★

111TH CONGRESS 

1ST SESSION H. R. 1106 

AN ACT 

To prevent mortgage foreclosures and enhance mortgage 

credit availability. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as ‘‘Help3 ing Families Save Their Homes Act of 2009’’. 

4 (b) TABLE OF CONTENTS.—The table of contents of 

5 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. 100. Definition. 

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. 

Sec. 109. GAO study. 

Sec. 110. Report to Congress. 

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. 

Sec. 125. Mortgage modification data collecting and reporting. 

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. 

Sec. 205. Application of GSE conforming loan limit to mortgages assisted with 

TARP funds. 

Sec. 206. Mortgages on certain homes on leased land. 

Sec. 207. Sense of Congress regarding mortgage revenue bond purchases. 

TITLE III—MORTGAGE FRAUD 

Sec. 301. Short title. 
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Sec. 302. Nationwide Mortgage Fraud Task Force. 

TITLE IV—FORECLOSURE MORATORIUM PROVISIONS 

Sec. 401. Sense of the Congress on foreclosures. 

1 TITLE I—PREVENTION OF 

2 MORTGAGE FORECLOSURES 

3 Subtitle A—Modification of 

4 Residential Mortgages 

5 SEC. 100. DEFINITION. 

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

7 amended by inserting after paragraph (43) the following 

8 (and make such technical and conforming changes as may 

9 be appropriate): 

10 ‘‘(43A) The term ‘qualified loan modification’ 

11 means a loan modification agreement made in ac12 cordance with the guidelines of the Obama Adminis13 tration’s Homeowner Affordability and Stability 

14 Plan as implemented March 4, 2009, that— 

15 ‘‘(A) reduces the debtor’s payment (includ16 ing principal and interest, and payments for 

17 real estate taxes, hazard insurance, mortgage 

18 insurance premium, homeowners’ association 

19 dues, ground rent, and special assessments) on 

20 a loan secured by a senior security interest in 

21 the principal residence of the debtor, to a per22 centage of the debtor’s income in accordance 

23 with such guidelines, without any period of neg-
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1 ative amortization or under which the aggregate 

2 amount of the regular periodic payments would 

3 not fully amortize the outstanding principal 

4 amount of such loan; 

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

6 by the debtor in order to obtain such modifica7 tion; and 

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

9 make payments under the modification agree10 ment notwithstanding the filing of a case under 

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

12 SEC. 101. ELIGIBILITY FOR RELIEF. 

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

14 amended— 

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

16 following: ‘‘For purposes of this subsection, the com17 putation of debts shall not include the secured or 

18 unsecured portions of— 

19 ‘‘(1) debts secured by the debtor’s principal res20 idence if the value of such residence as of the date 

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

22 the applicable maximum amount of noncontingent, 

23 liquidated, secured debts specified in this subsection; 

24 or 
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1 ‘‘(2) debts secured or formerly secured by what 

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

3 foreclosure or that the debtor surrendered to the 

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

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

6 than the applicable maximum amount of noncontin7 gent, liquidated, secured debts specified in this sub8 section.’’, and 

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

10 following: 

11 ‘‘(5) Notwithstanding the 180-day period speci12 fied in paragraph (1), with respect to a debtor in a 

13 case under chapter 13 who submits to the court a 

14 certification that the debtor has received notice that 

15 the holder of a claim secured by the debtor’s prin16 cipal residence may commence a foreclosure on the 

17 debtor’s principal residence, the requirements of 

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

19 the debtor satisfies such requirements not later than 

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

21 date of the filing of the petition.’’. 

22 SEC. 102. PROHIBITING CLAIMS ARISING FROM VIOLA23 TIONS OF THE TRUTH IN LENDING ACT. 

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

25 amended— 
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1 (1) in paragraph (8) by striking ‘‘or’’ at the 

2 end, 

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

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

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

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

7 interest in the debtor’s principal residence is subject 

8 to a remedy for rescission under the Truth in Lend9 ing Act notwithstanding the prior entry of a fore10 closure judgment, except that nothing in this para11 graph shall be construed to modify, impair, or super12 sede any other right of the debtor.’’. 

13 SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES. 

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

15 amended— 

16 (1) in subsection (b)— 

17 (A) by redesignating paragraph (11) as 

18 paragraph (12), 

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

20 the end, and 

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

22 following: 

23 ‘‘(11) notwithstanding paragraph (2), with re24 spect to a claim for a loan originated before the ef25 fective date of this paragraph and secured by a secu-
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1 rity interest in the debtor’s principal residence that 

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

3 commenced with respect to such loan, modify the 

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

5 the holder of any claim secured by a subordinate se6 curity interest in such residence)— 

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

8 amount of the allowed secured claim as deter9 mined under section 506(a)(1); 

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

11 adjustable under the terms of such loan by pro12 hibiting, reducing, or delaying adjustments to 

13 such rate of interest applicable on and after the 

14 date of filing of the plan; 

15 ‘‘(C) by modifying the terms and condi16 tions of such loan— 

17 ‘‘(i) to extend the repayment period 

18 for a period that is no longer than the 

19 longer of 40 years (reduced by the period 

20 for which such loan has been outstanding) 

21 or the remaining term of such loan, begin22 ning on the date of the order for relief 

23 under this chapter; and 

24 ‘‘(ii) to provide for the payment of in25 terest accruing after the date of the order 
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1 for relief under this chapter at a fixed an2 nual rate equal to the currently applicable 

3 average prime offer rate as of the date of 

4 the order for relief under this chapter, cor5 responding to the repayment term deter6 mined under the preceding paragraph, as 

7 published by the Federal Financial Institu8 tions Examination Council in its table enti9 tled ‘Average Prime Offer Rates—Fixed’, 

10 plus a reasonable premium for risk; and 

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

12 modified loan directly to the holder of the claim 

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

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

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

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

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

18 the principal residence securing such claim, before com19 pleting all payments under the plan (or, if applicable, be20 fore receiving a discharge under section 1328(b)) and re21 ceives net proceeds from the sale of such residence, then 

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

23 days after receiving such proceeds— 

24 ‘‘(1) if such residence is sold in the 1st year oc25 curring after the effective date of the plan, 90 per-
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1 cent of the amount of the difference between the 

2 sales price and the amount of such claim as origi3 nally determined under subsection (b)(11) (plus 

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

5 the unpaid amount of the allowed secured claim de6 termined as if such claim had not been reduced 

7 under such subsection; 

8 ‘‘(2) if such residence is sold in the 2d year oc9 curring after the effective date of the plan, 70 per10 cent of the amount of the difference between the 

11 sales price and the amount of such claim as origi12 nally determined under subsection (b)(11) (plus 

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

14 the unpaid amount of the allowed secured claim de15 termined as if such claim had not been reduced 

16 under such subsection; 

17 ‘‘(3) if such residence is sold in the 3d year oc18 curring after the effective date of the plan, 50 per19 cent of the amount of the difference between the 

20 sales price and the amount of such claim as origi21 nally determined under subsection (b)(11) (plus 

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

23 the unpaid amount of the allowed secured claim de24 termined as if such claim had not been reduced 

25 under such subsection; 
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1 ‘‘(4) if such residence is sold in the 4th year oc2 curring after the effective date of the plan, 30 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; and 

10 ‘‘(5) if such residence is sold in the 5th year oc11 curring after the effective date of the plan, 10 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 ‘‘(h) With respect to a claim of the kind described 

20 in subsection (b)(11), the plan may not contain a modi21 fication under the authority of subsection (b)(11)— 

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

23 after the expiration of the 30-day period beginning 

24 on the effective date of this subsection, unless— 

25 ‘‘(A) the debtor certifies that the debtor— 
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1 ‘‘(i) not less than 30 days before the 

2 commencement of the case, contacted the 

3 holder of such claim (or the entity col4 lecting payments on behalf of such holder) 

5 regarding modification of the loan that is 

6 the subject of such claim; 

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

8 (or the entity collecting payments on be9 half of such holder) a written statement of 

10 the debtor’s current income, expenses, and 

11 debt substantially conforming with the 

12 schedules required under section 521(a) or 

13 such other form as is promulgated by the 

14 Judicial Conference of the United States 

15 for such purpose; and 

16 ‘‘(iii) considered any qualified loan 

17 modification offered to the debtor by the 

18 holder of the claim (or the entity collecting 

19 payments on behalf of such holder); or 

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

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

22 on the date of case is commenced; 

23 ‘‘(2) in any other case pending under this chap24 ter, unless the debtor certifies that the debtor at25 tempted to contact the holder of such claim (or the 
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1 entity collecting payments on behalf of such holder) 

