II 

110TH CONGRESS 

1ST SESSION S. 1386 

To amend the Housing and Urban Development Act of 1968, to provide 

better assistance to low- and moderate-income families, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 14, 2007 

Mr. REED introduced the following bill; which was read twice and referred to 

the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Housing and Urban Development Act of 1968, 

to provide better assistance to low- and moderate-income 

families, 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 ‘‘Homeownership Pro5 tection and Enhancement Act of 2007’’. 

6 SEC. 2. REFORM OF SECTION 106 OF THE HOUSING AND 

7 URBAN DEVELOPMENT ACT OF 1968. 

8 Section 106 of the Housing and Urban Development 

9 Act of 1968 (12 U.S.C. 1701x) is amended— 


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1 (1) in subsection (c)— 

2 (A) in paragraph (3)— 

3 (i) in subparagraph (A)(ii), by strik4 ing ‘‘; and’’ and inserting ‘‘; or’’; and 

5 (ii) in subparagraph (A)(iii), by strik6 ing ‘‘involving principal’’ and all that fol7 lows through ‘‘the appraised’’ and insert8 ing ‘‘in which a homeowner has total eq9 uity equal to less than 3 percent of the ap10 praised’’; 

11 (B) in paragraph (4)— 

12 (i) in subparagraph (C)— 

13 (I) in clause (i), by striking ‘‘; 

14 or’’ and inserting a semicolon; 

15 (II) in clause (ii), by striking the 

16 period at the end and inserting a 

17 semicolon; 

18 (III) by adding at the end the 

19 following: 

20 ‘‘(iii) a significant reduction in the in21 come of the household due to divorce or 

22 death; or 

23 ‘‘(iv) a significant increase in basic ex24 penses of the homeowner or an immediate 

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1 ing the spouse, child, or parent for whom 

2 the homeowner provides substantial care or 

3 financial assistance) due to— 

4 ‘‘(I) an unexpected or significant 

5 increase in medical expenses; 

6 ‘‘(II) a divorce; 

7 ‘‘(III) unexpected and significant 

8 damage to the property, the repair of 

9 which will not be covered by private or 

10 public insurance; 

11 ‘‘(IV) a large property-tax in12 crease; or 

13 ‘‘(V) a large increase in condo14 minium or cooperative fees, dues, or 

15 assessments; or’’; and 

16 (ii) by adding at the end the fol17 lowing: 

18 ‘‘(D) the Secretary of Housing and Urban 

19 Development determines that the annual in20 come of the homeowner is no greater than the 

21 annual income established by the Secretary as 

22 being of low- or moderate-income.’’; 

23 (C) in paragraph (5)— 


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1 (i) by striking subparagraph (A) and 

2 inserting a new subparagraph (A) as fol3 lows: 

4 ‘‘(A) NOTIFICATION OF AVAILABILITY OF

5 PRE-PURCHASE HOMEOWNERSHIP COUNSELING, 

6 HOMEOWNERSHIP COUNSELING, AND HOME7 OWNERSHIP PROTECTION CENTER SERVICES.— 

8 ‘‘(i) NOTIFICATION TO MORTGAGE AP9 PLICANTS AT TIME OF MORTGAGE APPLI10 CATION.— 

11 ‘‘(I) IN GENERAL.—A proposed 

12 mortgagee shall provide notice to any 

13 applicant for a mortgage described in 

14 paragraph (4). 

15 ‘‘(II) CONTENT OF NOTICE.— 

16 The notice required under subclause 

17 (I) shall— 

18 ‘‘(aa) if provided to an eligi19 ble mortgage applicant, state 

20 that completion of a counseling 

21 program is required for insurance 

22 pursuant to section 203 of the 

23 National Housing Act (12 

24 U.S.C.1709); 


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1 ‘‘(bb) notify the mortgage 

2 applicant of the availability of 

3 homeownership counseling pro4 vided by non-profit organizations 

5 approved by the Secretary and 

6 experienced in the provision of 

7 pre-purchase homeownership 

8 counseling, or provide the toll9 free telephone number estab10 lished by the Secretary under 

11 subparagraph (D)(i); and 

12 ‘‘(cc) notify the mortgage 

13 applicant or homeowner by a 

14 statement or notice, written in 

15 plain English by the Secretary of 

16 Housing and Urban Develop17 ment, in consultation with the 

18 Secretary of Defense and the 

19 Secretary of the Treasury, ex20 plaining the mortgage and fore21 closure rights of servicemembers, 

22 and the dependents of such 

23 servicemembers, under the 

24 Servicemembers Civil Relief Act 

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1 cluding the toll-free military one 

2 source number to call if 

3 servicemembers, or the depend4 ents of such servicemembers, re5 quire further assistance. 

