I 

113TH CONGRESS 

2D SESSION H. R. 5396 

To require servicers to establish a deed-for-lease program under which eligible 

mortgagors may remain in their homes as renters. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 1, 2014 

Ms. MICHELLE LUJAN GRISHAM of New Mexico introduced the following bill; 

which was referred to the Committee on Financial Services 

A BILL 

To require servicers to establish a deed-for-lease program 

under which eligible mortgagors may remain in their 

homes as renters. 

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 ‘‘Keeping Families 

5 Home Act of 2014’’. 

6 SEC. 2. DEED-FOR-LEASE PROGRAM. 

7 (a) ESTABLISHMENT.— 

8 (1) IN GENERAL.—Each servicer shall establish 

9 a deed-for-lease program (hereinafter referred to as 


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1 the ‘‘Program’’), which shall permit an eligible mort2 gagor to— 

3 (A) enter into a deed in lieu of foreclosure 

4 agreement; 

5 (B) continue to occupy and lease the prop6 erty that is the subject of such agreement for 

7 a 1-year period that begins on the date of such 

8 agreement; and 

9 (C) have a right of first refusal to pur10 chase such property after the end of the 1-year 

11 lease period, if the owner of the property in12 tends to sell the property at that time. 

13 (2) EXCEPTION FOR SMALL SERVICERS.—The 

14 Program requirement under paragraph (1) shall not 

15 apply to a small servicer, as such term is defined by 

16 the Secretary of Housing and Urban Development. 

17 (b) NOTICE REQUIREMENT.—Servicers shall provide 

18 each eligible mortgagor with information about the Pro19 gram and how to apply to participate in the Program. 

20 (c) LEASE TERMS.—A lease entered into by an eligi21 ble mortgagor under the Program shall— 

22 (1) carry a monthly rent amount equal to the 

23 fair market rent for such property, as determined by 

24 an independent private appraiser hired by and paid 

25 by the servicer; and 


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1 (2) contain all typical lease provisions for simi2 lar rental property. 

3 (d) APPLICATION PROCESS.— 

4 (1) IN GENERAL.—An eligible mortgagor may 

5 apply for the Program at any time. 

6 (2) EFFECT OF FORECLOSURE SALE.—If there 

7 is a foreclosure sale pending with respect to the 

8 property— 

9 (A) the eligible mortgagor may only apply 

10 for the Program before the date that is 7 days 

11 before the date of such foreclosure sale; and 

12 (B) once the eligible mortgagor applies for 

13 the Program, the foreclosure sale shall be halt14 ed until after the eligible mortgagor’s Program 

15 application has been evaluated. 

16 (3) CONTENTS OF APPLICATION.— 

17 (A) IN GENERAL.—In applying for the 

18 Program, an eligible mortgagor shall provide 

19 the servicer with proof of the following informa20 tion: 

21 (i) The eligible mortgagor is subject 

22 to a financial hardship that makes the eli23 gible mortgagor unable to continue making 

24 timely payments on the eligible mortgage 

25 loan. 


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1 (ii) The eligible mortgagor is eligible 

2 to pay the monthly rent amount described 

3 under subsection (c)(1) and such amount 

4 is no more than 31 percent of the eligible 

5 mortgagor’s monthly income. 

6 (iii) The eligible mortgagor currently 

7 lives in the property and intends to con8 tinue doing so during the 1-year lease 

9 term. 

10 (B) ABILITY TO PAY HIGHER PERCENTAGE

11 OF INCOME IN RENT.—Notwithstanding sub12 paragraph (A)(ii), if an eligible mortgagor be13 lieves they are able pay the monthly rent 

14 amount despite such amount exceeding 31 per15 cent of the eligible mortgagor’s monthly income, 

16 the eligible mortgagor may request that the De17 partment of Housing and Urban Development 

18 review their information, along with any con19 tributing factors the eligible mortgagor may 

20 have (such as a low debt burden) and, if the 

21 Department notifies the eligible mortgagor that 

22 the Department agrees that the eligible mort23 gagor is able to pay a monthly rent amount 

24 that is equal to a percentage of their monthly 

25 income that is higher than 31 percent, such 


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1 higher percentage shall be used for purposes of 

2 subparagraph (A)(ii). 

