I 

111TH CONGRESS 

1ST SESSION H. R. 1295 

To mitigate mortgage foreclosures, facilitate and include fairness in housing 

recovery, and combat mortgage fraud, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 4, 2009 

Mrs. BIGGERT (for herself, Mr. BACHUS, Mr. NEUGEBAUER, Mrs. CAPITO, 

Ms. GINNY BROWN-WAITE of Florida, Mr. ROGERS of Michigan, Mr. 

JONES, Mr. SHIMKUS, Mr. ROONEY, Mr. SESSIONS, Mr. TURNER, Mr. 

SMITH of Texas, Mr. PAULSEN, Mrs. BONO MACK, Mr. LANCE, Mr. 

BILBRAY, Mr. REICHERT, Mr. CASTLE, Mr. MCCAUL, Mr. JOHNSON of 

Illinois, Mrs. MILLER of Michigan, and Mrs. SCHMIDT) introduced the 

following bill; which was referred to the Committee on Financial Services, 

and in addition to the Committees on Ways and Means and the Judiciary, 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 mitigate mortgage foreclosures, facilitate and include fairness in housing recovery, and combat mortgage fraud, 

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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Fairness in Housing Recovery Act of 2009’’. 


rfrederick on PROD1PC67 with BILLS
2 

•HR 1295 IH

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

2 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Servicer safe harbor for mortgage loan modifications. 

Sec. 3. Replacement of HOPE for Homeowners Program with program for insurance of homeownership retention mortgages. 

Sec. 4. Expanding and preserving homeownership through counseling. 

Sec. 5. Requirements for FHA-approved mortgagees. 

Sec. 6. Commission on the Foreclosure and Mortgage Lending Crisis. 

Sec. 7. Authorization of appropriations for combating mortgage fraud. 

Sec. 8. Enhancement of liquidity and stability of insured depository institutions 

to ensure availability of credit and reduction of foreclosures. 

Sec. 9. Prohibition on the receipt of common stock and the exercise of stock 

voting power. 

Sec. 10. Treatment of gain on disposition of subsidized residences. 

Sec. 11. Refundable tax credit for residences purchased during 2009 or 2010. 

Sec. 12. Conditions on mortgage relief. 

3 SEC. 2. SERVICER SAFE HARBOR FOR MORTGAGE LOAN 

4 MODIFICATIONS. 

5 (a) SAFE HARBOR.— 

6 (1) LOAN MODIFICATIONS AND WORKOUT

7 PLANS.—Notwithstanding any other provision of 

8 law, and notwithstanding any investment contract 

9 between a servicer and a securitization vehicle or in10 vestor, a servicer that acts consistent with the duty 

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

12 (15 U.S.C. 1639a) shall not be liable for entering 

13 into a loan modification, workout, or other loss miti14 gation plan, including, but not limited to, disposi15 tion, including any modification or refinancing un16 dertaken pursuant to standard loan modification, 

17 sale, or disposition guidelines issued by the Sec18 retary of the Treasury or his designee under the 


rfrederick on PROD1PC67 with BILLS
3 

•HR 1295 IH

1 Emergency Economic Stabilization Act of 2008, with 

2 respect to any such mortgage that meets all of the 

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

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

5 ownership of a residential mortgage loan or any 

6 interest in a pool of residential mortgage loans 

7 or in securities that distribute payments out of 

8 the principal, interest and other payments in 

9 loans on the pool; 

10 (B) any person who is obligated pursuant 

11 to a derivatives instrument to make payments 

12 determined in reference to any loan or any in13 terest referred to in subparagraph (A); or 

14 (C) any person that insures any loan or 

15 any interest referred to in subparagraph (A) 

16 under any law or regulation of the United 

17 States or any law or regulation of any State or 

18 political subdivision of any State. 

19 (2) ABILITY TO MODIFY MORTGAGES.— 

20 (A) ABILITY.—Notwithstanding any other 

21 provision of law, and notwithstanding any in22 vestment contract between a servicer and a 

23 securitization vehicle or investor, a servicer— 

24 (i) shall not be limited in the ability 

25 to modify mortgages, the number of mortVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
4 

•HR 1295 IH

1 gages that can be modified, the frequency 

2 of loan modifications, or the range of per3 missible modifications; and 

4 (ii) shall not be obligated to repur5 chase loans from or otherwise make pay6 ments to the securitization vehicle on ac7 count of a modification, workout, or other 

8 loss mitigation plan for a residential mort9 gage or a class of residential mortgages 

10 that constitute a part or all of the mort11 gages in the securitization vehicle, 

12 if any mortgage so modified meets all of the cri13 teria set forth in subparagraph (B). 

14 (B) CRITERIA.—The criteria under this 

15 subparagraph with respect to a mortgage are as 

16 follows: 

17 (i) Default on the payment of such 

18 mortgage has occurred or is reasonably 

19 foreseeable. 

20 (ii) The property securing such mort21 gage is occupied by the mortgagor of such 

22 mortgage. 

23 (iii) The servicer reasonably and in 

24 good faith believes that the anticipated re25 covery on the principal outstanding obligaVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
5 

•HR 1295 IH

1 tion of the mortgage under the particular 

2 modification or workout plan or other loss 

3 mitigation action will exceed, on a net 

4 present value basis, the anticipated recov5 ery on the principal outstanding obligation 

6 of the mortgage to be realized through 

7 foreclosure. 

8 (3) APPLICABILITY.—This subsection shall 

9 apply only with respect to modifications, workouts, 

10 and other loss mitigation plans initiated before Jan11 uary 1, 2012. 

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

13 modifications or workout plans subject to the safe harbor 

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

15 basis regarding the extent, scope and results of the 

16 servicer’s modification activities. The Secretary shall pre17 scribe regulations specifying the form, content, and timing 

18 of such reports. 

19 (c) LEGAL COSTS.—If an unsuccessful action is 

20 brought against a servicer by any person described in sub21 paragraph (A), (B), or (C) of subsection (a)(1), such per22 son shall bear any actual legal costs of the servicer, includ23 ing reasonable attorney fees and expert witness fees, in24 curred in good faith in such action, as determined by the 

25 court. 


rfrederick on PROD1PC67 with BILLS
6 

•HR 1295 IH

1 (d) DEFINITIONS.—For purposes of this section, the 

2 following definitions shall apply: 

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

4 the Secretary of the Treasury. 

5 (2) SECURITIZATION VEHICLE.—The term 

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

7 partnership, limited liability entity, special purpose 

8 entity, or other structure that— 

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

10 issuer, of mortgage pass-through certificates, 

11 participation certificates, mortgage-backed secu12 rities, or other similar securities backed by a 

13 pool of assets that includes residential mortgage 

14 loans; and 

15 (B) holds such mortgages. 

16 SEC. 3. REPLACEMENT OF HOPE FOR HOMEOWNERS PRO17 GRAM WITH PROGRAM FOR INSURANCE OF 

18 HOMEOWNERSHIP RETENTION MORTGAGES. 

19 (a) REPLACEMENT OF PROGRAM.—Title II of the 

20 National Housing Act (12 U.S.C. 1707 et seq.) is amend21 ed— 

22 (1) in section 257 (12 U.S.C. 1715z–23), as 

23 added by section 1402(a) of Public Law 110–289— 

24 (A) by striking subsections (a) through 

25 (k); and 


rfrederick on PROD1PC67 with BILLS
7 

•HR 1295 IH

1 (B) by striking subsections (n) through 

2 (v); 

3 (2) by redesignating section 257 (12 U.S.C. 

4 1715z–24), as added by section 2124 of Public Law 

5 110–289, as section 259; and 

6 (3) by inserting before such section 259 (as so 

7 redesignated) the following new section: 

8 ‘‘SEC. 258. INSURANCE OF HOMEOWNERSHIP RETENTION 

9 MORTGAGES. 

10 ‘‘(a) AUTHORITY.—The Secretary shall, subject only 

11 to the absence of qualified requests for insurance under 

12 this section and to the limitations under sections 257(m) 

13 and 531(a), make commitments to insure and insure any 

14 mortgage covering a 1- to 4-family residence that is made 

15 for the purpose of paying or prepaying outstanding obliga16 tions under an existing mortgage or mortgages on the resi17 dence if the mortgage being insured under this section 

18 meets the requirements of this section, as established by 

19 the Secretary. The Secretary shall establish such mortgage 

20 insurance products, and requirements and standards, in 

21 accordance with this section as the Secretary considers ap22 propriate to carry out this section and shall prescribe such 

23 regulations and provide such guidance as may be nec24 essary or appropriate to implement such products, require25 ments, and standards. 


rfrederick on PROD1PC67 with BILLS
8 

•HR 1295 IH

1 ‘‘(b) REQUIREMENTS OF INSURED MORTGAGE.—To 

2 be eligible for insurance under this section, a mortgage 

3 to be insured under this section shall comply with all of 

4 the following requirements: 

5 ‘‘(1) PRIMARY RESIDENCE.—The mortgagor 

6 under the mortgage to be insured shall provide docu7 mentation satisfactory in the determination of the 

8 Secretary to prove that the residence covered by the 

9 mortgage to be insured under this section is occu10 pied by the mortgagor as the primary residence of 

11 the mortgagor, and that such residence is the only 

12 residence in which the mortgagor has any present 

13 ownership interest. 

14 ‘‘(2) TROUBLED HOMEOWNER.—The mortgagor 

15 under the mortgage to be insured shall be the mort16 gagor under the existing mortgage to be refinanced 

17 by the insured mortgage and shall— 

18 ‘‘(A) be in default on the mortgagor’s obli19 gations under the existing mortgage; 

20 ‘‘(B) be in danger of defaulting, as deter21 mined in accordance with standards established 

22 by the Secretary, on the mortgagor’s obligations 

23 under the existing mortgage; or 

24 ‘‘(C) have a remaining principal obligation 

25 amount under such existing mortgage that exVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
9 

•HR 1295 IH

1 ceeds, at the time of the commitment for mort2 gage insurance under this section, the appraised 

3 value of the property that is subject to such ex4 isting mortgage. 

5 ‘‘(3) PROHIBITION ON REFINANCING LIAR

6 LOANS.—The Secretary may not insure a mortgage 

7 under this section if the mortgagor under such mort8 gage has knowingly, or willfully and with actual 

9 knowledge, furnished any material information re10 garding the income or financial worth of the mort11 gagor that is known to be false for the purpose of 

12 obtaining the existing mortgage that is to be refi13 nanced by the mortgage to be insured under this 

14 section. 

15 ‘‘(4) EXCLUSION OF ZERO DOWN PAYMENT

16 LOANS.—In connection with the origination of the 

17 senior existing mortgage to be refinanced with the 

18 mortgage insured under this section, the mortgagor 

19 shall have made a down payment, in cash or its 

20 equivalent, on account of the property purchased 

21 under such senior existing mortgage. 

