I 

115TH CONGRESS 

2D SESSION H. R. 6102 

To provide for the Director of the Federal Housing Finance Agency to 

establish prudential management and operations standards for mortgage 

servicers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 14, 2018 

Ms. MAXINE WATERS of California introduced the following bill; which was 

referred to the Committee on Financial Services 

A BILL 

To provide for the Director of the Federal Housing Finance 

Agency to establish prudential management and operations standards for mortgage servicers, 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 ‘‘Homeowner Mortgage 

5 Servicing Fairness Act of 2018’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—The Congress finds that— 


dlhill on DSK3GLQ082PROD with BILLS
2 

•HR 6102 IH

1 (1) mortgage servicing plays a critical role in 

2 determining the likelihood that a delinquent bor3 rower will be able to save their home from fore4 closure, but homeowners do not have the ability to 

5 choose their mortgage servicers; 

6 (2) a 2011 Yale Journal on Regulation article 

7 written by Adam Levitin and Tara Twomey, entitled 

8 ‘‘Mortgage Servicing’’, confirmed that borrowers 

9 have no control over what bank or non-bank entity 

10 services their mortgage loan, whether the servicing 

11 rights on their mortgage are transferred to a new 

12 entity, or what contractual provisions govern the 

13 servicing of their mortgage loan; 

14 (3) a 2011 report entitled ‘‘Interagency Review 

15 of Foreclosure Policies and Practices’’ conducted by 

16 the Federal Reserve System, the Office of the Comp17 troller of the Currency, and the Office of Thrift Su18 pervision acknowledged that ‘‘a number of super19 visory actions and industry reforms are required to 

20 address [weaknesses in foreclosure process govern21 ance] in a way that will hold servicers accountable 

22 for establishing necessary governance and controls’’; 

23 (4) there has been abundant evidence since the 

24 financial crisis of 2007 to 2009 that has indicated 

25 that some single-family housing mortgage servicers 


dlhill on DSK3GLQ082PROD with BILLS
3 

•HR 6102 IH

1 are failing to provide mortgage borrowers with the 

2 protections against foreclosure that they are entitled 

3 to by law, including failure to provide mortgage bor4 rowers with critical information about the process of 

5 applying for foreclosure relief and loan modifica6 tions; 

7 (5) multiple congressional hearings have uncov8 ered additional evidence of failures in mortgage serv9 icing, including— 

10 (A) the hearing of the Committee on Fi11 nancial Services of the House of Representa12 tives entitled ‘‘A Review of Mortgage Servicing 

13 Practices and Foreclosure Mitigation’’, July 25, 

14 2008 (Serial No. 110–132); 

15 (B) the hearing of the Subcommittee on 

16 Insurance, Housing, and Community Oppor17 tunity of the Committee on Financial Services 

18 of the House of Representatives entitled ‘‘Robo19 Signing, Chain of Title, Loss Mitigation and 

20 Other Issues in Mortgage Servicing’’, November 

21 18, 2010 (Serial No. 111–166); and 

22 (C) the joint hearing of the Subcommittee 

23 on Financial Institutions and Consumer Credit 

24 and the Subcommittee on Oversight and Inves25 tigations of the Committee on Financial ServVerDate Sep 11 2014 02:59 Jun 20, 2018 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6102.IH H6102

dlhill on DSK3GLQ082PROD with BILLS
4 

•HR 6102 IH

1 ices of the House of Representatives entitled 

2 ‘‘Mortgage Servicing: An Examination of the 

3 Role of Federal Regulators in Settlement Nego4 tiations and the Future of Mortgage Servicing 

5 Standards’’, July 7, 2011 (Serial No. 112–44); 

6 (6) in view of the heightened reliance by the 

7 Federal National Mortgage Association (Fannie 

8 Mae) and the Federal Home Loan Mortgage Cor9 poration (Freddie Mac) on unilateral reviews of bor10 rowers for loss mitigation in place of reviews of ap11 plications initiated by borrowers, there is an in12 creased need for oversight to bring accountability to 

