I 

111TH CONGRESS 

1ST SESSION H. R. 788 

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 

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, 

3 SECTION 1. SERVICER SAFE HARBOR. 

4 (a) SAFE HARBOR.— 

5 (1) LOAN MODIFICATIONS AND WORKOUT

6 PLANS.—Notwithstanding any other provision of 

7 law, and notwithstanding any investment contract 

8 between a servicer and a securitization vehicle or in9 vestor, a servicer that acts consistent with the duty 


pwalker on PROD1PC71 with BILLS
2 

•HR 788 IH

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

2 (15 U.S.C. 1639a) shall not be liable for entering 

3 into a loan modification or workout plan with re4 spect to any such mortgage that meets all of the cri5 teria set forth in paragraph (2)(B) to— 

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

7 ownership of a residential mortgage loan or any 

8 interest in a pool of residential mortgage loans 

9 or in securities that distribute payments out of 

10 the principal, interest and other payments in 

11 loans on the pool; 

12 (B) any person who is obligated to make 

13 payments determined in reference to any loan 

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

15 or 

16 (C) any person that insures any loan or 

17 any interest referred to in subparagraph (A) 

18 under any law or regulation of the United 

19 States or any law or regulation of any State or 

20 political subdivision of any State. 

21 (2) ABILITY TO MODIFY MORTGAGES.— 

22 (A) ABILITY.—Notwithstanding any other 

23 provision of law, and notwithstanding any in24 vestment contract between a servicer and a 

25 securitization vehicle or investor, a servicer— 


pwalker on PROD1PC71 with BILLS
3 

•HR 788 IH

1 (i) shall not be limited in the ability 

2 to modify mortgages, the number of mort3 gages that can be modified, the frequency 

4 of loan modifications, or the range of per5 missible modifications; and 

6 (ii) shall not be obligated to repur7 chase loans from or otherwise make pay8 ments to the securitization vehicle on ac9 count of a modification, workout, or other 

10 loss mitigation plan for a residential mort11 gage or a class of residential mortgages 

12 that constitute a part or all of the mort13 gages in the securitization vehicle, 

14 if any mortgage so modified meets all of the cri15 teria set forth in subparagraph (B). 

16 (B) CRITERIA.—The criteria under this 

17 subparagraph with respect to a mortgage are as 

18 follows: 

19 (i) Default on the payment of such 

20 mortgage has occurred or is reasonably 

21 foreseeable. 

22 (ii) The property securing such mort23 gage is occupied by the mortgagor of such 

24 mortgage. 


pwalker on PROD1PC71 with BILLS
4 

•HR 788 IH

1 (iii) The servicer reasonably and in 

2 good faith believes that the anticipated re3 covery on the principal outstanding obliga4 tion of the mortgage under the particular 

5 modification or workout plan or other loss 

6 mitigation action will exceed, on a net 

7 present value basis, the anticipated recov8 ery on the principal outstanding obligation 

9 of the mortgage to be realized through 

10 foreclosure. 

11 (3) APPLICABILITY.—This subsection shall 

12 apply only with respect to modifications, workouts, 

13 and other loss mitigation plans initiated before Jan14 uary 1, 2012. 

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

16 modifications or workout plans subject to the safe harbor 

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

18 basis regarding the extent, scope and results of the 

19 servicer’s modification activities. The Secretary shall pre20 scribe regulations specifying the form, content, and timing 

21 of such reports. 

22 (c) DEFINITION OF SECURITIZATION VEHICLES.— 

23 For purposes of this section, the term ‘‘securitization vehi24 cle’’ means a trust, corporation, partnership, limited liabil25 ity entity, special purpose entity, or other structure that— 


pwalker on PROD1PC71 with BILLS
5 

•HR 788 IH

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

2 mortgage pass-through certificates, participation cer3 tificates, mortgage-backed securities, or other similar 

4 securities backed by a pool of assets that includes 

5 residential mortgage loans; and 

6 (2) holds such mortgages. 

Æ 


pwalker on PROD1PC71 with BILLS