107. Standing trustee fees.
Sec. 108. Effective date; application of amendments.
          Subtitle B--Related Mortgage Modification Provisions

Sec. 121. Adjustments as a result of modification in bankruptcy of 
                            housing loans guaranteed by the department 
                            of veterans affairs.
Sec. 122. Payment of FHA mortgage insurance benefits.
Sec. 123. Adjustments as result of modification of rural single family 
                            housing loans in bankruptcy.
Sec. 124. Unenforceability of certain provision as being contrary to 
                            public policy.
        TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITY

Sec. 201. Servicer safe harbor for mortgage loan modifications.
Sec. 202. Changes to HOPE for Homeowners Program.
Sec. 203. Requirements for FHA-approved mortgagees.
Sec. 204. Enhancement of liquidity and stability of insured depository 
                            institutions to ensure availability of 
                            credit and reduction of foreclosures.

              TITLE I--PREVENTION OF MORTGAGE FORECLOSURES

           Subtitle A--Modification of Residential Mortgages

SEC. 101. ELIGIBILITY FOR RELIEF.

    Section 109 of title 11, United States Code, is amended--
            (1) by adding at the end of subsection (e) the following: 
        ``For purposes of this subsection, the computation of debts 
        shall not include the secured or unsecured portions of--
            ``(1) debts secured by the debtor's principal residence if 
        the value of such residence as of the date of the order for 
        relief under chapter 13 is less than the applicable maximum 
        amount of noncontingent, liquidated, secured debts specified in 
        this subsection; or
            ``(2) debts secured or formerly secured by what was the 
        debtor's principal residence that was sold in foreclosure or 
        that the debtor surrendered to the creditor if the value of 
        such real property as of the date of the order for relief under 
        chapter 13 was less than the applicable maximum amount of 
        noncontingent, liquidated, secured debts specified in this 
        subsection.'', and
            (2) by adding at the end of subsection (h) the following:
    ``(5) The requirements of paragraph (1) shall not apply in a case 
under chapter 13 with respect to a debtor who submits to the court a 
certification that the debtor has received notice that the holder of a 
claim secured by the debtor's principal residence may commence a 
foreclosure on the debtor's principal residence.''.

SEC. 102. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF THE TRUTH IN 
              LENDING ACT.

    Section 502(b) of title 11, United States Code, is amended--
            (1) in paragraph (8) by striking ``or'' at the end,
            (2) in paragraph (9) by striking the period at the end and 
        inserting ``; or'', and
            (3) by adding at the end the following:
            ``(10) the claim for a loan secured by a security interest 
        in the debtor's principal residence is subject to a remedy for 
        rescission under the Truth in Lending Act notwithstanding the 
        prior entry of a foreclosure judgment, except that nothing in 
        this paragraph shall be construed to modify, impair, or 
        supersede any other right of the debtor.''.

SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

    Section 1322 of title 11, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by redesignating paragraph (11) as paragraph 
                (12),
                    (B) in paragraph (10) by striking ``and'' at the 
                end, and
                    (C) by inserting after paragraph (10) the 
                following:
            ``(11) notwithstanding paragraph (2), with respect to a 
        claim for a loan originated before the effective date of this 
        paragraph and secured by a security interest in the debtor's 
        principal residence that is the subject of a notice that a 
        foreclosure may be commenced with respect to such loan, modify 
        the rights of the holder of such claim (and the rights of the 
        holder of any claim secured by a subordinate security interest 
        in such residence)--
                    ``(A) by providing for payment of the amount of the 
                allowed secured claim as determined under section 
                506(a)(1);
                    ``(B) if any applicable rate of interest is 
                adjustable under the terms of such loan by prohibiting, 
                reducing, or delaying adjustments to such rate of 
                interest applicable on and after the date of filing of 
                the plan;
                    ``(C) by modifying the terms and conditions of such 
                loan--
                            ``(i) to extend the repayment period for a 
                        period that is no longer than the longer of 40 
                        years (reduced by the period for which such 
                        loan has been outstanding) or the remaining 
                        term of such loan, beginning on the date of the 
                        order for relief under this chapter; and
                            ``(ii) to provide for the payment of 
                        interest accruing after the date of the order 
                        for relief under this chapter at a fixed annual 
                        rate equal to the currently applicable average 
                        prime offer rate as of the date of the order 
                        for relief under this chapter, corresponding to 
                        the repayment term determined under the 
                        preceding paragraph, as published by the 
                        Federal Financial Institutions Examination 
                        Council in its table entitled `Average Prime 
                        Offer Rates--Fixed', plus a reasonable premium 
                        for risk; and
                    ``(D) by providing for payments of such modified 
                loan directly to the holder of the claim or, at the 
                discretion of the court, through the trustee during the 
                term of the plan; and'', and
            (2) by adding at the end the following:
    ``(g) A claim may be reduced under subsection (b)(11)(A) only on 
the condition that if the debtor sells the principal residence securing 
such claim, before completing all payments under the plan (or, if 
applicable, before receiving a discharge under section 1328(b)) and 
receives net proceeds from the sale of such residence, then the debtor 
agrees to pay to such holder not later than 15 days after receiving 
such proceeds--
            ``(1) if such residence is sold in the 1st year occurring 
        after the effective date of the plan, 80 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under section 1322(b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection;
            ``(2) if such residence is sold in the 2d year occurring 
        after the effective date of the plan, 60 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under section 1322(b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection;
            ``(3) if such residence is sold in the 3d year occurring 
        after the effective date of the plan, 40 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under section 1322(b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection; and
            ``(4) if such residence is sold in the 4th year occurring 
        after the effective date of the plan, 20 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under section 1322(b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection.
    ``(h) With respect to a claim of the kind described in subsection 
(b)(11), the plan may not contain a modification under the authority of 
subsection (b)(11)--
            ``(1) in a case commenced under this chapter after the 
        expiration of the 15-day period beginning on the effective date 
        of this subsection, unless--
                    ``(A) the debtor certifies that the debtor 
                attempted, not less than 15 days before the 
                commencement of the case, to contact the holder of such 
                claim (or the entity collecting payments on behalf of 
                such holder) regarding modification of the loan that is 
                the subject of such claim; or
                    ``(B) a foreclosure sale is scheduled to occur on a 
                date in the 30-day period beginning on the date the 
                case is commenced; and
            ``(2) in any other case pending under this chapter, unless 
        the debtor certifies that the debtor attempted to contact the 
        holder of such claim (or the entity collecting payments on 
        behalf of such holder) regarding modification of the loan that 
        is the subject of such claim, before--
                    ``(A) filing a plan under section 1321 that 
                contains a modification under the authority of 
                subsection (b)(11); or
                    ``(B) modifying a plan under section 1323 or 1329 
                to contain a modification under the authority of 
                subsection (b)(11).
    ``(i) In determining the holder's allowed secured claim under 
section 506(a)(1) for purposes of subsection (b)(11)(A), the value of 
the debtor's principal residence shall be the fair market value of such 
residence on the date such value is determined.''.