2 regarding modification of the loan that is the subject 

3 of such claim, before— 

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

5 contains a modification under the authority of 

6 subsection (b)(11); or 

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

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

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

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

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

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

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

15 is contested, the court shall determine such value in ac16 cordance with the appraisal rules used by the Federal 

17 Housing Administration.’’. 

18 SEC. 104. COMBATING EXCESSIVE FEES. 

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

20 amended— 

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

22 end, 

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

24 the end and inserting a semicolon, and 

25 (3) by adding at the end the following: 
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1 ‘‘(3) the debtor, the debtor’s property, and 

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

3 or charge that is incurred while the case is pending 

4 and arises from a debt that is secured by the debt5 or’s principal residence except to the extent that— 

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

7 files with the court and serves on the trustee, 

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

9 or, in order to permit filing consistent with 

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

11 the court determines necessary) notice of such 

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

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

14 charge is incurred; or 

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

16 case; and 

17 ‘‘(B) such fee, cost, or charge— 

18 ‘‘(i) is lawful under applicable non19 bankruptcy law, reasonable, and provided 

20 for in the applicable security agreement; 

21 and 

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

23 of which is greater than the amount of 

24 such claim, including such fee, cost, or 

25 charge; 
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1 ‘‘(4) the failure of a party to give notice de2 scribed in paragraph (3) shall be deemed a waiver 

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

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

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

6 violation of section 524(a)(2) or, if the violation oc7 curs before the date of discharge, of section 362(a); 

8 and 

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

10 prepayment penalty on a claim secured by the debt11 or’s principal residence.’’. 

12 SEC. 105. CONFIRMATION OF PLAN. 

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

14 is amended— 

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

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

17 and (d)’’. 

18 (2) in paragraph (5)— 

19 (A) by inserting ‘‘except as otherwise pro20 vided in section 1322(b)(11),’’ after ‘‘(5)’’, and 

21 (B) in subparagraph (B)(iii)(I) by insert22 ing ‘‘(including payments of a claim modified 

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

24 the 1st place it appears, 
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1 (3) in paragraph (8) by striking ‘‘and’’ at the 

2 end, 

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

4 the end and inserting a semicolon, and 

5 (5) by inserting after paragraph (9) the fol6 lowing: 

7 ‘‘(10) notwithstanding subclause (I) of para8 graph (5)(B)(i), whenever the plan modifies a claim 

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

10 of a claim whose rights are modified pursuant to 

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

12 later of— 

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

14 secured claim; or 

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

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

17 under section 1328(b)); and 

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

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

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

22 this paragraph because the debtor can pay all of his 

23 or her debts and any future payment increases on 

24 such debts without difficulty for the foreseeable fu25 ture, including the positive amortization of mortgage 
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1 debt. In determining whether a reduction of the 

2 principal amount of the loan resulting from a modi3 fication made under the authority of section 

4 1322(b)(11) is made in good faith, the court shall 

5 consider whether the holder of such claim (or the en6 tity collecting payments on behalf of such holder) 

7 has offered to the debtor a qualified loan modifica8 tion that would enable the debtor to pay such debts 

9 and such loan without reducing such principal 

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

11 convicted of obtaining by actual fraud the extension, 

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

13 modified claim.’’. 

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

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

16 such technical and conforming changes as may be appro17 priate): 

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

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

20 secured by a senior security interest in the debtor’s prin21 cipal residence, may confirm a plan proposing a reduction 

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

23 interest and that does not reduce the principal, provided 

24 the total monthly mortgage payment is reduced to a per25 centage of the debtor’s income in accordance with the 
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1 guidelines of the Obama Administration’s Homeowner Af2 fordability and Stability Plan as implemented March 4, 

3 2009, if, taking into account the debtor’s financial situa4 tion, after allowance of expenses that would be permitted 

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

6 of subsection (b), regardless of whether the debtor is oth7 erwise subject to such paragraph, and taking into account 

8 additional debts and fees that are to be paid in this chap9 ter and thereafter, the debtor would be able to prevent 

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

11 such reduced interest rate without such reduction in prin12 cipal.’’. 

13 SEC. 106. DISCHARGE. 

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

15 amended— 

16 (1) by inserting ‘‘(other than payments to hold17 ers of claims whose rights are modified under sec18 tion 1322(b)(11))’’ after ‘‘paid’’, and 

19 (2) in paragraph (1) by inserting ‘‘or, to the ex20 tent of the unpaid portion of an allowed secured 

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

22 ‘‘1322(b)(5)’’. 
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1 SEC. 107. STANDING TRUSTEE FEES. 

2 (a) AMENDMENT TO TITLE 28.—Section 

3 586(e)(1)(B)(i) of title 28, United States Code, is amend4 ed— 

5 (1) by inserting ‘‘(I) except as provided in sub6 paragraph (II)’’ after ‘‘(i)’’, 

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

8 ‘‘and’’, and 

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

10 ‘‘(II) 4 percent with respect to pay11 ments received under section 1322(b)(11) 

12 of title 11 by the individual as a result of 

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

14 title 11, unless the bankruptcy court 

15 waives all fees with respect to such pay16 ments based on a determination that such 

17 individual has income less than 150 per18 cent of the income official poverty line (as 

19 defined by the Office of Management and 

20 Budget, and revised annually in accord21 ance with section 673(2) of the Omnibus 

22 Budget Reconciliation Act of 1981) appli23 cable to a family of the size involved and 

24 payment of such fees would render the 

25 debtor’s plan infeasible.’’. 
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1 (b) CONFORMING PROVISION.—The amendments 

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

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

4 Judges, United States Trustees, and Family Farmer 

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

6 3121) apply. 

7 SEC. 108. EFFECTIVE DATE; APPLICATION OF AMEND8 MENTS. 

9 (a) EFFECTIVE DATE.—Except as provided in sub10 section (b), this subtitle and the amendments made by this 

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

12 this Act. 

13 (b) APPLICATION OF AMENDMENTS.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this subtitle 

16 shall apply with respect to cases commenced under 

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

18 after the date of the enactment of this Act. 

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

20 apply with respect to cases closed under title 11 of 

21 the United States Code as of the date of the enact22 ment of this Act that are neither pending on appeal 

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

24 States. 
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1 SEC. 109. GAO STUDY. 

2 The Comptroller General shall carry out a study, and 

3 submit to the Committee on the Judiciary of the House 

4 of Representatives and the Committee on the Judiciary 

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

6 the enactment of this Act a report containing— 

7 (1) the results of such study of— 

8 (A) the number of debtors who filed, dur9 ing the 1-year period beginning on the date of 

10 the enactment of this Act, cases under chapter 

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

12 purpose of restructuring their principal resi13 dence mortgages, 

14 (B) the number of mortgages restructured 

15 under the amendments made by this subtitle 

16 that subsequently resulted in default and fore17 closure, 

18 (C) a comparison between the effectiveness 

19 of mortgages restructured under programs out20 side of bankruptcy, such as Hope Now and 

21 Help for Homeowners, and mortgages restruc22 tured under the amendments made by this sub23 title, 

24 (D) the number of cases presented to the 

25 bankruptcy courts where mortgages were re-
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1 structured under the amendments made by this 

2 subtitle that were appealed, 

3 (E) the number of cases presented to the 

4 bankruptcy courts where mortgages were re5 structured under the amendments made by the 

6 subtitle that were overturned on appeal, and 

7 (F) the number of bankruptcy judges dis8 ciplined as a result of actions taken to restruc9 ture mortgages under the amendments made by 

10 this subtitle, and 

11 (2) a recommendation as to whether such 

12 amendments should be amended to include a sunset 

13 clause. 

14 SEC. 110. REPORT TO CONGRESS. 

15 Not later than 18 months after the date of the enact16 ment of this Act, the Comptroller General, in consultation 

17 with the Federal Housing Administration, shall submit to 

18 the Congress, a report containing— 

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

20 amendments made by this subtitle on bankruptcy 

21 court, 

22 (2) a survey of whether the program should 

23 limit the types of homeowners eligible for the pro24 gram, and 
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1 (3) a recommendation on whether such amend2 ments should remain in effect. 