22 ‘‘(5) EXCLUSION OF NO-DOC LOANS.—The ex23 isting senior mortgage to be refinanced with the 

24 mortgage insured under this section shall have been 

25 originated only pursuant to the mortgagor providing 


rfrederick on PROD1PC67 with BILLS
10 

•HR 1295 IH

1 documentation sufficient to verify the amount and 

2 source of the mortgagor’s income. 

3 ‘‘(6) PROHIBITION ON REFINANCING ZERO4 DOWN LOANS AND LOANS WITH EQUITY RE5 MOVED.—The Secretary may not insure a mortgage 

6 under this section if— 

7 ‘‘(A) under the existing mortgage to be re8 financed, the mortgagor did not make any pay9 ment on account of the property (or any pay10 ment exceeding such nominal amount as the 

11 Secretary may establish), in cash or its equiva12 lent, in connection with acquisition of the prop13 erty; or 

14 ‘‘(B) during the term of the existing mort15 gage to be refinanced, the mortgagor withdrew 

16 all, or substantially all (in accordance with such 

17 standards and guidelines as the Secretary shall 

18 establish) of any equity of the mortgagor in the 

19 property subject to such existing mortgage. 

20 ‘‘(7) TERMS.—The mortgage to be insured 

21 under this section shall have such terms and condi22 tions as the Secretary shall provide, except that such 

23 mortgage shall— 

24 ‘‘(A) have a term to maturity not exceed25 ing 40 years; and 


rfrederick on PROD1PC67 with BILLS
11 

•HR 1295 IH

1 ‘‘(B) bear interest at an annual rate that 

2 is fixed for the entire term of the mortgage. 

3 ‘‘(8) REQUIRED WAIVER OF PREPAYMENT PEN4 ALTIES AND FEES.—All penalties for prepayment or 

5 refinancing of the existing mortgage, and all fees 

6 and penalties related to default or delinquency on 

7 the existing mortgage, shall be waived or forgiven. 

8 ‘‘(9) SHARED APPRECIATION.—The Secretary 

9 shall provide that, with respect to each mortgage in10 sured under this section, upon any sale or disposi11 tion of the property subject to such mortgage occur12 ring during the 5-year period beginning on the date 

13 of the insurance of the mortgage, to the extent of 

14 any principal write-down or interest rate subsidy 

15 provided in connection with the mortgage, the Sec16 retary and the mortgagee shall be entitled to a per17 centage of any appreciation in value of such prop18 erty that has occurred since the date that such 

19 mortgage was insured under this section, which per20 centage shall decrease over time, and the mortgagor 

21 shall be entitled to the remainder of any such appre22 ciation. 

23 ‘‘(10) MAXIMUM LOAN AMOUNT.—The principal 

24 obligation amount of the mortgage to be insured 

25 under this section shall not exceed the applicable 


rfrederick on PROD1PC67 with BILLS
12 

•HR 1295 IH

1 dollar amount limitation in effect under section 

2 305(a)(2) of the Federal Home Loan Mortgage Cor3 poration (12 U.S.C. 1452(a)(2)) for a property of 

4 the applicable size for the area in which the property 

5 is located . 

6 ‘‘(11) TERM; INTEREST RATE.—The refinanced 

7 eligible mortgage to be insured shall— 

8 ‘‘(A) bear interest at a single rate that is 

9 fixed for the entire term of the mortgage; and 

10 ‘‘(B) have a maturity of not less than 30 

11 years from the date of the beginning of amorti12 zation of such refinanced eligible mortgage. 

13 ‘‘(c) EXIT FEE.—The Secretary may establish a fee, 

14 charge, or other mechanism for recovering, upon sale or 

15 other disposition of the property that is subject to the 

16 mortgage insured under this section or upon the subse17 quent refinancing of the mortgage, a portion of the equity 

18 or appreciation in the property. 

19 ‘‘(d) GNMA PRICING.—In order to facilitate favor20 able pricing for loans insured under this section, the 

21 Board of Governors of the Federal Reserve System, the 

22 Secretary of the Treasury, the Federal National Mortgage 

23 Association, and the Federal Home Loan Mortgage Cor24 poration are authorized to purchase mortgage-backed se25 curities guaranteed by the Government National Mortgage 


rfrederick on PROD1PC67 with BILLS
13 

•HR 1295 IH

1 Association that are backed by loans originated under this 

2 section or whole loans originated and purchased under this 

3 section. The Government National Mortgage Association 

4 is authorized to hold, sell, and securitize whole loans origi5 nated under this section. 

6 ‘‘(e) DEFINITIONS.—For purposes of this section, the 

7 following definitions shall apply: 

8 ‘‘(1) EXISTING MORTGAGE.—The term ‘existing 

9 mortgage’ means, with respect to a mortgage in10 sured under this section, a mortgage that is to be 

11 extinguished, and paid or prepaid, from the proceeds 

12 of the mortgage insured under this section. 

13 ‘‘(2) SENIOR EXISTING MORTGAGE.—The term 

14 ‘senior existing mortgage’ means, with respect to a 

15 mortgage insured under this section, the existing 

16 mortgage that has superior priority. 

17 ‘‘(f) SUNSET.—The Secretary may not enter into any 

18 new commitment to insure any refinanced eligible mort19 gage, or newly insure any refinanced eligible mortgage 

20 pursuant to this section after the expiration of the 3-year 

21 period beginning upon the date of the enactment of this 

22 section.’’. 

23 (b) USE OF AGGREGATE INSURANCE AUTHORITY

24 AND FUNDS UNDER HOPE FOR HOMEOWNERS PRO25 GRAM.—Section 257 of the National Housing Act (12 


rfrederick on PROD1PC67 with BILLS
14 

•HR 1295 IH

1 U.S.C. 1715z–24), as added by section 1402(a) of Public 

2 Law 110–289), is amended— 

3 (1) in subsection (l)(1), by striking ‘‘this sec4 tion’’ and inserting ‘‘section 258’’; 

5 (2) in subsection (m), by striking ‘‘this section’’ 

6 and inserting ‘‘section 258’’; 

7 (3) in subsection (w)— 

8 (A) in paragraphs (1) and (3), by striking 

9 ‘‘HOPE for Homeowners Program’’ each place 

10 such term appears and inserting ‘‘mortgage in11 surance program under section 258’’; and 

12 (B) in paragraph (4) by striking ‘‘HOPE 

13 for Homeowners Program in accordance with 

14 subsections (i) and (k)’’ and inserting ‘‘mort15 gage insurance program under section 258’’; 

16 (4) by redesignating subsections (l), (m), and 

17 (w) as subsections (a), (b), and (c), respectively; and 

18 (5) by striking the section heading and insert19 ing the following: ‘‘HOPE FUND AND HOPE

20 BONDS.’’ 

21 (c) REDUCING TARP FUNDS TO OFFSET COSTS OF

22 PROGRAM.—Paragraph (3) of section 115(a) of the Emer23 gency Economic Stabilization Act of 2008 (12 U.S.C. 

24 5225) is amended by inserting ‘‘, as such amount is re25 duced by $1,000,000,000,’’ after ‘‘$700,000,000,000’’. 


rfrederick on PROD1PC67 with BILLS
15 

•HR 1295 IH

1 SEC. 4. EXPANDING AND PRESERVING HOMEOWNERSHIP 

2 THROUGH COUNSELING. 

3 (a) ESTABLISHMENT OF OFFICE OF HOUSING COUN4 SELING.—Section 4 of the Department of Housing and 

5 Urban Development Act (42 U.S.C. 3533) is amended by 

6 adding at the end the following new subsection: 

7 ‘‘(g) OFFICE OF HOUSING COUNSELING.— 

8 ‘‘(1) ESTABLISHMENT.—There is established, 

9 in the Office of the Secretary, the Office of Housing 

10 Counseling. 

11 ‘‘(2) DIRECTOR.—There is established the posi12 tion of Director of Housing Counseling. The Direc13 tor shall be the head of the Office of Housing Coun14 seling and shall be appointed by the Secretary. Such 

15 position shall be a career-reserved position in the 

16 Senior Executive Service. 

17 ‘‘(3) FUNCTIONS.— 

18 ‘‘(A) IN GENERAL.—The Director shall 

19 have ultimate responsibility within the Depart20 ment, except for the Secretary, for all activities 

21 and matters relating to homeownership coun22 seling and rental housing counseling, includ23 ing— 

24 ‘‘(i) research, grant administration, 

25 public outreach, and policy development re26 lating to such counseling; and 


rfrederick on PROD1PC67 with BILLS
16 

•HR 1295 IH

1 ‘‘(ii) establishment, coordination, and 

2 administration of all regulations, require3 ments, standards, and performance meas4 ures under programs and laws adminis5 tered by the Department that relate to 

6 housing counseling, homeownership coun7 seling (including maintenance of homes), 

8 mortgage-related counseling (including 

9 home equity conversion mortgages and 

10 credit protection options to avoid fore11 closure), and rental housing counseling, in12 cluding the requirements, standards, and 

13 performance measures relating to housing 

14 counseling. 

15 ‘‘(B) SPECIFIC FUNCTIONS.—The Director 

16 shall carry out the functions assigned to the Di17 rector and the Office under this section and any 

18 other provisions of law. Such functions shall in19 clude establishing rules necessary for— 

20 ‘‘(i) the counseling procedures under 

21 section 106(g)(1) of the Housing and 

22 Urban Development Act of 1968 (12 

23 U.S.C. 1701x(h)(1)); 

24 ‘‘(ii) carrying out all other functions 

25 of the Secretary under section 106(g) of 


rfrederick on PROD1PC67 with BILLS
17 

•HR 1295 IH

1 the Housing and Urban Development Act 

2 of 1968, including the establishment, oper3 ation, and publication of the availability of 

4 the toll-free telephone number under para5 graph (2) of such section; 

6 ‘‘(iii) carrying out section 5 of the 

7 Real Estate Settlement Procedures Act of 

8 1974 (12 U.S.C. 2604) for home buying 

9 information booklets prepared pursuant to 

10 such section; 

11 ‘‘(iv) carrying out the certification 

12 program under section 106(e) of the Hous13 ing and Urban Development Act of 1968 

14 (12 U.S.C. 1701x(e)); 

15 ‘‘(v) carrying out the assistance pro16 gram under section 106(a)(4) of the Hous17 ing and Urban Development Act of 1968, 

18 including criteria for selection of applica19 tions to receive assistance; 

20 ‘‘(vi) carrying out any functions re21 garding abusive, deceptive, or unscrupulous 

22 lending practices relating to residential 

23 mortgage loans that the Secretary con24 siders appropriate, which shall include conVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
18 

•HR 1295 IH

1 ducting the study under section 4(e) of the 

2 Fairness in Housing Recovery Act of 2009; 

3 ‘‘(vii) providing for operation of the 

4 advisory committee established under para5 graph (4) of this subsection; 

6 ‘‘(viii) collaborating with community7 based organizations with expertise in the 

8 field of housing counseling; and 

9 ‘‘(ix) providing for the building of ca10 pacity to provide housing counseling serv11 ices in areas that lack sufficient services. 