SEC. 104. COMBATING EXCESSIVE FEES.

    Section 1322(c) of title 11, United States Code, is amended--
            (1) in paragraph (1) by striking ``and'' at the end,
            (2) in paragraph (2) by striking the period at the end and 
        inserting a semicolon, and
            (3) by adding at the end the following:
            ``(3) the debtor, the debtor's property, and property of 
        the estate are not liable for a fee, cost, or charge that is 
        incurred while the case is pending and arises from a debt that 
        is secured by the debtor's principal residence except to the 
        extent that--
                    ``(A) the holder of the claim for such debt files 
                with the court and serves on the trustee, the debtor, 
                and the debtor's attorney (annually or, in order to 
                permit filing consistent with clause (ii), at such more 
                frequent periodicity as the court determines necessary) 
                notice of such fee, cost, or charge before the earlier 
                of--
                            ``(i) 1 year after such fee, cost, or 
                        charge is incurred; or
                            ``(ii) 60 days before the closing of the 
                        case; and
                    ``(B) such fee, cost, or charge--
                            ``(i) is lawful under applicable 
                        nonbankruptcy law, reasonable, and provided for 
                        in the applicable security agreement; and
                            ``(ii) is secured by property the value of 
                        which is greater than the amount of such claim, 
                        including such fee, cost, or charge;
            ``(4) the failure of a party to give notice described in 
        paragraph (3) shall be deemed a waiver of any claim for fees, 
        costs, or charges described in paragraph (3) for all purposes, 
        and any attempt to collect such fees, costs, or charges shall 
        constitute a violation of section 524(a)(2) or, if the 
        violation occurs before the date of discharge, of section 
        362(a); and
            ``(5) a plan may provide for the waiver of any prepayment 
        penalty on a claim secured by the debtor's principal 
        residence.''.

SEC. 105. CONFIRMATION OF PLAN.

    Section 1325(a) of title 11, United States Code, is amended--
            (1) in paragraph (5) by inserting ``except as otherwise 
        provided in section 1322(b)(11),'' after ``(5)'',
            (2) in paragraph (8) by striking ``and'' at the end,
            (3) in paragraph (9) by striking the period at the end and 
        inserting a semicolon, and
            (4) by inserting after paragraph (9) the following:
            ``(10) notwithstanding subclause (I) of paragraph 
        (5)(B)(i), whenever the plan modifies a claim in accordance 
        with section 1322(b)(11), the holder of a claim whose rights 
        are modified pursuant to section 1322(b)(11) shall retain the 
        lien until the later of--
                    ``(A) the payment of such holder's allowed secured 
                claim; or
                    ``(B) completion of all payments under the plan 
                (or, if applicable, receipt of a discharge under 
                section 1328(b)); and
            ``(11) whenever the plan modifies a claim in accordance 
        with section 1322(b)(11), the court finds that such 
        modification is in good faith and does not find that the debtor 
        has been convicted of obtaining by actual fraud the extension, 
        renewal, or refinancing of credit that gives rise to a modified 
        claim.''.

SEC. 106. DISCHARGE.

    Section 1328(a) of title 11, United States Code, is amended--
            (1) by inserting ``(other than payments to holders of 
        claims whose rights are modified under section 1322(b)(11))'' 
        after ``paid'', and
            (2) in paragraph (1) by inserting ``or, to the extent of 
        the unpaid portion of an allowed secured claim, provided for in 
        section 1322(b)(11)'' after ``1322(b)(5)''.

SEC. 107. STANDING TRUSTEE FEES.

