I 

111TH CONGRESS 

1ST SESSION H. R. 1231 

To protect the property and security of homeowners who are subject to 

foreclosure proceedings, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 26, 2009 

Ms. MOORE of Wisconsin (for herself and Mr. FRANK of Massachusetts) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, 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 protect the property and security of homeowners who 

are subject to foreclosure proceedings, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Foreclosure Rescue 

5 Fraud Act of 2009’’. 

6 SEC. 2. DEFINITIONS. 

7 For purposes of this Act, the following definitions 

8 shall apply: 


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1 (1) COMMISSION.—The term ‘‘Commission’’ 

2 means the Federal Trade Commission. 

3 (2) FORECLOSURE CONSULTANT.—The term 

4 ‘‘foreclosure consultant’’— 

5 (A) means a person who makes any solici6 tation, representation, or offer to a homeowner 

7 facing foreclosure on residential real property to 

8 perform, for gain, or who performs, for gain, 

9 any service that such person represents will pre10 vent, postpone, or reverse the effect of such 

11 foreclosure; and 

12 (B) does not include— 

13 (i) an attorney licensed to practice law 

14 in the State in which the property is lo15 cated who has established an attorney-cli16 ent relationship with the homeowner; 

17 (ii) a person licensed as a real estate 

18 broker or salesperson in the State where 

19 the property is located, and such person 

20 engages in acts permitted under the licen21 sure laws of such State; 

22 (iii) a housing counseling agency ap23 proved by the Secretary; 


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1 (iv) a depository institution (as de2 fined in section 3 of the Federal Deposit 

3 Insurance Act (12 U.S.C. 1813)); 

4 (v) a Federal credit union or a State 

5 credit union (as defined in section 101 of 

6 the Federal Credit Union Act (12 U.S.C. 

7 1752)); or 

8 (vi) an insurance company organized 

9 under the laws of any State. 

10 (3) HOMEOWNER.—The term ‘‘homeowner’’, 

11 with respect to residential real property for which an 

12 action to foreclose on the mortgage or deed of trust 

13 on such real property is filed, means the person 

14 holding record title to such property as of the date 

15 on which such action is filed. 

16 (4) LOAN SERVICER.—The term ‘‘loan servicer’’ 

17 has the same meaning as the term ‘‘servicer’’ in sec18 tion 6(i)(2) of the Real Estate Settlement Proce19 dures Act of 1974 (12 U.S.C. 2605(i)(2)). 

20 (5) RESIDENTIAL MORTGAGE LOAN.—The term 

21 ‘‘residential mortgage loan’’ means any loan pri22 marily for personal, family, or household use that is 

23 secured by a mortgage, deed of trust, or other equiv24 alent consensual security interest on a dwelling (as 

25 defined in section 103(v) of the Truth in Lending 


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1 Act (15 U.S.C. 1602(v)) or residential real estate 

2 upon which is constructed or intended to be con3 structed a dwelling (as so defined). 

4 (6) RESIDENTIAL REAL PROPERTY.—The term 

5 ‘‘residential real property’’ has the meaning given 

6 the term ‘‘dwelling’’ in section 103 of the Consumer 

7 Credit Protection Act (15 U.S.C. 1602). 

8 (7) SECRETARY.—The term ‘‘Secretary’’ means 

9 the Secretary of Housing and Urban Development. 

10 SEC. 3. MORTGAGE RESCUE FRAUD PROTECTION. 

11 (a) LIMITS ON FORECLOSURE CONSULTANTS.—A 

12 foreclosure consultant may not— 

13 (1) claim, demand, charge, collect, or receive 

14 any compensation from a homeowner for services 

15 performed by such foreclosure consultant with re16 spect to residential real property until such fore17 closure consultant has fully performed each service 

18 that such foreclosure consultant contracted to per19 form or represented would be performed with respect 

20 to such residential real property; 

21 (2) hold any power of attorney from any home22 owner, except to inspect documents, as provided by 

23 applicable law; 

24 (3) receive any consideration from a third party 

25 in connection with services rendered to a homeowner 


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1 by such third party with respect to the foreclosure 

2 of residential real property, unless such consider3 ation is fully disclosed, in a clear and conspicuous 

4 manner, to such homeowner in writing before such 

5 services are rendered; 

6 (4) accept any wage assignment, any lien of any 

7 type on real or personal property, or other security 

8 to secure the payment of compensation with respect 

9 to services provided by such foreclosure consultant 

10 in connection with the foreclosure of residential real 

11 property; or 

12 (5) acquire any interest, directly or indirectly, 

13 in the residence of a homeowner with whom the fore14 closure consultant has contracted. 

