I 

111TH CONGRESS 

1ST SESSION H. R. 703 

To promote bank liquidity and lending through deposit insurance, the HOPE 

for Homeowners Program, and other enhancements. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 27, 2009 

Mr. FRANK of Massachusetts introduced the following bill; which was referred 

to the Committee on Financial Services 

A BILL 

To promote bank liquidity and lending through deposit insurance, the HOPE for Homeowners Program, and other 

enhancements. 

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

3 SECTION 1. PERMANENT INCREASE IN DEPOSIT INSUR4 ANCE. 

5 (a) AMENDMENTS TO FEDERAL DEPOSIT INSURANCE

6 ACT.—Section 11(a)(1) of the Federal Deposit Insurance 

7 Act (12 U.S.C. 1821(a)) is amended— 

8 (1) in paragraph (1)(E), by striking 

9 ‘‘$100,000’’ and inserting ‘‘$250,000’’; 


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1 (2) in paragraph (1)(F)(i), by striking ‘‘2010’’ 

2 and inserting ‘‘2015’’; 

3 (3) in subclause (I) of paragraph (1)(F)(i), by 

4 striking ‘‘$100,000’’ and inserting ‘‘$250,000’’; 

5 (4) in subclause (II) of paragraph (1)(F)(i), by 

6 striking ‘‘the calendar year preceding the date this 

7 subparagraph takes effect under the Federal Deposit 

8 Insurance Reform Act of 2005’’ and inserting ‘‘cal9 endar year 2008’’; and 

10 (5) in paragraph (3)(A)(iii), by striking ‘‘, ex11 cept that $250,000 shall be substituted for $100,000 

12 wherever such term appears in such paragraph’’. 

13 (b) REPEAL OF EESA PROVISION.—Section 136 of 

14 the Emergency Economic Stabilization Act (Public Law 

15 110–343; 122 Stat. 3765) is hereby repealed. 

16 (c) AMENDMENT TO FEDERAL CREDIT UNION

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

18 (12 U.S.C. 1787(k)) is amended— 

19 (1) in paragraph (3)— 

20 (A) by striking the opening quotation mark 

21 before ‘‘$250,000’’; 

22 (B) by striking ‘‘, except that $250,000 

23 shall be substituted for $100,000 wherever such 

24 term appears in such section’’; and 


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1 (C) by striking the closing quotation mark 

2 after the closing parenthesis; and 

3 (2) in paragraph (5), by striking ‘‘$100,000’’ 

4 and inserting ‘‘$250,000’’. 

5 SEC. 2. EXTENSION OF RESTORATION PLAN PERIOD. 

6 Section 7(b)(3)(E)(ii) of the Federal Deposit Insur7 ance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by 

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

9 SEC. 3. FDIC BORROWING AUTHORITY. 

10 Section 14(a) of the Federal Deposit Insurance Act 

11 (12 U.S.C. 1824(a)) is amended— 

12 (1) by striking ‘‘$30,000,000,000’’ and insert13 ing ‘‘$100,000,000,000’’; and 

14 (2) by inserting prior to the last sentence, the 

15 following new sentence: ‘‘The Corporation may re16 quest in writing to borrow, and the Secretary may 

17 authorize and approve the borrowing of, additional 

18 amounts above $100,000,000,000 to the extent that 

19 the Board of Directors and the Secretary determine 

20 such borrowing to be necessary.’’. 

21 SEC. 4. FDIC SYSTEMIC RISK SPECIAL ASSESSMENTS. 

22 Section 13(c)(4)(G)(ii) of the Federal Deposit Insur23 ance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read 

24 as follows: 

25 ‘‘(ii) REPAYMENT OF LOSS.— 


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1 ‘‘(I) IN GENERAL.—The Corpora2 tion shall recover the loss to the De3 posit Insurance Fund arising from 

4 any action taken or assistance pro5 vided with respect to an insured de6 pository institution under clause (i) 

7 from 1 or more special assessments on 

8 insured depository institutions, deposi9 tory institution holding companies 

10 (with the concurrence of the Secretary 

11 of the Treasury with respect to hold12 ing companies), or both, as the Cor13 poration determines to be appropriate. 

14 ‘‘(II) TREATMENT OF DEPOSI15 TORY INSTITUTION HOLDING COMPA16 NIES.—For purposes of this clause, 

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

18 to depository institution holding com19 panies as if they were insured deposi20 tory institutions. 

