II 

110TH CONGRESS 

2D SESSION S. 3690 

To help struggling families stay in their homes and to ensure that taxpayers 

are protected when the Secretary of the Treasury purchases equity shares 

in financial institutions. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 17 (legislative day, SEPTEMBER 17), 2008 

Mr. DURBIN introduced the following bill; which was read twice and referred 

to the Committee on the Judiciary 

A BILL 

To help struggling families stay in their homes and to ensure 

that taxpayers are protected when the Secretary of the 

Treasury purchases equity shares in financial institutions. 

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 ‘‘Homeowner Assistance 

5 and Taxpayer Protection Act’’. 


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1 TITLE I—ASSISTING 

2 HOMEOWNERS 

3 SEC. 101. RESTRUCTURING LOANS OWNED BY THE GOV4 ERNMENT. 

5 (a) MORTGAGES ACQUIRED BY THE SECRETARY.— 

6 Section 109(a) of the Emergency Economic Stabilization 

7 Act of 2008 (division A of Public Law 110–343) is amend8 ed by striking ‘‘encourage’’ and inserting ‘‘require’’. 

9 (b) MORTGAGES HELD BY FEDERAL PROPERTY

10 MANAGERS.—Section 110(b)(1) of the Emergency Eco11 nomic Stabilization Act of 2008 (division A of Public Law 

12 110–343) is amended by striking ‘‘encourage’’ and insert13 ing ‘‘require’’. 

14 (c) OBLIGATIONS SECURED BY MORTGAGES HELD

15 BY FEDERAL PROPERTY MANAGERS.—Section 110(c)(1) 

16 of the Emergency Economic Stabilization Act of 2008 (di17 vision A of Public Law 110–343) is amended by striking 

18 ‘‘encourage’’ and inserting ‘‘require’’. 

19 SEC. 102. REQUIRING LENDERS TO PARTICIPATE IN HOPE 

20 FOR HOMEOWNERS PROGRAM WHEN HOME21 OWNERS ELECT TO PARTICIPATE. 

22 Section 257(b)(1) of the National Housing Act (12 

23 U.S.C. 1715z–23(b)(1)) is amended by striking ‘‘and ex24 isting loan holders’’ and inserting ‘‘, but required on the 

25 part of existing loan holders when homeowners apply,’’. 


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1 SEC. 103. HELPING FAMILIES SAVE THEIR HOMES IN BANK2 RUPTCY. 

3 (a) SPECIAL RULES FOR MODIFICATION OF LOANS

4 SECURED BY RESIDENCES.— 

5 (1) IN GENERAL.—Section 1322(b) of title 11, 

6 United States Code, is amended— 

7 (A) in paragraph (10), by striking ‘‘and’’ 

8 at the end; 

9 (B) by redesignating paragraph (11) as 

10 paragraph (12); and 

11 (C) by inserting after paragraph (10) the 

12 following: 

13 ‘‘(11) notwithstanding paragraph (2) and other14 wise applicable nonbankruptcy law— 

15 ‘‘(A) modify an allowed secured claim se16 cured by the debtor’s principal residence, as de17 scribed in subparagraph (B), if, after deduction 

18 from the debtor’s current monthly income of 

19 the expenses permitted for debtors described in 

20 section 1325(b)(3) of this title (other than 

21 amounts contractually due to creditors holding 

22 such allowed secured claims and additional pay23 ments necessary to maintain possession of that 

24 residence), the debtor has insufficient remain25 ing income to retain possession of the residence 

26 by curing a default and maintaining payments 


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1 while the case is pending, as provided under 

2 paragraph (5); and 

3 ‘‘(B) provide for payment of such claim— 

4 ‘‘(i) in an amount equal to the 

5 amount of the allowed secured claim; 

6 ‘‘(ii) for a period that is not longer 

7 than 40 years; and 

8 ‘‘(iii) at a rate of interest accruing 

9 after such date calculated at a fixed an10 nual percentage rate, in an amount equal 

11 to the most recently published annual yield 

12 on conventional mortgages published by 

13 the Board of Governors of the Federal Re14 serve System, as of the applicable time set 

15 forth in the rules of the Board, plus a rea16 sonable premium for risk; and’’. 

17 (2) CONFORMING AMENDMENT.—Section 

18 1325(a)(5) of title 11, United States Code, is 

19 amended by inserting before ‘‘with respect’’ the fol20 lowing: ‘‘except as otherwise provided in section 

21 1322(b)(11) of this title,’’. 

22 (b) WAIVER OF COUNSELING REQUIREMENT WHEN

23 HOMES ARE IN FORECLOSURE.—Section 109(h) of title 

24 11, United States Code, is amended by adding at the end 

25 the following: 


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1 ‘‘(5) The requirements of paragraph (1) shall 

2 not apply with respect to a debtor who files with the 

3 court a certification that a foreclosure sale of the 

4 debtor’s principal residence has been scheduled.’’. 