15 (b) CONTRACT REQUIREMENTS.— 

16 (1) WRITTEN CONTRACT REQUIRED.—Notwith17 standing any other provision of law, a foreclosure 

18 consultant may not provide to a homeowner a service 

19 related to the foreclosure of residential real prop20 erty— 

21 (A) unless— 

22 (i) a written contract for the purchase 

23 of such service has been signed and dated 

24 by the homeowner; and 


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1 (ii) such contract complies with the 

2 requirements described in paragraph (2); 

3 and 

4 (B) before the end of the 3-business-day 

5 period beginning on the date on which the con6 tract is signed. 

7 (2) TERMS AND CONDITIONS OF CONTRACT.— 

8 The requirements described in this paragraph, with 

9 respect to a contract, are as follows: 

10 (A) The contract includes, in writing— 

11 (i) a full and detailed description of 

12 the exact nature of the contract and the 

13 total amount and terms of compensation; 

14 (ii) the name, physical address, phone 

15 number, e-mail address, and facsimile 

16 number, if any, of the foreclosure consult17 ant to whom a notice of cancellation can be 

18 mailed or sent under subsection (d); and 

19 (iii) a conspicuous statement in at 

20 least 12-point boldface type in immediate 

21 proximity to the space reserved for the 

22 homeowner’s signature on the contract 

23 that reads as follows: ‘‘You may cancel this 

24 contract without penalty or obligation at 

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1 ness day after the date on which you sign 

2 the contract. See the attached notice of 

3 cancellation form for an explanation of this 

4 right.’’. 

5 (B) The contract is written in the principal 

6 language used to solicit or market the services 

7 to the homeowner. 

8 (C) The contract is accompanied by the 

9 form required by subsection (c)(2). 

10 (c) RIGHT TO CANCEL CONTRACT.— 

11 (1) IN GENERAL.—With respect to a contract 

12 between a homeowner and a foreclosure consultant 

13 regarding the foreclosure on the residential real 

14 property of such homeowner, such homeowner may 

15 cancel such contract without penalty or obligation by 

16 mailing a notice of cancellation not later than mid17 night of the 3rd business day after the date on 

18 which such contract is executed or would become en19 forceable against the parties to such contract. 

20 (2) CANCELLATION FORM AND OTHER INFOR21 MATION.—Each contract described in paragraph (1) 

22 shall be accompanied by a form, in duplicate, that— 

23 (A) has the heading ‘‘Notice of Cancella24 tion’’ in boldface type; and 


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1 (B) contains in boldface type the following 

2 statement: 

3 ‘‘You may cancel this contract, without any 

4 penalty or obligation, at any time before midnight of 

5 the 3rd day after the date on which the contract is 

6 signed by you. 

7 ‘‘To cancel this contract, mail or deliver a 

8 signed and dated copy of this cancellation notice or 

9 any other equivalent written notice to [insert name 

10 of foreclosure consultant] at [insert address of fore11 closure consultant] before midnight on [insert date]. 

12 ‘‘I hereby cancel this transaction on [insert 

13 date] [insert homeowner signature].’’. 

14 (d) WAIVER OF RIGHTS AND PROTECTIONS PROHIB15 ITED.— 

16 (1) IN GENERAL.—A waiver by a homeowner of 

17 any protection provided by this section or any right 

18 of a homeowner under this section— 

19 (A) shall be treated as void; and 

20 (B) may not be enforced by any Federal or 

21 State court or by any person. 

22 (2) ATTEMPT TO OBTAIN A WAIVER.—Any at23 tempt by any person to obtain a waiver from any 

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1 tion or any right of the homeowner under this sec2 tion shall be treated as a violation of this section. 

3 (3) CONTRACTS NOT IN COMPLIANCE.—Any 

4 contract that does not comply with the applicable 

5 provisions of this Act shall be void and may not be 

6 enforceable by any party. 

7 SEC. 4. WARNINGS TO HOMEOWNERS OF FORECLOSURE 

8 RESCUE SCAMS. 

9 (a) IN GENERAL.—If a loan servicer finds that a 

10 homeowner has failed to make 2 consecutive payments on 

11 a residential mortgage loan and such loan is at risk of 

12 being foreclosed upon, the loan servicer shall notify such 

13 homeowner of the dangers of fraudulent activities associ14 ated with foreclosure. 

15 (b) NOTICE REQUIREMENTS.—Each notice provided 

16 under subsection (a) shall— 

17 (1) be in writing; 

18 (2) be included with a mailing of account infor19 mation; 

20 (3) have the heading ‘‘Notice Required by Fed21 eral Law’’ in a 14-point boldface type in English 

22 and Spanish at the top of such notice; and 

23 (4) contain the following statement in English 

24 and Spanish: ‘‘Mortgage foreclosure is a complex 

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1 ing your home. You should be careful about any 

2 such promises. There are government and nonprofit 

3 agencies you may contact for helpful information 

4 about the foreclosure process. Contact your lender 

5 immediately at [llll], call the Department of 

6 Housing and Urban Development Housing Coun7 seling Line at (800) 569–4287 to find a housing 

8 counseling agency certified by the Department to as9 sist you in avoiding foreclosure, or visit the Depart10 ment’s Tips for Avoiding Foreclosure website at 

11 http://www.hud.gov/foreclosure for additional assist12 ance.’’ (the blank space to be filled in by the loan 

13 servicer and successor telephone numbers and Uni14 form Resource Locators (URLs) for the Department 

15 of Housing and Urban Development Housing Coun16 seling Line and Tips for Avoiding Foreclosure 

17 website, respectively.). 

