II 

116TH CONGRESS 

1ST SESSION S. 2279 

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

by the FHA, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2019 

Ms. CORTEZ MASTO (for herself and Mr. VAN HOLLEN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

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 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 Section 204(a) of the National Housing Act (12 

3 U.S.C. 1710(a)) is amended by adding at the end the fol4 lowing: 

5 ‘‘(10) DOCUMENTATION OF LOSS MITIGATION

6 EFFORTS.— 

7 ‘‘(A) IN GENERAL.—Notwithstanding any 

8 other provision of this title, the Secretary may 

9 not pay insurance benefits to any mortgagee of 

10 a single family mortgage insured under this Act 

11 unless the mortgagee or other servicer for the 

12 mortgage has provided documentation to the 

13 Secretary that is sufficient to demonstrate com14 pliance with any requirements of the Secretary 

15 applicable to the mortgage relating to loss miti16 gation. 

17 ‘‘(B) RULE OF CONSTRUCTION.—Nothing 

18 in this paragraph may be construed to limit the 

19 authority of the Secretary to impose civil mone20 tary penalties.’’. 

21 SEC. 3. HUD OVERSIGHT OF SERVICERS. 

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

23 1735f–11) is amended by adding at the end the following: 

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

25 ‘‘(1) OVERSIGHT.— 


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

2 conduct oversight of servicers of single family 

3 mortgages insured under this Act on a regular 

4 and ongoing basis and in a manner designed 

5 to— 

6 ‘‘(i) ensure that the servicers comply 

7 with the requirements of this Act and the 

8 standards and guidelines established by the 

9 Secretary for the servicing of those mort10 gages; and 

11 ‘‘(ii) identify systemic problems and 

12 trends with the compliance described in 

13 clause (i). 

14 ‘‘(B) LOSS MITIGATION REQUIREMENTS.— 

15 The oversight conducted under subparagraph 

16 (A) shall include— 

17 ‘‘(i) oversight designed to ensure that 

18 the servicers comply with the requirements 

19 under this Act, and the standards and 

20 guidelines established by the Secretary, for 

21 loss mitigation; and 

22 ‘‘(ii) appropriate sampling and review 

23 of the compliance described in clause (i), 

24 including direct information collection 

25 through generally accepted means from 


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1 borrowers whose files were sampled, such 

2 as surveys, focus groups, interview, or 

3 other similar measures. 

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

5 shall take such actions as may be necessary to rem6 edy failures by servicers of single family mortgages 

7 insured under this Act to comply with the require8 ments of this Act and the standards and guidelines 

9 established by the Secretary for the servicing of 

10 those mortgages, including ordering noncompliant 

11 servicers to take corrective actions, including barring 

12 foreclosure and cancelling from the borrower’s ac13 count balance and from any insurance claim any in14 terest and other fees that accrued during periods of 

15 noncompliance.’’. 

16 SEC. 4. COMPLAINT PROCEDURE REGARDING LOSS MITI17 GATION. 

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

19 1731a et seq.) is amended by adding at the end the fol20 lowing: 

21 ‘‘SEC. 543. COMPLAINT PROCEDURE REGARDING LOSS 

22 MITIGATION. 

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

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

25 and maintain a procedure for mortgagors under sinVerDate Sep 11 2014 23:35 Aug 03, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2279.IS S2279

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1 gle family mortgages insured under this Act to reg2 ister complaints with the Secretary regarding serv3 icing, including loss mitigation actions, which 

4 shall— 

5 ‘‘(A) include making available to the public 

6 a website of the Department of Housing and 

7 Urban Development, an e-mail address, a phone 

8 number, and a mailing address for registering 

9 complaints; and 

10 ‘‘(B) provide an opportunity for servicers 

11 to respond to complaints and submit informa12 tion regarding complaints. 

13 ‘‘(2) ATTEMPT TO RESOLVE.—For each com14 plaint registered under the procedure established 

15 under this subsection, the Secretary shall— 

16 ‘‘(A) review the complaint and any re17 sponse by the servicer; and 

18 ‘‘(B) seek to resolve any dispute between 

19 the mortgagor and the servicer and make a de20 termination regarding the complaint. 

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

22 determination regarding the compliance of a servicer 

23 with the requirements, standards, and guidelines for 

24 servicing, including in identifying systemic problems 

25 and trends with servicing, the Secretary shall take 


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1 into consideration information obtained under the 

2 procedure established under this subsection. 

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

4 Upon making a determination with respect to a complaint 

5 regarding servicing, the Secretary shall notify the com6 plainant of— 

7 ‘‘(1) the determination; 

8 ‘‘(2) the opportunity for the complainant to ap9 peal an adverse determination under the procedure 

10 established under subsection (a); and 

11 ‘‘(3) the requirements for and how to initiate 

12 an appeal described in paragraph (2). 