5 (c) COMBATING EXCESSIVE FEES.—Section 1322(c) 

6 of title 11, the United States Code, is amended— 

7 (1) in paragraph (1), by striking ‘‘and’’ at the 

8 end; 

9 (2) in paragraph (2), by striking the period at 

10 the end and inserting a semicolon; and 

11 (3) by adding at the end the following: 

12 ‘‘(3) the plan need not provide for the payment 

13 of, and the debtor, the debtor’s property, and prop14 erty of the estate shall not be liable for, any fee, 

15 cost, or charge, notwithstanding section 506(b), that 

16 arises in connection with a claim secured by the 

17 debtor’s principal residence if the event that gives 

18 rise to such fee, cost, or charge occurs while the case 

19 is pending but before the discharge order, except to 

20 the extent that— 

21 ‘‘(A) notice of such fees, costs, or charges 

22 is filed with the court, and served on the debtor 

23 and the trustee, before the expiration of the 

24 earlier of— 


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1 ‘‘(i) 1 year after the event that gives 

2 rise to such fee, cost, or charge occurs; or 

3 ‘‘(ii) 60 days before the closing of the 

4 case; and 

5 ‘‘(B) such fees, costs, or charges are law6 ful, reasonable, and provided for in the agree7 ment under which such claim or security inter8 est arose; 

9 ‘‘(4) the failure of a party to give notice de10 scribed in paragraph (3) shall be deemed a waiver 

11 of any claim for fees, costs, or charges described in 

12 paragraph (3) for all purposes, and any attempt to 

13 collect such fees, costs, or charges shall constitute a 

14 violation of section 524(a)(2) of this title or, if the 

15 violation occurs before the date of discharge, of sec16 tion 362(a) of this title; and 

17 ‘‘(5) a plan may provide for the waiver of any 

18 prepayment penalty on a claim secured by the prin19 cipal residence of the debtor.’’. 

20 (d) PROHIBITING CLAIMS ARISING FROM VIOLA21 TIONS OF CONSUMER PROTECTION LAWS.—Section 

22 502(b) of title 11, United States Code, is amended— 

23 (1) in paragraph (8), by striking ‘‘or’’ at the 

24 end; 


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1 (2) in paragraph (9), by striking the period at 

2 the end and inserting ‘‘; or’’; and 

3 (3) by adding at the end the following: 

4 ‘‘(10) such claim includes a request for dam5 ages or rescission based on a failure to comply with 

6 the Truth in Lending Act (15 U.S.C. 1601 et seq.), 

7 or any other provision of applicable State or Federal 

8 consumer protection law in force when the failure to 

9 comply occurred, notwithstanding a prior entry of a 

10 foreclosure judgment.’’. 

11 (e) APPLICATION OF AMENDMENTS.—The amend12 ments made to title 11, United States Code, by this sec13 tion shall apply with respect to cases commenced under 

14 that title 11 on or after the date of enactment of this Act, 

15 or pending on the date of enactment of this Act. 

16 TITLE II—PROTECTING 

17 TAXPAYERS 

18 SEC. 201. BARRING DIVIDEND INCREASES. 

19 Section 113(d) of the Emergency Economic Stabiliza20 tion Act of 2008 (division A of Public Law 110–343) is 

21 amended by adding at the end the following: 

22 ‘‘(4) DIVIDENDS.—If the Secretary purchases 

23 troubled assets under the authority of this Act, the 

24 financial institutions from which such assets are 

25 purchased may not pay dividends in a cumulative 


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1 amount that is higher in the current or a future fis2 cal year than the cumulative dividends paid in the 

3 fiscal year immediately preceding the sale of the 

4 troubled assets until such time as the troubled as5 sets are no longer owned by the Secretary.’’. 

6 SEC. 202. REDUCING DIVIDENDS TO PAY FOR EXCESSIVE 

7 EXECUTIVE COMPENSATION. 

8 Section 111(b)(2) of the Emergency Economic Sta9 bilization Act of 2008 (Public Law 110–343) is amend10 ed— 

11 (1) in subparagraph (B), by striking ‘‘and’’ at 

12 the end; 

13 (2) in subparagraph (C), by striking the period 

14 at the end and inserting ‘‘; and’’; and 

15 (3) by adding at the end the following: 

16 ‘‘(D) a reduction in dividends paid by the 

17 institution in its next fiscal year equal to the 

18 executive compensation paid to senior executive 

19 officers in excess of $500,000 per officer in the 

20 current fiscal year.’’. 

Æ 


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