6 ‘‘(ii) NOTIFICATION AT TIME OF

7 CLOSING OF AVAILABILITY OF COUNSELING

8 UPON DELINQUENCY AND SERVICES OF

9 STATE HOMEOWNERSHIP PROTECTION

10 CENTERS.— 

11 ‘‘(I) IN GENERAL.—At the time 

12 of closing, and together with the final 

13 signed loan documents, a mortgagee 

14 shall provide to the homeowner a 

15 plain language statement in con16 spicuous 16-point type or larger which 

17 shall include the following: 

18 ‘‘(aa) COUNSELING STATE19 MENT.—A counseling statement 

20 that reads as follows: 

21 ‘If you are more than 30 days 

22 late on your mortgage payments, 

23 your lender or loan servicer is re24 quired by law to notify you of 

25 agencies approved by the United 


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1 States Department of Housing 

2 and Urban Development (HUD) 

3 that may be able to assist you, 

4 including the contact information 

5 for your State Homeownership 

6 Protection Center if there is one 

7 operating in your State. Before 

8 you miss another mortgage pay9 ment, you are strongly encour10 aged to contact your lender or 

11 loan servicer or one of the agen12 cies on the approved list for as13 sistance. If you are more than 60 

14 days late on your mortgage pay15 ments, your lender or loan 

16 servicer is required by law to 

17 send you a second notification 

18 containing this information. In 

19 addition, if you are more than 60 

20 days late on your mortgage pay21 ment and you are registered with 

22 a State Homeownership Protec23 tion Center, your lender or loan 

24 servicer also will be required to 

25 notify the Center, so that the 


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1 Center can contact you regarding 

2 any assistance it may be able to 

3 provide. 

4 ‘‘(bb) COUNSELING AGENCY

5 LISTING.—A listing of at least 5 

6 housing counseling agencies ap7 proved by the Department of 

8 Housing and Urban Develop9 ment, at least 1 of which is lo10 cated in the State in which the 

11 property to be mortgaged is lo12 cated. 

13 ‘‘(cc) TOLL-FREE NUM14 BER.—The listing of the toll-free 

15 telephone number established by 

16 the Secretary under subpara17 graph (D)(i). 

18 ‘‘(dd) CONTACT INFORMA19 TION FOR STATE HOMEOWNER20 SHIP PROTECTION CENTER.—The 

21 contact information, including 

22 telephone number, email address, 

23 and physical address of the State 

24 Homeownership Protection Cen25 ter, if such a Center is operating 


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1 in the State in which the prop2 erty to be mortgaged is located. 

3 ‘‘(ee) NOTICE TO

4 SERVICEMEMBERS OR DEPEND5 ENTS OF SERVICEMEMBERS.—A 

6 statement, written in plain 

7 English, drafted by the Secretary 

8 of Housing and Urban Develop9 ment, in consultation with the 

10 Secretary of Defense and the 

11 Secretary of the Treasury, ex12 plaining the mortgage and fore13 closure rights of servicemembers, 

14 and the dependents of such 

15 servicemembers, under the 

16 Servicemembers Civil Relief Act 

17 (50 U.S.C. App. 501 et seq.), in18 cluding the toll-free military one 

19 source number to call if 

20 servicemembers, or the depend21 ents of such servicemembers, re22 quire further assistance. 

23 ‘‘(ff) SUMMARY OF DUTY TO

24 ENGAGE IN LOSS MITIGATION.— 

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1 tion of the mortgagee to engage 

2 in reasonable loss mitigation ac3 tivities for the purpose of pro4 viding an alternative to fore5 closure, including language in6 forming the homeowner that the 

7 mortgagee’s failure to comply 

8 with such loss mitigation require9 ments constitutes a defense to 

10 the foreclosure. 

11 ‘‘(II) MANNER OF DISCLO12 SURE.— 

13 ‘‘(aa) 1 DOCUMENT.—At the 

14 discretion of the mortgagee, the 

15 mortgagee may provide all the in16 formation required under clause 

17 (I) in one single document. 

18 ‘‘(bb) REQUIRED DESCRIP19 TION OF DOCUMENT AT CLOS20 ING.—A mortgagee shall briefly 

21 describe the document in item 

22 (aa) to the homeowner during 

23 closing. 