3 Subtitle B—Related Mortgage 

4 Modification Provisions 

5 SEC. 121. ADJUSTMENTS AS A RESULT OF MODIFICATION 

6 IN BANKRUPTCY OF HOUSING LOANS GUAR7 ANTEED BY THE DEPARTMENT OF VETERANS 

8 AFFAIRS. 

9 (a) IN GENERAL.—Section 3732 of title 38, United 

10 States Code, is amended— 

11 (1) in subsection (a)— 

12 (A) by redesignating paragraph (2) as sub13 paragraph (A) of paragraph (2), and 

14 (2) by inserting after subparagraph (A) the fol15 lowing new subparagraph: 

16 ‘‘(B) In the event that a housing loan 

17 guaranteed under this chapter is modified 

18 under the authority provided under section 

19 1322(b) of title 11, United States Code, the 

20 Secretary may pay the holder of the obligation 

21 the unpaid balance of the obligation due as of 

22 the date of the filing of the petition under title 

23 11, United States Code, plus accrued interest, 

24 but only upon the assignment, transfer, and de25 livery to the Secretary (in a form and manner 
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1 satisfactory to the Secretary) of all rights, in2 terest, claims, evidence, and records with re3 spect to the housing loan.’’. 

4 (b) MATURITY OF HOUSING LOANS.—Paragraph (1) 

5 of section (d) of section 3703 of title 38, United States 

6 Code, is amended by inserting ‘‘at the time of origination’’ 

7 after ‘‘loan’’. 

8 (c) IMPLEMENTATION.—The Secretary of Veterans 

9 Affairs may implement the amendments made by this sec10 tion through notice, procedure notice, or administrative 

11 notice. 

12 SEC. 122. PAYMENT OF FHA MORTGAGE INSURANCE BENE13 FITS. 

14 (a) IN GENERAL.—Subsection (a) of section 204 of 

15 the National Housing Act (12 U.S.C. 1710(a)) is amend16 ed— 

17 (1) in paragraph (1), by adding at the end the 

18 following new subparagraph: 

19 ‘‘(E) MODIFICATION OF MORTGAGE IN

20 BANKRUPTCY.— 

21 ‘‘(i) AUTHORITY.—If an order is en22 tered under the authority provided under 

23 section 1322(b) of title 11, United States 

24 Code, that (a) determines the amount of 

25 an allowed secured claim under a mortgage 
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1 in accordance with section 506(a)(1) of 

2 title 11, United States Code, and the 

3 amount of such allowed secured claim is 

4 less than the amount due under the mort5 gage as of the date of the filing of the peti6 tion under title 11, United States Code, or 

7 (b) reduces the interest to be paid under a 

8 mortgage in accordance with section 1325 

9 of such title, the Secretary may pay insur10 ance benefits for the mortgage as follows: 

11 ‘‘(I) FULL PAYMENT AND AS12 SIGNMENT.—The Secretary may pay 

13 the insurance benefits for the mort14 gage, but only upon the assignment, 

15 transfer, and delivery to the Secretary 

16 of all rights, interest, claims, evidence, 

17 and records with respect to the mort18 gage specified in clauses (i) through 

19 (iv) of paragraph (1)(A). The insur20 ance benefits shall be paid in the 

21 amount equal to the original principal 

22 obligation of the mortgage (with such 

23 additions and deductions as the Sec24 retary determines are appropriate) 

25 which was unpaid upon the date of 
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1 the filing of by the mortgagor of the 

2 petition under title 11 of the United 

3 States Code. Nothing in this Act may 

4 be construed to prevent the Secretary 

5 from providing insurance under this 

6 title for a mortgage that has pre7 viously been assigned to the Secretary 

8 under this subclause. The decision of 

9 whether to utilize the authority under 

10 this subclause for payment and as11 signment shall be at the election of 

12 the mortgagee, subject to such terms 

13 and conditions as the Secretary may 

14 establish. 

15 ‘‘(II) ASSIGNMENT OF UNSE16 CURED CLAIM.—The Secretary may 

17 make a partial payment of the insur18 ance benefits for any unsecured claim 

19 under the mortgage, but only upon 

20 the assignment to the Secretary of 

21 any unsecured claim of the mortgagee 

22 against the mortgagor or others aris23 ing out of such order. Such assign24 ment shall be deemed valid irrespec25 tive of whether such claim has been or 
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1 will be discharged under title 11 of 

2 the United States Code. The insur3 ance benefits shall be paid in the 

4 amount specified in subclause (I) of 

5 this clause, as such amount is reduced 

6 by the amount of the allowed secured 

7 claim. Such allowed secured claim 

8 shall continue to be insured under sec9 tion 203. 

10 ‘‘(III) INTEREST PAYMENTS.— 

11 The Secretary may make periodic pay12 ments, or a one-time payment, of in13 surance benefits for interest payments 

14 that are reduced pursuant to such 

15 order, as determined by the Secretary, 

16 but only upon assignment to the Sec17 retary of all rights and interest re18 lated to such payments. 

19 ‘‘(ii) DELIVERY OF EVIDENCE OF

20 ENTRY OF ORDER.—Notwithstanding any 

21 other provision of this paragraph, no insur22 ance benefits may be paid pursuant to this 

23 subparagraph for a mortgage before deliv24 ery to the Secretary of evidence of the 

25 entry of the order issued pursuant to title 
27 

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1 11, United States Code, in a form satisfac2 tory to the Secretary.’’; 

3 (2) in paragraph (5), in the matter preceding 

4 subparagraph (A), by inserting after ‘‘section 520, 

5 and’’ the following: ‘‘, except as provided in para6 graph (1)(E),’’; and 

7 (3) by adding at the end the following new 

8 paragraph: 

9 ‘‘(10) LOAN MODIFICATION PROGRAM.— 

10 ‘‘(A) AUTHORITY.—The Secretary may 

11 carry out a program solely to encourage loan 

12 modifications for eligible delinquent mortgages 

13 through the payment of insurance benefits and 

14 assignment of the mortgage to the Secretary 

15 and the subsequent modification of the terms of 

16 the mortgage according to a loan modification 

17 approved by the mortgagee. 

18 ‘‘(B) PAYMENT OF BENEFITS AND ASSIGN19 MENT.—Under the program under this para20 graph, the Secretary may pay insurance bene21 fits for a mortgage, in the amount determined 

22 in accordance with paragraph (5)(A), without 

23 reduction for any amounts modified, but only 

24 upon the assignment, transfer, and delivery to 

25 the Secretary of all rights, interest, claims, evi-
28 

•HR 1106 EH1S 

1 dence, and records with respect to the mortgage 

2 specified in clauses (i) through (iv) of para3 graph (1)(A). 

4 ‘‘(C) DISPOSITION.—After modification of 

5 a mortgage pursuant to this paragraph, the 

6 Secretary may provide insurance under this 

7 title for the mortgage. The Secretary may sub8 sequently— 

9 ‘‘(i) re-assign the mortgage to the 

10 mortgagee under terms and conditions as 

11 are agreed to by the mortgagee and the 

12 Secretary; 

13 ‘‘(ii) act as a Government National 

14 Mortgage Association issuer, or contract 

15 with an entity for such purpose, in order 

16 to pool the mortgage into a Government 

17 National Mortgage Association security; or 

18 ‘‘(iii) re-sell the mortgage in accord19 ance with any program that has been es20 tablished for purchase by the Federal Gov21 ernment of mortgages insured under this 

22 title, and the Secretary may coordinate 

23 standards for interest rate reductions 

24 available for loan modification with inter25 est rates established for such purchase. 
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•HR 1106 EH1S 

1 ‘‘(D) LOAN SERVICING.—In carrying out 

2 the program under this section, the Secretary 

3 may require the existing servicer of a mortgage 

4 assigned to the Secretary under the program to 

5 continue servicing the mortgage as an agent of 

6 the Secretary during the period that the Sec7 retary acquires and holds the mortgage for the 

8 purpose of modifying the terms of the mort9 gage. If the mortgage is resold pursuant to sub10 paragraph (C)(iii), the Secretary may provide 

11 for the existing servicer to continue to service 

12 the mortgage or may engage another entity to 

13 service the mortgage.’’. 

14 (b) AMENDMENT TO PARTIAL CLAIM AUTHORITY.— 

15 Paragraph (1) of section 230(b) of the National Housing 

16 Act (12 U.S.C. 1715u(b)(1)) is amended by striking ‘‘12 

17 of the monthly mortgage payments’’ and inserting ‘‘30 

18 percent of the unpaid principal balance of the mortgage’’. 