12 ‘‘(4) ADVISORY COMMITTEE.— 

13 ‘‘(A) IN GENERAL.—The Secretary shall 

14 appoint an advisory committee to provide advice 

15 regarding the carrying out of the functions of 

16 the Director. 

17 ‘‘(B) MEMBERS.—Such advisory committee 

18 shall consist of not more than 12 individuals, 

19 and the membership of the committee shall 

20 equally represent all aspects of the mortgage 

21 and real estate industry, including consumers. 

22 ‘‘(C) TERMS.—Except as provided in sub23 paragraph (D), each member of the advisory 

24 committee shall be appointed for a term of 3 


rfrederick on PROD1PC67 with BILLS
19 

•HR 1295 IH

1 years. Members may be reappointed at the dis2 cretion of the Secretary. 

3 ‘‘(D) TERMS OF INITIAL APPOINTEES.—As 

4 designated by the Secretary at the time of ap5 pointment, of the members first appointed to 

6 the advisory committee, 4 shall be appointed for 

7 a term of 1 year and 4 shall be appointed for 

8 a term of 2 years. 

9 ‘‘(E) PROHIBITION OF PAY; TRAVEL EX10 PENSES.—Members of the advisory committee 

11 shall serve without pay, but shall receive travel 

12 expenses, including per diem in lieu of subsist13 ence, in accordance with applicable provisions 

14 under subchapter I of chapter 57 of title 5, 

15 United States Code. 

16 ‘‘(F) ADVISORY ROLE ONLY.—The advi17 sory committee shall have no role in reviewing 

18 or awarding housing counseling grants. 

19 ‘‘(5) SCOPE OF HOMEOWNERSHIP COUN20 SELING.—In carrying out the responsibilities of the 

21 Director, the Director shall ensure that homeowner22 ship counseling provided by, in connection with, or 

23 pursuant to any function, activity, or program of the 

24 Department addresses the entire process of home25 ownership, including the decision to purchase a 


rfrederick on PROD1PC67 with BILLS
20 

•HR 1295 IH

1 home, the selection and purchase of a home, issues 

2 arising during or affecting the period of ownership 

3 of a home (including refinancing, default and fore4 closure, and other financial decisions), and the sale 

5 or other disposition of a home.’’. 

6 (b) COUNSELING PROCEDURES.— 

7 (1) IN GENERAL.—Section 106 of the Housing 

8 and Urban Development Act of 1968 (12 U.S.C. 

9 1701x) is amended by adding at the end the fol10 lowing new subsection: 

11 ‘‘(g) PROCEDURES AND ACTIVITIES.— 

12 ‘‘(1) COUNSELING PROCEDURES.— 

13 ‘‘(A) IN GENERAL.—The Secretary shall 

14 establish, coordinate, and monitor the adminis15 tration by the Department of Housing and 

16 Urban Development of the counseling proce17 dures for homeownership counseling and rental 

18 housing counseling provided in connection with 

19 any program of the Department, including all 

20 requirements, standards, and performance 

21 measures that relate to homeownership and 

22 rental housing counseling. 

23 ‘‘(B) HOMEOWNERSHIP COUNSELING.— 

24 For purposes of this subsection and as used in 

25 the provisions referred to in this subparagraph, 


rfrederick on PROD1PC67 with BILLS
21 

•HR 1295 IH

1 the term ‘homeownership counseling’ means 

2 counseling related to homeownership and resi3 dential mortgage loans. Such term includes 

4 counseling related to homeownership and resi5 dential mortgage loans that is provided pursu6 ant to— 

7 ‘‘(i) section 105(a)(20) of the Housing 

8 and Community Development Act of 1974 

9 (42 U.S.C. 5305(a)(20)); 

10 ‘‘(ii) in the United States Housing 

11 Act of 1937— 

12 ‘‘(I) section 9(e) (42 U.S.C. 

13 1437g(e)); 

14 ‘‘(II) section 8(y)(1)(D) (42 

15 U.S.C. 1437f(y)(1)(D)); 

16 ‘‘(III) section 18(a)(4)(D) (42 

17 U.S.C. 1437p(a)(4)(D)); 

18 ‘‘(IV) section 23(c)(4) (42 U.S.C. 

19 1437u(c)(4)); 

20 ‘‘(V) section 32(e)(4) (42 U.S.C. 

21 1437z–4(e)(4)); 

22 ‘‘(VI) section 33(d)(2)(B) (42 

23 U.S.C. 1437z–5(d)(2)(B)); 


rfrederick on PROD1PC67 with BILLS
22 

•HR 1295 IH

1 ‘‘(VII) sections 302(b)(6) and 

2 303(b)(7) (42 U.S.C. 1437aaa– 

3 1(b)(6), 1437aaa–2(b)(7)); and 

4 ‘‘(VIII) section 304(c)(4) (42 

5 U.S.C. 1437aaa–3(c)(4)); 

6 ‘‘(iii) section 302(a)(4) of the Amer7 ican Homeownership and Economic Oppor8 tunity Act of 2000 (42 U.S.C. 1437f note); 

9 ‘‘(iv) sections 233(b)(2) and 258(b) of 

10 the Cranston-Gonzalez National Affordable 

11 Housing Act (42 U.S.C. 12773(b)(2), 

12 12808(b)); 

13 ‘‘(v) this section and section 101(e) of 

14 the Housing and Urban Development Act 

15 of 1968 (12 U.S.C. 1701x, 1701w(e)); 

16 ‘‘(vi) section 220(d)(2)(G) of the Low17 Income Housing Preservation and Resident 

18 Homeownership Act of 1990 (12 U.S.C. 

19 4110(d)(2)(G)); 

20 ‘‘(vii) sections 422(b)(6), 423(b)(7), 

21 424(c)(4), 442(b)(6), and 443(b)(6) of the 

22 Cranston-Gonzalez National Affordable 

23 Housing Act (42 U.S.C. 12872(b)(6), 

24 12873(b)(7), 12874(c)(4), 12892(b)(6), 

25 and 12893(b)(6)); 


rfrederick on PROD1PC67 with BILLS
23 

•HR 1295 IH

1 ‘‘(viii) section 491(b)(1)(F)(iii) of the 

2 McKinney-Vento Homeless Assistance Act 

3 (42 U.S.C. 11408(b)(1)(F)(iii)); 

4 ‘‘(ix) sections 202(3) and 

5 810(b)(2)(A) of the Native American 

6 Housing and Self-Determination Act of 

7 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

8 ‘‘(x) in the National Housing Act— 

9 ‘‘(I) in section 203 (12 U.S.C. 

10 1709), the penultimate undesignated 

11 paragraph of paragraph (2) of sub12 section (b), subsection (c)(2)(A), and 

13 subsection (r)(4); 

14 ‘‘(II) subsections (a) and (c)(3) 

15 of section 237 (12 U.S.C. 1715z–2); 

16 and 

17 ‘‘(III) subsections (d)(2)(B) and 

18 (m)(1) of section 255 (12 U.S.C. 

19 1715z–20); 

20 ‘‘(xi) section 502(h)(4)(B) of the 

21 Housing Act of 1949 (42 U.S.C. 

22 1472(h)(4)(B)); and 

23 ‘‘(xii) section 508 of the Housing and 

24 Urban Development Act of 1970 (12 

25 U.S.C. 1701z–7). 


rfrederick on PROD1PC67 with BILLS
24 

•HR 1295 IH

1 ‘‘(C) RENTAL HOUSING COUNSELING.— 

2 For purposes of this subsection, the term ‘rent3 al housing counseling’ means counseling related 

4 to rental of residential property, which may in5 clude counseling regarding future homeowner6 ship opportunities and providing referrals for 

7 renters and prospective renters to entities pro8 viding counseling and shall include counseling 

9 related to such topics that is provided pursuant 

10 to— 

11 ‘‘(i) section 105(a)(20) of the Housing 

12 and Community Development Act of 1974 

13 (42 U.S.C. 5305(a)(20)); 

14 ‘‘(ii) in the United States Housing 

15 Act of 1937— 

16 ‘‘(I) section 9(e) (42 U.S.C. 

17 1437g(e)); 

18 ‘‘(II) section 18(a)(4)(D) (42 

19 U.S.C. 1437p(a)(4)(D)); 

20 ‘‘(III) section 23(c)(4) (42 

21 U.S.C. 1437u(c)(4)); 

22 ‘‘(IV) section 32(e)(4) (42 U.S.C. 

23 1437z–4(e)(4)); 

24 ‘‘(V) section 33(d)(2)(B) (42 

25 U.S.C. 1437z–5(d)(2)(B)); and 


rfrederick on PROD1PC67 with BILLS
25 

•HR 1295 IH

1 ‘‘(VI) section 302(b)(6) (42 

2 U.S.C. 1437aaa–1(b)(6)); 

3 ‘‘(iii) section 233(b)(2) of the Cran4 ston-Gonzalez National Affordable Housing 

5 Act (42 U.S.C. 12773(b)(2)); 

6 ‘‘(iv) section 106 of the Housing and 

7 Urban Development Act of 1968 (12 

8 U.S.C. 1701x); 

9 ‘‘(v) section 422(b)(6) of the Cran10 ston-Gonzalez National Affordable Housing 

11 Act (42 U.S.C. 12872(b)(6)); 

12 ‘‘(vi) section 491(b)(1)(F)(iii) of the 

13 McKinney-Vento Homeless Assistance Act 

14 (42 U.S.C. 11408(b)(1)(F)(iii)); 

15 ‘‘(vii) sections 202(3) and 

16 810(b)(2)(A) of the Native American 

17 Housing and Self-Determination Act of 

18 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); 

19 and 

20 ‘‘(viii) the rental assistance program 

21 under section 8 of the United States Hous22 ing Act of 1937 (42 U.S.C. 1437f). 

23 ‘‘(2) STANDARDS FOR MATERIALS.—The Sec24 retary, in conjunction with the advisory committee 

25 established under section 4(g)(4) of the Department 


rfrederick on PROD1PC67 with BILLS
26 

•HR 1295 IH

1 of Housing and Urban Development Act (42 U.S.C. 