3 (4) EFFECT OF JUNIOR LIENS.—If an eligible 

4 mortgagor applies for a Program with respect to a 

5 single family property subject to a junior lien— 

6 (A) if the servicer of the Program is also 

7 the holder of the junior lien, the servicer shall 

8 release the junior lien and, subject to the other 

9 requirements of this section, the eligible mort10 gagor shall be eligible to participate in the Pro11 gram; and 

12 (B) if the servicer of the Program is not 

13 the holder of the junior lien, the servicer shall 

14 contact such junior lien holder and request that 

15 the holder release the lien, and— 

16 (i) if the holder releases the lien, then, 

17 subject to the other requirements of this 

18 section, the eligible mortgagor shall be eli19 gible to participate in the Program; and 

20 (ii) if the holder does not release the 

21 lien, then the eligible mortgagor shall not 

22 be eligible to participate in the Program. 

23 (e) EVALUATION AND NOTIFICATION.— 

24 (1) DEADLINE FOR EVALUATION.—The servicer 

25 shall evaluate the eligible mortgagor’s application 


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1 within 30 days of receiving such application and 

2 shall accept an eligible mortgagor into the Program 

3 if the eligible mortgagor has provided the proof de4 scribed under subsection (d)(3)(A). 

5 (2) NOTIFICATION.—Promptly after making a 

6 determination under paragraph (1), the servicer 

7 shall notify the eligible mortgagor of such deter8 mination in writing and, if the servicer determines 

9 that the eligible mortgagor may not be accepted into 

10 the Program, the servicer shall specifically explain in 

11 writing why the eligible mortgage was not accepted. 

12 (f) SUBSEQUENT OWNERS FOLLOW PROGRAM RE13 QUIREMENTS.—Any subsequent owner of the property 

14 being leased pursuant to the Program shall— 

15 (1) maintain the Program and abide by the 

16 terms of the Program to the same extent as the 

17 servicer of the eligible mortgage; and 

18 (2) certify to the Department of Housing and 

19 Urban Development, before finalizing any purchase 

20 of the property, that they will abide by the terms of 

21 the Program. 

22 (g) RULEMAKING; COMPLIANCE EVALUATION.—The 

23 Department of Housing and Urban Development shall— 

24 (1) issue such regulations as may be necessary 

25 to carry out this section; 


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1 (2) evaluate the compliance by servicers and 

2 owners with the requirements of this section; and 

3 (3) enforce the requirements of this section. 

4 (h) DEFINITIONS.—For purposes of this section: 

5 (1) ELIGIBLE MORTGAGOR.—The term ‘‘eligible 

6 mortgagor’’ means a mortgagor under an eligible 

7 mortgage. 

8 (2) ELIGIBLE MORTGAGE.—The term ‘‘eligible 

9 mortgage’’ means a first or subordinate mortgage on 

10 a property that— 

11 (A) is a single family property; and 

12 (B) is currently being used as the principal 

13 residence of the eligible mortgagor. 

14 (3) SINGLE FAMILY PROPERTY.—The term 

15 ‘‘single family property’’ means— 

16 (A) a structure consisting of 1 to 4 dwell17 ing units; 

18 (B) a dwelling unit in a multi-unit condo19 minium property together with an undivided in20 terest in the common areas and facilities serv21 ing the property; 

22 (C) a dwelling unit in a multi-unit project 

23 for which purchase of stock or a membership 

24 interest entitles the purchaser to permanent oc25 cupancy of that unit; or 


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1 (D) a manufactured housing unit. 

Æ 


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