21 ‘‘(III) REGULATIONS.—The Cor22 poration shall prescribe such regula23 tions as it deems necessary to imple24 ment this clause. In prescribing such 

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1 ting the appropriate assessment rate 

2 or rates, the Corporation shall con3 sider: the types of entities that benefit 

4 from any action taken or assistance 

5 provided under this subparagraph; 

6 economic conditions; the effects on the 

7 industry; and such other factors as 

8 the Corporation deems appropriate.’’. 

9 SEC. 5. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM. 

10 Section 257 of the National Housing Act (12 U.S.C. 

11 1715z–23) is amended— 

12 (1) in subsection (e)— 

13 (A) in paragraph (1), by striking subpara14 graph (B); 

15 (B) in paragraph (2)(B), by striking ‘‘90 

16 percent’’ and inserting ‘‘93 percent’’; 

17 (C) by striking paragraph (7); and 

18 (D) by redesignating paragraphs (8), (9), 

19 (10), and (11) as paragraphs (7), (8), (9), and 

20 (10), respectively; 

21 (2) in subsection (h)(2), by striking ‘‘, or in any 

22 case in which a mortgagor fails to make the first 

23 payment on a refinanced eligible mortgage’’; 

24 (3) by striking subsection (i) and inserting the 

25 following new subsection: 


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1 ‘‘(i) ANNUAL PREMIUMS.— 

2 ‘‘(1) IN GENERAL.—For each refinanced eligible 

3 mortgage insured under this section, the Secretary 

4 shall establish and collect an annual premium in an 

5 amount equal to not less than 0.55 percent of the 

6 amount of the remaining insured principal balance 

7 of the mortgage and not more than 0.75 percent of 

8 such remaining insured principal balance, as deter9 mined according to a schedule established by the 

10 Board that assigns such annual premiums based 

11 upon the credit risk of the mortgage. 

12 ‘‘(2) REDUCTION OR TERMINATION DURING

13 MORTGAGE TERM.—Notwithstanding paragraph (1), 

14 the Secretary may provide that the annual premiums 

15 charged for refinanced eligible mortgages insured 

16 under this section are reduced over the term of the 

17 mortgage or that the collection of such premiums is 

18 discontinued at some time during the term of the 

19 mortgage, in a manner that is consistent with poli20 cies for such reduction or discontinuation of annual 

21 premiums charged for mortgages in accordance with 

22 section 203(c).’’; 

23 (4) in subsection (k)— 

24 (A) by striking the subsection heading and 

25 inserting ‘‘Exit Fee’’; 


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1 (B) in paragraph (1), in the matter pre2 ceding subparagraph (A), by striking ‘‘such sale 

3 or refinancing’’ and inserting ‘‘the mortgage 

4 being insured under this section’’; and 

5 (C) by striking paragraph (2); 

6 (5) in subsection (s)(3)(A)(ii), by striking ‘‘sub7 section (e)(1)(B) and such other’’ and inserting 

8 ‘‘such’’; 

9 (6) in subsection (v), by inserting after the pe10 riod at the end the following: ‘‘The Board shall con11 form documents, forms, and procedures for mort12 gages insured under this section to those in place for 

13 mortgages insured under section 203(b) to the max14 imum extent possible consistent with the require15 ments of this section.’’; 

16 (7) in subsection (w)(1)(C), by striking 

17 ‘‘(e)(4)(A)’’ and inserting ‘‘(e)(3)(A)’’; and 

18 (8) by adding at the end the following new sub19 section: 

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

21 Board may establish a payment to the servicer of the exist22 ing senior mortgage for every loan insured under the 

23 HOPE for Homeowners Program.’’. 

24 SEC. 6. SERVICER SAFE HARBOR. 

25 (a) SAFE HARBOR.— 


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1 (1) LOAN MODIFICATIONS AND WORKOUT

2 PLANS.—Notwithstanding any other provision of 

3 law, and notwithstanding any investment contract 

4 between a servicer and a securitization vehicle or in5 vestor, a servicer that acts consistent with the duty 

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

7 (15 U.S.C. 1639a) shall not be liable for entering 

8 into a loan modification or workout plan with re9 spect to any such mortgage that meets all of the cri10 teria set forth in paragraph (2)(B) to— 

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

12 ownership of a residential mortgage loan or any 

13 interest in a pool of residential mortgage loans 

14 or in securities that distribute payments out of 

15 the principal, interest and other payments in 

16 loans on the pool; 

17 (B) any person who is obligated to make 

18 payments determined in reference to any loan 

19 or any interest referred to in subparagraph (A); 

20 or 

21 (C) any person that insures any loan or 

22 any interest referred to in subparagraph (A) 

23 under any law or regulation of the United 

24 States or any law or regulation of any State or 

25 political subdivision of any State. 