13 the loss mitigation review process; 

14 (7) mortgage borrowers have also faced other 

15 wide-ranging problems with their mortgage servicers, 

16 including errors that have cost some borrowers 

17 money and have cost others their homes; 

18 (8) such problems have included lapses in basic 

19 mortgage servicing functions, such as inaccurate 

20 monthly statements, improperly credited payments, 

21 improper escrow handling, ignored customer com22 plaints, and improper servicing transfers; 

23 (9) these failures in mortgage servicing are fur24 ther evidenced by enforcement actions initiated by 

25 the Consumer Financial Protection Bureau against 


dlhill on DSK3GLQ082PROD with BILLS
5 

•HR 6102 IH

1 nine different bank and non-bank mortgage servicers 

2 from 2013 through 2017 for ‘‘mismanaging the loss 

3 mitigation process’’, ‘‘mistreating mortgage bor4 rowers who were trying to save their homes from 

5 foreclosure’’, and ‘‘failing borrowers at every stage 

6 of the mortgage servicing process’’; 

7 (10) although some Federal regulators, in par8 ticular the Federal Housing Finance Agency and the 

9 Consumer Financial Protection Bureau, have the au10 thority to take enforcement and supervisory action 

11 against mortgage servicers that harm borrowers, 

12 Federal regulators should take additional action that 

13 will protect homeowners from the types of abuses 

14 that have led to stalled modifications, excess fees, 

15 and even foreclosure; and 

16 (11) to ensure market confidence in the United 

17 States housing system and improve accountability 

18 and transparency, Federal regulators should be em19 powered to fully exercise all statutorily mandated 

20 and implied powers to protect consumers from harm21 ful mortgage servicers. 

22 (b) PURPOSE.—It is the purpose of this Act to ensure 

23 that mortgage borrowers are protected from abusive serv24 icing practices, to end engagement by mortgage servicers 

25 in illegal servicing practices, to keep more people in their 


dlhill on DSK3GLQ082PROD with BILLS
6 

•HR 6102 IH

1 homes whenever possible, to promote servicers’ compliance 

2 with the loss mitigation guidelines of Fannie Mae and 

3 Freddie Mac, and to minimize losses to companies and 

4 taxpayers. 

5 SEC. 3. REGULATION AND OVERSIGHT OF MORTGAGE 

6 SERVICERS. 

7 (a) IN GENERAL.—Subpart A of part 2 of subtitle 

8 A of the Federal Housing Enterprises Financial Safety 

9 and Soundness Act of 1992 (12 U.S.C. 4541 et seq.) is 

10 amended by adding at the end the following new section: 

11 ‘‘SEC. 1327. PRUDENTIAL MANAGEMENT AND OPERATIONS 

12 STANDARDS FOR COVERED SERVICERS. 

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

14 following definitions shall apply: 

15 ‘‘(1) DIRECTOR.—The term ‘Director’ has the 

16 meaning given such term in section 1303. 

17 ‘‘(2) COVERED SERVICER.—The term ‘covered 

18 servicer’ means a servicer, as such term is defined 

19 in section 6(i) of the Real Estate Settlement Proce20 dures Act of 1974 (12 U.S.C. 2605(i)), that con21 ducts mortgage servicing with respect to any single22 family mortgage loans owned or guaranteed by any 

23 enterprise. 


dlhill on DSK3GLQ082PROD with BILLS
7 

•HR 6102 IH

1 ‘‘(b) STANDARDS.—The Director shall establish 

2 standards, by regulation, for covered servicers relating to 

3 each of the following: 

4 ‘‘(1) Adequacy of internal controls and informa5 tion systems, taking into account the nature and 

6 scale of business operations. 

7 ‘‘(2) Independence and adequacy of internal 

8 audit systems. 

9 ‘‘(3) Overall risk management processes, includ10 ing adequacy of oversight by senior management and 

11 policies to identify, measure, monitor, and control 

12 material risks, including data protection and reputa13 tional risks. 