2 3533(g)(4), shall establish standards for materials 

3 and forms to be used, as appropriate, by organiza4 tions providing homeownership counseling services, 

5 including any recipients of assistance pursuant to 

6 subsection (a)(4). 

7 ‘‘(3) MORTGAGE SOFTWARE SYSTEMS.— 

8 ‘‘(A) CERTIFICATION.—The Secretary shall 

9 provide for the certification of various computer 

10 software programs for consumers to use in eval11 uating different residential mortgage loan pro12 posals. The Secretary shall require, for such 

13 certification, that the mortgage software sys14 tems take into account— 

15 ‘‘(i) the consumer’s financial situation 

16 and the cost of maintaining a home, in17 cluding insurance, taxes, and utilities; 

18 ‘‘(ii) the amount of time the consumer 

19 expects to remain in the home or expected 

20 time to maturity of the loan; and 

21 ‘‘(iii) such other factors as the Sec22 retary considers appropriate to assist the 

23 consumer in evaluating whether to pay 

24 points, to lock in an interest rate, to select 

25 an adjustable or fixed rate loan, to select 


rfrederick on PROD1PC67 with BILLS
27 

•HR 1295 IH

1 a conventional or government-insured or 

2 guaranteed loan and to make other choices 

3 during the loan application process. 

4 If the Secretary determines that available exist5 ing software is inadequate to assist consumers 

6 during the residential mortgage loan application 

7 process, the Secretary shall arrange for the de8 velopment by private sector software companies 

9 of new mortgage software systems that meet 

10 the Secretary’s specifications. 

11 ‘‘(B) USE AND INITIAL AVAILABILITY.— 

12 Such certified computer software programs 

13 shall be used to supplement, not replace, hous14 ing counseling. The Secretary shall provide that 

15 such programs are initially used only in connec16 tion with the assistance of housing counselors 

17 certified pursuant to subsection (e). 

18 ‘‘(C) AVAILABILITY.—After a period of ini19 tial availability under subparagraph (B) as the 

20 Secretary considers appropriate, the Secretary 

21 shall take reasonable steps to make mortgage 

22 software systems certified pursuant to this 

23 paragraph widely available through the Internet 

24 and at public locations, including public librar25 ies, senior-citizen centers, public housing sites, 


rfrederick on PROD1PC67 with BILLS
28 

•HR 1295 IH

1 offices of public housing agencies that admin2 ister rental housing assistance vouchers, and 

3 housing counseling centers. 

4 ‘‘(4) NATIONAL PUBLIC SERVICE MULTIMEDIA

5 CAMPAIGNS TO PROMOTE HOUSING COUNSELING.— 

6 ‘‘(A) IN GENERAL.—The Director of Hous7 ing Counseling shall develop, implement, and 

8 conduct national public service multimedia cam9 paigns designed to make persons facing mort10 gage foreclosure, persons considering a 

11 subprime mortgage loan to purchase a home, el12 derly persons, persons who face language bar13 riers, low-income persons, and other potentially 

14 vulnerable consumers aware that it is advisable, 

15 before seeking or maintaining a residential 

16 mortgage loan, to obtain homeownership coun17 seling from an unbiased and reliable sources 

18 and that such homeownership counseling is 

19 available, including through programs spon20 sored by the Secretary of Housing and Urban 

21 Development. 

22 ‘‘(B) CONTACT INFORMATION.—Each seg23 ment of the multimedia campaign under sub24 paragraph (A) shall publicize the toll-free tele25 phone number and web site of the Department 


rfrederick on PROD1PC67 with BILLS
29 

•HR 1295 IH

1 of Housing and Urban Development through 

2 which persons seeking housing counseling can 

3 locate a housing counseling agency in their 

4 State that is certified by the Secretary of Hous5 ing and Urban Development and can provide 

6 advice on buying a home, renting, defaults, 

7 foreclosures, credit issues, and reverse mort8 gages. 

9 ‘‘(C) AUTHORIZATION OF APPROPRIA10 TIONS.—There are authorized to be appro11 priated to the Secretary, not to exceed 

12 $3,000,000 for fiscal years 2009, 2010, and 

13 2011, for the development, implementation, and 

14 conducting of national public service multimedia 

15 campaigns under this paragraph. 

16 ‘‘(5) EDUCATION PROGRAMS.—The Secretary 

17 shall provide advice and technical assistance to 

18 States, units of general local government, and non19 profit organizations regarding the establishment and 

20 operation of, including assistance with the develop21 ment of content and materials for, educational pro22 grams to inform and educate consumers, particularly 

23 those most vulnerable with respect to residential 

24 mortgage loans (such as elderly persons, persons 

25 facing language barriers, low-income persons, and 


rfrederick on PROD1PC67 with BILLS
30 

•HR 1295 IH

1 other potentially vulnerable consumers), regarding 

2 home mortgages, mortgage refinancing, home equity 

3 loans, and home repair loans.’’. 

4 (2) CONFORMING AMENDMENTS TO GRANT PRO5 GRAM FOR HOMEOWNERSHIP COUNSELING ORGANI6 ZATIONS.—Section 106(c)(5)(A)(ii) of the Housing 

7 and Urban Development Act of 1968 (12 U.S.C. 

8 1701x(c)(5)(A)(ii)) is amended— 

9 (A) in subclause (III), by striking ‘‘and’’ at 

10 the end; 

11 (B) in subclause (IV) by striking the pe12 riod at the end and inserting ‘‘; and’’; and 

13 (C) by inserting after subclause (IV) the 

14 following new subclause: 

15 ‘‘(V) notify the housing or mort16 gage applicant of the availability of 

17 mortgage software systems provided 

18 pursuant to subsection (g)(3).’’. 

19 (c) GRANTS FOR HOUSING COUNSELING ASSIST20 ANCE.—Section 106(a) of the Housing and Urban Devel21 opment Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended 

22 by adding at the end the following new paragraph: 

23 ‘‘(4) HOMEOWNERSHIP AND RENTAL COUNSELING

24 ASSISTANCE.— 


rfrederick on PROD1PC67 with BILLS
31 

•HR 1295 IH

1 ‘‘(A) IN GENERAL.—The Secretary shall make 

2 financial assistance available under this paragraph 

3 to States, units of general local governments, and 

4 nonprofit organizations providing homeownership or 

5 rental counseling (as such terms are defined in sub6 section (g)(1)). 

7 ‘‘(B) QUALIFIED ENTITIES.—The Secretary 

8 shall establish standards and guidelines for eligibility 

9 of organizations (including governmental and non10 profit organizations) to receive assistance under this 

11 paragraph. 

12 ‘‘(C) DISTRIBUTION.—Assistance made avail13 able under this paragraph shall be distributed in a 

14 manner that encourages efficient and successful 

15 counseling programs. 

16 ‘‘(D) AUTHORIZATION OF APPROPRIATIONS.— 

17 There are authorized to be appropriated 

18 $45,000,000 for each of fiscal years 2009 through 

19 2012 for— 

20 ‘‘(i) the operations of the Office of Hous21 ing Counseling of the Department of Housing 

22 and Urban Development; 

23 ‘‘(ii) the responsibilities of the Secretary 

24 under paragraphs (2) through (5) of subsection 

25 (g); and 


rfrederick on PROD1PC67 with BILLS
32 

•HR 1295 IH

1 ‘‘(iii) assistance pursuant to this para2 graph for entities providing homeownership and 

3 rental counseling.’’. 

4 (d) REQUIREMENTS TO USE HUD-CERTIFIED

5 COUNSELORS UNDER HUD PROGRAMS.—Section 106(e) 

6 of the Housing and Urban Development Act of 1968 (12 

7 U.S.C. 1701x(e)) is amended— 

8 (1) by striking paragraph (1) and inserting the 

9 following new paragraph: 

10 ‘‘(1) REQUIREMENT FOR ASSISTANCE.—An or11 ganization may not receive assistance for counseling 

12 activities under subsection (a)(1)(iii), (a)(2), (a)(4), 

13 (c), or (d) of this section, or under section 101(e), 

14 unless the organization, or the individuals through 

15 which the organization provides such counseling, has 

16 been certified by the Secretary under this subsection 

17 as competent to provide such counseling.’’; 

18 (2) in paragraph (2)— 

19 (A) by inserting ‘‘and for certifying organi20 zations’’ before the period at the end of the 

21 first sentence; and 

22 (B) in the second sentence by striking ‘‘for 

23 certification’’ and inserting ‘‘, for certification 

24 of an organization, that each individual through 

25 which the organization provides counseling shall 


rfrederick on PROD1PC67 with BILLS
33 

•HR 1295 IH

1 demonstrate, and, for certification of an indi2 vidual,’’; 

3 (3) in paragraph (3), by inserting ‘‘organiza4 tions and’’ before ‘‘individuals’’; 

5 (4) by redesignating paragraph (3) as para6 graph (5); and 

7 (5) by inserting after paragraph (2) the fol8 lowing new paragraphs: 

9 ‘‘(3) REQUIREMENT UNDER HUD PROGRAMS.— 

10 Any homeownership counseling or rental housing 

11 counseling (as such terms are defined in subsection 

12 (g)(1)) required under, or provided in connection 

13 with, any program administered by the Department 

14 of Housing and Urban Development shall be pro15 vided only by organizations or counselors certified by 

16 the Secretary under this subsection as competent to 

17 provide such counseling. 

18 ‘‘(4) OUTREACH.—The Secretary shall take 

19 such actions as the Secretary considers appropriate 

20 to ensure that individuals and organizations pro21 viding homeownership or rental housing counseling 

22 are aware of the certification requirements and 

23 standards of this subsection and of the training and 

24 certification programs under subsection (f).’’. 


rfrederick on PROD1PC67 with BILLS
34 

•HR 1295 IH

1 (e) STUDY OF DEFAULTS AND FORECLOSURES.— 

2 The Secretary of Housing and Urban Development shall 

3 conduct an extensive study of the root causes of default 

4 and foreclosure of home loans, using as much empirical 

5 data as are available. The study shall also examine the 

6 role of escrow accounts in helping prime and nonprime 

7 borrowers to avoid defaults and foreclosures. Not later 

8 than 12 months after the date of the enactment of this 

9 Act, the Secretary shall submit to the Congress a prelimi10 nary report regarding the study. Not later than 24 months 

11 after such date of enactment, the Secretary shall submit 

12 a final report regarding the results of the study, which 

13 shall include any recommended legislation relating to the 

14 study, and recommendations for best practices and for a 

15 process to identify populations that need counseling the 

16 most. 

