II 

111TH CONGRESS 

1ST SESSION S. 117 

To protect the property and security of homeowners who are subject to 

foreclosure proceedings, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 6, 2009 

Mr. KOHL (for himself, Ms. COLLINS, Mrs. LINCOLN, Mrs. BOXER, and Ms. 

MIKULSKI) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To protect the property and security of homeowners who 

are subject to foreclosure proceedings, 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 title may be cited as the ‘‘Foreclosure Rescue 

5 Fraud Act of 2009’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act: 

8 (1) COMMISSION.—The term ‘‘Commission’’ 

9 means the Federal Trade Commission. 


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1 (2) FORECLOSURE CONSULTANT.—The term 

2 ‘‘foreclosure consultant’’— 

3 (A) means a person who makes any solici4 tation, representation, or offer to a homeowner 

5 facing foreclosure on residential real property to 

6 perform, for gain, or who performs, for gain, 

7 any service that such person represents will pre8 vent, postpone, or reverse the effect of such 

9 foreclosure; and 

10 (B) does not include— 

11 (i) an attorney licensed to practice law 

12 in the State in which the property is lo13 cated who has established an attorney-cli14 ent relationship with the homeowner; 

15 (ii) a person licensed as a real estate 

16 broker or salesperson in the State where 

17 the property is located, and such person 

18 engages in acts permitted under the licen19 sure laws of such State; 

20 (iii) a housing counseling agency ap21 proved by the Secretary; 

22 (iv) a depository institution (as de23 fined in section 3 of the Federal Deposit 

24 Insurance Act (12 U.S.C. 1813)); 


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1 (v) a Federal credit union or a State 

2 credit union (as defined in section 101 of 

3 the Federal Credit Union Act (12 U.S.C. 

4 1752)); or 

5 (vi) an insurance company organized 

6 under the laws of any State. 

7 (3) HOMEOWNER.—The term ‘‘homeowner’’, 

8 with respect to residential real property for which an 

9 action to foreclose on the mortgage or deed of trust 

10 on such real property is filed, means the person 

11 holding record title to such property as of the date 

12 on which such action is filed. 

13 (4) LOAN SERVICER.—The term ‘‘loan servicer’’ 

14 has the same meaning as the term ‘‘servicer’’ in sec15 tion 6(i)(2) of the Real Estate Settlement Proce16 dures Act of 1974 (12 U.S.C. 2605(i)(2)). 

17 (5) RESIDENTIAL MORTGAGE LOAN.—The term 

18 ‘‘residential mortgage loan’’ means any loan pri19 marily for personal, family, or household use that is 

20 secured by a mortgage, deed of trust, or other equiv21 alent consensual security interest on a dwelling (as 

22 defined in section 103(v) of the Truth in Lending 

23 Act (15 U.S.C. 1602(v)) or residential real estate 

24 upon which is constructed or intended to be con25 structed a dwelling (as so defined). 


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1 (6) RESIDENTIAL REAL PROPERTY.—The term 

2 ‘‘residential real property’’ has the meaning given 

3 the term ‘‘dwelling’’ in section 103 of the Consumer 

4 Credit Protection Act (15 U.S.C. 1602). 

5 (7) SECRETARY.—The term ‘‘Secretary’’ means 

6 the Secretary of Housing and Urban Development. 

7 SEC. 3. MORTGAGE RESCUE FRAUD PROTECTION. 

8 (a) LIMITS ON FORECLOSURE CONSULTANTS.—A 

9 foreclosure consultant may not— 

10 (1) claim, demand, charge, collect, or receive 

11 any compensation from a homeowner for services 

12 performed by such foreclosure consultant with re13 spect to residential real property until such fore14 closure consultant has fully performed each service 

15 that such foreclosure consultant contracted to per16 form or represented would be performed with respect 

17 to such residential real property; 

18 (2) hold any power of attorney from any home19 owner, except to inspect documents, as provided by 

20 applicable law; 

21 (3) receive any consideration from a third party 

22 in connection with services rendered to a homeowner 

23 by such third party with respect to the foreclosure 

24 of residential real property, unless such consider25 ation is fully disclosed, in a clear and conspicuous 


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1 manner, to such homeowner in writing before such 

2 services are rendered; 

3 (4) accept any wage assignment, any lien of any 

4 type on real or personal property, or other security 

5 to secure the payment of compensation with respect 

6 to services provided by such foreclosure consultant 

7 in connection with the foreclosure of residential real 

8 property; or 

9 (5) acquire any interest, directly or indirectly, 

10 in the residence of a homeowner with whom the fore11 closure consultant has contracted. 

12 (b) CONTRACT REQUIREMENTS.— 

13 (1) WRITTEN CONTRACT REQUIRED.—Notwith14 standing any other provision of law, a foreclosure 

15 consultant may not provide to a homeowner a service 

16 related to the foreclosure of residential real prop17 erty— 

18 (A) unless— 

19 (i) a written contract for the purchase 

20 of such service has been signed and dated 

21 by the homeowner; and 

22 (ii) such contract complies with the 

23 requirements described in paragraph (2); 

24 and 


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1 (B) before the end of the 3-business-day 

2 period beginning on the date on which the con3 tract is signed. 