19 (c) IMPLEMENTATION.—The Secretary of Housing 

20 and Urban Development may implement the amendments 

21 made by this section through notice or mortgagee letter. 
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•HR 1106 EH1S 

1 SEC. 123. ADJUSTMENTS AS RESULT OF MODIFICATION OF 

2 RURAL SINGLE FAMILY HOUSING LOANS IN 

3 BANKRUPTCY. 

4 (a) GUARANTEED RURAL HOUSING LOANS.—Sub5 section (h) of section 502 of the Housing Act of 1949 (42 

6 U.S.C. 1472(h)) is amended— 

7 (1) in paragraph (7)— 

8 (A) in subparagraph (A), by inserting be9 fore the period at the end the following: ‘‘, un10 less the maturity date of the loan is modified in 

11 a bankruptcy proceeding or at the discretion of 

12 the Secretary’’; and 

13 (B) in subparagraph (B), by inserting be14 fore the semicolon the following: ‘‘, unless such 

15 rate is modified in a bankruptcy proceeding’’; 

16 (2) by redesignating paragraphs (13) and (14) 

17 as paragraphs (14) and (15), respectively; and 

18 (3) by inserting after paragraph (12) the fol19 lowing new paragraph: 

20 ‘‘(13) PAYMENT OF GUARANTEE.—In addition 

21 to all other authorities to pay a guarantee claim, the 

22 Secretary may also pay the guaranteed portion of 

23 any losses incurred by the holder of a note or the 

24 servicer resulting from a modification of a note by 

25 a bankruptcy proceeding.’’. 
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1 (b) INSURED RURAL HOUSING LOANS.—Subsection 

2 (j) of section 517 of the Housing Act of 1949 (42 U.S.C. 

3 1487(j)) is amended— 

4 (1) by redesignating paragraphs (2) through 

5 (7) as paragraphs (3) through (8), respectively; and 

6 (2) by inserting after paragraph (1) the fol7 lowing new paragraph: 

8 ‘‘(2) to pay for losses incurred by holders or 

9 servicers in the event of a modification pursuant to 

10 a bankruptcy proceeding;’’. 

11 (c) IMPLEMENTATION.—The Secretary of Agriculture 

12 may implement the amendments made by this section 

13 through notice, procedure notice, or administrative notice. 

14 SEC. 124. UNENFORCEABILITY OF CERTAIN PROVISION AS 

15 BEING CONTRARY TO PUBLIC POLICY. 

16 No provision in any investment contract between a 

17 servicer and a securitization vehicle or investor in effect 

18 as of the date of enactment of this Act that requires excess 

19 bankruptcy losses that exceed a certain dollar amount on 

20 residential mortgages to be borne by classes of certificates 

21 on a pro rata basis that refers to types of bankruptcy 

22 losses that could not have been incurred under the law 

23 in effect at the time such contract was entered into shall 

24 be enforceable, as such provision shall be contrary to pub25 lic policy. Notwithstanding this section, such reference to 
32 

•HR 1106 EH1S 

1 types of bankruptcy losses that could have been incurred 

2 under the law in effect at the time such contract was en3 tered into shall be enforceable. 

4 SEC. 125. MORTGAGE MODIFICATION DATA COLLECTING 

5 AND REPORTING. 

6 (a) REPORTING REQUIREMENTS.—Not later than 

7 120 days after the date of the enactment of this Act, and 

8 quarterly thereafter, the Comptroller of the Currency, in 

9 coordination with the Director of the Office of Thrift Su10 pervision, shall submit a report to the Committee on 

11 Banking, Housing, and Urban Affairs of the Senate, the 

12 Committee on Financial Services of the House of Rep13 resentatives, and the Joint Economic Committee on the 

14 volume of mortgage modifications reported to the Office 

15 of the Comptroller of the Currency and the Office of 

16 Thrift Supervision, under the mortgage metrics program 

17 of each such Office, during the previous quarter, including 

18 the following: 

19 (1) A copy of the data collection instrument 

20 currently used by the Office of the Comptroller of 

21 the Currency and the Office of Thrift Supervision to 

22 collect data on loan modifications. 

23 (2) The total number of mortgage modifications 

24 resulting in each of the following: 
33 

•HR 1106 EH1S 

1 (A) Additions of delinquent payments and 

2 fees to loan balances. 

3 (B) Interest rate reductions and freezes. 

4 (C) Term extensions. 

5 (D) Reductions of principal. 

6 (E) Deferrals of principal. 

7 (F) Combinations of modifications de8 scribed in subparagraph (A), (B), (C), (D), or 

9 (E). 

10 (3) The total number of mortgage modifications 

11 in which the total monthly principal and interest 

12 payment resulted in the following: 

13 (A) An increase. 

14 (B) Remained the same. 

15 (C) Decreased less than 10 percent. 

16 (D) Decreased between 10 percent and 20 

17 percent. 

18 (E) Decreased 20 percent or more. 

19 (4) The total number of loans that have been 

20 modified and then entered into default, where the 

21 loan modification resulted in— 

22 (A) higher monthly payments by the home23 owner; 

24 (B) equivalent monthly payments by the 

25 homeowner; 
34 

•HR 1106 EH1S 

1 (C) lower monthly payments by the home2 owner of up to 10 percent; 

3 (D) lower monthly payments by the home4 owner of between 10 percent to 20 percent; or 

5 (E) lower monthly payments by the home6 owner of more than 20 percent. 

7 (b) DATA COLLECTION.— 

8 (1) REQUIRED.— 

9 (A) IN GENERAL.—Not later than 60 days 

10 after the date of the enactment of this Act, the 

11 Comptroller of the Currency and the Director 

12 of the Office of Thrift Supervision, shall issue 

13 mortgage modification data collection and re14 porting requirements to institutions covered 

15 under the reporting requirement of the mort16 gage metrics program of the Comptroller or the 

17 Director. 

18 (B) INCLUSIVENESS OF COLLECTIONS.— 

19 The requirements under subparagraph (A) shall 

20 provide for the collection of all mortgage modi21 fication data needed by the Comptroller of the 

22 Currency and the Director of the Office of 

23 Thrift Supervision to fulfill the reporting re24 quirements under subsection (a). 
35 

•HR 1106 EH1S 

1 (2) REPORT.—The Comptroller of the Currency 

2 shall report all requirements established under para3 graph (1) to each committee receiving the report re4 quired under subsection (a). 

5 TITLE II—FORECLOSURE MITI6 GATION AND CREDIT AVAIL7 ABILITY 

8 SEC. 201. SERVICER SAFE HARBOR FOR MORTGAGE LOAN 

9 MODIFICATIONS. 

10 (a) SAFE HARBOR.— 

11 (1) LOAN MODIFICATIONS AND WORKOUT

12 PLANS.—Notwithstanding any other provision of 

13 law, and notwithstanding any investment contract 

14 between a servicer and a securitization vehicle or in15 vestor, a servicer that acts consistent with the duty 

16 set forth in section 129A(a) of Truth in Lending Act 

17 (15 U.S.C. 1639a) shall not be liable for entering 

18 into a loan modification, workout, or other loss miti19 gation plan, including, but not limited to, disposi20 tion, including any modification or refinancing un21 dertaken pursuant to standard loan modification, 

22 sale, or disposition guidelines issued by the Sec23 retary of the Treasury or his designee under the 

24 Emergency Economic Stabilization Act of 2008, with 
36 

•HR 1106 EH1S 

1 respect to any such mortgage that meets all of the 

2 criteria set forth in paragraph (2)(B) to— 

3 (A) any person, based on that person’s 

4 ownership of a residential mortgage loan or any 

5 interest in a pool of residential mortgage loans 

6 or in securities that distribute payments out of 

7 the principal, interest and other payments in 

8 loans on the pool; 

9 (B) any person who is obligated pursuant 

10 to a derivatives instrument to make payments 

11 determined in reference to any loan or any in12 terest referred to in subparagraph (A); or 

13 (C) any person that insures any loan or 

14 any interest referred to in subparagraph (A) 

15 under any law or regulation of the United 

16 States or any law or regulation of any State or 

17 political subdivision of any State. 

18 (2) ABILITY TO MODIFY MORTGAGES.— 

19 (A) ABILITY.—Notwithstanding any other 

20 provision of law, and notwithstanding any in21 vestment contract between a servicer and a 

22 securitization vehicle or investor, a servicer— 

23 (i) shall not be limited in the ability 

24 to modify mortgages, the number of mort25 gages that can be modified, the frequency 
37 

•HR 1106 EH1S 

1 of loan modifications, or the range of per2 missible modifications; and 

3 (ii) shall not be obligated to repur4 chase loans from or otherwise make pay5 ments to the securitization vehicle on ac6 count of a modification, workout, or other 

7 loss mitigation plan for a residential mort8 gage or a class of residential mortgages 

9 that constitute a part or all of the mort10 gages in the securitization vehicle, 

11 if any mortgage so modified meets all of the cri12 teria set forth in subparagraph (B). 

