I 

116TH CONGRESS 

1ST SESSION H. R. 3958 

To make necessary reforms to improve compliance with loss mitigation requirements by servicers of mortgages for single family housing insured 

by the FHA and to prevent foreclosures on FHA borrowers, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 25, 2019 

Ms. WATERS (for herself, Mrs. CAROLYN B. MALONEY of New York, Mr. 

CLAY, Ms. TLAIB, Mr. FOSTER, and Mr. CLEAVER) introduced the following bill; which was referred to the Committee on Financial Services 

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 to prevent 

foreclosures on FHA borrowers, 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. SHORT TITLE. 

4 This Act may be cited as the ‘‘FHA Foreclosure Pre5 vention Act of 2019’’. 


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1 SEC. 2. DOCUMENTATION OF LOSS MITIGATION EFFORTS. 

2 Subsection (a) of section 204 of the National Hous3 ing Act (12 U.S.C. 1710(a)) is amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(10) DOCUMENTATION OF LOSS MITIGATION

6 EFFORTS.—Notwithstanding any other provision of 

7 this title, the Secretary may not pay insurance bene8 fits to any mortgagee of a single family mortgage in9 sured under this Act unless the mortgagee or other 

10 servicer for the mortgage has provided documenta11 tion to the Secretary that is sufficient to dem12 onstrate compliance with any requirements of the 

13 Secretary applicable to such mortgage relating to 

14 loss mitigation. This paragraph may not be con15 strued to limit the authority of the Secretary to im16 pose civil monetary penalties.’’. 

17 SEC. 3. HUD OVERSIGHT OF SERVICERS. 

18 Section 533 of the National Housing Act (12 U.S.C. 

19 1735f–11) is amended by adding at the end the following 

20 new subsection: 

21 ‘‘(d) OVERSIGHT OF MORTGAGE SERVICERS.— 

22 ‘‘(1) OVERSIGHT.— 

23 ‘‘(A) IN GENERAL.—The Secretary shall 

24 conduct oversight of servicers of single family 

25 mortgages insured under this Act on a regular 

26 and ongoing basis and in a manner designed to 


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1 ensure that such servicers comply with the re2 quirements of this Act and the standards and 

3 guidelines established by the Secretary for serv4 icing of such mortgages and to identify systemic 

5 problems and trends with such compliance. 

6 ‘‘(B) LOSS MITIGATION REQUIREMENTS.— 

7 Such oversight shall include oversight designed 

8 to ensure that such servicers comply with the 

9 requirements under this Act, and the standards 

10 and guidelines established by the Secretary, for 

11 loss mitigation, and shall include appropriate 

12 sampling and review of such servicer compli13 ance, including direct information collection 

14 through generally accepted means from bor15 rowers whose files were sampled, such as sur16 veys, focus groups, interview, or other similar 

17 measures. 

18 ‘‘(2) CORRECTIVE ACTION.—The Secretary 

19 shall take such actions as may be necessary to rem20 edy failures by servicers of single family mortgages 

21 insured under this Act to comply with the require22 ments of this Act and the standards and guidelines 

23 established by the Secretary for servicing of such 

24 mortgages, including ordering non-compliant servi25 cers to take corrective actions, including barring 


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1 foreclosure and cancelling from the borrowers ac2 count balance and from any insurance claim any in3 terest and other fees that accrued during periods of 

4 noncompliance.’’. 

5 SEC. 4. COMPLAINT PROCEDURE REGARDING LOSS MITI6 GATION. 

7 Title V of the National Housing Act (12 U.S.C. 

8 1731a et seq.) is amended by adding at the end the fol9 lowing new section: 

10 ‘‘SEC. 543. COMPLAINT PROCEDURE REGARDING LOSS 

11 MITIGATION. 

12 ‘‘(a) COMPLAINT PROCEDURE FOR BORROWERS.— 

13 ‘‘(1) FEATURES.—The Secretary shall establish 

14 and maintain a procedure for mortgagors under sin15 gle family mortgages insured under this Act to reg16 ister complaints with the Secretary regarding serv17 icing, including loss mitigation actions, which shall 

18 include making available to the public a website of 

19 the Department, an e-mail address, a phone number, 

20 and a mailing address for such purpose. Such proce21 dure shall provide an opportunity for servicers to re22 spond to such complaints and submit information re23 garding complaints. 

24 ‘‘(2) ATTEMPT TO RESOLVE.—For each com25 plaint registered under the procedure established 


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1 pursuant to this subsection, the Secretary shall re2 view the complaint and any response by the servicer 

3 and shall seek to resolve any dispute between the 

4 mortgagor and the servicer and make a determina5 tion with regard to complaint. 

6 ‘‘(3) USE OF INFORMATION.—In making any 

7 determinations regarding servicers’ compliance with 

8 the requirements, standards, and guidelines for serv9 icing, including in identifying systemic problems and 

10 trends with servicing, the Secretary shall take into 

11 consideration information obtained under the com12 plaint procedure under this subsection. 

13 ‘‘(b) NOTIFICATION OF OPPORTUNITY TO APPEAL.— 

14 Upon making a determination with respect to a complaint, 

15 the Secretary shall notify the complainant of such deter16 mination, of the opportunity for the complainant to appeal 

17 an adverse determination under the procedure established 

18 pursuant to subsection (a), and the requirements for and 

19 how to initiate such an appeal. 