4 (2) TERMS AND CONDITIONS OF CONTRACT.— 

5 The requirements described in this paragraph, with 

6 respect to a contract, are as follows: 

7 (A) The contract includes, in writing— 

8 (i) a full and detailed description of 

9 the exact nature of the contract and the 

10 total amount and terms of compensation; 

11 (ii) the name, physical address, phone 

12 number, email address, and facsimile num13 ber, if any, of the foreclosure consultant to 

14 whom a notice of cancellation can be 

15 mailed or sent under subsection (d); and 

16 (iii) a conspicuous statement in at 

17 least 12 point bold face type in immediate 

18 proximity to the space reserved for the 

19 homeowner’s signature on the contract 

20 that reads as follows: ‘‘You may cancel this 

21 contract without penalty or obligation at 

22 any time before midnight of the 3rd busi23 ness day after the date on which you sign 

24 the contract. See the attached notice of 


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1 cancellation form for an explanation of this 

2 right.’’. 

3 (B) The contract is written in the principal 

4 language used to solicit or market the services 

5 to the homeowner. 

6 (C) The contract is accompanied by the 

7 form required by subsection (c)(2). 

8 (c) RIGHT TO CANCEL CONTRACT.— 

9 (1) IN GENERAL.—With respect to a contract 

10 between a homeowner and a foreclosure consultant 

11 regarding the foreclosure on the residential real 

12 property of such homeowner, such homeowner may 

13 cancel such contract without penalty or obligation by 

14 mailing a notice of cancellation not later than mid15 night of the 3rd business day after the date on 

16 which such contract is executed or would become en17 forceable against the parties to such contract. 

18 (2) CANCELLATION FORM AND OTHER INFOR19 MATION.—Each contract described in paragraph (1) 

20 shall be accompanied by a form, in duplicate, that— 

21 (A) has the heading ‘‘Notice of Cancella22 tion’’ in boldface type; and 

23 (B) contains in boldface type the following 

24 statement: 


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1 ‘‘You may cancel this contract, without any 

2 penalty or obligation, at any time before midnight of 

3 the 3rd day after the date on which the contract is 

4 signed by you. 

5 ‘‘To cancel this contract, mail or deliver a 

6 signed and dated copy of this cancellation notice or 

7 any other equivalent written notice to [insert name 

8 of foreclosure consultant] at [insert address of fore9 closure consultant] before midnight on [insert date]. 

10 ‘‘I hereby cancel this transaction on [insert 

11 date] [insert homeowner signature].’’. 

12 (d) WAIVER OF RIGHTS AND PROTECTIONS PROHIB13 ITED.— 

14 (1) IN GENERAL.—A waiver by a homeowner of 

15 any protection provided by this section or any right 

16 of a homeowner under this section— 

17 (A) shall be treated as void; and 

18 (B) may not be enforced by any Federal or 

19 State court or by any person. 

20 (2) ATTEMPT TO OBTAIN A WAIVER.—Any at21 tempt by any person to obtain a waiver from any 

22 homeowner of any protection provided by this sec23 tion or any right of the homeowner under this sec24 tion shall be treated as a violation of this section. 


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1 (3) CONTRACTS NOT IN COMPLIANCE.—Any 

2 contract that does not comply with the applicable 

3 provisions of this title shall be void and may not be 

4 enforceable by any party. 

5 SEC. 4. WARNINGS TO HOMEOWNERS OF FORECLOSURE 

6 RESCUE SCAMS. 

7 (a) IN GENERAL.—If a loan servicer finds that a 

8 homeowner has failed to make 2 consecutive payments on 

9 a residential mortgage loan and such loan is at risk of 

10 being foreclosed upon, the loan servicer shall notify such 

11 homeowner of the dangers of fraudulent activities associ12 ated with foreclosure. 

13 (b) NOTICE REQUIREMENTS.—Each notice provided 

14 under subsection (a) shall— 

15 (1) be in writing; 

16 (2) be included with a mailing of account infor17 mation; 

18 (3) have the heading ‘‘Notice Required by Fed19 eral Law’’ in a 14-point boldface type in English 

20 and Spanish at the top of such notice; and 

21 (4) contain the following statement in English 

22 and Spanish: ‘‘Mortgage foreclosure is a complex 

23 process. Some people may approach you about sav24 ing your home. You should be careful about any 

25 such promises. There are government and nonprofit 


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1 agencies you may contact for helpful information 

2 about the foreclosure process. Contact your lender 

3 immediately at [llll], call the Department of 

4 Housing and Urban Development Housing Coun5 seling Line at (800) 569–4287 to find a housing 

6 counseling agency certified by the Department to as7 sist you in avoiding foreclosure, or visit the Depart8 ment’s Tips for Avoiding Foreclosure website at 

9 http://www.hud.gov/foreclosure for additional assist10 ance.’’ (the blank space to be filled in by the loan 

11 servicer and successor telephone numbers and Uni12 form Resource Locators (URLs) for the Department 

13 of Housing and Urban Development Housing Coun14 seling Line and Tips for Avoiding Foreclosure 

15 website, respectively). 

