I 

111TH CONGRESS 

2D SESSION H. R. 6431 

To amend title 11 of the United States Code to modify the application 

of chapter 13 with respect to principal residences that are the subject 

of foreclosure. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 18, 2010 

Mr. MCDERMOTT introduced the following bill; which was referred to the 

Committee on the Judiciary 

A BILL 

To amend title 11 of the United States Code to modify 

the application of chapter 13 with respect to principal 

residences that are the subject of foreclosure. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Protecting Home5 owners and Foreclosure Stabilization Act of 2010’’. 

6 SEC. 2. PRESERVATION OF STAY OF FORECLOSURE OF 

7 PRINCIPAL RESIDENCE. 

8 Section 362(d) of title 11, the United States Code, 

9 is amended in paragraph (1) by inserting ‘‘(excluding a 


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1 stay of the foreclosure of the principal residence of the 

2 debtor)’’ after ‘‘stay’’ the first place it appears. 

3 SEC. 3. AUTHORITY TO MODIFY CERTAIN MORTGAGES. 

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

5 amended— 

6 (1) in subsection (b)— 

7 (A) by redesignating paragraph (11) as 

8 paragraph (12), 

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

10 the end, and 

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

12 following: 

13 ‘‘(11) notwithstanding paragraph (2) and other14 wise applicable nonbankruptcy law, with respect to a 

15 claim for a loan originated before the effective date 

16 of this paragraph and secured by a security interest 

17 in the debtor’s principal residence that is the subject 

18 of a notice that a foreclosure may be commenced 

19 with respect to such loan, modify the rights of the 

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

21 any claim secured by a subordinate security interest 

22 in such residence)— 

23 ‘‘(A) if any applicable rate of interest is 

24 adjustable under the terms of such security in25 terest by prohibiting, reducing, or delaying adVerDate Mar 15 2010 21:08 Nov 19, 2010 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6431.IH H6431

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1 justments to such rate of interest applicable on 

2 and after the date of filing of the plan; 

3 ‘‘(B) by modifying the terms and condi4 tions of such loan to provide for the payment 

5 of interest accruing after the date of the order 

6 for relief under this chapter at a fixed annual 

7 rate equal to the currently applicable average 

8 prime offer rate as of the date of the order for 

9 relief under this chapter, corresponding to the 

10 repayment term determined under the pre11 ceding paragraph, as published by the Federal 

12 Financial Institutions Examination Council in 

13 its table entitled ‘Average Prime Offer Rates— 

14 Fixed’, plus a reasonable premium for risk; and 

15 ‘‘(C) by providing for payments of such 

16 modified loan directly to the holder of such 

17 claim; and’’, and 

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

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

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

21 the principal residence securing such claim, before receiv22 ing a discharge under this chapter and receives net pro23 ceeds from the sale of such residence, then the debtor 

24 agrees to pay to such holder if such residence is sold in 

25 the 10-year period beginning on the effective date of the 


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1 plan, 30 percent of the capital gains, if any, as defined 

2 in section 1001 of the Internal Revenue Code of 1986.’’. 

3 SEC. 4. EXTENDED PERIOD FOR FILING CERTAIN CHAPTER 

4 13 PLANS. 

5 If the debtor’s plan modifies the rights of a holder 

6 of a claim under section 1322(b)(11), then for purposes 

7 of rule 3015(b) of the Federal Rules of Bankruptcy Proce8 dure a reference to ‘‘14 days’’ shall be deemed to be a 

9 reference to ‘‘30 days’’. 

10 SEC. 5. EXEMPTION FROM COUNSELING REQUIREMENT. 

11 Section 109(h) of title 11, the United States Code, 

12 is amended— 

13 (1) in paragraph (1) by striking ‘‘(2) and (3)’’ 

14 and inserting ‘‘(2), (3), (4), and (5)’’; and 

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

16 ‘‘(5) The requirements of paragraph (1) shall not 

17 apply with respect to a debtor whose principal residence 

18 is the subject of a notice of foreclosure (or similar notice 

19 under State law).’’. 

20 SEC. 6. REQUIREMENT TO REQUEST MODIFICATION. 

21 Section 521(a) of title 11, the United States Code, 

22 is amended— 

23 (1) in paragraph (6) by striking ‘‘and’’ at the 

24 end, 


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1 (2) in paragraph (7) by striking the period at 

2 the end, and 

3 (3) and inserting after paragraph (7) the fol4 lowing: 

5 ‘‘(8) in a voluntary case under chapter 13 in 

6 which there is a debt secured by a lien on the prin7 cipal residence of the debtor, certify under penalty 

8 of perjury that before the filing of the petition debt9 or requested that the holder of the claim for such 

10 debt modify such debt.’’. 

11 SEC. 7. RULE OF CONSTRUCTION. 

12 Nothing in this Act or the amendments made by this 

13 Act shall be construed to modify any obligation of the Fed14 eral Housing Administration, the Veterans Administra15 tion, or the Department of Agriculture under a contract 

16 that guarantees or insures the payment of any part of a 

17 loan secured by a security interest in a principal residence. 

18 SEC. 8. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

19 (a) EFFECTIVE DATE.—Except as provided in sub20 section (b), this and the amendments made by this shall 

21 take effect on the date of the enactment of this Act. 

22 (b) APPLICATION OF AMENDMENTS.— 

23 (1) IN GENERAL.—Except as provided in para24 graph (2), the amendments made by this Act shall 

25 apply with respect to cases commenced under title 


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1 11 of the United States Code before, on, or after the 

2 date of the enactment of this Act. 

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

4 apply with respect to cases closed under title 11 of 

5 the United States Code as of the date of the enact6 ment of this Act that are neither pending on appeal 

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

8 States. 

Æ 


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