13 (B) CRITERIA.—The criteria under this 

14 subparagraph with respect to a mortgage are as 

15 follows: 

16 (i) Default on the payment of such 

17 mortgage has occurred or is reasonably 

18 foreseeable. 

19 (ii) The property securing such mort20 gage is occupied by the mortgagor of such 

21 mortgage. 

22 (iii) The servicer reasonably and in 

23 good faith believes that the anticipated re24 covery on the principal outstanding obliga25 tion of the mortgage under the particular 
38 

•HR 1106 EH1S 

1 modification or workout plan or other loss 

2 mitigation action will exceed, on a net 

3 present value basis, the anticipated recov4 ery on the principal outstanding obligation 

5 of the mortgage to be realized through 

6 foreclosure. 

7 (3) APPLICABILITY.—This subsection shall 

8 apply only with respect to modifications, workouts, 

9 and other loss mitigation plans initiated before Jan10 uary 1, 2012. 

11 (b) REPORTING.—Each servicer that engages in loan 

12 modifications or workout plans subject to the safe harbor 

13 in subsection (a) shall report to the Secretary on a regular 

14 basis regarding the extent, scope and results of the 

15 servicer’s modification activities. The Secretary shall pre16 scribe regulations specifying the form, content, and timing 

17 of such reports. 

18 (c) DEFINITIONS.—For purposes of this section, the 

19 following definitions shall apply: 

20 (1) SECRETARY.—The term ‘‘Secretary’’ means 

21 the Secretary of the Treasury. 

22 (2) SECURITIZATION VEHICLE.—The term 

23 ‘‘securitization vehicle’’ means a trust, corporation, 

24 partnership, limited liability entity, special purpose 

25 entity, or other structure that— 
39 

•HR 1106 EH1S 

1 (A) is the issuer, or is created by the 

2 issuer, of mortgage pass-through certificates, 

3 participation certificates, mortgage-backed secu4 rities, or other similar securities backed by a 

5 pool of assets that includes residential mortgage 

6 loans; and 

7 (B) holds such mortgages. 

8 SEC. 202. CHANGES TO HOPE FOR HOMEOWNERS PRO9 GRAM. 

10 (a) PROGRAM CHANGES.—Section 257 of the Na11 tional Housing Act (12 U.S.C. 1715z–23) is amended— 

12 (1) in subsection (c)— 

13 (A) in the heading for paragraph (1), by 

14 striking ‘‘THE BOARD’’ and inserting ‘‘SEC15 RETARY’’; 

16 (B) in paragraph (1), by striking ‘‘Board’’ 

17 inserting ‘‘Secretary, after consultation with the 

18 Board,’’; and 

19 (C) by adding after paragraph (2) the fol20 lowing: 

21 ‘‘(3) DUTIES OF BOARD.—The Board shall ad22 vise the Secretary regarding the establishment and 

23 implementation of the HOPE for Homeowners Pro24 gram.’’. 
40 

•HR 1106 EH1S 

1 (2) by striking ‘‘Board’’ each place such term 

2 appears in subsections (e), (h)(1), (h)(3), (j), (l), 

3 (n), (s)(3), and (v) and inserting ‘‘Secretary’’; 

4 (3) in subsection (e)— 

5 (A) by striking paragraph (1) and insert6 ing the following: 

7 ‘‘(1) BORROWER CERTIFICATION.— 

8 ‘‘(A) NO INTENTIONAL DEFAULT OR

9 FALSE INFORMATION.—The mortgagor shall 

10 provide a certification to the Secretary that the 

11 mortgagor has not intentionally defaulted on 

12 the existing mortgage or mortgages and has not 

13 knowingly, or willfully and with actual knowl14 edge, furnished material information known to 

15 be false for the purpose of obtaining the eligible 

16 mortgage to be insured and has not been con17 victed under Federal or State law for fraud 

18 during the 10-year period ending upon the in19 surance of the mortgage under this section. 

20 ‘‘(B) LIABILITY FOR REPAYMENT.—The 

21 mortgagor shall agree in writing that the mort22 gagor shall be liable to repay to the Secretary 

23 any direct financial benefit achieved from the 

24 reduction of indebtedness on the existing mort25 gage or mortgages on the residence refinanced 
41 

•HR 1106 EH1S 

1 under this section derived from misrepresenta2 tions made by the mortgagor in the certifi3 cations and documentation required under this 

4 paragraph, subject to the discretion of the Sec5 retary.’’; 

6 (B) in paragraph (4)(A), by striking ‘‘; 

7 subject to standards established by the Board 

8 under subparagraph (B),’’; 

9 (C) in paragraph (7), by striking ‘‘and pro10 vided that’’ and all that follows through ‘‘new 

11 second lien’’ and inserting ‘‘and except that the 

12 Secretary may, under such terms and condi13 tions as the Secretary may establish, permit the 

14 establishment of a second lien on a property 

15 under an eligible mortgage to be insured, for 

16 the purpose of facilitating payment of closing or 

17 refinancing costs by a State or locality using 

18 funds provided under the HOME Investment 

19 Partnerships program under title II of the 

20 Cranston-Gonzalez National Affordable Hous21 ing Act (42 U.S.C. 12721 et seq.) or the com22 munity development block grants program 

23 under title I of the Housing and Community 

24 Development Act of 1974 (42 U.S.C. 5301 et 
42 

•HR 1106 EH1S 

1 seq.) or by a State or local housing finance 

2 agency’’; 

3 (D) in paragraph (9)— 

4 (i) by striking ‘‘by procuring (A) an 

5 income tax return transcript of the income 

6 tax return of the mortgagor, or (B)’’ and 

7 inserting ‘‘in accordance with procedures 

8 and standards that the Secretary shall es9 tablish, which may include requiring the 

10 mortgagee to procure’’; and 

11 (ii) by striking ‘‘and by any other 

12 method, in accordance with procedures and 

13 standards that the Board shall establish’’; 

14 (E) by striking subparagraph (10); 

15 (F) in paragraph (11), by inserting before 

16 the period at the end the following: ‘‘, except 

17 that the Secretary may provide exceptions to 

18 such latter requirement (relating to present 

19 ownership interest) for any mortgagor who has 

20 inherited a property or for any mortgagor who 

21 has relocated to a new jurisdiction, and is in 

22 the process of trying to sell such property or 

23 has been unable to sell such property due to ad24 verse market conditions’’; 
43 

•HR 1106 EH1S 

1 (G) by redesignating paragraph (11) as 

2 paragraph (10); and 

3 (H) by adding at the end: 

4 ‘‘(11) BAN ON MILLIONAIRES.—The mortgagor 

5 shall not have a net worth, as of the date the mort6 gagor first applies for a mortgage to be insured 

7 under the Program under this section, that exceeds 

8 $1,000,000.’’; 

9 (4) in subsection (h)(2)— 

10 (A) by striking ‘‘The Board shall prohibit 

11 the Secretary from paying’’ and inserting ‘‘The 

12 Secretary shall not pay’’; and 

13 (B) by inserting after the period at the end 

14 the following: ‘‘In implementing this provision 

15 with respect to a failure by a mortgagor to 

16 make a first payment, the Secretary shall estab17 lish policies and timing of endorsements as con18 sistent as is possible with endorsement policies 

19 established with respect to mortgages insured 

20 under section 203(b)’’; 

21 (5) in subsection (i)— 

22 (A) by inserting ‘‘, after weighing maxi23 mization of participation with consideration of 

24 collection of premiums,’’ after ‘‘Secretary 

25 shall’’; 
44 

•HR 1106 EH1S 

1 (B) in paragraph (1), by striking ‘‘equal to 

2 3 percent’’ and inserting ‘‘not more than 2 per3 cent’’; and 

4 (C) in paragraph (2), by striking ‘‘equal to 

5 1.5 percent’’ and inserting ‘‘not more than 1 

6 percent’’; 

7 (6) in subsection (k)— 

8 (A) by striking the subsection heading and 

9 inserting ‘‘EXIT FEE’’; 

10 (B) in paragraph (1), in the matter pre11 ceding subparagraph (A), by striking ‘‘such sale 

12 or refinancing’’ and inserting ‘‘the mortgage 

13 being insured under this section’’; and 

14 (C) in paragraph (2), by striking ‘‘and the 

15 mortgagor’’ and all that follows through the 

16 end and inserting ‘‘may, upon any sale or dis17 position of the property to which the mortgage 

18 relates, be entitled to up to 50 percent of ap19 preciation, up to the appraised value of the 

20 home at the time when the mortgage being refi21 nanced under this section was originally made. 

