I 

111TH CONGRESS 

1ST SESSION H. R. 527 

To amend the Truth in Lending Act to permit deferrals on certain home 

mortgage foreclosures for a limited period to allow homeowners to take 

remedial action, to require home mortgage servicers to provide advance 

notice of any upcoming reset of the mortgage interest rate, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 14, 2009 

Ms. MATSUI (for herself and Ms. CASTOR of Florida) introduced the following 

bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act to permit deferrals 

on certain home mortgage foreclosures for a limited period to allow homeowners to take remedial action, to 

require home mortgage servicers to provide advance notice of any upcoming reset of the mortgage interest rate, 

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 ‘‘Home Retention and 

5 Economic Stabilization Act of 2009’’. 


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1 SEC. 2. FORECLOSURE DEFERMENT. 

2 (a) IN GENERAL.—Chapter 2 of the Truth in Lend3 ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 

4 after section 128 the following new section: 

5 ‘‘§ 128A. Foreclosure deferment and reset notification 

6 for mortgages 

7 ‘‘(a) DEFINITIONS.—For purposes of this section, the 

8 following definitions shall apply: 

9 ‘‘(1) DEFERMENT PAYMENT AMOUNT.—The 

10 term ‘deferment payment amount’ means the 

11 amount of the monthly payment that is due on an 

12 eligible deferred-foreclosure mortgage during the 

13 deferment period. 

14 ‘‘(2) DEFERMENT PERIOD.—The term 

15 ‘deferment period’ means the period that— 

16 ‘‘(A) begins when the eligible consumer 

17 sends notice of the exercise of the deferral right 

18 under subsection (b)(1) with respect to an eligi19 ble deferred-foreclosure mortgage to the cred20 itor or servicer; and 

21 ‘‘(B) ends on the earliest of the following 

22 applicable dates: 

23 ‘‘(i) The date that is 270 days after 

24 the beginning of the period. 

25 ‘‘(ii) The end of the 30-day period be26 ginning on any due date for any deferment 


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1 payment (on such mortgage, in accordance 

2 with this section) which remains unpaid as 

3 of the end of such 30-day period. 

4 ‘‘(iii) The date on which the creditor 

5 or servicer enters into a qualified loan 

6 modification with the consumer. 

7 ‘‘(iv) The date on which the deferment 

8 is terminated by judicial order. 

9 ‘‘(3) DEFERMENT PERIOD TRIGGER.—The term 

10 ‘deferment period trigger’ means the date on which 

11 the consumer becomes eligible for a deferment under 

12 subsection (b)(1) with respect to an eligible deferred13 foreclosure mortgage and occurs on the earlier of— 

14 ‘‘(A) the date of any adjustment or reset 

15 of the interest rate on such mortgage; 

16 ‘‘(B) the date by which the consumer is 60 

17 days delinquent on mortgage payments; or 

18 ‘‘(C) the date of the first increase in the 

19 minimum monthly payment due under such 

20 mortgage after the origination of such mort21 gage. 

22 ‘‘(4) ELIGIBLE DEFERRED-FORECLOSURE

23 MORTGAGE.—The term ‘eligible deferred-foreclosure 

24 mortgage’ means a consumer credit transaction that 


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1 is secured by the principal dwelling of an eligible 

2 consumer that— 

3 ‘‘(A) was entered into before the date of 

4 enactment of this section; and 

5 ‘‘(B) has reached the deferment period 

6 trigger. 

7 ‘‘(5) ELIGIBLE CONSUMER.—The term ‘eligible 

8 consumer’ means a consumer who— 

9 ‘‘(A) is a mortgagor or borrower on an eli10 gible deferred-foreclosure mortgage; 

11 ‘‘(B) has resided at the property secured 

12 by such mortgage since the mortgage trans13 action was entered into and intends to reside at 

14 such property at least until the end of the 

15 deferment period; 

16 ‘‘(C) has a current monthly income that, 

17 when multiplied by 12, is less than 200 percent 

18 of the area median annual income for the rel19 evant family size in the State in which the resi20 dence is located; and 

21 ‘‘(D) during the deferment period, re22 sponds to reasonable inquiries from a creditor 

23 or servicer with respect to an eligible deferred24 foreclosure mortgage. 