24 ‘‘(III) OTHER REQUIREMENTS AT

25 TIME OF CLOSING FOR MORTGAGEES


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1 OPERATING IN A STATE WHERE A

2 STATE HOMEOWNERSHIP PROTECTION

3 CENTER IS LOCATED.— 

4 ‘‘(aa) REGISTRATION WITH

5 STATE HOMEOWNERSHIP PRO6 TECTION CENTERS.—In addition 

7 to the required documents de8 scribed in subclauses (I) and (II), 

9 at the time of closing the mort10 gagee shall explain in writing and 

11 verbally that the homeowner’s 

12 name and contact information 

13 will be registered with a State 

14 Homeownership Protection Cen15 ter so that the Center can at16 tempt to reach the homeowner if 

17 the homeowner is 60 days or 

18 more late in making any mort19 gage payment. 

20 ‘‘(bb) BROCHURES.—The 

21 mortgagee shall distribute to a 

22 homeowner any brochure, pam23 phlet, or other brief document 

24 prepared by the State Home25 ownership Protection Center that 


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1 describes the services provided by 

2 the Center. 

3 ‘‘(cc) DUTY OF MORTGAGEE

4 TO FORWARD INFORMATION.— 

5 The mortgagee shall forward to 

6 the State Homeownership Protec7 tion Center the contact informa8 tion of the mortgage applicant 

9 and shall agree to notify the Cen10 ter if the mortgage payment of 

11 the homeowner is or becomes 

12 more than 60 days late so that 

13 the Center can attempt to reach 

14 the homeowner. 

15 ‘‘(dd) REQUIRED DISCLO16 SURES TO THE HOMEOWNER.— 

17 Each homeowner shall be in18 formed that being registered with 

19 a State Homeownership Protec20 tion Center under this subclause 

21 may provide easier access to as22 sistance in case of financial dif23 ficulty and that no information 

24 that would make it possible to 

25 identify the homeowner will be 


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1 given to any other entity for any 

2 reason without the prior approval 

3 of the homeowner. 

4 ‘‘(ee) ADDITIONAL RESPON5 SIBILITIES OF MORTGAGEES.— 

6 The mortgagee shall note reg7 istration with the State Home8 ownership Protection Center with 

9 the loan information of the home10 owner, however such information 

11 is stored, and shall ensure that 

12 any entity which purchases the 

13 loan of the homeowner is aware 

14 of where they are registered and 

15 the requirement that the State 

16 Homeownership Protection Cen17 ter be notified if the homeowner 

18 is or becomes more than 60 days 

19 late on any mortgage payment. 

20 ‘‘(iii) NOTICE UPON DELINQUENCY OF

21 HOMEOWNER.— 

22 ‘‘(I) IN GENERAL.—Except as 

23 provided in subparagraph (C)— 

24 ‘‘(aa) if a homeowner be25 comes 30 or more days late on 


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1 any mortgage payment, the mort2 gagee shall provide notice in the 

3 manner described in clause (iv) 

4 to any eligible homeowner who 

5 fails to pay any amount within 

6 30 days of the date the amount 

7 is due under a home loan; 

8 ‘‘(bb) if a homeowner be9 comes 60 or more days late on 

10 any mortgage payment, the mort11 gagee shall provide notice to the 

12 homeowner a second time in the 

13 manner described in clause (iv) 

14 to any eligible homeowner who 

15 fails to pay any amount within 

16 60 days of the date the amount 

17 is due under a home loan; and 

18 ‘‘(cc) if a homeowner be19 comes 60 or more days late on 

20 any mortgage payment, and such 

21 homeowner is registered with a 

22 State Homeownership Protection 

23 Center, the mortgagee shall pro24 vide notice to that State Home25 ownership Protection Center. 


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1 ‘‘(II) FAILURE TO PROVIDE NO2 TICE.—Failure to provide notice to a 

3 homeowner or to a State Homeowner4 ship Protection Center required under 

5 this subsection constitutes a defense 

6 to foreclosure. 