22 The Secretary may share any amounts received 

23 under this paragraph with the holder of the eli24 gible mortgage refinanced under this section.’’; 
45 

•HR 1106 EH1S 

1 (7) in the heading for subsection (n), by strik2 ing ‘‘THE BOARD’’ and inserting ‘‘SECRETARY’’; 

3 (8) in subsection (p), by striking ‘‘Under the di4 rection of the Board, the’’ and inserting ‘‘The’’; 

5 (9) in subsection (s)— 

6 (A) in the first sentence of paragraph (2), 

7 by striking ‘‘Board of Directors of’’ and insert8 ing ‘‘Advisory Board for’’; and 

9 (B) in paragraph (3)(A)(ii), by striking 

10 ‘‘subsection (e)(1)(B) and such other’’ and in11 serting ‘‘such’’; 

12 (10) in subsection (v), by inserting after the pe13 riod at the end the following: ‘‘The Secretary shall 

14 conform documents, forms, and procedures for mort15 gages insured under this section to those in place for 

16 mortgages insured under section 203(b) to the max17 imum extent possible consistent with the require18 ments of this section.’’; and 

19 (11) by adding at the end the following new 

20 subsections: 

21 ‘‘(x) PAYMENT TO EXISTING LOAN SERVICER.—The 

22 Secretary may establish a payment to the servicer of the 

23 existing senior mortgage for every loan insured under the 

24 HOPE for Homeowners Program in an amount, for each 

25 such loan, that does not exceed $1,000. 
46 

•HR 1106 EH1S 

1 ‘‘(y) AUCTIONS.—The Secretary, with the concur2 rence of the Board, shall, if feasible, establish a structure 

3 and organize procedures for an auction to refinance eligi4 ble mortgages on a wholesale or bulk basis.’’. 

5 (b) REDUCING TARP FUNDS TO OFFSET COSTS OF

6 PROGRAM CHANGES.—Paragraph (3) of section 115(a) of 

7 the Emergency Economic Stabilization Act of 2008 (12 

8 U.S.C. 5225) is amended by inserting ‘‘, as such amount 

9 is reduced by $2,316,000,000,’’ after 

10 ‘‘$700,000,000,000’’. 

11 SEC. 203. REQUIREMENTS FOR FHA-APPROVED MORTGA12 GEES. 

13 (a) MORTGAGEE REVIEW BOARD.—Paragraph (2) of 

14 section 202(c) of the National Housing Act (12 U.S.C. 

15 1708(c)) is amended— 

16 (1) in subparagraph (E), by inserting ‘‘and’’ 

17 after the semicolon; 

18 (2) in subparagraph (F), by striking ‘‘; and’’ 

19 and inserting a period; and 

20 (3) by striking subparagraph (G). 

21 (b) LIMITATIONS ON PARTICIPATION AND MORT22 GAGEE APPROVAL AND USE OF NAME.—Section 202 of 

23 the National Housing Act (12 U.S.C. 1708) is amended— 

24 (1) by redesignating subsections (d), (e), and 

25 (f) as subsections (e), (f), and (g), respectively; 
47 

•HR 1106 EH1S 

1 (2) by inserting after subsection (c) the fol2 lowing new subsection: 

3 ‘‘(d) LIMITATIONS ON PARTICIPATION IN ORIGINA4 TION AND MORTGAGEE APPROVAL.— 

5 ‘‘(1) REQUIREMENT.—Any person or entity 

6 that is not approved by the Secretary to serve as a 

7 mortgagee, as such term is defined in subsection 

8 (c)(7), shall not participate in the origination of an 

9 FHA-insured loan except as authorized by the Sec10 retary. 

11 ‘‘(2) ELIGIBILITY FOR APPROVAL.—In order to 

12 be eligible for approval by the Secretary, an appli13 cant mortgagee shall not be, and shall not have any 

14 officer, partner, director, principal, manager, super15 visor, loan processor, loan underwriter, or loan origi16 nator of the applicant mortgagee who is— 

17 ‘‘(A) currently suspended, debarred, under 

18 a limited denial of participation (LDP), or oth19 erwise restricted under part 24 or 25 of title 24 

20 of the Code of Federal Regulations, or any suc21 cessor regulations to such parts, or under simi22 lar provisions of any other Federal agency; 

23 ‘‘(B) under indictment for, or has been 

24 convicted of, an offense that reflects adversely 

25 upon the applicant’s integrity, competence or 
48 

•HR 1106 EH1S 

1 fitness to meet the responsibilities of an ap2 proved mortgagee; 

3 ‘‘(C) subject to unresolved findings con4 tained in a Department of Housing and Urban 

5 Development or other governmental audit, in6 vestigation, or review; 

7 ‘‘(D) engaged in business practices that do 

8 not conform to generally accepted practices of 

9 prudent mortgagees or that demonstrate irre10 sponsibility; 

11 ‘‘(E) convicted of, or who has pled guilty 

12 or nolo contendre to, a felony related to partici13 pation in the real estate or mortgage loan in14 dustry— 

15 ‘‘(i) during the 7-year period pre16 ceding the date of the application for li17 censing and registration; or 

18 ‘‘(ii) at any time preceding such date 

19 of application, if such felony involved an 

20 act of fraud, dishonesty, or a breach of 

21 trust, or money laundering; 

22 ‘‘(F) in violation of provisions of the 

23 S.A.F.E. Mortgage Licensing Act of 2008 (12 

24 U.S.C. 5101 et seq.) or any applicable provision 

25 of State law; or 
49 

•HR 1106 EH1S 

1 ‘‘(G) in violation of any other requirement 

2 as established by the Secretary. 

3 ‘‘(3) RULEMAKING AND IMPLEMENTATION.— 

4 The Secretary shall conduct a rulemaking to carry 

5 out this subsection. The Secretary shall implement 

6 this subsection not later than the expiration of the 

7 60-day period beginning upon the date of the enact8 ment of this subsection by notice, mortgagee letter, 

9 or interim final regulations, which shall take effect 

10 upon issuance.’’; and 

11 (3) by adding at the end the following new sub12 section: 

13 ‘‘(h) USE OF NAME.—The Secretary shall, by regula14 tion, require each mortgagee approved by the Secretary 

15 for participation in the FHA mortgage insurance pro16 grams of the Secretary— 

17 ‘‘(1) to use the business name of the mortgagee 

18 that is registered with the Secretary in connection 

19 with such approval in all advertisements and pro20 motional materials, as such terms are defined by the 

21 Secretary, relating to the business of such mort22 gagee in such mortgage insurance programs; and 

23 ‘‘(2) to maintain copies of all such advertise24 ments and promotional materials, in such form and 

25 for such period as the Secretary requires.’’. 
50 

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1 (c) CHANGE OF STATUS.—The National Housing Act 

2 is amended by striking section 532 (12 U.S.C. 1735f–10) 

3 and inserting the following new section: 

4 ‘‘SEC. 532. CHANGE OF MORTGAGEE STATUS. 

5 ‘‘(a) NOTIFICATION.—Upon the occurrence of any ac6 tion described in subsection (b), an approved mortgagee 

7 shall immediately submit to the Secretary, in writing, noti8 fication of such occurrence. 

9 ‘‘(b) ACTIONS.—The actions described in this sub10 section are as follows: 

11 ‘‘(1) The debarment, suspension of a Limited 

12 Denial of Participation (LDP), or application of 

13 other sanctions, fines, or penalties applied to the 

14 mortgagee or to any officer, partner, director, prin15 cipal, manager, supervisor, loan processor, loan un16 derwriter, or loan originator of the mortgagee pursu17 ant to applicable provisions of State or Federal law. 

18 ‘‘(2) The revocation of a State-issued mortgage 

19 loan originator license issued pursuant to the 

20 S.A.F.E. Mortgage Licensing Act of 2008 (12 

21 U.S.C. 5101 et seq.) or any other similar declaration 

22 of ineligibility pursuant to State law.’’. 