    (a) Amendment to Title 28.--Section 586(e)(1)(B)(i) of title 28, 
United States Code, is amended--
            (1) by inserting ``(I) except as provided in subparagraph 
        (II)'' after ``(i)'',
            (2) by striking ``or'' at the end and inserting ``and'', 
        and
            (3) by adding at the end the following:
                            ``(II) 4 percent with respect to payments 
                        received under section 1322(b)(11) of title 11 
                        by the individual as a result of the operation 
                        of section 1322(b)(11)(D) of title 11, unless 
                        the bankruptcy court waives all fees with 
                        respect to such payments based on a 
                        determination that such individual has income 
                        less than 150 percent of the income official 
                        poverty line (as defined by the Office of 
                        Management and Budget, and revised annually in 
                        accordance with section 673(2) of the Omnibus 
                        Budget Reconciliation Act of 1981) applicable 
                        to a family of the size involved and payment of 
                        such fees would render the debtor's plan 
                        infeasible.''.
    (b) Conforming Provision.--The amendments made by this section 
shall apply to any trustee to whom the provisions of section 302(d)(3) 
of the Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986 (Public Law 99-554; 100 Stat. 3121) apply.

SEC. 108. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this 
subtitle and the amendments made by this subtitle shall take effect on 
the date of the enactment of this Act.
    (b) Application of Amendments.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this subtitle shall apply with respect to 
        cases commenced under title 11 of the United States Code 
        before, on, or after the date of the enactment of this Act.
            (2) Limitation.--Paragraph (1) shall not apply with respect 
        to cases closed under title 11 of the United States Code as of 
        the date of the enactment of this Act that are neither pending 
        on appeal in, nor appealable to, any court of the United 
        States.

          Subtitle B--Related Mortgage Modification Provisions

SEC. 121. ADJUSTMENTS AS A RESULT OF MODIFICATION IN BANKRUPTCY OF 
              HOUSING LOANS GUARANTEED BY THE DEPARTMENT OF VETERANS 
              AFFAIRS.

    (a) In General.--Subsection (a) of section 3732 of title 38, United 
States Code is amended--
            (1) in subsection (a)--
                    (A) by redesignating paragraph (2) as subparagraph 
                (A) of paragraph (2), and
            (2) by inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) In the event that a housing loan guaranteed 
                under this chapter is modified under the authority 
                provided under section 1322(b) of title 11, United 
                States Code, the Secretary may pay the holder of the 
                obligation the unpaid balance of the obligation due as 
                of the date of the filing of the petition under title 
                11, United States Code, plus accrued interest, but only 
                upon the assignment, transfer, and delivery to the 
                Secretary (in a form and manner satisfactory to the 
                Secretary) of all rights, interest, claims, evidence, 
                and records with respect to the housing loan.''.
    (b) Maturity of Housing Loans.--Paragraph (1) of section (d) of 
section 3703 of title 38, United States Code, is amended by inserting 
``at the time of origination'' after ``loan''.
    (c) Implementation.--The Secretary of Veterans Affairs may 
implement the amendments made by this section through notice, procedure 
notice, or administrative notice.

SEC. 122. PAYMENT OF FHA MORTGAGE INSURANCE BENEFITS.

