```

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2698 Introduced in Senate (IS)]

<DOC>

115th CONGRESS
  2d Session
                                S. 2698

 To make necessary reforms to improve compliance with loss mitigation 
   requirements by servicers of mortgages for single family housing 
              insured by the FHA, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 18, 2018

Ms. Cortez Masto (for herself and Ms. Warren) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL

 
 To make necessary reforms to improve compliance with loss mitigation 
   requirements by servicers of mortgages for single family housing 
              insured by the FHA, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``FHA Foreclosure Prevention Act of 
2018''.

SEC. 2. DOCUMENTATION OF LOSS MITIGATION EFFORTS.

    Section 204(a) of the National Housing Act (12 U.S.C. 1710(a)) is 
amended by adding at the end the following:
            ``(10) Documentation of loss mitigation efforts.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this title, the Secretary may not pay 
                insurance benefits to any mortgagee of a single family 
                mortgage insured under this Act unless the mortgagee or 
                other servicer for the mortgage has provided 
                documentation to the Secretary that is sufficient to 
                demonstrate compliance with any requirements of the 
                Secretary applicable to the mortgage relating to loss 
                mitigation.
                    ``(B) Rule of construction.--Nothing in this 
                paragraph may be construed to limit the authority of 
                the Secretary to impose civil monetary penalties.''.

SEC. 3. HUD OVERSIGHT OF SERVICERS.

    Section 533 of the National Housing Act (12 U.S.C. 1735f-11) is 
amended by adding at the end the following:
    ``(d) Oversight of Mortgage Servicers.--
            ``(1) Oversight.--
                    ``(A) In general.--The Secretary shall conduct 
                oversight of servicers of single family mortgages 
                insured under this Act on a regular and ongoing basis 
                and in a manner designed to--
                            ``(i) ensure that the servicers comply with 
                        the requirements of this Act and the standards 
                        and guidelines established by the Secretary for 
                        the servicing of those mortgages; and
                            ``(ii) identify systemic problems and 
                        trends with the compliance described in clause 
                        (i).
                    ``(B) Loss mitigation requirements.--The oversight 
                conducted under subparagraph (A) shall include--
                            ``(i) oversight designed to ensure that the 
                        servicers comply with the requirements under 
                        this Act, and the standards and guidelines 
                        established by the Secretary, for loss 
                        mitigation; and
                            ``(ii) appropriate sampling and review of 
                        the compliance described in clause (i), 
                        including direct information collection through 
                        generally accepted means from borrowers whose 
                        files were sampled, such as surveys, focus 
                        groups, interview, or other similar measures.
            ``(2) Corrective action.--The Secretary shall take such 
        actions as may be necessary to remedy failures by servicers of 
        single family mortgages insured under this Act to comply with 
        the requirements of this Act and the standards and guidelines 
        established by the Secretary for the servicing of those 
        mortgages, including ordering noncompliant servicers to take 
        corrective actions, including barring foreclosure and 
        cancelling from the borrowers account balance and from any 
        insurance claim any interest and other fees that accrued during 
        periods of noncompliance.''.

SEC. 4. COMPLAINT PROCEDURE REGARDING LOSS MITIGATION.

    Title V of the National Housing Act (12 U.S.C. 1731a et seq.) is 
amended by adding at the end the following:

``SEC. 543. COMPLAINT PROCEDURE REGARDING LOSS MITIGATION.

    ``(a) Complaint Procedure for Borrowers.--
            ``(1) Features.--The Secretary shall establish and maintain 
        a procedure for mortgagors under single family mortgages 
        insured under this Act to register complaints with the 
        Secretary regarding servicing, including loss mitigation 
        actions, which shall--
                    ``(A) include making available to the public a 
                website of the Department of Housing and Urban 
                Development, an e-mail address, a phone number, and a 
                mailing address for registering complaints; and
                    ``(B) provide an opportunity for servicers to 
                respond to complaints and submit information regarding 
                complaints.
            ``(2) Attempt to resolve.--For each complaint registered 
        under the procedure established under this subsection, the 
        Secretary shall--
                    ``(A) review the complaint and any response by the 
                servicer; and
                    ``(B) seek to resolve any dispute between the 
                mortgagor and the servicer and make a determination 
                regarding the complaint.
            ``(3) Use of information.--In making any determination 
        regarding the compliance of a servicer with the requirements, 
        standards, and guidelines for servicing, including in 
        identifying systemic problems and trends with servicing, the 
        Secretary shall take into consideration information obtained 
        under the procedure established under this subsection.