17 (f) DEFINITIONS FOR COUNSELING-RELATED PRO18 GRAMS.—Section 106 of the Housing and Urban Develop19 ment Act of 1968 (12 U.S.C. 1701x), as amended by the 

20 preceding provisions of this section, is further amended 

21 by adding at the end the following new subsection: 

22 ‘‘(h) DEFINITIONS.—For purposes of this section: 

23 ‘‘(1) NONPROFIT ORGANIZATION.—The term 

24 ‘nonprofit organization’ has the meaning given such 

25 term in section 104(5) of the Cranston-Gonzalez NaVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
35 

•HR 1295 IH

1 tional Affordable Housing Act (42 U.S.C. 

2 12704(5)), except that subparagraph (D) of such 

3 section shall not apply for purposes of this section. 

4 ‘‘(2) STATE.—The term ‘State’ means each of 

5 the several States, the Commonwealth of Puerto 

6 Rico, the District of Columbia, the Commonwealth 

7 of the Northern Mariana Islands, Guam, the Virgin 

8 Islands, American Samoa, the Trust Territories of 

9 the Pacific, or any other possession of the United 

10 States. 

11 ‘‘(3) UNIT OF GENERAL LOCAL GOVERN12 MENT.—The term ‘unit of general local government’ 

13 means any city, county, parish, town, township, bor14 ough, village, or other general purpose political sub15 division of a State.’’. 

16 (g) UPDATING AND SIMPLIFICATION OF MORTGAGE

17 INFORMATION BOOKLET.—Section 5 of the Real Estate 

18 Settlement Procedures Act of 1974 (12 U.S.C. 2604) is 

19 amended— 

20 (1) in the section heading, by striking ‘‘SPE21 CIAL’’ and inserting ‘‘HOME BUYING’’; 

22 (2) by striking subsections (a) and (b) and in23 serting the following new subsections: 

24 ‘‘(a) PREPARATION AND DISTRIBUTION.—The Sec25 retary shall prepare, at least once every 5 years, a booklet 


rfrederick on PROD1PC67 with BILLS
36 

•HR 1295 IH

1 to help consumers applying for federally related mortgage 

2 loans to understand the nature and costs of real estate 

3 settlement services. The Secretary shall prepare the book4 let in various languages and cultural styles, as the Sec5 retary determines to be appropriate, so that the booklet 

6 is understandable and accessible to homebuyers of dif7 ferent ethnic and cultural backgrounds. The Secretary 

8 shall distribute such booklets to all lenders that make fed9 erally related mortgage loans. The Secretary shall also dis10 tribute to such lenders lists, organized by location, of 

11 homeownership counselors certified under section 106(e) 

12 of the Housing and Urban Development Act of 1968 (12 

13 U.S.C. 1701x(e)) for use in complying with the require14 ment under subsection (c) of this section. 

15 ‘‘(b) CONTENTS.—Each booklet shall be in such form 

16 and detail as the Secretary shall prescribe and, in addition 

17 to such other information as the Secretary may provide, 

18 shall include in plain and understandable language the fol19 lowing information: 

20 ‘‘(1) A description and explanation of the na21 ture and purpose of the costs incident to a real es22 tate settlement or a federally related mortgage loan. 

23 The description and explanation shall provide gen24 eral information about the mortgage process as well 

25 as specific information concerning, at a minimum— 


rfrederick on PROD1PC67 with BILLS
37 

•HR 1295 IH

1 ‘‘(A) balloon payments; 

2 ‘‘(B) prepayment penalties; and 

3 ‘‘(C) the trade-off between closing costs 

4 and the interest rate over the life of the loan. 

5 ‘‘(2) An explanation and sample of the uniform 

6 settlement statement required by section 4. 

7 ‘‘(3) A list and explanation of lending practices, 

8 including those prohibited by the Truth in Lending 

9 Act or other applicable Federal law, and of other un10 fair practices and unreasonable or unnecessary 

11 charges to be avoided by the prospective buyer with 

12 respect to a real estate settlement. 

13 ‘‘(4) A list and explanation of questions a con14 sumer obtaining a federally related mortgage loan 

15 should ask regarding the loan, including whether the 

16 consumer will have the ability to repay the loan, 

17 whether the consumer sufficiently shopped for the 

18 loan, whether the loan terms include prepayment 

19 penalties or balloon payments, and whether the loan 

20 will benefit the borrower. 

21 ‘‘(5) An explanation of the right of rescission as 

22 to certain transactions provided by sections 125 and 

23 129 of the Truth in Lending Act. 

24 ‘‘(6) A brief explanation of the nature of a vari25 able rate mortgage and a reference to the booklet 


rfrederick on PROD1PC67 with BILLS
38 

•HR 1295 IH

1 entitled ‘Consumer Handbook on Adjustable Rate 

2 Mortgages’, published by the Board of Governors of 

3 the Federal Reserve System pursuant to section 

4 226.19(b)(1) of title 12, Code of Federal Regula5 tions, or to any suitable substitute of such booklet 

6 that such Board of Governors may subsequently 

7 adopt pursuant to such section. 

8 ‘‘(7) A brief explanation of the nature of a 

9 home equity line of credit and a reference to the 

10 pamphlet required to be provided under section 

11 127A of the Truth in Lending Act. 

12 ‘‘(8) Information about homeownership coun13 seling services made available pursuant to section 

14 106(a)(4) of the Housing and Urban Development 

15 Act of 1968 (12 U.S.C. 1701x(a)(4)), a rec16 ommendation that the consumer use such services, 

17 and notification that a list of certified providers of 

18 homeownership counseling in the area, and their 

19 contact information, is available. 

20 ‘‘(9) An explanation of the nature and purpose 

21 of escrow accounts when used in connection with 

22 loans secured by residential real estate and the re23 quirements under section 10 of this Act regarding 

24 such accounts. 


rfrederick on PROD1PC67 with BILLS
39 

•HR 1295 IH

1 ‘‘(10) An explanation of the choices available to 

2 buyers of residential real estate in selecting persons 

3 to provide necessary services incidental to a real es4 tate settlement. 

5 ‘‘(11) An explanation of a consumer’s respon6 sibilities, liabilities, and obligations in a mortgage 

7 transaction. 

8 ‘‘(12) An explanation of the nature and purpose 

9 of real estate appraisals, including the difference be10 tween an appraisal and a home inspection. 

11 ‘‘(13) Notice that the Office of Housing of the 

12 Department of Housing and Urban Development has 

13 made publicly available a brochure regarding loan 

14 fraud and a World Wide Web address and toll-free 

15 telephone number for obtaining the brochure. 

16 The booklet prepared pursuant to this section shall take 

17 into consideration differences in real estate settlement pro18 cedures that may exist among the several States and terri19 tories of the United States and among separate political 

20 subdivisions within the same State and territory.’’; 

21 (3) in subsection (c), by inserting at the end 

22 the following new sentence: ‘‘Each lender shall also 

23 include with the booklet a reasonably complete or 

24 updated list of homeownership counselors who are 

25 certified pursuant to section 106(e) of the Housing 


rfrederick on PROD1PC67 with BILLS
40 

•HR 1295 IH

1 and Urban Development Act of 1968 (12 U.S.C. 

2 1701x(e)) and located in the area of the lender.’’; 

3 and 

4 (4) in subsection (d), by inserting after the pe5 riod at the end of the first sentence the following: 

6 ‘‘The lender shall provide the HUD-issued booklet in 

7 the version that is most appropriate for the person 

8 receiving it.’’. 

9 SEC. 5. REQUIREMENTS FOR FHA-APPROVED MORTGA10 GEES. 

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

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

13 1708(c)) is amended— 

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

15 after the semicolon; 

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

17 and inserting a period; and 

18 (3) by striking subparagraph (G). 

19 (b) LIMITATIONS ON PARTICIPATION AND MORT20 GAGEE APPROVAL AND USE OF NAME.—Section 202 of 

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

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

23 (f) as subsections (e), (f), and (g), respectively; 

24 (2) by inserting after subsection (c) the fol25 lowing new subsection: 


rfrederick on PROD1PC67 with BILLS
41 

•HR 1295 IH

1 ‘‘(d) LIMITATIONS ON PARTICIPATION IN ORIGINA2 TION AND MORTGAGEE APPROVAL.— 

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

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

5 mortgagee, as such term is defined in subsection 

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

7 FHA-insured loan except as authorized by the Sec8 retary. 

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

10 be eligible for approval by the Secretary, an appli11 cant mortgagee shall not be, and shall not have any 

12 officer, partner, director, principal, manager, super13 visor, loan processor, loan underwriter, or loan origi14 nator of the applicant mortgagee who is— 

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

16 a limited denial of participation (LDP), or oth17 erwise restricted under part 24 or 25 of title 24 

18 of the Code of Federal Regulations, or any suc19 cessor regulations to such parts, or under simi20 lar provisions of any other Federal agency; 

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

22 convicted of, an offense that reflects adversely 

23 upon the applicant’s integrity, competence or 

24 fitness to meet the responsibilities of an ap25 proved mortgagee; 


rfrederick on PROD1PC67 with BILLS
42 

•HR 1295 IH

1 ‘‘(C) subject to unresolved findings con2 tained in a Department of Housing and Urban 

3 Development or other governmental audit, in4 vestigation, or review; 

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

6 not conform to generally accepted practices of 

7 prudent mortgagees or that demonstrate irre8 sponsibility; 

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

10 or nolo contendre to, a felony related to partici11 pation in the real estate or mortgage loan in12 dustry— 

13 ‘‘(i) during the 7-year period pre14 ceding the date of the application for li15 censing and registration; or 

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

17 of application, if such felony involved an 

18 act of fraud, dishonesty, or a breach of 

19 trust, or money laundering; 

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

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

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

23 of State law; or 

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

25 as established by the Secretary. 


rfrederick on PROD1PC67 with BILLS
43 

•HR 1295 IH

1 ‘‘(3) RULEMAKING AND IMPLEMENTATION.— 

2 The Secretary shall conduct a rulemaking to carry 

3 out this subsection. The Secretary shall implement 

4 this subsection not later than the expiration of the 

5 60-day period beginning upon the date of the enact6 ment of this subsection by notice, mortgagee letter, 

7 or interim final regulations, which shall take effect 

8 upon issuance.’’; and 

9 (3) by adding at the end the following new sub10 section: 

11 ‘‘(h) USE OF NAME.—The Secretary shall, by regula12 tion, require each mortgagee approved by the Secretary 

13 for participation in the FHA mortgage insurance pro14 grams of the Secretary— 

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

16 that is registered with the Secretary in connection 

17 with such approval in all advertisements and pro18 motional materials, as such terms are defined by the 

19 Secretary, relating to the business of such mort20 gagee in such mortgage insurance programs; and 

21 ‘‘(2) to maintain copies of all such advertise22 ments and promotional materials, in such form and 

23 for such period as the Secretary requires.’’. 


rfrederick on PROD1PC67 with BILLS
44 

•HR 1295 IH

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— 


rfrederick on PROD1PC67 with BILLS
45 

•HR 1295 IH

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 


rfrederick on PROD1PC67 with BILLS
46 

•HR 1295 IH

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 


rfrederick on PROD1PC67 with BILLS
47 

•HR 1295 IH

1 that is based on volume of mortgages originated 

2 by such mortgagees. 