    (a) In General.--Subsection (a) of section 204 of the National 
Housing Act (12 U.S.C. 1710(a)) is amended--
            (1) in paragraph (1), by adding at the end the following 
        new subparagraph:
                    ``(E) Modification of mortgage in bankruptcy.--
                            ``(i) Authority.--If an order is entered 
                        under the authority provided under section 
                        1322(b) of title 11, United States Code, that 
                        (a) determines the amount of an allowed secured 
                        claim under a mortgage in accordance with 
                        section 506(a)(1) of title 11, United States 
                        Code, and the amount of such allowed secured 
                        claim is less than the amount due under the 
                        mortgage as of the date of the filing of the 
                        petition under title 11, United States Code, or 
                        (b) reduces the interest to be paid under a 
                        mortgage in accordance with section 1325 of 
                        such title, the Secretary may pay insurance 
                        benefits for the mortgage as follows:
                                    ``(I) Full payment and 
                                assignment.--The Secretary may pay the 
                                insurance benefits for the mortgage, 
                                but only upon the assignment, transfer, 
                                and delivery to the Secretary of all 
                                rights, interest, claims, evidence, and 
                                records with respect to the mortgage 
                                specified in clauses (i) through (iv) 
                                of paragraph (1)(A). The insurance 
                                benefits shall be paid in the amount 
                                equal to the original principal 
                                obligation of the mortgage (with such 
                                additions and deductions as the 
                                Secretary determines are appropriate) 
                                which was unpaid upon the date of the 
                                filing of by the mortgagor of the 
                                petition under title 11 of the United 
                                States Code. Nothing in this Act may be 
                                construed to prevent the Secretary from 
                                providing insurance under this title 
                                for a mortgage that has previously been 
                                assigned to the Secretary under this 
                                subclause. The decision of whether to 
                                utilize the authority under this 
                                subclause for payment and assignment 
                                shall be at the election of the 
                                mortgagee, subject to such terms and 
                                conditions as the Secretary may 
                                establish.
                                    ``(II) Assignment of unsecured 
                                claim.--The Secretary may make a 
                                partial payment of the insurance 
                                benefits for any unsecured claim under 
                                the mortgage, but only upon the 
                                assignment to the Secretary of any 
                                unsecured claim of the mortgagee 
                                against the mortgagor or others arising 
                                out of such order. Such assignment 
                                shall be deemed valid irrespective of 
                                whether such claim has been or will be 
                                discharged under title 11 of the United 
                                States Code. The insurance benefits 
                                shall be paid in the amount specified 
                                in subclause (I) of this clause, as 
                                such amount is reduced by the amount of 
                                the allowed secured claim. Such allowed 
                                secured claim shall continue to be 
                                insured under section 203.
                                    ``(III) Interest payments.--The 
                                Secretary may make periodic payments, 
                                or a one-time payment, of insurance 
                                benefits for interest payments that are 
                                reduced pursuant to such order, as 
                                determined by the Secretary, but only 
                                upon assignment to the Secretary of all 
                                rights and interest related to such 
                                payments.
                            ``(ii) Delivery of evidence of entry of 
                        order.--Notwithstanding any other provision of 
                        this paragraph, no insurance benefits may be 
                        paid pursuant to this subparagraph for a 
                        mortgage before delivery to the Secretary of 
                        evidence of the entry of the order issued 
                        pursuant to title 11, United States Code, in a 
                        form satisfactory to the Secretary.'';
            (2) in paragraph (5), in the matter preceding subparagraph 
        (A), by inserting after ``section 520, and'' the following: ``, 
        except as provided in paragraph (1)(E),''; and
            (3) by adding at the end the following new paragraph:
            ``(10) Loan modification program.--
                    ``(A) Authority.--The Secretary may carry out a 
                program solely to encourage loan modifications for 
                eligible delinquent mortgages through the payment of 
                insurance benefits and assignment of the mortgage to 
                the Secretary and the subsequent modification of the 
                terms of the mortgage according to a loan modification 
                approved by the mortgagee.
                    ``(B) Payment of benefits and assignment.--Under 
                the program under this paragraph, the Secretary may pay 
                insurance benefits for a mortgage, in the amount 
                determined in accordance with paragraph (5)(A), without 
                reduction for any amounts modified, but only upon the 
                assignment, transfer, and delivery to the Secretary of 
                all rights, interest, claims, evidence, and records 
                with respect to the mortgage specified in clauses (i) 
                through (iv) of paragraph (1)(A).
                    ``(C) Disposition.--After modification of a 
                mortgage pursuant to this paragraph, the Secretary may 
                provide insurance under this title for the mortgage. 
                The Secretary may subsequently--
                            ``(i) re-assign the mortgage to the 
                        mortgagee under terms and conditions as are 
                        agreed to by the mortgagee and the Secretary;
                            ``(ii) act as a Government National 
                        Mortgage Association issuer, or contract with 
                        an entity for such purpose, in order to pool 
                        the mortgage into a Government National 
                        Mortgage Association security; or
                            ``(iii) re-sell the mortgage in accordance 
                        with any program that has been established for 
                        purchase by the Federal Government of mortgages 
                        insured under this title, and the Secretary may 
                        coordinate standards for interest rate 
                        reductions available for loan modification with 
                        interest rates established for such purchase.
                    ``(D) Loan servicing.--In carrying out the program 
                under this section, the Secretary may require the 
                existing servicer of a mortgage assigned to the 
                Secretary under the program to continue servicing the 
                mortgage as an agent of the Secretary during the period 
                that the Secretary acquires and holds the mortgage for 
                the purpose of modifying the terms of the mortgage. If 
                the mortgage is resold pursuant to subparagraph 
                (C)(iii), the Secretary may provide for the existing 
                servicer to continue to service the mortgage or may 
                engage another entity to service the mortgage.''.
    (b) Amendment to Partial Claim Authority.--Paragraph (1) of section 
230(b) of the National Housing Act (12 U.S.C. 1715u(b)(1)) is amended 
by striking ``12 of the monthly mortgage payments'' and inserting ``30 
percent of the unpaid principal balance of the mortgage''.
    (c) Implementation.--The Secretary of Housing and Urban Development 
may implement the amendments made by this section through notice or 
mortgagee letter.

SEC. 123. ADJUSTMENTS AS RESULT OF MODIFICATION OF RURAL SINGLE FAMILY 
              HOUSING LOANS IN BANKRUPTCY.

    (a) Guaranteed Rural Housing Loans.--Subsection (h) of section 502 
of the Housing Act of 1949 (42 U.S.C. 1472(h)) is amended--
            (1) in paragraph (7)--
                    (A) in subparagraph (A), by inserting before the 
                period at the end the following: ``, unless the 
                maturity date of the loan is modified in a bankruptcy 
                proceeding or at the discretion of the Secretary''; and
                    (B) in subparagraph (B), by inserting before the 
                semicolon the following: ``, unless such rate is 
                modified in a bankruptcy proceeding'';
            (2) by redesignating paragraphs (13) and (14) as paragraphs 
        (14) and (15), respectively; and
            (3) by inserting after paragraph (12) the following new 
        paragraph:
            ``(13) Payment of guarantee.--In addition to all other 
        authorities to pay a guarantee claim, the Secretary may also 
        pay the guaranteed portion of any losses incurred by the holder 
        of a note or the servicer resulting from a modification of a 
        note by a bankruptcy proceeding.''.
    (b) Insured Rural Housing Loans.--Subsection (j) of section 517 of 
the Housing Act of 1949 (42 U.S.C. 1487(j)) is amended--
            (1) by redesignating paragraphs (2) through (7) as 
        paragraphs (3) through (8), respectively; and
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) to pay for losses incurred by holders or servicers in 
        the event of a modification pursuant to a bankruptcy 
        proceeding;''.
    (c) Implementation.--The Secretary of Agriculture may implement the 
amendments made by this section through notice, procedure notice, or 
administrative notice.

SEC. 124. UNENFORCEABILITY OF CERTAIN PROVISION AS BEING CONTRARY TO 
              PUBLIC POLICY.