25 ‘‘(6) QUALIFIED LOAN MODIFICATION.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 loan modification’ means a permanent, sustain3 able loan modification. 

4 ‘‘(B) FDIC REGULATIONS.—Not later 

5 than 60 days after the date of enactment of the 

6 Home Retention and Economic Stabilization 

7 Act of 2009, the Chairperson of the Federal 

8 Deposit Insurance Corporation shall promulgate 

9 rules establishing under what circumstances a 

10 loan modification will qualify as permanent and 

11 sustainable. 

12 ‘‘(b) RIGHT TO DEFERMENT OF INSTITUTION OF OR

13 ACTION ON FORECLOSURE.— 

14 ‘‘(1) RIGHT ESTABLISHED.—Any eligible de15 ferred-foreclosure consumer shall have the right to 

16 defer any initiation of a foreclosure, whether judicial 

17 or nonjudicial, or any action in connection with a 

18 foreclosure already instituted, including any fore19 closure sale, with respect to any eligible deferred20 foreclosure mortgage by any creditor, servicer, or 

21 holder of such mortgage, or any other person acting 

22 on behalf of any such creditor, servicer, or holder, 

23 until the end of the deferment period. 

24 ‘‘(2) ENFORCEMENT OF RIGHT.—An eligible de25 ferred-foreclosure consumer may defend against a 


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1 foreclosure or bring an action in any court of com2 petent or general jurisdiction to compel compliance 

3 with the right of the consumer under paragraph (1) 

4 to defer any initiation of a foreclosure or any action 

5 in connection with a foreclosure already instituted, 

6 including any foreclosure sale, with respect to any 

7 eligible deferred-foreclosure mortgage. 

8 ‘‘(c) NOTICE TO CONSUMER BEFORE ANY FORE9 CLOSURE ACTION.— 

10 ‘‘(1) NOTICE OF RIGHT REQUIRED.—Before ini11 tiating any foreclosure with respect to any eligible 

12 deferred-foreclosure mortgage, the creditor or 

13 servicer shall notify, by personal service, any eligible 

14 deferred-foreclosure consumer with respect to such 

15 mortgage of such consumer’s right under subsection 

16 (b) to defer the initiation of foreclosure. 

17 ‘‘(2) CONTENTS OF NOTICE.—The Board shall 

18 prescribe, by regulations under sections 105 and 

19 122, the content and format, including the size of 

20 the font, of the notices under paragraph (1) in a 

21 manner that maximizes the likelihood that the con22 sumer will obtain and understand all the information 

23 necessary to exercise the right to defer any action to 

24 institute foreclosure, including— 


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1 ‘‘(A) the manner and format for obtaining 

2 such deferral, including a sample notice form, 

3 an identification form, and a certification form 

4 for the consumer to use in complying with sub5 section (d)(1); 

6 ‘‘(B) contact information for the creditor 

7 or servicer, as the case may be and any third 

8 party involved in foreclosure proceedings, in9 cluding State or local officials; and 

10 ‘‘(C) contact information for obtaining any 

11 counseling concerning the exercise of such de12 ferral from a counselor approved by the appro13 priate State housing finance agency or the Sec14 retary of Housing and Urban Development. 

15 ‘‘(3) TIMING.—No foreclosure action or pro16 ceeding with respect to any eligible deferred-fore17 closure mortgage shall be valid unless the creditor or 

18 servicer has provided the notice required under this 

19 subsection to the consumer at least 30 days before 

20 instituting any such action or proceeding and at 

21 least once during each subsequent 30-day period 

22 until the foreclosure becomes final. 