3 SEC. 6. COMMISSION ON THE FORECLOSURE AND MORT4 GAGE LENDING CRISIS. 

5 (a) ESTABLISHMENT OF COMMISSION.—There is es6 tablished in the legislative branch a commission to be 

7 known as the ‘‘Commission on the Foreclosure and Mort8 gage Lending Crisis’’ (in this section referred to as the 

9 ‘‘Commission’’). 

10 (b) FINDINGS AND PURPOSE.— 

11 (1) FINDINGS.—Congress finds the following: 

12 (A) The United States is experiencing a 

13 steady increase in foreclosures and mortgage 

14 lending problems that have impacted home15 owners, families, communities, the United 

16 States economy and the global credit markets. 

17 (B) In 2006, there were an estimated 

18 1,300,000 foreclosures in the United States. 

19 (C) This number increased by 79 percent 

20 in 2007, bringing the estimated number of fore21 closures nationwide to 2,200,000. 

22 (D) In 2008, an estimated 3,200,000 fore23 closures were reported. 

24 (E) Estimates suggest that this trend is 

25 likely to continue with millions more Americans 


rfrederick on PROD1PC67 with BILLS
48 

•HR 1295 IH

1 potentially losing their homes to foreclosure in 

2 the next 4 years. 

3 (2) PURPOSE.—The purpose of this section is 

4 to establish a commission to undertake a comprehen5 sive analysis and review of the origins and causes of 

6 the current foreclosure and mortgage lending crisis 

7 and to issue a report of its findings to the Congress. 

8 The Commission shall also recommend legislative 

9 and regulatory changes that will prohibit the kinds 

10 of lending practices that contributed to the increased 

11 foreclosure rate and the current mortgage lending 

12 crisis. 

13 (c) COMPOSITION.— 

14 (1) MEMBERS.—The Commission shall be com15 posed of 10 members as follows: 

16 (A) 2 members shall be appointed by the 

17 Speaker of the House of Representatives. 

18 (B) 2 members shall be appointed by the 

19 minority leader of the House of Representa20 tives. 

21 (C) 2 members shall be appointed by the 

22 majority leader of the Senate. 

23 (D) 2 members shall be appointed by the 

24 minority leader of the Senate. 


rfrederick on PROD1PC67 with BILLS
49 

•HR 1295 IH

1 (E) The Secretary of the Treasury or his 

2 designee. 

3 (F) The chairman of the Board of Gov4 ernors of the Federal Reserve System or his 

5 designee. 

6 (2) DEADLINE FOR APPOINTMENT.—All mem7 bers of the Commission shall be appointed not later 

8 than 30 days after the date of the enactment of this 

9 Act. 

10 (3) CO-CHAIRMEN.—Of the members appointed 

11 to the Commission under subparagraphs (A) 

12 through (D) of paragraph (1), 2 shall be designated 

13 as the co-chairmen of the Commission. One co-chair14 man shall be designated by the Speaker of the 

15 House of Representatives in consultation with the 

16 majority leader of the Senate and the other co-chair17 man shall be designated by the minority leader of 

18 the House of Representatives in consultation with 

19 the minority leader of the Senate. 

20 (4) VACANCIES.—Any vacancy in the Commis21 sion shall not affect its powers, but shall be filled in 

22 the same manner in which the original appointment 

23 was made. 

24 (5) COMPENSATION.— 


rfrederick on PROD1PC67 with BILLS
50 

•HR 1295 IH

1 (A) IN GENERAL.—Members of the Com2 mission shall serve without pay. 

3 (B) TRAVEL EXPENSES.—While away from 

4 their homes or regular places of business in the 

5 performance of services for the Commission, 

6 members of the Commission shall be allowed 

7 travel expenses, including per diem in lieu of 

8 subsistence, in the same manner as persons em9 ployed intermittently in the Government service 

10 are allowed expenses under section 5703(b) of 

11 title 5, United States Code. 

12 (6) INITIAL MEETING; RULES OF PROCEDURE; 

13 QUORUM.— 

14 (A) INITIAL MEETING.—The Commission 

15 shall meet and begin the operations of the Com16 mission not later than 60 days after the date of 

17 the enactment of this Act. 

18 (B) MEETINGS.—After its initial meeting, 

19 the Commission shall meet upon the call of the 

20 co-chairmen or a majority of its members. 

21 (C) QUORUM.—A majority of the members 

22 of the Commission shall constitute a quorum. 

23 (D) RULES OF PROCEDURE.—The Com24 mission may establish rules for the conduct of 


rfrederick on PROD1PC67 with BILLS
51 

•HR 1295 IH

1 the Commission’s business, if such rules are 

2 consistent with this Act or other applicable law. 

3 (d) DUTIES.— 

4 (1) IN GENERAL.—The Commission shall— 

5 (A) study and assess the current legal and 

6 regulatory framework governing the housing 

7 mortgage lending markets and investigate how 

8 the such framework contributed to the in9 creased foreclosure rate, including— 

10 (i) refinancing practices; 

11 (ii) loan to value ratios; and 

12 (iii) the prevalence of fraudulent in13 dustry practices; 

14 (B) recommend changes to the current 

15 legal and regulatory framework to prohibit 

16 lending practices that have contributed to the 

17 mortgage lending crisis; 

18 (C) review the impact of subprime abuses 

19 and predatory lending practices; 

20 (D) assess the role of States in enacting 

21 policies to reduce predatory lending practices 

22 and abuses in the subprime markets; 

23 (E) assess the impact of mortgage backed 

24 securities and Fannie Mae and Freddie Mac on 

25 the mortgage lending crisis; and 


rfrederick on PROD1PC67 with BILLS
52 

•HR 1295 IH

1 (F) assess the impact of the Community 

2 Reinvestment Act on the mortgage lending cri3 sis. 

4 (2) FINAL REPORT.—Not later than 12 months 

5 after the date of enactment of this Act, the Commis6 sion shall submit to the Congress a final report con7 taining such findings, conclusions, and recommenda8 tions as have been agreed to by a majority of Com9 mission members. If, at the conclusion of such 12 

10 month period, a majority of the Commission deter11 mines it necessary, the Commission may be granted 

12 a 6 month extension for submission of its final re13 port upon written notification to the Congress. 

14 (e) POWERS OF THE COMMISSION.— 

15 (1) HEARINGS AND EVIDENCE.—The Commis16 sion, or on the authority of the Commission or any 

17 subcommittee or member thereof, may, for the pur18 pose of carrying out this title— 

19 (A) hold such hearings and sit and act at 

20 such times and places, take such testimony, re21 ceive such evidence, administer such oaths; and 

22 (B) subject to paragraph (2)(A), subpoena 

23 or otherwise require, the attendance and testi24 mony of such witnesses and the production of 

25 such books, records, correspondence, memoVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
53 

•HR 1295 IH

1 randa, papers, and documents as the Commis2 sion or such designated subcommittee or des3 ignated member may determine advisable. 

4 (2) SUBPOENAS.— 

5 (A) ISSUANCE.— 

6 (i) IN GENERAL.—A subpoena may be 

7 issued under this subsection only— 

8 (I) by a co-chairman; or 

9 (II) by the affirmative vote of a 

10 majority of the members of the Com11 mission. 

12 (ii) SIGNATURE.—Subject to clause 

13 (i), subpoenas issued under this subpara14 graph may be issued under the signature 

15 of a co-chairman or any member des16 ignated by a majority of the Commission, 

17 may be served by any person designated by 

18 the co-chairmen or by a member des19 ignated by a majority of the Commission. 

20 (B) ENFORCEMENT.— 

21 (i) IN GENERAL.—In the case of con22 tumacy or failure to obey a subpoena 

23 issued under subparagraph (A), the United 

24 States district court for the judicial district 

25 in which the subpoenaed person resides, is 


rfrederick on PROD1PC67 with BILLS
54 

•HR 1295 IH

1 served, or may be found, or where the sub2 poena is returnable, may issue an order re3 quiring such person to appear at any des4 ignated place to testify or to produce docu5 mentary or other evidence. Any failure to 

6 obey the order of the court may be pun7 ished by the court as a contempt of that 

8 court. 

9 (ii) ADDITIONAL ENFORCEMENT.—In 

10 the case of any failure of any witness to 

11 comply with any subpoena or to testify 

12 when summoned under authority of this 

13 section, the Commission may, by majority 

14 vote, certify a statement of fact consti15 tuting such failure to the appropriate 

16 United States attorney, who may bring the 

17 matter before the grand jury for its action, 

18 under the same statutory authority and 

19 procedures as if the United States attorney 

20 had received as certification under section 

21 102 through 104 of the Revised Statutes 

22 of the United States (2 U.S.C. 192 

23 through 194). 

24 (3) CONTRACT AUTHORITY.—The Commission 

25 may, to such extent and in such amounts as are proVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
55 

•HR 1295 IH

1 vided in appropriation Acts, enter into contracts to 

2 enable the Commission to discharge its duties under 

3 this section. 

4 (4) INFORMATION FROM FEDERAL AGENCIES.— 

5 (A) IN GENERAL.—The Commission is au6 thorized to secure directly from any executive 

7 department, bureau, agency, board, commission, 

8 office, independent establishment, or instrumen9 tality of the Government, information, sugges10 tions, estimates, and statistics for the purposes 

11 of this section. Each department, bureau, agen12 cy, board, commission, office, independent es13 tablishment, or instrumentality shall, to the ex14 tent authorized by law, furnish such informa15 tion, suggestions, estimates, and statistics di16 rectly to the Commission, upon request made by 

17 the co-chairmen of any subcommittee created by 

18 a majority of the Commission, or any member 

19 designated by a majority of the Commission. 

20 (B) RECEIPT, HANDLING, STORAGE, AND

21 DISSEMINATION.—Information shall only be re22 ceived, handled, stored, and disseminated by 

23 members of the Commission and its staff con24 sistent with all applicable statutes, regulations, 

25 and Executive orders. 


rfrederick on PROD1PC67 with BILLS
56 

•HR 1295 IH

1 (5) ASSISTANCE FROM FEDERAL AGENCIES.— 

2 (A) GENERAL SERVICES ADMINISTRA3 TION.—The Administrator of General Services 

4 shall provide to the Commission on a reimburs5 able basis administrative support and other 

6 services for the performance of the Commis7 sion’s functions. 