    No provision in any investment contract between a servicer and a 
securitization vehicle or investor in effect as of the date of 
enactment of this Act that requires excess bankruptcy losses that 
exceed a certain dollar amount on residential mortgages to be borne by 
classes of certificates on a pro rata basis that refers to types of 
bankruptcy losses that could not have been incurred under the law in 
effect at the time such contract was entered into shall be enforceable, 
as such provision shall be contrary to public policy.  Notwithstanding 
this section, such reference to types of bankruptcy losses that could 
have been incurred under the law in effect at the time such contract 
was entered into shall be enforceable.

        TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITY

SEC. 201. SERVICER SAFE HARBOR FOR MORTGAGE LOAN MODIFICATIONS.

    (a) Safe Harbor.--
            (1) Loan modifications and workout plans.--Notwithstanding 
        any other provision of law, and notwithstanding any investment 
        contract between a servicer and a securitization vehicle or 
        investor, a servicer that acts consistent with the duty set 
        forth in section 129A(a) of Truth in Lending Act (15 U.S.C. 
        1639a) shall not be liable for entering into a loan 
        modification, workout, or other loss mitigation plan, 
        including, but not limited to, disposition with respect to any 
        such mortgage that meets all of the criteria set forth in 
        paragraph (2)(B) to--
                    (A) any person, based on that person's ownership of 
                a residential mortgage loan or any interest in a pool 
                of residential mortgage loans or in securities that 
                distribute payments out of the principal, interest and 
                other payments in loans on the pool;
                    (B) any person who is obligated pursuant to a 
                derivatives instrument to make payments determined in 
                reference to any loan or any interest referred to in 
                subparagraph (A); or
                    (C) any person that insures any loan or any 
                interest referred to in subparagraph (A) under any law 
                or regulation of the United States or any law or 
                regulation of any State or political subdivision of any 
                State.
            (2) Ability to modify mortgages.--
                    (A) Ability.--Notwithstanding any other provision 
                of law, and notwithstanding any investment contract 
                between a servicer and a securitization vehicle or 
                investor, a servicer--
                            (i) shall not be limited in the ability to 
                        modify mortgages, the number of mortgages that 
                        can be modified, the frequency of loan 
                        modifications, or the range of permissible 
                        modifications; and
                            (ii) shall not be obligated to repurchase 
                        loans from or otherwise make payments to the 
                        securitization vehicle on account of a 
                        modification, workout, or other loss mitigation 
                        plan for a residential mortgage or a class of 
                        residential mortgages that constitute a part or 
                        all of the mortgages in the securitization 
                        vehicle,
                if any mortgage so modified meets all of the criteria 
                set forth in subparagraph (B).
                    (B) Criteria.--The criteria under this subparagraph 
                with respect to a mortgage are as follows:
                            (i) Default on the payment of such mortgage 
                        has occurred or is reasonably foreseeable.
                            (ii) The property securing such mortgage is 
                        occupied by the mortgagor of such mortgage.
                            (iii) The servicer reasonably and in good 
                        faith believes that the anticipated recovery on 
                        the principal outstanding obligation of the 
                        mortgage under the particular modification or 
                        workout plan or other loss mitigation action 
                        will exceed, on a net present value basis, the 
                        anticipated recovery on the principal 
                        outstanding obligation of the mortgage to be 
                        realized through foreclosure.
            (3) Applicability.--This subsection shall apply only with 
        respect to modifications, workouts, and other loss mitigation 
        plans initiated before January 1, 2012.
    (b) Reporting.--Each servicer that engages in loan modifications or 
workout plans subject to the safe harbor in subsection (a) shall report 
to the Secretary on a regular basis regarding the extent, scope and 
results of the servicer's modification activities. The Secretary shall 
prescribe regulations specifying the form, content, and timing of such 
reports.
    (c) Definition of Securitization Vehicles.--For purposes of this 
section, the term ``securitization vehicle'' means a trust, 
corporation, partnership, limited liability entity, special purpose 
entity, or other structure that--
            (1) is the issuer, or is created by the issuer, of mortgage 
        pass-through certificates, participation certificates, 
        mortgage-backed securities, or other similar securities backed 
        by a pool of assets that includes residential mortgage loans; 
        and
            (2) holds such mortgages.

SEC. 202. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM.

