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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3958 Introduced in House (IH)]

<DOC>

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``FHA Foreclosure Prevention Act of 
2019''.

SEC. 2. DOCUMENTATION OF LOSS MITIGATION EFFORTS.

    Subsection (a) of section 204 of the National Housing Act (12 
U.S.C. 1710(a)) is amended by adding at the end the following new 
paragraph:
            ``(10) Documentation of loss mitigation efforts.--
        Notwithstanding any other provision of this title, the 
        Secretary may not pay insurance benefits to any mortgagee of a 
        single family mortgage insured under this Act unless the 
        mortgagee or other servicer for the mortgage has provided 
        documentation to the Secretary that is sufficient to 
        demonstrate compliance with any requirements of the Secretary 
        applicable to such mortgage relating to loss mitigation. This 
        paragraph may not be construed to limit the authority of the 
        Secretary to impose civil monetary penalties.''.

SEC. 3. HUD OVERSIGHT OF SERVICERS.

    Section 533 of the National Housing Act (12 U.S.C. 1735f-11) is 
amended by adding at the end the following new subsection:
    ``(d) Oversight of Mortgage Servicers.--
            ``(1) Oversight.--
                    ``(A) In general.--The Secretary shall conduct 
                oversight of servicers of single family mortgages 
                insured under this Act on a regular and ongoing basis 
                and in a manner designed to ensure that such servicers 
                comply with the requirements of this Act and the 
                standards and guidelines established by the Secretary 
                for servicing of such mortgages and to identify 
                systemic problems and trends with such compliance.
                    ``(B) Loss mitigation requirements.--Such oversight 
                shall include oversight designed to ensure that such 
                servicers comply with the requirements under this Act, 
                and the standards and guidelines established by the 
                Secretary, for loss mitigation, and shall include 
                appropriate sampling and review of such servicer 
                compliance, including direct information collection 
                through generally accepted means from borrowers whose 
                files were sampled, such as surveys, focus groups, 
                interview, or other similar measures.
            ``(2) Corrective action.--The Secretary shall take such 
        actions as may be necessary to remedy failures by servicers of 
        single family mortgages insured under this Act to comply with 
        the requirements of this Act and the standards and guidelines 
        established by the Secretary for servicing of such mortgages, 
        including ordering non-compliant servicers to take corrective 
        actions, including barring foreclosure and cancelling from the 
        borrowers account balance and from any insurance claim any 
        interest and other fees that accrued during periods of 
        noncompliance.''.

SEC. 4. COMPLAINT PROCEDURE REGARDING LOSS MITIGATION.

    Title V of the National Housing Act (12 U.S.C. 1731a et seq.) is 
amended by adding at the end the following new section:

``SEC. 543. COMPLAINT PROCEDURE REGARDING LOSS MITIGATION.

    ``(a) Complaint Procedure for Borrowers.--
            ``(1) Features.--The Secretary shall establish and maintain 
        a procedure for mortgagors under single family mortgages 
        insured under this Act to register complaints with the 
        Secretary regarding servicing, including loss mitigation 
        actions, which shall include making available to the public a 
        website of the Department, an e-mail address, a phone number, 
        and a mailing address for such purpose. Such procedure shall 
        provide an opportunity for servicers to respond to such 
        complaints and submit information regarding complaints.
            ``(2) Attempt to resolve.--For each complaint registered 
        under the procedure established pursuant to this subsection, 
        the Secretary shall review the complaint and any response by 
        the servicer and shall seek to resolve any dispute between the 
        mortgagor and the servicer and make a determination with regard 
        to complaint.
            ``(3) Use of information.--In making any determinations 
        regarding servicers' compliance with the requirements, 
        standards, and guidelines for servicing, including in 
        identifying systemic problems and trends with servicing, the 
        Secretary shall take into consideration information obtained 
        under the complaint procedure under this subsection.
    ``(b) Notification of Opportunity To Appeal.--Upon making a 
determination with respect to a complaint, the Secretary shall notify 
the complainant of such determination, of the opportunity for the 
complainant to appeal an adverse determination under the procedure 
established pursuant to subsection (a), and the requirements for and 
how to initiate such an appeal.
    ``(c) Appeals Procedure.--
            ``(1) Establishment.--The Secretary shall provide a 
        procedure for mortgagors to appeal an adverse determination by 
        the Secretary regarding a complaint registered under the 
        procedure established pursuant to subsection (a), and, if 
        appropriate, may take action pursuant to section 533(d)(2) 
        pursuant to a decision on such an appeal.
            ``(2) Limitation.--The Secretary shall provide that the 
        procedure established pursuant to this subsection may not 
        provide an appeal for any complaint that was previously 
        appealed under such procedure.
    ``(d) Prohibition on Foreclosure.--The Secretary shall prohibit the 
foreclosure of a mortgage during any period that a complaint or appeal 
regarding such mortgage is pending under the procedures established 
pursuant to this section and during a reasonable period after a 
complainant is notified of a determination regarding a complaint that 
provides the complainant an opportunity to appeal such decision.
    ``(e) Reporting.--The Secretary shall submit a report to the 
Congress annually regarding complaints received under the procedure 
maintained pursuant to subsection (a), which shall specify the number 
of complaints received, disaggregated by types of complaints, status of 
complaints, geographic distribution of complaints, and average times 
for resolution of complaints, shall include relevant information 
submitted by servicers, and shall include any other information that 
the Secretary considers relevant. Such report shall comply with any 
applicable privacy protections.''.