23 ‘‘(d) INSTITUTION OF DEFERMENT.— 

24 ‘‘(1) PROCEDURE REQUIRED.—Any eligible de25 ferred-foreclosure consumer who chooses to exercise 


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1 a deferment right under subsection (b) shall pro2 vide— 

3 ‘‘(A) notice of the exercise of such to the 

4 servicer or other person described in the notice 

5 to the consumer under subsection (e) by any 

6 reasonable means including by mail, service 

7 whether directly or to any agent, including at 

8 the address of any registered agent; 

9 ‘‘(B) a clear identification of the eligible 

10 deferred-foreclosure consumer and the address 

11 of the property securing the mortgage; and 

12 ‘‘(C) a certification that at least 1 con13 sumer borrower with respect to such mortgage 

14 resides at the property secured by such mort15 gage and intends to reside at such property at 

16 least until the end of the deferment period. 

17 ‘‘(2) SUFFICIENCY OF NOTICE.— 

18 ‘‘(A) IN GENERAL.—Notice and delivery of 

19 an affidavit under paragraph (1) may be made 

20 by any reasonable means including by mail, 

21 service whether directly or to any agent, includ22 ing at the address of any registered agent with 

23 the secretary of state for the State in which the 

24 property is located, or any attorney rep25 resenting the consumer, or by such means as 


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1 the terms of the mortgage or regulations pre2 scribed by the Board may provide. 

3 ‘‘(B) OTHER PARTIES.—If any court, any 

4 sheriff or other official designated under State 

5 law, or any other person authorized under State 

6 law and the contracts of the parties to maintain 

7 any foreclosure proceeding or conduct any fore8 closure sale receives, directly or indirectly, a 

9 copy of any notice provided under this sub10 section by an eligible deferred-foreclosure con11 sumer with respect to any eligible deferred-fore12 closure mortgage, no foreclosure action may be 

13 taken by the court, sheriff, official, or other 

14 person with respect to such mortgage during 

15 the applicable deferred-foreclosure period. 

16 ‘‘(3) ACKNOWLEDGMENT.— 

17 ‘‘(A) IN GENERAL.—Any creditor, servicer, 

18 or holder of an eligible deferred-foreclosure 

19 mortgage, or any other person acting on behalf 

20 of any such creditor, servicer, or holder, who re21 ceives a notice from a consumer under para22 graph (2) shall acknowledge to the consumer 

23 the receipt of the notice of the exercise of the 

24 deferment right under subsection (b) before the 


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1 end of the 10-business day period beginning on 

2 the date of such receipt. 

3 ‘‘(B) CONTENTS OF NOTICE.—The ac4 knowledgment provided to any eligible deferred5 foreclosure consumer under subparagraph (A) 

6 shall include the date on which the next pay7 ment is due on the eligible deferred-foreclosure 

8 mortgage, the deferment payment amount, the 

9 date on which each subsequent payment is due, 

10 and the address or the delivery method for each 

11 such payment that is acceptable to the recipi12 ent. 

13 ‘‘(4) MONTHLY PAYMENT NOTICES.—Each peri14 odic statement of account submitted by the creditor 

15 or servicer with respect to any eligible deferred-fore16 closure mortgage during the period while any 

17 deferment right under subsection (b) is in effect 

18 shall include— 

19 ‘‘(A) the due date and the amount of the 

20 next payment due on such mortgage; 

21 ‘‘(B) the address or the delivery method 

22 for such payment; 

23 ‘‘(C) the date on which the deferral of the 

24 foreclosure will terminate; and 


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1 ‘‘(D) a notice that failure to make such 

2 payment in a timely manner will jeopardize the 

3 continuation of the deferral of the foreclosure. 

4 ‘‘(e) DEFERMENT PAYMENT.— 

5 ‘‘(1) IN GENERAL.—During the deferment pe6 riod with respect to any eligible deferred-foreclosure 

7 mortgage for which any deferment right has been 

8 exercised under subsection (b), monthly payments 

9 shall continue to be made by the consumer with re10 spect to such mortgage. 