14 ‘‘(4) Compliance with the mortgage servicing 

15 requirements under the Real Estate Settlement Pro16 cedures Act of 1974 (12 U.S.C. 2601 et seq.) and 

17 the regulations implementing such Act (12 C.F.R. 

18 Part 1024; Regulation X), in consultation with the 

19 Bureau of Consumer Financial Protection, including 

20 a system for solicitation and review of borrower com21 plaints involving servicing of single-family housing 

22 mortgage loans owned or guaranteed by an enter23 prise. 

24 ‘‘(5) Documentation and retention of records 

25 related to borrower interactions that enable the DiVerDate Sep 11 2014 02:59 Jun 20, 2018 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6102.IH H6102

dlhill on DSK3GLQ082PROD with BILLS
8 

•HR 6102 IH

1 rector to evaluate the quality of service given to bor2 rowers, including borrower contact, delinquency 

3 management practices, loan modifications and fore4 closure alternatives, and foreclosure timelines, which 

5 shall provide that in each instance involving a de6 fault under a loan, the covered servicer shall docu7 ment and retain a detailed description of the actions 

8 such servicer took to comply with the enterprises’ 

9 loss mitigation review requirements, including efforts 

10 to establish borrower contact, solicit a loss mitiga11 tion application, review the application under the ap12 propriate guidelines, and inform the borrower of the 

13 servicer’s decisions. 

14 ‘‘(6) Such other operational and management 

15 standards as the Director determines to be appro16 priate to carry out the purposes of this Act. 

17 ‘‘(c) FAILURE TO MEET STANDARDS.— 

18 ‘‘(1) PLAN REQUIREMENT.— 

19 ‘‘(A) IN GENERAL.—If the Director deter20 mines that a covered servicer fails to meet any 

21 standard established under subsection (b), the 

22 Director shall require the covered servicer to 

23 submit an acceptable plan, in writing, to the 

24 Director within the time allowed under subpara25 graph (C). 


dlhill on DSK3GLQ082PROD with BILLS
9 

•HR 6102 IH

1 ‘‘(B) CONTENTS.—Any plan required or 

2 authorized under subparagraph (A) shall speci3 fy the actions that the covered servicer will take 

4 to correct the deficiency. 

5 ‘‘(C) DEADLINES FOR SUBMISSION AND

6 REVIEW.—The Director shall by regulation es7 tablish deadlines that— 

8 ‘‘(i) require a covered servicer to sub9 mit a plan required under this subpara10 graph not later than 30 days after the Di11 rector determines that the covered servicer 

12 fails to meet any standard established 

13 under subsection (a); and 

14 ‘‘(ii) require the Director to approve, 

15 deny, or otherwise respond to the plan not 

16 later than 30 days after the plan is sub17 mitted. 

18 ‘‘(2) REQUIRED ORDER UPON FAILURE TO SUB19 MIT OR IMPLEMENT PLAN.—If a covered servicer 

20 fails to submit an acceptable plan within the time al21 lowed under paragraph (1)(C), or fails in any mate22 rial respect to implement a plan accepted by the Di23 rector, the following shall apply: 


dlhill on DSK3GLQ082PROD with BILLS
10 

•HR 6102 IH

1 ‘‘(A) REQUIRED CORRECTION OF DEFI2 CIENCY.—The Director shall, by order, require 

3 the covered servicer to correct the deficiency. 

4 ‘‘(B) OTHER AUTHORITY.—The Director 

5 may, by order, take one or more of the fol6 lowing actions until the deficiency is corrected: 

7 ‘‘(i) Impose a civil monetary penalty 

8 upon the covered servicer in an amount not 

9 to exceed $10,000 for each day during 

10 which such deficiency continues. 

11 ‘‘(ii) Mandate the transfer of loan 

12 servicing rights without providing com13 pensation to the covered servicer. 

14 ‘‘(iii) Limit or prohibit the covered 

15 servicer from conducting business with the 

16 enterprises. 