SEC. 5. NOTICE TO BORROWERS OF LOSS MITIGATION STATUS AND DECISIONS.

    Subsection (a) of section 204 of the National Housing Act (12 
U.S.C. 1710(a)), as amended by the preceding provisions of this Act, is 
further amended by adding at the end the following new paragraph:
            ``(11) Notice to borrowers of loss mitigation status and 
        decisions.--
                    ``(A) Required notice.--The Secretary shall require 
                that before any acceleration of the indebtedness due 
                under a mortgage, the servicer for the mortgage shall 
                provide written notice to the mortgagor that includes--
                            ``(i) a summary explaining how the servicer 
                        applied the loss mitigation option priority 
                        analysis established by the Secretary, 
                        including the loss mitigation review waterfall 
                        under section III.A.2.j.iii of the Secretary's 
                        Handbook 4000.1 or any successor provision, and 
                        setting forth the actual information entered in 
                        applying such analysis;
                            ``(ii) with respect to any mortgage for 
                        which the servicer did not conduct the analysis 
                        referred to in clause (i) because the servicer 
                        determined that the mortgagor did not express 
                        any interest in loss mitigation or provide 
                        appropriate documents--
                                    ``(I) a statement of such 
                                determination;
                                    ``(II) a description of the actions 
                                that the servicer took to solicit the 
                                borrower for loss mitigation review and 
                                obtain appropriate documents; and
                                    ``(III) a statement of the dates 
                                that the servicer took such actions; 
                                and
                            ``(iii) a statement setting forth the 
                        results of the servicers' monthly loss 
                        mitigation evaluations for the mortgage 
                        required under section 203.605(a) of the 
                        Secretary's regulations (24 C.F.R. 203.605(a)) 
                        or any successor provision;
                            ``(iv) with respect to any loss mitigation 
                        action for which the mortgagor was determined 
                        to be ineligible, an explanation of, and 
                        documentation showing, why the mortgagor was 
                        determined to be ineligible;
                            ``(v) a statement informing the borrower 
                        that, upon the request of the borrower, the 
                        Secretary will provide the borrower with all 
                        loss mitigation evaluation documentation 
                        required by the Secretary with respect to the 
                        mortgage, including monthly evaluations 
                        referred to in clause (iii); and
                            ``(vi) information describing the procedure 
                        under section 543(a) for registering complaints 
                        regarding loss mitigation and the procedure 
                        under section 543(c) for appealing a servicer's 
                        decisions regarding loss mitigation actions.
                    ``(B) References.--Such notice shall contain 
                references to the applicable provisions of applicable 
                handbook of the Secretary regarding ongoing loss 
                mitigation reviews and standards for such reviews and 
                shall identify how such provisions may be accessed on a 
                publicly accessible website of the Department.''.

SEC. 6. RULE OF CONSTRUCTION.

    Nothing in this Act may be construed to supercede, or exempt any 
person from complying with, any provision of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2601 et seq.) or the regulations 
issued under such Act.
                                 <all>
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