    ``(b) Notification of Opportunity To Appeal.--Upon making a 
determination with respect to a complaint regarding servicing, the 
Secretary shall notify the complainant of--
            ``(1) the determination;
            ``(2) the opportunity for the complainant to appeal an 
        adverse determination under the procedure established under 
        subsection (a); and
            ``(3) the requirements for and how to initiate an appeal 
        described in paragraph (2).
    ``(c) Appeals Procedure.--
            ``(1) Establishment.--The Secretary--
                    ``(A) shall provide a procedure for mortgagors to 
                appeal an adverse determination by the Secretary 
                regarding a complaint registered under the procedure 
                established under subsection (a); and
                    ``(B) if appropriate, may take action pursuant to 
                section 533(d)(2) with respect to a decision on an 
                appeal described in subparagraph (A).
            ``(2) Limitation.--The procedure established under this 
        subsection may not provide an appeal for any complaint that was 
        previously appealed under the procedure.
    ``(d) Prohibition on Foreclosure.--The Secretary shall prohibit the 
foreclosure of a mortgage during any period that a complaint or appeal 
regarding the mortgage is pending under the procedures established 
under this section and during a reasonable period after a complainant 
is notified of a determination regarding a complaint that provides the 
complainant an opportunity to appeal the decision.
    ``(e) Reporting.--The Secretary shall submit an annual report to 
Congress regarding complaints received under the procedure maintained 
under subsection (a), which shall--
            ``(1) specify the number of complaints received, 
        disaggregated by types of complaints, status of complaints, 
        geographic distribution of complaints, and average times for 
        resolution of complaints;
            ``(2) include relevant information submitted by servicers 
        and any other information that the Secretary considers 
        relevant; and
            ``(3) comply with any applicable privacy protections.''.

SEC. 5. NOTICE TO BORROWERS OF LOSS MITIGATION STATUS AND DECISIONS.

    Section 204(a) of the National Housing Act (12 U.S.C. 1710(a)), as 
amended by section 2, is amended by adding at the end the following:
            ``(11) Notice to borrowers of loss mitigation status and 
        decisions.--
                    ``(A) Required notice.--The Secretary shall require 
                that, before any acceleration of the indebtedness due 
                under a mortgage, the servicer for the mortgage shall 
                provide written notice to the mortgagor that includes--
                            ``(i) a summary explaining how the servicer 
                        applied the loss mitigation option priority 
                        analysis established by the Secretary, 
                        including the loss mitigation review waterfall 
                        under section III.A.2.j.iii of the FHA Single 
                        Family Housing Policy Handbook 4000.1, or any 
                        successor provision, and setting forth the 
                        actual information entered in applying the 
                        analysis;
                            ``(ii) if the servicer did not conduct the 
                        analysis described in clause (i) because the 
                        servicer determined that the mortgagor did not 
                        express any interest in loss mitigation or 
                        provide appropriate documents--
                                    ``(I) a statement of that 
                                determination;
                                    ``(II) a description of the actions 
                                that the servicer took to solicit the 
                                borrower for loss mitigation review and 
                                obtain appropriate documents; and
                                    ``(III) a statement of the dates 
                                that the servicer took the actions 
                                described in subclause (II);
                            ``(iii) a statement setting forth the 
                        results of the monthly loss mitigation 
                        evaluations of the servicer for the mortgage 
                        required under section 203.605(a) of title 24, 
                        Code of Federal Regulations, or any successor 
                        regulation;
                            ``(iv) with respect to any loss mitigation 
                        action for which the mortgagor was determined 
                        to be ineligible, an explanation of, and 
                        documentation showing, why the mortgagor was 
                        determined to be ineligible;
                            ``(v) a statement informing the borrower 
                        that, upon the request of the borrower, the 
                        Secretary shall provide the borrower with all 
                        loss mitigation evaluation documentation 
                        required by the Secretary with respect to the 
                        mortgage, including the monthly evaluations 
                        described in clause (iii); and
                            ``(vi) information describing the procedure 
                        under section 543(a) for registering complaints 
                        regarding loss mitigation and the procedure 
                        under section 543(c) for appealing the decision 
                        of a servicer regarding loss mitigation 
                        actions.
                    ``(B) References.--The notice required under 
                subparagraph (A) shall--
                            ``(i) contain references to the applicable 
                        provisions of the applicable handbook of the 
                        Department of Housing and Urban Development 
                        regarding ongoing loss mitigation reviews and 
                        the standards for those reviews; and
                            ``(ii) identify how the provisions 
                        described in clause (i) may be accessed on a 
                        publicly accessible website of the Department 
                        of Housing and Urban Development.''.

SEC. 6. RULE OF CONSTRUCTION.

    Nothing in this Act may be construed to supercede, or exempt any 
person from complying with, any provision of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2601 et seq.) or any regulations 
issued under that Act.
                                 <all>
```