23 (d) CIVIL MONEY PENALTIES.—Section 536 of the 

24 National Housing Act (12 U.S.C. 1735f–14) is amend25 ed— 
51 

•HR 1106 EH1S 

1 (1) in subsection (b)— 

2 (A) in paragraph (1)— 

3 (i) in the matter preceding subpara4 graph (A), by inserting ‘‘or any of its own5 ers, officers, or directors’’ after ‘‘mort6 gagee or lender’’; 

7 (ii) in subparagraph (H), by striking 

8 ‘‘title I’’ and all that follows through ‘‘Act 

9 of 1989)’’ and inserting ‘‘title I or II’’; and 

10 (iii) by inserting after subparagraph 

11 (J) the following: 

12 ‘‘(K) Violation of section 202(d) of this 

13 Act (12 U.S.C. 1708(d)).’’; and 

14 (B) in paragraph (2)— 

15 (i) in subparagraph (B), by striking 

16 ‘‘or’’ at the end; 

17 (ii) in subparagraph (C), by striking 

18 the period at the end and inserting ‘‘; or’’; 

19 and 

20 (iii) by adding at the end the fol21 lowing new subparagraph: 

22 ‘‘(D) causing or participating in any of the 

23 violations set forth in paragraph (1) of this sub24 section.’’; and 
52 

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1 (2) in subsection (g), by striking ‘‘The term’’ 

2 and all that follows through the end of the sentence 

3 and inserting ‘‘For purposes of this section, a person 

4 acts knowingly when a person has actual knowledge 

5 of acts or should have known of the acts.’’. 

6 (e) EXPANDED REVIEW OF FHA MORTGAGEE AP7 PLICANTS AND NEWLY APPROVED MORTGAGEES.—Not 

8 later than the expiration of the 3-month period beginning 

9 upon the date of the enactment of this Act, the Secretary 

10 of Housing and Urban Development shall— 

11 (1) expand the existing process for reviewing 

12 new applicants for approval for participation in the 

13 mortgage insurance programs of the Secretary for 

14 mortgages on 1- to 4-family residences for the pur15 pose of identifying applicants who represent a high 

16 risk to the Mutual Mortgage Insurance Fund; and 

17 (2) implement procedures that, for mortgagees 

18 approved during the 12-month period ending upon 

19 such date of enactment— 

20 (A) expand the number of mortgages origi21 nated by such mortgagees that are reviewed for 

22 compliance with applicable laws, regulations, 

23 and policies; and 

24 (B) include a process for random reviews 

25 of such mortgagees and a process for reviews 
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1 that is based on volume of mortgages originated 

2 by such mortgagees. 

3 SEC. 204. ENHANCEMENT OF LIQUIDITY AND STABILITY OF 

4 INSURED DEPOSITORY INSTITUTIONS TO EN5 SURE AVAILABILITY OF CREDIT AND REDUC6 TION OF FORECLOSURES. 

7 (a) PERMANENT INCREASE IN DEPOSIT INSUR8 ANCE.— 

9 (1) AMENDMENTS TO FEDERAL DEPOSIT IN10 SURANCE ACT.—Effective upon the date of the en11 actment of this Act, section 11(a) of the Federal De12 posit Insurance Act (12 U.S.C. 1821(a)) is amend13 ed— 

14 (A) in paragraph (1)(E), by striking 

15 ‘‘$100,000’’ and inserting ‘‘$250,000’’; 

16 (B) in paragraph (1)(F)(i), by striking 

17 ‘‘2010’’ and inserting ‘‘2015’’; 

18 (C) in subclause (I) of paragraph 

19 (1)(F)(i), by striking ‘‘$100,000’’ and inserting 

20 ‘‘$250,000’’; 

21 (D) in subclause (II) of paragraph 

22 (1)(F)(i), by striking ‘‘the calendar year pre23 ceding the date this subparagraph takes effect 

24 under the Federal Deposit Insurance Reform 
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1 Act of 2005’’ and inserting ‘‘calendar year 

2 2008’’; and 

3 (E) in paragraph (3)(A), by striking ‘‘, ex4 cept that $250,000 shall be substituted for 

5 $100,000 wherever such term appears in such 

6 paragraph’’. 

7 (2) AMENDMENT TO FEDERAL CREDIT UNION

8 ACT.—Section 207(k) of the Federal Credit Union 

9 Act (12 U.S.C. 1787(k)) is amended— 

10 (A) in paragraph (3)— 

11 (i) by striking the opening quotation 

12 mark before ‘‘$250,000’’; 

13 (ii) by striking ‘‘, except that 

14 $250,000 shall be substituted for $100,000 

15 wherever such term appears in such sec16 tion’’; and 

17 (iii) by striking the closing quotation 

18 mark after the closing parenthesis; and 

19 (B) in paragraph (5), by striking 

20 ‘‘$100,000’’ and inserting ‘‘$250,000’’. 

21 (3) REPEAL OF EESA PROVISION.—Section 136 

22 of the Emergency Economic Stabilization Act (12 

23 U.S.C. 5241) is hereby repealed. 

24 (b) EXTENSION OF RESTORATION PLAN PERIOD.— 

25 Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance 
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•HR 1106 EH1S 

1 Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by striking 

2 ‘‘5-year period’’ and inserting ‘‘8-year period’’. 

3 (c) FDIC AND NCUA BORROWING AUTHORITY.— 

4 (1) FDIC.—Section 14(a) of the Federal De5 posit Insurance Act (12 U.S.C. 1824(a)) is amended 

6 by striking ‘‘$30,000,000,000’’ and inserting 

7 ‘‘$100,000,000,000’’. 

8 (2) NCUA.—Section 203(d)(1) of the Federal 

9 Credit Union Act (12 U.S.C. 1783(d)(1)) is amend10 ed by striking ‘‘$100,000,000’’ and inserting 

11 ‘‘$6,000,000,000’’. 

12 (d) EXPANDING SYSTEMIC RISK SPECIAL ASSESS13 MENTS.—Section 13(c)(4)(G)(ii) of the Federal Deposit 

14 Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended 

15 to read as follows: 

16 ‘‘(ii) REPAYMENT OF LOSS.— 

17 ‘‘(I) IN GENERAL.—The Corpora18 tion shall recover the loss to the De19 posit Insurance Fund arising from 

20 any action taken or assistance pro21 vided with respect to an insured de22 pository institution under clause (i) 

23 from 1 or more special assessments on 

24 insured depository institutions, deposi25 tory institution holding companies 
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1 (with the concurrence of the Secretary 

2 of the Treasury with respect to hold3 ing companies), or both, as the Cor4 poration determines to be appropriate. 

5 ‘‘(II) TREATMENT OF DEPOSI6 TORY INSTITUTION HOLDING COMPA7 NIES.—For purposes of this clause, 

8 sections 7(c)(2) and 18(h) shall apply 

9 to depository institution holding com10 panies as if they were insured deposi11 tory institutions. 

12 ‘‘(III) REGULATIONS.—The Cor13 poration shall prescribe such regula14 tions as it deems necessary to imple15 ment this clause. In prescribing such 

16 regulations, defining terms, and set17 ting the appropriate assessment rate 

18 or rates, the Corporation shall estab19 lish rates sufficient to cover the losses 

20 incurred as a result of the actions of 

21 the Corporation under clause (i) and 

22 shall consider: the types of entities 

23 that benefit from any action taken or 

24 assistance provided under this sub25 paragraph; economic conditions, the 
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1 effects on the industry, and such 

2 other factors as the Corporation 

3 deems appropriate and relevant to the 

4 action taken or the assistance pro5 vided. Any funds so collected that ex6 ceed actual losses shall be placed in 

7 the Deposit Insurance Fund.’’. 

8 (e) ESTABLISHMENT OF A NATIONAL CREDIT UNION

9 SHARE INSURANCE FUND RESTORATION PLAN PE10 RIOD.—Section 202(c)(2) of the Federal Credit Union Act 

11 (12 U.S.C. 1782(c)(2)) is amended by adding at the end 

12 the following new subparagraph: 

13 ‘‘(D) FUND RESTORATION PLANS.— 

14 ‘‘(i) IN GENERAL.—Whenever— 

15 ‘‘(I) the Board projects that the 

16 equity ratio of the Fund will, within 6 

17 months of such determination, fall 

18 below the minimum amount specified 

19 in subparagraph (C) for the des20 ignated equity ratio; or 

21 ‘‘(II) the equity ratio of the Fund 

22 actually falls below the minimum 

23 amount specified in subparagraph (C) 

24 for the equity ratio without any deter-
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1 mination under sub-clause (I) having 

2 been made, 

3 the Board shall establish and implement a 

4 Share Insurance Fund restoration plan 

5 within 90 days that meets the require6 ments of clause (ii) and such other condi7 tions as the Board determines to be appro8 priate. 

9 ‘‘(ii) REQUIREMENTS OF RESTORA10 TION PLAN.—A Share Insurance Fund res11 toration plan meets the requirements of 

12 this clause if the plan provides that the eq13 uity ratio of the Fund will meet or exceed 

14 the minimum amount specified in subpara15 graph (C) for the designated equity ratio 

16 before the end of the 5-year period begin17 ning upon the implementation of the plan 

18 (or such longer period as the Board may 

19 determine to be necessary due to extraor20 dinary circumstances). 