8 (B) OTHER DEPARTMENTS AND AGEN9 CIES.—In addition to the assistance described 

10 in subparagraph (A), departments and agencies 

11 of the United States may provide to the Com12 mission such services, funds, facilities, staff, 

13 and other support services as they may deter14 mine advisable and as may be authorized by 

15 law. 

16 (6) POSTAL SERVICES.—The Commission may 

17 use the United States mails in the same manner and 

18 under the same conditions as departments and agen19 cies of the United States. 

20 (f) STAFF.— 

21 (1) IN GENERAL.— 

22 (A) APPOINTMENT AND COMPENSATION.— 

23 The co-chairman, in accordance with rules 

24 agreed upon by the Commission, may appoint 

25 and fix the compensation of a staff director and 


rfrederick on PROD1PC67 with BILLS
57 

•HR 1295 IH

1 such other personnel as may be necessary to en2 able the Commission to carry out its duties, 

3 without regard to the provisions of title 5, 

4 United States Code, governing appointments in 

5 the competitive service, and without regard to 

6 the provisions of chapter 51 and subchapter III 

7 of chapter 53 of such title relating to classifica8 tion and General Schedule pay rates, except 

9 that no rate of pay fixed under this subsection 

10 may exceed the equivalent of that payable for a 

11 position at level IV of the Executive Schedule 

12 under section 5316 of title 5, United States 

13 Code. 

14 (B) PERSONNEL AS FEDERAL EMPLOY15 EES.— 

16 (i) IN GENERAL.—The executive di17 rector and any personnel of the Commis18 sion who are employees shall be employees 

19 under section 2105 of title 5, United 

20 States Code, for purposes of chapters 63, 

21 81, 83, 84, 85, 87, 89, and 90 of that title. 

22 (ii) MEMBERS OF THE COMMISSION.— 

23 Clause (i) shall not apply to members of 

24 the Commission. 


rfrederick on PROD1PC67 with BILLS
58 

•HR 1295 IH

1 (2) DETAILEES.—Any Federal Government em2 ployee may be detailed to the Commission without 

3 reimbursement from the Commission, and such 

4 detailee shall retain the rights, status, and privileges 

5 of his or her regular employment without interrup6 tion. 

7 (3) EXPERT AND CONSULTANT SERVICES.—The 

8 Commission is authorized to procure the services of 

9 experts and consultants in accordance with section 

10 3109 of title 5, United States Code, but at rates not 

11 to exceed the daily rate paid to a person occupying 

12 a position at level IV of the Executive Schedule 

13 under section 5315 of title 5, United States Code. 

14 (4) VOLUNTEER SERVICES.—Notwithstanding 

15 section 1342 of title 31, United States Code, the 

16 Commission may accept and use voluntary and un17 compensated services as the Commission determines 

18 necessary. 

19 (g) NONAPPLICABILITY OF FEDERAL ADVISORY

20 COMMITTEE ACT.— 

21 (1) IN GENERAL.—The Federal Advisory Com22 mittee Act (5 U.S.C. App.) shall not apply to the 

23 Commission. 


rfrederick on PROD1PC67 with BILLS
59 

•HR 1295 IH

1 (2) PUBLIC MEETINGS AND RELEASE OF PUB2 LIC VERSIONS OF REPORTS.—The Commission 

3 shall— 

4 (A) hold public hearings and meetings to 

5 the extent appropriate; and 

6 (B) release public versions of the report re7 quired under subsection (d)(2). 

8 (3) PUBLIC HEARINGS.—Any public hearings of 

9 the Commission shall be conducted in a manner con10 sistent with the protection of information provided 

11 to or developed for or by the Commission as re12 quired by any applicable statute, regulations, or Ex13 ecutive order. 

14 (h) TERMINATION.— 

15 (1) IN GENERAL.—The Commission and all the 

16 authorities of this section, shall terminate not later 

17 than 60 days after the date on which the final report 

18 is submitted under subsection (d)(2). 

19 (2) ADMINISTRATIVE ACTIVITIES BEFORE TER20 MINATION.—The Commission may use the 60-day 

21 period referred to in paragraph (1) for the purpose 

22 of concluding its activities, including providing testi23 mony to committees of Congress concerning its re24 port and disseminating the final report. 


rfrederick on PROD1PC67 with BILLS
60 

•HR 1295 IH

1 (i) AUTHORIZATION OF APPROPRIATION.—There are 

2 authorized to be appropriated such sums as necessary to 

3 carry out this section. 

4 SEC. 7. AUTHORIZATION OF APPROPRIATIONS FOR COM5 BATING MORTGAGE FRAUD. 

6 For fiscal years 2009, 2010, 2011, 2012, and 2013, 

7 there are authorized to be appropriated to the Attorney 

8 General a total of— 

9 (1) $31,250,000 to support the employment of 

10 30 additional agents of the Federal Bureau of Inves11 tigation and 2 additional dedicated prosecutors at 

12 the Department of Justice to coordinate prosecution 

13 of mortgage fraud efforts with the offices of the 

14 United States Attorneys; and 

15 (2) $750,000 to support the operations of inter16 agency task forces of the Federal Bureau of Inves17 tigation in the areas with the 15 highest concentra18 tions of mortgage fraud. 

19 SEC. 8. ENHANCEMENT OF LIQUIDITY AND STABILITY OF 

20 INSURED DEPOSITORY INSTITUTIONS TO EN21 SURE AVAILABILITY OF CREDIT AND REDUC22 TION OF FORECLOSURES. 

23 (a) PERMANENT INCREASE IN DEPOSIT INSUR24 ANCE.— 


rfrederick on PROD1PC67 with BILLS
61 

•HR 1295 IH

1 (1) AMENDMENTS TO FEDERAL DEPOSIT IN2 SURANCE ACT.—Effective upon the date of the en3 actment of this Act, section 11(a) of the Federal De4 posit Insurance Act (12 U.S.C. 1821(a)) is amend5 ed— 

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

7 ‘‘$100,000’’ and inserting ‘‘$250,000’’; 

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

9 ‘‘2010’’ and inserting ‘‘2015’’; 

10 (C) in subclause (I) of paragraph 

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

12 ‘‘$250,000’’; 

13 (D) in subclause (II) of paragraph 

14 (1)(F)(i), by striking ‘‘the calendar year pre15 ceding the date this subparagraph takes effect 

16 under the Federal Deposit Insurance Reform 

17 Act of 2005’’ and inserting ‘‘calendar year 

18 2008’’; and 

19 (E) in paragraph (3)(A), by striking ‘‘, ex20 cept that $250,000 shall be substituted for 

21 $100,000 wherever such term appears in such 

22 paragraph’’. 

23 (2) AMENDMENT TO FEDERAL CREDIT UNION

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

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


rfrederick on PROD1PC67 with BILLS
62 

•HR 1295 IH

1 (A) in paragraph (3)— 

2 (i) by striking the opening quotation 

3 mark before ‘‘$250,000’’; 

4 (ii) by striking ‘‘, except that 

5 $250,000 shall be substituted for $100,000 

6 wherever such term appears in such sec7 tion’’; and 

8 (iii) by striking the closing quotation 

9 mark after the closing parenthesis; and 

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

11 ‘‘$100,000’’ and inserting ‘‘$250,000’’. 

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

13 of the Emergency Economic Stabilization Act (12 

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

15 (b) EXTENSION OF RESTORATION PLAN PERIOD.— 

16 Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance 

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

18 ‘‘5-year period’’ and inserting ‘‘8-year period’’. 

19 (c) FDIC AND NCUA BORROWING AUTHORITY.— 

20 (1) FDIC.—Section 14(a) of the Federal De21 posit Insurance Act (12 U.S.C. 1824(a)) is amended 

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

23 ‘‘$100,000,000,000’’. 

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

25 Credit Union Act (12 U.S.C. 1783(d)(1)) is amendVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00062 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
63 

•HR 1295 IH

1 ed by striking ‘‘$100,000,000’’ and inserting 

2 ‘‘$6,000,000,000’’. 

3 (d) EXPANDING SYSTEMIC RISK SPECIAL ASSESS4 MENTS.—Section 13(c)(4)(G)(ii) of the Federal Deposit 

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

6 to read as follows: 

7 ‘‘(ii) REPAYMENT OF LOSS.— 

8 ‘‘(I) IN GENERAL.—The Corpora9 tion shall recover the loss to the De10 posit Insurance Fund arising from 

11 any action taken or assistance pro12 vided with respect to an insured de13 pository institution under clause (i) 

14 from 1 or more special assessments on 

15 insured depository institutions, deposi16 tory institution holding companies 

17 (with the concurrence of the Secretary 

18 of the Treasury with respect to hold19 ing companies), or both, as the Cor20 poration determines to be appropriate. 

21 ‘‘(II) TREATMENT OF DEPOSI22 TORY INSTITUTION HOLDING COMPA23 NIES.—For purposes of this clause, 

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

25 to depository institution holding comVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
64 

•HR 1295 IH

1 panies as if they were insured deposi2 tory institutions. 

3 ‘‘(III) REGULATIONS.—The Cor4 poration shall prescribe such regula5 tions as it deems necessary to imple6 ment this clause. In prescribing such 

7 regulations, defining terms, and set8 ting the appropriate assessment rate 

9 or rates, the Corporation shall estab10 lish rates sufficient to cover the losses 

11 incurred as a result of the actions of 

12 the Corporation under clause (i) and 

13 shall consider: the types of entities 

14 that benefit from any action taken or 

15 assistance provided under this sub16 paragraph; economic conditions, the 

17 effects on the industry, and such 

18 other factors as the Corporation 

19 deems appropriate and relevant to the 

20 action taken or the assistance pro21 vided. Any funds so collected that ex22 ceed actual losses shall be placed in 

23 the Deposit Insurance Fund.’’. 

24 (e) ESTABLISHMENT OF A NATIONAL CREDIT UNION

25 SHARE INSURANCE FUND RESTORATION PLAN PEVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00064 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
65 

•HR 1295 IH

1 RIOD.—Section 202(c)(2) of the Federal Credit Union Act 

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

3 the following new subparagraph: 

4 ‘‘(D) FUND RESTORATION PLANS.— 

5 ‘‘(i) IN GENERAL.—Whenever— 

6 ‘‘(I) the Board projects that the 

7 equity ratio of the Fund will, within 6 

8 months of such determination, fall 

9 below the minimum amount specified 

10 in subparagraph (C) for the des11 ignated equity ratio; or 

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

13 actually falls below the minimum 

14 amount specified in subparagraph (C) 

15 for the equity ratio without any deter16 mination under sub-clause (I) having 

17 been made, 

18 the Board shall establish and implement a 

19 Share Insurance Fund restoration plan 

20 within 90 days that meets the require21 ments of clause (ii) and such other condi22 tions as the Board determines to be appro23 priate. 