16 SEC. 5. CIVIL LIABILITY. 

17 (a) IN GENERAL.—Any foreclosure consultant who 

18 fails to comply with any provision of section 3 or 4 with 

19 respect to any other person shall be liable to such person 

20 in an amount equal to the greater of— 

21 (1) the amount of any actual damage sustained 

22 by such person as a result of such failure; or 

23 (2) any amount paid by the person to the fore24 closure consultant. 


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1 (b) ATTORNEYS’ FEES.—In the case of any success2 ful action to enforce any liability under subsection (a), the 

3 foreclosure consultant shall also be liable to the person in 

4 an amount equal to the costs of the action, together with 

5 reasonable attorneys’ fees. 

6 SEC. 6. ADMINISTRATIVE ENFORCEMENT. 

7 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS8 SION.— 

9 (1) UNFAIR OR DECEPTIVE ACT OR PRAC10 TICE.—A violation of a prohibition described in sec11 tion 3 or a failure to comply with any provision of 

12 section 3 or 4 shall be treated as a violation of a 

13 rule defining an unfair or deceptive act or practice 

14 promulgated under section 18(a)(1)(B) of the Fed15 eral Trade Commission Act (15 U.S.C. 

16 57a(a)(1)(B)). 

17 (2) ACTIONS BY THE FEDERAL TRADE COMMIS18 SION.—The Federal Trade Commission shall enforce 

19 the provisions of sections 3 and 4 in the same man20 ner, by the same means, and with the same jurisdic21 tion, powers, and duties as though all applicable 

22 terms and provisions of the Federal Trade Commis23 sion Act (15 U.S.C. 41 et seq.) were incorporated 

24 into and made part of this title. 

25 (b) STATE ACTION FOR VIOLATIONS.— 


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1 (1) AUTHORITY OF STATES.—In addition to 

2 such other remedies as are provided under State 

3 law, whenever the chief law enforcement officer of a 

4 State, or an official or agency designated by a State, 

5 has reason to believe that any person has violated or 

6 is violating the provisions of section 3 or 4, the 

7 State— 

8 (A) may bring an action to enjoin such vio9 lation in any appropriate United States district 

10 court or any other court of competent jurisdic11 tion; 

12 (B) may bring an action on behalf of its 

13 residents to recover damages for which the per14 son is liable to such residents under section 5 

15 as a result of the violation; and 

16 (C) in the case of any successful action 

17 under subparagraph (A) or (B), shall be award18 ed the costs of the action. 

19 (2) RIGHTS OF FEDERAL TRADE COMMIS20 SION.— 

21 (A) NOTICE TO COMMISSION.—The State 

22 shall serve prior written notice of any civil ac23 tion under paragraph (1) upon the Commission 

24 and provide the Commission with a copy of its 

25 complaint, except in any case in which such 


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1 prior notice is not feasible, in which case the 

2 State shall serve such notice immediately upon 

3 instituting such action. 

4 (B) INTERVENTION.—The Commission 

5 shall have the right— 

6 (i) to intervene in any action referred 

7 to in subparagraph (A); 

8 (ii) upon so intervening, to be heard 

9 on all matters arising in the action; 

10 (iii) to remove the action to the appro11 priate United States district court; and 

12 (iv) to file petitions for appeal in such 

13 actions. 

14 (3) INVESTIGATORY POWERS.—For purposes of 

15 bringing any action under this subsection, nothing in 

16 this subsection shall prevent the chief law enforce17 ment officer, or an official or agency designated by 

18 a State, from exercising the powers conferred on the 

19 chief law enforcement officer or such official by the 

20 laws of such State to conduct investigations or to 

21 administer oaths or affirmations, or to compel the 

22 attendance of witnesses or the production of docu23 mentary and other evidence. 

24 (4) LIMITATION.—Whenever the Federal Trade 

25 Commission has instituted a civil action for a violaVerDate Nov 24 2008 07:06 Jan 07, 2009 Jkt 079200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S117.IS S117

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1 tion of section 3 or 4, no State may, during the 

2 pendency of such action, bring an action under this 

3 section against any defendant named in the com4 plaint of the Commission for any violation of section 

5 3 or 4 that is alleged in that complaint. 

6 SEC. 7. PREEMPTION. 

7 Nothing in this title affects any provision of State 

8 or local law respecting any foreclosure consultant, residen9 tial mortgage loan, or residential real property that pro10 vides equal or greater protection to homeowners than what 

11 is provided under this title. 

Æ 


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