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Union Calendar No. 5 

111TH CONGRESS 

1ST SESSION H. R. 788 

[Report No. 111–13] 

To provide a safe harbor for mortgage servicers who engage in specified 

mortgage loan modifications, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 2, 2009 

Mr. KANJORSKI (for himself, Mr. CASTLE, and Mr. FRANK of Massachusetts) 

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

FEBRUARY 10, 2009 

Additional sponsor: Mr. CAPUANO

FEBRUARY 10, 2009 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on February 2, 2009] 

A BILL 

To provide a safe harbor for mortgage servicers who engage 

in specified mortgage loan modifications, 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, 


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1 SECTION 1. SERVICER SAFE HARBOR. 

2 (a) SAFE HARBOR.— 

3 (1) LOAN MODIFICATIONS AND WORKOUT

4 PLANS.—Notwithstanding any other provision of law, 

5 and notwithstanding any investment contract between 

6 a servicer and a securitization vehicle or investor, a 

7 servicer that acts consistent with the duty set forth in 

8 section 129A(a) of Truth in Lending Act (15 U.S.C. 

9 1639a) shall not be liable for entering into a loan 

10 modification or workout plan with respect to any 

11 such mortgage that meets all of the criteria set forth 

12 in paragraph (2)(B) to— 

13 (A) any person, based on that person’s own14 ership of a residential mortgage loan or any in15 terest in a pool of residential mortgage loans or 

16 in securities that distribute payments out of the 

17 principal, interest and other payments in loans 

18 on the pool; 

19 (B) any person who is obligated pursuant 

20 to a derivatives instrument to make payments 

21 determined in reference to any loan or any in22 terest referred to in subparagraph (A); or 

23 (C) any person that insures any loan or 

24 any interest referred to in subparagraph (A) 

25 under any law or regulation of the United States 


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1 or any law or regulation of any State or polit2 ical subdivision of any State. 

3 (2) ABILITY TO MODIFY MORTGAGES.— 

4 (A) ABILITY.—Notwithstanding any other 

5 provision of law, and notwithstanding any in6 vestment contract between a servicer and a 

7 securitization vehicle or investor, a servicer— 

8 (i) shall not be limited in the ability to 

9 modify mortgages, the number of mortgages 

10 that can be modified, the frequency of loan 

11 modifications, or the range of permissible 

12 modifications; and 

13 (ii) shall not be obligated to repurchase 

14 loans from or otherwise make payments to 

15 the securitization vehicle on account of a 

16 modification, workout, or other loss mitiga17 tion plan for a residential mortgage or a 

18 class of residential mortgages that constitute 

19 a part or all of the mortgages in the 

20 securitization vehicle, 

21 if any mortgage so modified meets all of the cri22 teria set forth in subparagraph (B). 

23 (B) CRITERIA.—The criteria under this 

24 subparagraph with respect to a mortgage are as 

25 follows: 


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1 (i) Default on the payment of such 

2 mortgage has occurred or is reasonably fore3 seeable. 

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 recovery 

14 on the principal outstanding obligation of 

15 the mortgage to be realized through fore16 closure. 

17 (3) APPLICABILITY.—This subsection shall apply 

18 only with respect to modifications, workouts, and 

19 other loss mitigation plans initiated before January 

20 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 servicer’s 

25 modification activities. The Secretary shall prescribe reguVerDate Nov 24 2008 00:07 Feb 11, 2009 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H788.RH H788

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1 lations specifying the form, content, and timing of such re2 ports. 

3 (c) DEFINITION OF SECURITIZATION VEHICLES.—For 

4 purposes of this section, the term ‘‘securitization vehicle’’ 

5 means a trust, corporation, partnership, limited liability 

6 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 resi11 dential mortgage loans; and 

12 (2) holds such mortgages. 


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Union Calendar No. 5 

111TH CONGRESS 

1ST SESSION H. R. 788 

[Report No. 111–13] 

A BILL 

To provide a safe harbor for mortgage servicers 

tions, and for other purposes. who engage in specified mortgage loan modificaFEBRUARY 10, 2009 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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