    (a) Program Changes.--Section 257 of the National Housing Act (12 
U.S.C. 1715z-23) is amended--
            (1) in subsection (c)--
                    (A) in the heading for paragraph (1), by striking 
                ``the board'' and inserting ``secretary'';
                    (B) in paragraph (1), by striking ``Board'' 
                inserting ``Secretary, after consultation with the 
                Board,''; and
                    (C) by adding after paragraph (2) the following:
            ``(3) Duties of board.--The Board shall advise the 
        Secretary regarding the establishment and implementation of the 
        HOPE for Homeowners Program.''.
            (2) by striking ``Board'' each place such term appears in 
        subsections (e), (h)(1), (h)(3), (j), (l), (n), (s)(3), and (v) 
        and inserting ``Secretary'';
            (3) in subsection (e)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) Borrower certification.--
                    ``(A) No intentional default or false 
                information.--The mortgagor shall provide a 
                certification to the Secretary that the mortgagor has 
                not intentionally defaulted on the existing mortgage or 
                mortgages and has not knowingly, or willfully and with 
                actual knowledge, furnished material information known 
                to be false for the purpose of obtaining the eligible 
                mortgage to be insured.
                    ``(B) Liability for repayment.--The mortgagor shall 
                agree in writing that the mortgagor shall be liable to 
                repay to the Secretary any direct financial benefit 
                achieved from the reduction of indebtedness on the 
                existing mortgage or mortgages on the residence 
                refinanced under this section derived from 
                misrepresentations made by the mortgagor in the 
                certifications and documentation required under this 
                paragraph, subject to the discretion of the 
                Secretary.'';
                    (B) in paragraph (7), by striking the semicolon and 
                all that follows through ``new second lien'';
                    (C) in paragraph (9)--
                            (i) by striking ``by procuring (A) an 
                        income tax return transcript of the income tax 
                        return of the mortgagor, or (B)'' and inserting 
                        ``in accordance with procedures and standards 
                        that the Secretary shall establish, which may 
                        include requiring the mortgagee to procure''; 
                        and
                            (ii) by striking ``and by any other method, 
                        in accordance with procedures and standards 
                        that the Board shall establish''; and
                    (D) by adding after paragraph (11) the following 
                new paragraph:
            ``(12) Ban on millionaires.--The mortgagor shall not have a 
        net worth, as of the date the mortgagor first applies for a 
        mortgage to be insured under the Program under this section, 
        that exceeds $1,000,000.'';
            (4) in subsection (h)(2)--
                    (A) by striking ``The Board shall prohibit the 
                Secretary from paying'' and inserting ``The Secretary 
                shall not pay''; and
                    (B) by inserting after the period at the end the 
                following: ``In implementing this provision with 
                respect to a failure by a mortgagor to make a first 
                payment, the Secretary shall establish policies and 
                timing of endorsements as consistent as is possible 
                with endorsement policies established with respect to 
                mortgages insured under section 203(b)'';
            (5) in subsection (i)--
                    (A) by inserting ``, after weighing maximization of 
                participation with consideration of collection of 
                premiums,'' after ``Secretary shall'';
                    (B) in paragraph (1), by striking ``equal to 3 
                percent'' and inserting ``not more than 2 percent''; 
                and
                    (C) in paragraph (2), by striking ``equal to 1.5 
                percent'' and inserting ``not more than 1 percent'';
            (6) in subsection (k)--
                    (A) by striking the subsection heading and 
                inserting ``Exit Fee'';
                    (B) in paragraph (1), in the matter preceding 
                subparagraph (A), by striking ``such sale or 
                refinancing'' and inserting ``the mortgage being 
                insured under this section''; and
                    (C) in paragraph (2), by striking ``and the 
                mortgagor'' and all that follows through the end and 
                inserting ``may, upon any sale or disposition of the 
                property to which the mortgage relates, be entitled to 
                up to 50 percent of appreciation, up to the appraised 
                value of the home at the time when the mortgage being 
                refinanced under this section was originally made. The 
                Secretary may share any amounts received under this 
                paragraph with the holder of the eligible mortgage 
                refinanced under this section.'';
            (7) in the heading for subsection (n), by striking ``the 
        Board'' and inserting ``Secretary'';
            (8) in subsection (p), by striking ``Under the direction of 
        the Board, the'' and inserting ``The'';
            (9) in subsection (s)--
                    (A) in the first sentence of paragraph (2), by 
                striking ``Board of Directors of'' and inserting 
                ``Advisory Board for''; and
                    (B) in paragraph (3)(A)(ii), by striking 
                ``subsection (e)(1)(B) and such other'' and inserting 
                ``such'';
            (10) in subsection (v), by inserting after the period at 
        the end the following: ``The Secretary shall conform documents, 
        forms, and procedures for mortgages insured under this section 
        to those in place for mortgages insured under section 203(b) to 
        the maximum extent possible consistent with the requirements of 
        this section.''; and
            (11) by adding at the end the following new subsections:
    ``(x) Payment to Existing Loan Servicer.--The Secretary may 
establish a payment to the servicer of the existing senior mortgage for 
every loan insured under the HOPE for Homeowners Program in an amount, 
for each such loan, that does not exceed $1,000.
    ``(y) Auctions.--The Secretary, with the concurrence of the Board, 
shall, if feasible, establish a structure and organize procedures for 
an auction to refinance eligible mortgages on a wholesale or bulk 
basis.''.
    (b) Reducing TARP Funds To Offset Costs of Program Changes.--
Paragraph (3) of section 115(a) of the Emergency Economic Stabilization 
Act of 2008 (12 U.S.C. 5225) is amended by inserting ``, as such amount 
is reduced by $2,316,000,000,'' after ``$700,000,000,000''.

SEC. 203. REQUIREMENTS FOR FHA-APPROVED MORTGAGEES.