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1 (2) ABILITY TO MODIFY MORTGAGES.— 

2 (A) ABILITY.—Notwithstanding any other 

3 provision of law, and notwithstanding any in4 vestment contract between a servicer and a 

5 securitization vehicle or investor, a servicer— 

6 (i) shall not be limited in the ability 

7 to modify mortgages, the number of mort8 gages that can be modified, the frequency 

9 of loan modifications, or the range of per10 missible modifications; and 

11 (ii) shall not be obligated to repur12 chase loans from or otherwise make pay13 ments to the securitization vehicle on ac14 count of a modification, workout, or other 

15 loss mitigation plan for a residential mort16 gage or a class of residential mortgages 

17 that constitute a part or all of the mort18 gages in the securitization vehicle, 

19 if any mortgage so modified meets all of the cri20 teria set forth in subparagraph (B). 

21 (B) CRITERIA.—The criteria under this 

22 subparagraph with respect to a mortgage are as 

23 follows: 


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1 (i) Default on the payment of such 

2 mortgage has occurred or is reasonably 

3 foreseeable. 

4 (ii) The property securing such mort5 gage is occupied by the mortgagor of such 

6 mortgage. 

7 (iii) The servicer reasonably and in 

8 good faith believes that the anticipated re9 covery on the principal outstanding obliga10 tion of the mortgage under the particular 

11 modification or workout plan or other loss 

12 mitigation action will exceed, on a net 

13 present value basis, the anticipated recov14 ery on the principal outstanding obligation 

15 of the mortgage to be realized through 

16 foreclosure. 

17 (3) APPLICABILITY.—This subsection shall 

18 apply only with respect to modifications, workouts, 

19 and other loss mitigation plans initiated before Jan20 uary 1, 2012. 

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

22 modifications or workout plans subject to the safe harbor 

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

24 basis regarding the extent, scope and results of the 

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1 scribe regulations specifying the form, content, and timing 

2 of such reports. 

3 (c) DEFINITION OF SECURITIZATION VEHICLES.— 

4 For purposes of this section, the term ‘‘securitization vehi5 cle’’ means a trust, corporation, partnership, limited liabil6 ity entity, special purpose entity, or other structure that— 

7 (1) is the issuer, or is created by the issuer, of 

8 mortgage pass-through certificates, participation cer9 tificates, mortgage-backed securities, or other similar 

10 securities backed by a pool of assets that includes 

11 residential mortgage loans; and 

12 (2) holds such mortgages. 

13 SEC. 7. AVAILABILITY OF TARP FUNDS TO SMALLER COM14 MUNITY INSTITUTIONS. 

15 (a) PROMPT ACTION.—The Secretary shall promptly 

16 take all necessary actions to provide assistance under title 

17 I of the Emergency Economic Stabilization Act of 2008 

18 to smaller community financial institutions, including such 

19 institutions that are privately held. 

20 (b) COMPARABLE TERMS.—An institution that re21 ceives assistance after the date of the enactment of the 

22 this Act, shall do so on terms comparable to the terms 

23 applicable to institutions that received assistance prior to 

24 the date of the enactment of this Act if the institution— 


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1 (1) has submitted an application on which no 

2 action has been taken, such as institutions that are 

3 C corporations (including privately held institutions) 

4 and community development financial institutions; 

5 or 

6 (2) is of a type for which the Secretary has not 

7 yet established an application deadline or for which 

8 any such deadline has not yet occurred as of the 

9 date of the enactment of this Act, such as institu10 tions that are non-stock corporations, S-corpora11 tions, mutually owned insured depository institutions 

12 (as defined in section 3 of the Federal Deposit In13 surance Act). 

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

15 terms ‘‘S Corporation’’ and ‘‘C Corporation’’ shall have 

16 the same meaning given to those terms in section 1361(a) 

17 of the Internal Revenue Code of 1986. 

Æ 


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