24 ‘‘(ii) REQUIREMENTS OF RESTORA25 TION PLAN.—A Share Insurance Fund resVerDate Nov 24 2008 04:40 Mar 05, 2009 Jkt 079200 PO 00000 Frm 00065 Fmt 6652 Sfmt 6201 E:\BILLS\H1295.IH H1295

rfrederick on PROD1PC67 with BILLS
66 

•HR 1295 IH

1 toration plan meets the requirements of 

2 this clause if the plan provides that the eq3 uity ratio of the Fund will meet or exceed 

4 the minimum amount specified in subpara5 graph (C) for the designated equity ratio 

6 before the end of the 5-year period begin7 ning upon the implementation of the plan 

8 (or such longer period as the Board may 

9 determine to be necessary due to extraor10 dinary circumstances). 

11 ‘‘(iii) TRANSPARENCY.—Not more 

12 than 30 days after the Board establishes 

13 and implements a restoration plan under 

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

15 Federal Register a detailed analysis of the 

16 factors considered and the basis for the ac17 tions taken with regard to the plan.’’. 

18 SEC. 9. PROHIBITION ON THE RECEIPT OF COMMON STOCK 

19 AND THE EXERCISE OF STOCK VOTING 

20 POWER. 

21 Title I of the Emergency Economic Stabilization Act 

22 of 2008 is amended by adding at the end the following 

23 new section: 


rfrederick on PROD1PC67 with BILLS
67 

•HR 1295 IH

1 ‘‘SEC. 137. PROHIBITION ON THE RECEIPT OF COMMON 

2 STOCK AND THE EXERCISE OF STOCK VOT3 ING POWER. 

4 ‘‘(a) IN GENERAL.—Notwithstanding any other pro5 vision of this title, in carrying out this title the Secretary 

6 shall not make any purchase for which the Secretary re7 ceives control-diluting stock. 

8 ‘‘(b) APPLICATION.—Subsection (a) shall apply to 

9 purchases made by the Secretary under this title on or 

10 after the date of the enactment of this section. 

11 ‘‘(c) CONVERSION OF CERTAIN SECURITIES RE12 CEIVED BY THE SECRETARY.—Notwithstanding any other 

13 provision of this title, the Secretary shall not convert any 

14 security received by the Secretary under this title, other 

15 than a warrant, into control-diluting stock. 

16 ‘‘(d) CONTROL-DILUTING STOCK DEFINED.—For 

17 purposes of this section, the term ‘control-diluting stock’ 

18 means— 

19 ‘‘(1) common stock of a financial institution; 

20 ‘‘(2) any other voting stock of a financial insti21 tution, other than voting stock that the Secretary 

22 agrees not to exercise the voting power of such 

23 stock; or 

24 ‘‘(3) a warrant giving the right to the Secretary 

25 to receive stock described in paragraph (1) or (2).’’. 


rfrederick on PROD1PC67 with BILLS
68 

•HR 1295 IH

1 SEC. 10. TREATMENT OF GAIN ON DISPOSITION OF SUB2 SIDIZED RESIDENCES. 

3 (a) IN GENERAL.—In the case any taxpayer who 

4 holds (at the time of the provision of the relief or assist5 ance described in subsection (b)) any interest in a sub6 sidized residence— 

7 (1) section 121 of the Internal Revenue Code of 

8 1986 (relating to exclusion of gain from sale of prin9 cipal residence) shall not apply to any gain from the 

10 sale or exchange of such interest, and 

11 (2) the rate of tax under section 1 of such Code 

12 on such gain shall be twice the rate which would 

13 otherwise apply. 

14 (b) SUBSIDIZED RESIDENCE.—For purposes of this 

15 section, the term ‘‘subsidized residence’’ means any resi16 dence that is subject to a mortgage with respect to which 

17 relief or assistance is provided under this Act or any 

18 amendment made by this Act, under any authority or pro19 gram established or amended by this Act, or by any finan20 cial institution subject to the amendments made by section 

21 204. 

22 SEC. 11. REFUNDABLE TAX CREDIT FOR RESIDENCES PUR23 CHASED DURING 2009 OR 2010. 

24 (a) IN GENERAL.—Subpart C of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of 


rfrederick on PROD1PC67 with BILLS
69 

•HR 1295 IH

1 1986 (relating to refundable credits) is amended by insert2 ing after section 36 the following new section: 

3 ‘‘SEC. 36A. GENERAL HOMEBUYER CREDIT FOR RESI4 DENCES PURCHASED DURING 2009 OR 2010. 

5 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in6 dividual who makes an eligible purchase during the taxable 

7 year, there shall be allowed as a credit against the tax 

8 imposed by this subtitle for such taxable year an amount 

9 equal to so much of the purchase price as does not exceed 

10 the applicable amount. 

11 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub12 section (a), the applicable amount is— 

13 ‘‘(1) $10,000 in the case of an eligible purchase 

14 where the down payment is at least 15 percent of 

15 the purchase price, 

16 ‘‘(2) $5,000 in the case of an eligible purchase 

17 where the down payment is at least 10 percent of 

18 the purchase price, 

19 ‘‘(3) $2,000 in the case of an eligible purchase 

20 where the down payment is at least 5 percent of the 

21 purchase price, and 

22 ‘‘(4) zero in any other case. 

23 ‘‘(c) DEFINITIONS.—For purposes of this section— 


rfrederick on PROD1PC67 with BILLS
70 

•HR 1295 IH

1 ‘‘(1) ELIGIBLE PURCHASE.—The term ‘eligible 

2 purchase’ means the purchase of a residence for the 

3 taxpayer if— 

4 ‘‘(A) such residence is located in the 

5 United States, 

6 ‘‘(B) the construction of such residence 

7 began before 2009, and 

8 ‘‘(C) such purchase is made by the tax9 payer during 2009 or 2010. 

10 ‘‘(2) OTHER DEFINITIONS.—The terms ‘pur11 chase’ and ‘purchase price’ have the respective 

12 meanings given such terms by section 26(c). 

13 ‘‘(d) EXCEPTIONS.—No credit shall be allowed under 

14 subsection (a) to any taxpayer for any taxable year with 

15 respect to the purchase of a residence if— 

16 ‘‘(1) credit under section 36 (relating to first17 time homebuyer credit) or 1400C (relating to first18 time homebuyer in the District of Columbia) is al19 lowed to the taxpayer (or the taxpayer’s spouse) for 

20 such taxable year or any prior taxable year, 

21 ‘‘(2) the residence is financed by the proceeds 

22 of a qualified mortgage issue the interest on which 

23 is exempt from tax under section 103, 

24 ‘‘(3) the taxpayer is a nonresident alien, or 


rfrederick on PROD1PC67 with BILLS
71 

•HR 1295 IH

1 ‘‘(4) the taxpayer disposes of such residence (or 

2 such residence ceases to be a residence of the tax3 payer (or, if married, the taxpayer’s spouse)) before 

4 the close of such taxable year. 

5 ‘‘(e) OTHER RULES TO APPLY.— 

6 ‘‘(1) RELATED PERSONS.—Rules similar to the 

7 rules of section 26(c)(5) shall apply for purposes of 

8 this section. 

9 ‘‘(2) MARRIED INDIVIDUALS FILING SEPARATE

10 RETURNS, ETC.—Rules similar to the rules of sub11 paragraphs (B) and (C) of section 26(b)(1) shall 

12 apply for purposes of this section. 

13 ‘‘(3) REPORTING.—Rules similar to the rules of 

14 section 26(e) shall apply for purposes of this section. 

15 ‘‘(f) RECAPTURE OF CREDIT.—Rules similar to the 

16 rules of section 26(f) shall apply for purposes of this sec17 tion, except that— 

18 ‘‘(1) paragraph (1) thereof shall be applied by 

substituting ‘331⁄3 percent’ for ‘62 19 ⁄3 percent’, and 

20 ‘‘(2) paragraph (7) thereof shall be applied by 

21 substituting ‘3 years’ for ‘15 years’.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Section 26(b)(2) of such Code is amended— 

24 (A) in subparagraph (W)— 


rfrederick on PROD1PC67 with BILLS
72 

•HR 1295 IH

1 (i) by striking ‘‘homebuyer credit’’ 

2 and inserting ‘‘first-time homebuyer cred3 it’’, and 

4 (ii) by striking ‘‘and’’, 

5 (B) by striking the period at the end of 

6 subparagraph (X) and inserting ‘‘, and’’, and 

7 (C) by inserting after subparagraph (X) 

8 the following new subparagraph: 

9 ‘‘(Y) section 36A(f) (relating to recapture 

10 of general homebuyer credit)’’. 

11 (2) Section 6211(b)(4)(A) of such Code is 

12 amended by inserting ‘‘36A,’’ after ‘‘36,’’. 

13 (3) Section 1324(b)(2) of title 31, United 

14 States Code, is amended by inserting ‘‘36A,’’ after 

15 ‘‘36,’’. 

16 (4) The table of sections for subpart C of part 

17 IV of subchapter A of chapter 1 of such Code is 

18 amended by inserting after the item relating to sec19 tion 36 the following new item: 

‘‘Sec. 36A. General homebuyer credit for residences purchased during 2009 or 

2010.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to residences purchased after De22 cember 31, 2008, in taxable years ending after such date. 


rfrederick on PROD1PC67 with BILLS
73 

•HR 1295 IH

1 SEC. 12. CONDITIONS ON MORTGAGE RELIEF. 

2 Notwithstanding any other provision of this Act or 

3 any amendment made by this Act, no relief or assistance 

4 may be provided under this Act or any such amendment, 

5 under any authority or program established or amended 

6 by this Act, or by any financial institution subject to the 

7 amendments made by section 8 of this Act, to or on behalf 

8 of any mortgagor unless, before such assistance is pro9 vided the agency or entity providing such relief or assist10 ance makes a determination that— 

11 (1) the mortgagor’s income was accurately stat12 ed on the application for the original mortgage in 

13 connection with which such relief or assistance is 

14 being provided; 

15 (2) the residential property that is subject to 

16 the original mortgage in connection with such relief 

17 or assistance is being provided is the principal resi18 dence of the mortgagor; 

19 (3) the mortgagor has never been convicted 

20 under Federal or State law for financial fraud; and 

21 (4) the mortgagor is a citizen or national of the 

22 United States or an alien lawfully admitted for per23 manent residence in the United States. 

Æ 


rfrederick on PROD1PC67 with BILLS