11 ‘‘(2) AMOUNT OF PAYMENT.—The deferment 

12 payment amount for purposes of monthly payments 

13 under paragraph (1) with respect to any eligible de14 ferred-foreclosure mortgage shall be, as applicable, 

15 the lesser of— 

16 ‘‘(A) the minimum monthly payment of 

17 principal and interest on the date on which the 

18 loan was originated; 

19 ‘‘(B) a monthly payment based on the out20 standing loan principal plus a rate of interest 

21 calculated at a fixed annual percentage rate, in 

22 an amount equal to the most recent conven23 tional mortgage rate plus a 100 basis point pre24 mium for risk, amortized over a period of 30 


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1 years minus the period of time since the origi2 nation of the loan; or 

3 ‘‘(C) the amount of the first minimum 

4 monthly payment due under the mortgage after 

5 the origination of such mortgage. 

6 ‘‘(3) AMORTIZATION OF DIFFERENCE.—The 

7 difference between the amount of any monthly pay8 ment due under the terms of any eligible deferred9 foreclosure mortgage and the deferment payment 

10 amount shall be amortized over the life of the mort11 gage beginning after the deferred-foreclosure period 

12 in accordance with regulations which the Board shall 

13 prescribe. 

14 ‘‘(4) CHARGES PROHIBITED.—No creditor or 

15 servicer may impose any late fee or other fee or 

16 charge during the deferment period with respect to 

17 any eligible deferred-foreclosure mortgage for which 

18 any deferment right has been exercised under sub19 section (b) or in connection with the exercise of such 

20 deferment right. 

21 ‘‘(f) NOTICE OF RESET AND ALTERNATIVES.—Dur22 ing the 1-month period that ends 120 days before the date 

23 on which the interest rate in effect during the introductory 

24 period of an eligible deferred-foreclosure mortgage adjusts 

25 or resets to a variable interest rate, or the minimum 


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1 monthly payment of principal and interest required first 

2 increases from the amount of the first such minimum 

3 monthly payment due under the mortgage after the origi4 nation of such mortgage, the creditor or servicer of such 

5 loan shall provide a written notice, separate and distinct 

6 from all other correspondence to the consumer, that in7 cludes the following: 

8 ‘‘(1) Any index or formula used— 

9 ‘‘(A) in determining the annual percentage 

10 rate applicable as of the effective date of a reset 

11 or adjustment; and 

12 ‘‘(B) in making any increases in the min13 imum monthly payments due, and a source of 

14 information about the index or formula. 

15 ‘‘(2) A good faith estimate, based on accepted 

16 industry standards and disclosed in a clear and con17 spicuous manner, of the creditor or servicer of the 

18 amount of the monthly payment that will apply after 

19 the date of the adjustment or reset, or increase, as 

20 applicable, and the assumptions on which this esti21 mate is based. 

22 ‘‘(3) A list of alternatives consumers may pur23 sue before the date of adjustment or reset, or in24 crease, as applicable, and descriptions of the actions 


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1 consumers must take to pursue such alternatives, in2 cluding— 

3 ‘‘(A) refinancing; 

4 ‘‘(B) renegotiation of loan terms; 

5 ‘‘(C) payment forbearance; 

6 ‘‘(D) pre-foreclosure sales; 

7 ‘‘(E) any payment assistance available 

8 from the State in which the property is located; 

9 and 

10 ‘‘(F) any refinancing, loan modification, or 

11 other assistance program available through the 

12 Federal Government that may apply to the 

13 loan. 

14 ‘‘(4) The names, addresses, telephone numbers, 

15 and Internet addresses of counseling agencies or 

16 programs reasonably available to the consumer that 

17 have been certified or approved and made publicly 

18 available by the Secretary of Housing and Urban 

19 Development or a State housing finance authority 

20 (as defined in section 1301 of the Financial Institu21 tions Reform, Recovery, and Enforcement Act of 

22 1989). 

23 ‘‘(5) The address, telephone number, and Inter24 net address for the State housing finance authority 


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1 (as so defined) for the State in which the consumer 

2 resides. 