20 ‘‘(c) APPEALS PROCEDURE.— 

21 ‘‘(1) ESTABLISHMENT.—The Secretary shall 

22 provide a procedure for mortgagors to appeal an ad23 verse determination by the Secretary regarding a 

24 complaint registered under the procedure established 

25 pursuant to subsection (a), and, if appropriate, may 


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1 take action pursuant to section 533(d)(2) pursuant 

2 to a decision on such an appeal. 

3 ‘‘(2) LIMITATION.—The Secretary shall provide 

4 that the procedure established pursuant to this sub5 section may not provide an appeal for any complaint 

6 that was previously appealed under such procedure. 

7 ‘‘(d) PROHIBITION ON FORECLOSURE.—The Sec8 retary shall prohibit the foreclosure of a mortgage during 

9 any period that a complaint or appeal regarding such 

10 mortgage is pending under the procedures established pur11 suant to this section and during a reasonable period after 

12 a complainant is notified of a determination regarding a 

13 complaint that provides the complainant an opportunity 

14 to appeal such decision. 

15 ‘‘(e) REPORTING.—The Secretary shall submit a re16 port to the Congress annually regarding complaints re17 ceived under the procedure maintained pursuant to sub18 section (a), which shall specify the number of complaints 

19 received, disaggregated by types of complaints, status of 

20 complaints, geographic distribution of complaints, and av21 erage times for resolution of complaints, shall include rel22 evant information submitted by servicers, and shall in23 clude any other information that the Secretary considers 

24 relevant. Such report shall comply with any applicable pri25 vacy protections.’’. 


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1 SEC. 5. NOTICE TO BORROWERS OF LOSS MITIGATION STA2 TUS AND DECISIONS. 

3 Subsection (a) of section 204 of the National Hous4 ing Act (12 U.S.C. 1710(a)), as amended by the preceding 

5 provisions of this Act, is further amended by adding at 

6 the end the following new paragraph: 

7 ‘‘(11) NOTICE TO BORROWERS OF LOSS MITIGA8 TION STATUS AND DECISIONS.— 

9 ‘‘(A) REQUIRED NOTICE.—The Secretary 

10 shall require that before any acceleration of the 

11 indebtedness due under a mortgage, the servicer 

12 for the mortgage shall provide written notice to 

13 the mortgagor that includes— 

14 ‘‘(i) a summary explaining how the 

15 servicer applied the loss mitigation option 

16 priority analysis established by the Sec17 retary, including the loss mitigation review 

18 waterfall under section III.A.2.j.iii of the 

19 Secretary’s Handbook 4000.1 or any suc20 cessor provision, and setting forth the ac21 tual information entered in applying such 

22 analysis; 

23 ‘‘(ii) with respect to any mortgage for 

24 which the servicer did not conduct the 

25 analysis referred to in clause (i) because 

26 the servicer determined that the mortgagor 


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1 did not express any interest in loss mitiga2 tion or provide appropriate documents— 

3 ‘‘(I) a statement of such deter4 mination; 

5 ‘‘(II) a description of the actions 

6 that the servicer took to solicit the 

7 borrower for loss mitigation review 

8 and obtain appropriate documents; 

9 and 

10 ‘‘(III) a statement of the dates 

11 that the servicer took such actions; 

12 and 

13 ‘‘(iii) a statement setting forth the re14 sults of the servicers’ monthly loss mitiga15 tion evaluations for the mortgage required 

16 under section 203.605(a) of the Sec17 retary’s regulations (24 C.F.R. 

18 203.605(a)) or any successor provision; 

19 ‘‘(iv) with respect to any loss mitiga20 tion action for which the mortgagor was 

21 determined to be ineligible, an explanation 

22 of, and documentation showing, why the 

23 mortgagor was determined to be ineligible; 

24 ‘‘(v) a statement informing the bor25 rower that, upon the request of the borVerDate Sep 11 2014 23:35 Aug 03, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3958.IH H3958

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1 rower, the Secretary will provide the bor2 rower with all loss mitigation evaluation 

3 documentation required by the Secretary 

4 with respect to the mortgage, including 

5 monthly evaluations referred to in clause 

6 (iii); and 

7 ‘‘(vi) information describing the proce8 dure under section 543(a) for registering 

9 complaints regarding loss mitigation and 

10 the procedure under section 543(c) for ap11 pealing a servicer’s decisions regarding loss 

12 mitigation actions. 

13 ‘‘(B) REFERENCES.—Such notice shall 

14 contain references to the applicable provisions 

15 of applicable handbook of the Secretary regard16 ing ongoing loss mitigation reviews and stand17 ards for such reviews and shall identify how 

18 such provisions may be accessed on a publicly 

19 accessible website of the Department.’’. 

20 SEC. 6. RULE OF CONSTRUCTION. 

21 Nothing in this Act may be construed to supercede, 

22 or exempt any person from complying with, any provision 

23 of the Real Estate Settlement Procedures Act of 1974 (12 


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1 U.S.C. 2601 et seq.) or the regulations issued under such 

2 Act. 

Æ 


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