17 ‘‘(iv) Require the covered servicer to 

18 take any other action that the Director de19 termines will better carry out the purposes 

20 of this section than any of the actions de21 scribed in this subparagraph. 

22 ‘‘(3) MANDATORY RESTRICTIONS.—In com23 plying with paragraph (2), the Director shall take 

24 one or more of the actions described in clauses (i) 

25 through (iv) of paragraph (2)(B) if— 


dlhill on DSK3GLQ082PROD with BILLS
11 

•HR 6102 IH

1 ‘‘(A) the Director determines that the cov2 ered servicer fails to meet any standard pre3 scribed under subsection (b); and 

4 ‘‘(B) the covered servicer has not corrected 

5 the deficiency within a reasonable period or 

6 within a period established by the Director. 

7 ‘‘(d) OTHER ENFORCEMENT AUTHORITY NOT AF8 FECTED.—The authority of the Director under this sec9 tion is in addition to any other authority of the Director 

10 and does not limit the additional or concurrent authority 

11 of the Bureau of Consumer Financial Protection as estab12 lished in title X of the Dodd-Frank Wall Street Reform 

13 and Consumer Protection Act (12 U.S.C. 5481 et seq.). 

14 ‘‘(e) OVERSIGHT.—The Director shall conduct over15 sight of covered servicers on a regular and ongoing basis 

16 and in a manner designed to ensure that such servicers 

17 comply with the requirements of this Act and the regula18 tions established by the Director for servicing of such 

19 mortgages and to identify systemic problems and trends 

20 with such compliance. 

21 ‘‘(f) EXAMINATIONS.— 

22 ‘‘(1) AUTHORITY.—The Director shall have 

23 power to make a thorough examination of any cov24 ered servicer whenever the Director determines an 


dlhill on DSK3GLQ082PROD with BILLS
12 

•HR 6102 IH

1 examination of any such servicer is necessary to 

2 carry out the purposes of this section. 

3 ‘‘(2) MANUALS.—The Director may issue and 

4 revise examination manuals as necessary to carry 

5 out paragraph (1). 

6 ‘‘(g) REGULATORY FEES.— 

7 ‘‘(1) AUTHORIZATION.—The Director may as8 sess and collect from covered servicers a reasonable 

9 fee, in an amount not exceeding the amount suffi10 cient to provide for reasonable costs (including ad11 ministrative costs) and expenses incurred by the Di12 rector in connection with carrying out the respon13 sibilities of the Director under this section. 

14 ‘‘(2) ESTABLISHMENT.—The Director shall es15 tablish the amount of fees under this subsection for 

16 a fiscal year so as to generate a total revenue 

17 amount not exceeding the Director’s estimate of 100 

18 percent of the costs of the Agency in carrying out 

19 the responsibilities under this section during such 

20 year. 

21 ‘‘(3) AVAILABILITY.—Fees authorized under 

22 paragraph (1) for a fiscal year shall be available for 

23 obligation only— 

24 ‘‘(A) to the extent and in the amount pro25 vided in advance in appropriations Acts; and 


dlhill on DSK3GLQ082PROD with BILLS
13 

•HR 6102 IH

1 ‘‘(B) to pay the costs of the Agency in car2 rying out the responsibilities under this section 

3 during such fiscal year. 

4 ‘‘(h) ISSUANCE OF REGULATIONS.—The Director 

5 shall issue such regulations as may be necessary to enable 

6 the Director to administer or to carry out the purposes 

7 of this section and to prevent evasions thereof.’’. 

8 (b) TIMING.—The Director of the Federal Housing 

9 Finance Agency shall issue final regulations, as required 

10 by section 1327 of the Federal Housing Enterprises Fi11 nancial Safety and Soundness Act of 1992 (as added by 

12 subsection (a) of this section), not later than the expira13 tion of the 12-month period beginning on the date of the 

14 enactment of this Act. 

Æ 


dlhill on DSK3GLQ082PROD with BILLS