    (a) Mortgagee Review Board.--Paragraph (2) of section 202(c) of the 
National Housing Act (12 U.S.C. 1708(c)) is amended--
            (1) in subparagraph (E), by inserting ``and'' after the 
        semicolon;
            (2) in subparagraph (F), by striking ``; and'' and 
        inserting a period; and
            (3) by striking subparagraph (G).
    (b) Limitations on Participation and Mortgagee Approval and Use of 
Name.--Section 202 of the National Housing Act (12 U.S.C. 1708) is 
amended--
            (1) by redesignating subsections (d), (e), and (f) as 
        subsections (e), (f), and (g), respectively;
            (2) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Limitations on Participation in Origination and Mortgagee 
Approval.--
            ``(1) Requirement.--Any person or entity that is not 
        approved by the Secretary to serve as a mortgagee, as such term 
        is defined in subsection (c)(7), shall not participate in the 
        origination of an FHA-insured loan except as authorized by the 
        Secretary.
            ``(2) Eligibility for approval.--In order to be eligible 
        for approval by the Secretary, an applicant mortgagee shall not 
        be, and shall not have any officer, partner, director, 
        principal, or employee of the applicant mortgagee who is--
                    ``(A) currently suspended, debarred, under a 
                limited denial of participation (LDP), or otherwise 
                restricted under part 24 or 25 of title 24 of the Code 
                of Federal Regulations, or any successor regulations to 
                such parts, or under similar provisions of any other 
                Federal agency;
                    ``(B) under indictment for, or has been convicted 
                of, an offense that reflects adversely upon the 
                applicant's integrity, competence or fitness to meet 
                the responsibilities of an approved mortgagee;
                    ``(C) subject to unresolved findings contained in a 
                Department of Housing and Urban Development or other 
                governmental audit, investigation, or review;
                    ``(D) engaged in business practices that do not 
                conform to generally accepted practices of prudent 
                mortgagees or that demonstrate irresponsibility;
                    ``(E) convicted of, or who has pled guilty or nolo 
                contendre to, a felony related to participation in the 
                real estate or mortgage loan industry--
                            ``(i) during the 7-year period preceding 
                        the date of the application for licensing and 
                        registration; or
                            ``(ii) at any time preceding such date of 
                        application, if such felony involved an act of 
                        fraud, dishonesty, or a breach of trust, or 
                        money laundering;
                    ``(F) in violation of provisions of the S.A.F.E. 
                Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) 
                or any applicable provision of State law; or
                    ``(G) in violation of any other requirement as 
                established by the Secretary.''; and
            (3) by adding at the end the following new subsection:
    ``(h) Use of Name.--The Secretary shall, by regulation, require 
each mortgagee approved by the Secretary for participation in the FHA 
mortgage insurance programs of the Secretary--
            ``(1) to use the business name of the mortgagee that is 
        registered with the Secretary in connection with such approval 
        in all advertisements and promotional materials, as such terms 
        are defined by the Secretary, relating to the business of such 
        mortgagee in such mortgage insurance programs; and
            ``(2) to maintain copies of all such advertisements and 
        promotional materials, in such form and for such period as the 
        Secretary requires.''.
    (c) Change of Status.--The National Housing Act is amended by 
striking section 532 (12 U.S.C. 1735f-10) and inserting the following 
new section:

``SEC. 532. CHANGE OF MORTGAGEE STATUS.

    ``(a) Notification.--Upon the occurrence of any action described in 
subsection (b), an approved mortgagee shall immediately submit to the 
Secretary, in writing, notification of such occurrence.
    ``(b) Actions.--The actions described in this subsection are as 
follows:
            ``(1) The debarment, suspension of a Limited Denial of 
        Participation (LDP), or application of other sanctions, fines, 
        or penalties applied to the mortgagee or to any officer, 
        partner, director, principal, manager, supervisor, loan 
        processor, loan underwriter, or loan originator of the 
        mortgagee pursuant to applicable provisions of State or Federal 
        law.
            ``(2) The revocation of a State-issued mortgage loan 
        originator license issued pursuant to the S.A.F.E. Mortgage 
        Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any other 
        similar declaration of ineligibility pursuant to State law.''.
    (d) Civil Money Penalties.--Section 536 of the National Housing Act 
(12 U.S.C. 1735f-14) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in the matter preceding subparagraph 
                        (A), by inserting ``or any of its owners, 
                        officers, or directors'' after ``mortgagee or 
                        lender'';
                            (ii) in subparagraph (H), by striking 
                        ``title I'' and all that follows through ``Act 
                        of 1989)'' and inserting ``title I or II''; and
                            (iii) by inserting after subparagraph (J) 
                        the following:
                    ``(K) Violation of section 202(d) of this Act (12 
                U.S.C. 1708(d)).''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (B), by striking ``or'' 
                        at the end;
                            (ii) in subparagraph (C), by striking the 
                        period at the end and inserting ``; or''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
                    ``(D) causing or participating in any of the 
                violations set forth in paragraph (1) of this 
                subsection.''; and
            (2) in subsection (g), by striking ``The term'' and all 
        that follows through the end of the sentence and inserting 
        ``For purposes of this section, a person acts knowingly when a 
        person has actual knowledge of acts or should have known of the 
        acts.''.
    (e) Expanded Review of FHA Mortgagee Applicants and Newly Approved 
Mortgagees.--Not later than the expiration of the 3-month period 
beginning upon the date of the enactment of this Act, the Secretary of 
Housing and Urban Development shall--
            (1) expand the existing process for reviewing new 
        applicants for approval for participation in the mortgage 
        insurance programs of the Secretary for mortgages on 1- to 4-
        family residences for the purpose of identifying applicants who 
        represent a high risk to the Mutual Mortgage Insurance Fund; 
        and
            (2) implement procedures that, for mortgagees approved 
        during the 12-month period ending upon such date of enactment--
                    (A) expand the number of mortgages originated by 
                such mortgagees that are reviewed for compliance with 
                applicable laws, regulations, and policies; and
                    (B) include a process for random reviews of such 
                mortgagees and a process for reviews that is based on 
                volume of mortgages originated by such mortgagees.

SEC. 204. ENHANCEMENT OF LIQUIDITY AND STABILITY OF INSURED DEPOSITORY 
              INSTITUTIONS TO ENSURE AVAILABILITY OF CREDIT AND 
              REDUCTION OF FORECLOSURES.