13 ‘‘(c) APPEALS PROCEDURE.— 

14 ‘‘(1) ESTABLISHMENT.—The Secretary— 

15 ‘‘(A) shall provide a procedure for mortga16 gors to appeal an adverse determination by the 

17 Secretary regarding a complaint registered 

18 under the procedure established under sub19 section (a); and 

20 ‘‘(B) if appropriate, may take action pur21 suant to section 533(d)(2) with respect to a de22 cision on an appeal described in subparagraph 

23 (A). 

24 ‘‘(2) LIMITATION.—The procedure established 

25 under this subsection may not provide an appeal for 


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1 any complaint that was previously appealed under 

2 the procedure. 

3 ‘‘(d) PROHIBITION ON FORECLOSURE.—The Sec4 retary shall prohibit the foreclosure of a mortgage during 

5 any period that a complaint or appeal regarding the mort6 gage is pending under the procedures established under 

7 this section and during a reasonable period after a com8 plainant is notified of a determination regarding a com9 plaint that provides the complainant an opportunity to ap10 peal the decision. 

11 ‘‘(e) REPORTING.—The Secretary shall submit an an12 nual report to Congress regarding complaints received 

13 under the procedure maintained under subsection (a), 

14 which shall— 

15 ‘‘(1) specify the number of complaints received, 

16 disaggregated by types of complaints, status of com17 plaints, geographic distribution of complaints, and 

18 average times for resolution of complaints; 

19 ‘‘(2) include relevant information submitted by 

20 servicers and any other information that the Sec21 retary considers relevant; and 

22 ‘‘(3) comply with any applicable privacy protec23 tions.’’. 


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

3 Section 204(a) of the National Housing Act (12 

4 U.S.C. 1710(a)), as amended by section 2, is amended by 

5 adding at the end the following: 

6 ‘‘(11) NOTICE TO BORROWERS OF LOSS MITIGA7 TION STATUS AND DECISIONS.— 

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

9 shall require that, before any acceleration of the 

10 indebtedness due under a mortgage, the servicer 

11 for the mortgage shall provide written notice to 

12 the mortgagor that includes— 

13 ‘‘(i) a summary explaining how the 

14 servicer applied the loss mitigation option 

15 priority analysis established by the Sec16 retary, including the loss mitigation review 

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

18 FHA Single Family Housing Policy Hand19 book 4000.1, or any successor provision, 

20 and setting forth the actual information 

21 entered in applying the analysis; 

22 ‘‘(ii) if the servicer did not conduct 

23 the analysis described in clause (i) because 

24 the servicer determined that the mortgagor 

25 did not express any interest in loss mitiga26 tion or provide appropriate documents— 


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1 ‘‘(I) a statement of that deter2 mination; 

3 ‘‘(II) a description of the actions 

4 that the servicer took to solicit the 

5 borrower for loss mitigation review 

6 and obtain appropriate documents; 

7 and 

8 ‘‘(III) a statement of the dates 

9 that the servicer took the actions de10 scribed in subclause (II); 

11 ‘‘(iii) a statement setting forth the re12 sults of the monthly loss mitigation evalua13 tions of the servicer for the mortgage re14 quired under section 203.605(a) of title 

15 24, Code of Federal Regulations, or any 

16 successor regulation; 

17 ‘‘(iv) with respect to any loss mitiga18 tion action for which the mortgagor was 

19 determined to be ineligible, an explanation 

20 of, and documentation showing, why the 

21 mortgagor was determined to be ineligible; 

22 ‘‘(v) a statement informing the bor23 rower that, upon the request of the bor24 rower, the Secretary shall provide the bor25 rower with all loss mitigation evaluation 


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1 documentation required by the Secretary 

2 with respect to the mortgage, including the 

3 monthly evaluations described in clause 

4 (iii); and 

5 ‘‘(vi) information describing the proce6 dure under section 543(a) for registering 

7 complaints regarding loss mitigation and 

8 the procedure under section 543(c) for ap9 pealing the decision of a servicer regarding 

10 loss mitigation actions. 

11 ‘‘(B) REFERENCES.—The notice required 

12 under subparagraph (A) shall— 

13 ‘‘(i) contain references to the applica14 ble provisions of the applicable handbook 

15 of the Department of Housing and Urban 

16 Development regarding ongoing loss miti17 gation reviews and the standards for those 

18 reviews; and 

19 ‘‘(ii) identify how the provisions de20 scribed in clause (i) may be accessed on a 

21 publicly accessible website of the Depart22 ment of Housing and Urban Develop23 ment.’’. 


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1 SEC. 6. RULE OF CONSTRUCTION. 

2 Nothing in this Act may be construed to supercede, 

3 or exempt any person from complying with, any provision 

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

5 U.S.C. 2601 et seq.) or any regulations issued under that 

6 Act. 

Æ 


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