18 SEC. 5. CIVIL LIABILITY. 

19 (a) IN GENERAL.—Any foreclosure consultant who 

20 fails to comply with any provision of section 3 or 4 with 

21 respect to any other person shall be liable to such person 

22 in an amount equal to the greater of— 

23 (1) the amount of any actual damage sustained 

24 by such person as a result of such failure; or 


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1 (2) any amount paid by the person to the fore2 closure consultant. 

3 (b) ATTORNEYS’ FEES.—In the case of any success4 ful action to enforce any liability under subsection (a), the 

5 foreclosure consultant shall also be liable to the person in 

6 an amount equal to the costs of the action, together with 

7 reasonable attorneys’ fees. 

8 SEC. 6. ADMINISTRATIVE ENFORCEMENT. 

9 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS10 SION.— 

11 (1) UNFAIR OR DECEPTIVE ACT OR PRAC12 TICE.—A violation of a prohibition described in sec13 tion 3 or a failure to comply with any provision of 

14 section 3 or 4 shall be treated as a violation of a 

15 rule defining an unfair or deceptive act or practice 

16 promulgated under section 18(a)(1)(B) of the Fed17 eral Trade Commission Act (15 U.S.C. 

18 57a(a)(1)(B)). 

19 (2) ACTIONS BY THE FEDERAL TRADE COMMIS20 SION.—The Federal Trade Commission shall enforce 

21 the provisions of sections 3 and 4 in the same man22 ner, by the same means, and with the same jurisdic23 tion, powers, and duties as though all applicable 

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1 sion Act (15 U.S.C. 41 et seq.) were incorporated 

2 into and made part of this Act. 

3 (b) STATE ACTION FOR VIOLATIONS.— 

4 (1) AUTHORITY OF STATES.—In addition to 

5 such other remedies as are provided under State 

6 law, whenever the chief law enforcement officer of a 

7 State, or an official or agency designated by a State, 

8 has reason to believe that any person has violated or 

9 is violating the provisions of section 3 or 4, the 

10 State— 

11 (A) may bring an action to enjoin such vio12 lation in any appropriate United States district 

13 court or any other court of competent jurisdic14 tion; 

15 (B) may bring an action on behalf of its 

16 residents to recover damages for which the per17 son is liable to such residents under section 5 

18 as a result of the violation; and 

19 (C) in the case of any successful action 

20 under subparagraph (A) or (B), shall be award21 ed the costs of the action. 

22 (2) RIGHTS OF FEDERAL TRADE COMMIS23 SION.— 

24 (A) NOTICE TO COMMISSION.—The State 

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1 tion under paragraph (1) upon the Commission 

2 and provide the Commission with a copy of its 

3 complaint, except in any case in which such 

4 prior notice is not feasible, in which case the 

5 State shall serve such notice immediately upon 

6 instituting such action. 

7 (B) INTERVENTION.—The Commission 

8 shall have the right— 

9 (i) to intervene in any action referred 

10 to in subparagraph (A); 

11 (ii) upon so intervening, to be heard 

12 on all matters arising in the action; 

13 (iii) to remove the action to the appro14 priate United States district court; and 

15 (iv) to file petitions for appeal in such 

16 actions. 

17 (3) INVESTIGATORY POWERS.—For purposes of 

18 bringing any action under this subsection, nothing in 

19 this subsection shall prevent the chief law enforce20 ment officer, or an official or agency designated by 

21 a State, from exercising the powers conferred on the 

22 chief law enforcement officer or such official by the 

23 laws of such State to conduct investigations or to 

24 administer oaths or affirmations, or to compel the 


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1 attendance of witnesses or the production of docu2 mentary and other evidence. 

3 (4) LIMITATION.—Whenever the Federal Trade 

4 Commission has instituted a civil action for a viola5 tion of section 3 or 4, no State may, during the 

6 pendency of such action, bring an action under this 

7 section against any defendant named in the com8 plaint of the Commission for any violation of section 

9 3 or 4 that is alleged in that complaint. 

10 SEC. 7. PREEMPTION. 

11 No provision of this Act shall be construed as affect12 ing any provision of State or local law respecting any fore13 closure consultant, residential mortgage loan, or residen14 tial real property that provides equal or greater protection 

15 to homeowners than what is provided under this Act. 

Æ 


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