    (a) Permanent Increase in Deposit Insurance.--
            (1) Amendments to federal deposit insurance act.--Effective 
        upon the date of the enactment of this Act, section 11(a) of 
        the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is 
        amended--
                    (A) in paragraph (1)(E), by striking ``$100,000'' 
                and inserting ``$250,000'';
                    (B) in paragraph (1)(F)(i), by striking ``2010'' 
                and inserting ``2015'';
                    (C) in subclause (I) of paragraph (1)(F)(i), by 
                striking ``$100,000'' and inserting ``$250,000'';
                    (D) in subclause (II) of paragraph (1)(F)(i), by 
                striking ``the calendar year preceding the date this 
                subparagraph takes effect under the Federal Deposit 
                Insurance Reform Act of 2005'' and inserting ``calendar 
                year 2008''; and
                    (E) in paragraph (3)(A), by striking ``, except 
                that $250,000 shall be substituted for $100,000 
                wherever such term appears in such paragraph''.
            (2) Amendment to federal credit union act.--Section 207(k) 
        of the Federal Credit Union Act (12 U.S.C. 1787(k)) is 
        amended--
                    (A) in paragraph (3)--
                            (i) by striking the opening quotation mark 
                        before ``$250,000'';
                            (ii) by striking ``, except that $250,000 
                        shall be substituted for $100,000 wherever such 
                        term appears in such section''; and
                            (iii) by striking the closing quotation 
                        mark after the closing parenthesis; and
                    (B) in paragraph (5), by striking ``$100,000'' and 
                inserting ``$250,000''.
            (3) Repeal of eesa provision.--Section 136 of the Emergency 
        Economic Stabilization Act (12 U.S.C. 5241) is hereby repealed.
    (b) Extension of Restoration Plan Period.--Section 7(b)(3)(E)(ii) 
of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is 
amended by striking ``5-year period'' and inserting ``8-year period''.
    (c) FDIC and NCUA Borrowing Authority.--
            (1) FDIC.--Section 14(a) of the Federal Deposit Insurance 
        Act (12 U.S.C. 1824(a)) is amended by striking 
        ``$30,000,000,000'' and inserting ``$100,000,000,000''.
            (2) NCUA.--Section 203(d)(1) of the Federal Credit Union 
        Act (12 U.S.C. 1783(d)(1)) is amended by striking 
        ``$100,000,000'' and inserting ``$6,000,000,000''.
    (d) Expanding Systemic Risk Special Assessments.--Section 
13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 
1823(c)(4)(G)(ii)) is amended to read as follows:
                            ``(ii) Repayment of loss.--
                                    ``(I) In general.--The Corporation 
                                shall recover the loss to the Deposit 
                                Insurance Fund arising from any action 
                                taken or assistance provided with 
                                respect to an insured depository 
                                institution under clause (i) from 1 or 
                                more special assessments on insured 
                                depository institutions, depository 
                                institution holding companies (with the 
                                concurrence of the Secretary of the 
                                Treasury with respect to holding 
                                companies), or both, as the Corporation 
                                determines to be appropriate.
                                    ``(II) Treatment of depository 
                                institution holding companies.--For 
                                purposes of this clause, sections 
                                7(c)(2) and 18(h) shall apply to 
                                depository institution holding 
                                companies as if they were insured 
                                depository institutions.
                                    ``(III) Regulations.--The 
                                Corporation shall prescribe such 
                                regulations as it deems necessary to 
                                implement this clause. In prescribing 
                                such regulations, defining terms, and 
                                setting the appropriate assessment rate 
                                or rates, the Corporation shall 
                                establish rates sufficient to cover the 
                                losses incurred as a result of the 
                                actions of the Corporation under clause 
                                (i) and shall consider: the types of 
                                entities that benefit from any action 
                                taken or assistance provided under this 
                                subparagraph; economic conditions, the 
                                effects on the industry, and such other 
                                factors as the Corporation deems 
                                appropriate and relevant to the action 
                                taken or the assistance provided. Any 
                                funds so collected that exceed actual 
                                losses shall be placed in the Deposit 
                                Insurance Fund.''.
    (e) Establishment of a National Credit Union Share Insurance Fund 
Restoration Plan Period.--Section 202(c)(2) of the Federal Credit Union 
Act (12 U.S.C. 1782(c)(2)) is amended by adding at the end the 
following new subparagraph:
                    ``(D) Fund restoration plans.--
                            ``(i) In general.--Whenever--
                                    ``(I) the Board projects that the 
                                equity ratio of the Fund will, within 6 
                                months of such determination, fall 
                                below the minimum amount specified in 
                                subparagraph (C) for the designated 
                                equity ratio; or
                                    ``(II) the equity ratio of the Fund 
                                actually falls below the minimum amount 
                                specified in subparagraph (C) for the 
                                equity ratio without any determination 
                                under sub-clause (I) having been made,
                        the Board shall establish and implement a Share 
                        Insurance Fund restoration plan within 90 days 
                        that meets the requirements of clause (ii) and 
                        such other conditions as the Board determines 
                        to be appropriate.
                            ``(ii) Requirements of restoration plan.--A 
                        Share Insurance Fund restoration plan meets the 
                        requirements of this clause if the plan 
                        provides that the equity ratio of the Fund will 
                        meet or exceed the minimum amount specified in 
                        subparagraph (C) for the designated equity 
                        ratio before the end of the 5-year period 
                        beginning upon the implementation of the plan 
                        (or such longer period as the Board may 
                        determine to be necessary due to extraordinary 
                        circumstances).
                            ``(iii) Transparency.--Not more than 30 
                        days after the Board establishes and implements 
                        a restoration plan under clause (i), the Board 
                        shall publish in the Federal Register a 
                        detailed analysis of the factors considered and 
                        the basis for the actions taken with regard to 
                        the plan.''.
                                 <all>
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