3 ‘‘(g) MOST RECENT CONVENTIONAL MORTGAGE

4 RATE.—For purposes of subsection (f)(1)(A)(ii), the term 

5 ‘most recent conventional mortgage rate’ means the con6 tract interest rate on commitments for fixed-rate first 

7 mortgages most recently published in the Federal Reserve 

8 Statistical Release on selected interest rates (daily or 

9 weekly), and commonly referred to as the H.15 release (or 

10 any successor publication), in the week preceding a date 

11 of determination for purposes of applying this subsection. 

12 ‘‘(h) DUTY OF CONSUMER TO MAINTAIN PROP13 ERTY.— 

14 ‘‘(1) IN GENERAL.—Any eligible deferred-fore15 closure consumer for whom a deferment of fore16 closure is in effect under this section with respect to 

17 any eligible deferred-foreclosure mortgage may not, 

18 with respect to any property securing such mort19 gage, destroy, damage, or impair such property, 

20 allow the property to substantially deteriorate, or 

21 commit waste on the property. 

22 ‘‘(i) DECLARATION OF RIGHTS.—In addition to the 

23 right of any party to a mortgage to seek a declaratory 

24 judgment under section 2201 of title 28, United States 

25 Code, any such party may apply prior to the end of the 


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1 deferment period to any State court of competent or gen2 eral jurisdiction for an order establishing the rights, du3 ties, and conditions imposed on or applicable to any party 

4 to the mortgage, including the terms and conditions of a 

5 deferment. 

6 ‘‘(j) COORDINATION WITH STATE LAW.— 

7 ‘‘(1) IN GENERAL.—No provision of this section 

8 shall be construed as annulling, altering, or affecting 

9 the laws of any State relating to deferment of fore10 closures, except to the extent that those laws are in11 consistent with the provisions of this section, and 

12 then only to the extent of the inconsistency. 

13 ‘‘(2) RULE OF CONSTRUCTION.—A State law is 

14 not inconsistent with this section if the protection 

15 that such law affords any consumer is greater than 

16 the protection afforded by this section.’’. 

17 (b) CLERICAL AMENDMENT.—The table of sections 

18 for chapter 2 of the Truth in Lending Act is amended 

19 by inserting after the item relating to section 128 the fol20 lowing new item: 

‘‘128A. Foreclosure deferment and reset notification for certain mortgages.’’. 

21 SEC. 3. HOUSING COUNSELING. 

22 (a) AUTHORIZATION OF APPROPRIATIONS.—There is 

23 authorized to be appropriated for fiscal year 2009, 

24 $200,000,000 for the Neighborhood Reinvestment Cor25 poration, for carrying out foreclosure mitigation activities 


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1 under the terms and conditions contained in the second 

2 paragraph under the heading ‘‘Neighborhood Reinvest3 ment Corporation—Payment to the Neighborhood Rein4 vestment Corporation’’ in title III of division K of Public 

5 Law 110–161 (121 Stat. 2441), which may include use 

6 for costs of providing additional counselors, translators, 

7 and other staffers and costs of providing additional com8 puters and improving databases and overall operations to 

9 better assist mortgagor families. 

10 (b) COUNSELING SERVICES.—Amounts made avail11 able under this Act may also be used by counseling inter12 mediaries approved by the Department of Housing and 

13 Urban Development or the Neighborhood Reinvestment 

14 Corporation to assist homeowners who have legal issues 

15 directly related to the homeowner’s foreclosure, delin16 quency, or short sale, either by hiring attorneys directly 

17 or by contracting with legal aid agencies experienced in 

18 foreclosure work. Such attorneys or agencies shall be capa19 ble of assisting homeowners of owner-occupied homes with 

20 mortgages in default, in danger of default, or subject to 

21 or at risk of foreclosure and who have legal issues that 

22 cannot be handled by counselors already employed by such 

23 intermediaries. 

Æ 


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