21 ‘‘(iii) TRANSPARENCY.—Not more 

22 than 30 days after the Board establishes 

23 and implements a restoration plan under 

24 clause (i), the Board shall publish in the 

25 Federal Register a detailed analysis of the 
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1 factors considered and the basis for the ac2 tions taken with regard to the plan.’’. 

3 SEC. 205. APPLICATION OF GSE CONFORMING LOAN LIMIT 

4 TO MORTGAGES ASSISTED WITH TARP 

5 FUNDS. 

6 In making any assistance available to prevent and 

7 mitigate foreclosures on residential properties, including 

8 any assistance for mortgage modifications, using any 

9 amounts made available to the Secretary of the Treasury 

10 under title I of the Emergency Economic Stabilization Act 

11 of 2008, the Secretary shall provide that the limitation 

12 on the maximum original principal obligation of a mort13 gage that may be modified, refinanced, made, guaranteed, 

14 insured, or otherwise assisted, using such amounts shall 

15 not be less than the dollar amount limitation on the max16 imum original principal obligation of a mortgage that may 

17 be purchased by the Federal Home Loan Mortgage Cor18 poration that is in effect, at the time that the mortgage 

19 is modified, refinanced, made, guaranteed, insured, or oth20 erwise assisted using such amounts, for the area in which 

21 the property involved in the transaction is located. 
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1 SEC. 206. MORTGAGES ON CERTAIN HOMES ON LEASED 

2 LAND. 

3 Section 255(b)(4) of the National Housing Act (12 

4 U.S.C. 1715z–20(b)(4)) is amended by striking subpara5 graph (B) and inserting: 

6 ‘‘(B) under a lease that has a term that 

7 ends no earlier than the minimum number of 

8 years, as specified by the Secretary, beyond the 

9 actuarial life expectancy of the mortgagor or co10 mortgagor, whichever is the later date.’’. 

11 SEC. 207. SENSE OF CONGRESS REGARDING MORTGAGE 

12 REVENUE BOND PURCHASES. 

13 It is the sense of the Congress that the Secretary of 

14 the Treasury should use amounts made available in this 

15 Act to purchase mortgage revenue bonds for single-family 

16 housing issued through State housing finance agencies 

17 and through units of local government and agencies there18 of. 

19 TITLE III—MORTGAGE FRAUD 

20 SEC. 301. SHORT TITLE. 

21 This title may be cited as the ‘‘Nationwide Mortgage 

22 Fraud Task Force Act of 2009’’. 

23 SEC. 302. NATIONWIDE MORTGAGE FRAUD TASK FORCE. 

24 (a) ESTABLISHMENT.—There is established in the 

25 Department of Justice the Nationwide Mortgage Fraud 

26 Task Force (hereinafter referred to in this section as the 
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1 ‘‘Task Force’’) to address mortgage fraud in the United 

2 States. 

3 (b) SUPPORT.—The Attorney General shall provide 

4 the Task Force with the appropriate staff, administrative 

5 support, and other resources necessary to carry out the 

6 duties of the Task Force. 

7 (c) EXECUTIVE DIRECTOR.—The Attorney General 

8 shall appoint one staff member provided to the Task Force 

9 to be the Executive Director of the Task Force and such 

10 Executive Director shall ensure that the duties of the Task 

11 Force are carried out. 

12 (d) BRANCHES.—The Task Force shall establish, 

13 oversee, and direct branches in each of the 10 States de14 termined by the Attorney General to have the highest con15 centration of mortgage fraud. 

16 (e) MANDATORY FUNCTIONS.—The Task Force, in17 cluding the branches of the Task Force established under 

18 subsection (d), shall— 

19 (1) establish coordinating entities, and solicit 

20 the voluntary participation of Federal, State, and 

21 local law enforcement and prosecutorial agencies in 

22 such entities, to organize initiatives to address mort23 gage fraud, including initiatives to enforce State 

24 mortgage fraud laws and other related Federal and 

25 State laws; 
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1 (2) provide training to Federal, State, and local 

2 law enforcement and prosecutorial agencies with re3 spect to mortgage fraud, including related Federal 

4 and State laws; 

5 (3) collect and disseminate data with respect to 

6 mortgage fraud, including Federal, State, and local 

7 data relating to mortgage fraud investigations and 

8 prosecutions; and 

9 (4) perform other functions determined by the 

10 Attorney General to enhance the detection of, pre11 vention of, and response to mortgage fraud in the 

12 United States. 

13 (f) OPTIONAL FUNCTIONS.—The Task Force, includ14 ing the branches of the Task Force established under sub15 section (d), may— 

16 (1) initiate and coordinate Federal mortgage 

17 fraud investigations and, through the coordinating 

18 entities established under subsection (e), State and 

19 local mortgage fraud investigations; 

20 (2) establish a toll-free hotline for— 

21 (A) reporting mortgage fraud; 

22 (B) providing the public with access to in23 formation and resources with respect to mort24 gage fraud; and 
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1 (C) directing reports of mortgage fraud to 

2 the appropriate Federal, State, and local law 

3 enforcement and prosecutorial agency, including 

4 to the appropriate branch of the Task Force es5 tablished under subsection (d); 

6 (3) create a database with respect to suspen7 sions and revocations of mortgage industry licenses 

8 and certifications to facilitate the sharing of such in9 formation by States; 

10 (4) make recommendations with respect to the 

11 need for and resources available to provide the 

12 equipment and training necessary for the Task 

13 Force to combat mortgage fraud; and 

14 (5) propose legislation to Federal, State, and 

15 local legislative bodies with respect to the elimination 

16 and prevention of mortgage fraud, including meas17 ures to address mortgage loan procedures and prop18 erty appraiser practices that provide opportunities 

19 for mortgage fraud. 

20 (g) DEFINITION.—In this section, the term ‘‘mort21 gage fraud’’ means a material misstatement, misrepresen22 tation, or omission relating to the property or potential 

23 mortgage relied on by an underwriter or lender to fund, 

24 purchase, or insure a loan. 
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1 TITLE IV—FORECLOSURE 

2 MORATORIUM PROVISIONS 

3 SEC. 401. SENSE OF THE CONGRESS ON FORECLOSURES. 

4 (a) IN GENERAL.—It is the sense of the Congress 

5 that mortgage holders, institutions, and mortgage 

6 servicers should not initiate a foreclosure proceeding or 

7 a foreclosure sale on any homeowner until the foreclosure 

8 mitigation provisions, like the Hope for Homeowners pro9 gram, as required under title II, and the President’s 

10 ‘‘Homeowner Affordability and Stability Plan’’ have been 

11 implemented and determined to be operational by the Sec12 retary of Housing and Urban Development and the Sec13 retary of the Treasury. 

14 (b) SCOPE OF MORATORIUM.—The foreclosure mora15 torium referred to in subsection (a) should apply only for 

16 first mortgages secured by the owner’s principal dwelling. 

17 (c) FHA-REGULATED LOAN MODIFICATION AGREE18 MENTS.—If a mortgage holder, institution, or mortgage 

19 servicer to which subsection (a) applies reaches a loan 

20 modification agreement with a homeowner under the aus21 pices of the Federal Housing Administration before any 

22 plan referred to in such subsection takes effect, subsection 

23 (a) shall cease to apply to such institution as of the effec24 tive date of the loan modification agreement. 
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1 (d) DUTY OF CONSUMER TO MAINTAIN PROPERTY.— 

2 Any homeowner for whose benefit any foreclosure pro3 ceeding or sale is barred under subsection (a) from being 

4 instituted, continued , or consummated with respect to any 

5 homeowner mortgage should not, with respect to any prop6 erty securing such mortgage, destroy, damage, or impair 

7 such property, allow the property to deteriorate, or commit 

8 waste on the property. 

9 (e) DUTY OF CONSUMER TO RESPOND TO REASON10 ABLE INQUIRIES.—Any homeowner for whose benefit any 

11 foreclosure proceeding or sale is barred under subsection 

12 (a) from being instituted, continued, or consummated with 

13 respect to any homeowner mortgage should respond to 

14 reasonable inquiries from a creditor or servicer during the 

15 period during which such foreclosure proceeding or sale 

16 is barred. 

Passed the House of Representatives March 5, 

2009. 

Attest: 

Clerk. 
111TH CONGRESS 

1ST SESSION H. R. 1106 

AN ACT 

To prevent mortgage foreclosures and enhance 

mortgage credit availability.