7 ‘‘(iv) CONTENT OF NOTICE UPON DE8 LINQUENCY OF HOMEOWNER.— 

9 ‘‘(I) REGISTERED HOME10 OWNERS.—The notice required under 

11 clause (iii) for a homeowner registered 

12 with a State Homeownership Protec13 tion Center shall— 

14 ‘‘(aa) notify the homeowner 

15 of the availability of any home16 ownership counseling provided by 

17 the mortgagee; 

18 ‘‘(bb) provide the home19 owner a current copy of the 

20 statement described in clause 

21 (ii)(I) provided to the homeowner 

22 at closing; and 

23 ‘‘(cc) when the homeowner 

24 becomes 60 or more days late on 

25 any mortgage payment— 


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1 ‘‘(AA) notify the State 

2 Homeownership Protection 

3 Center with whom the home4 owner is registered; and 

5 ‘‘(BB) provide the Cen6 ter with the contact infor7 mation of the homeowner. 

8 ‘‘(II) NON-REGISTERED HOME9 OWNERS.—The notice required under 

10 clause (iii) for a homeowner not reg11 istered with a State Homeownership 

12 Protection Center shall— 

13 ‘‘(aa) notify the homeowner 

14 of the availability of any home15 ownership counseling provided by 

16 the mortgagee; and 

17 ‘‘(bb) provide the home18 owner a current copy of the 

19 statement described in clause 

20 (ii)(I) provided to the homeowner 

21 at closing. 

22 ‘‘(III) MAILINGS.—When the no23 tice required under clause (iii) is sent, 

24 the outside of the mailing envelope 

25 shall state that such mailing contains 


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1 federally required information on Fed2 eral Government-approved financial 

3 counseling agencies.’’; 

4 (ii) by striking subparagraph (B) and 

5 inserting a new subparagraph (B) as fol6 lows: 

7 ‘‘(B) DEADLINE FOR NOTIFICATION.—The 

8 notification required in subparagraph (A) shall 

9 be made in a manner approved by the Sec10 retary.’’; 

11 (iii) in subparagraph (D)(i)(I), by in12 serting ‘‘post-purchase’’ before ‘‘home13 ownership counseling’’; and 

14 (iv) by adding at the end the fol15 lowing: 

16 ‘‘(F) NATIONWIDE AVAILABILITY.—The 

17 Secretary shall ensure that each State is served 

18 by at least one local, regional, or national agen19 cy with an office in the State that provides the 

20 services described in this paragraph.’’; 

21 (D) in paragraph (6)(D), by inserting ‘‘for 

22 a primary residence’’ before the period; 

23 (2) by striking subsection (d) and inserting the 

24 following: 


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1 ‘‘(d) GRANTS TO STATES FOR STATE HOMEOWNER2 SHIP PROTECTION CENTERS.— 

3 ‘‘(1) IN GENERAL.—The Secretary shall award 

4 grants, on a competitive basis, to State housing fi5 nance agencies or any other designated State agen6 cy, to enable such agencies to establish and operate 

7 State Homeownership Protection Centers. 

8 ‘‘(2) NOTIFICATION OF FUNDING AVAIL9 ABILITY.—The Secretary shall release a Notification 

10 of Funding Availability for grants awarded under 

11 this subsection for a fiscal year not later than 3 

12 months after the date of enactment of the appro13 priate Act making appropriations for the Depart14 ment of Housing and Urban Development for the 

15 fiscal year. 

16 ‘‘(3) APPLICATION.— 

17 ‘‘(A) SUBMISSION TO THE SECRETARY.— 

18 To be eligible to receive a grant under this sub19 section, a State housing finance agency or any 

20 other designated State agency shall submit an 

21 application to the Secretary, at such time and 

22 in such manner as the Secretary may require, 

23 and containing such information as the Sec24 retary determines necessary— 


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1 ‘‘(i) to determine the ability of such 

2 agency to operate a Center; and 

3 ‘‘(ii) to establish priorities for funding 

4 based on need. 

5 ‘‘(B) ANNOUNCEMENT OF AWARDS.—The 

6 Secretary shall announce, within 4 months after 

7 the last date for the submission of applications 

8 described in subparagraph (A) for a fiscal year, 

9 the grants conditionally awarded under this 

10 subsection for that fiscal year. 

11 ‘‘(4) PURPOSE.—The purpose of any State 

12 Homeownership Protection Center established under 

13 paragraph (1) shall be— 

14 ‘‘(A) to provide a centralized location for 

15 information on, and referral to, public services 

16 available to assist a homeowner who is in de17 fault on their home loan; 

18 ‘‘(B) to provide a homeowner with referrals 

19 to counseling agencies approved by the Depart20 ment of Housing and Urban Development that 

21 may be able to assist that homeowner, if that 

22 homeowner is in default on their home loan; 

23 and 

24 ‘‘(C) to attempt to contact each home25 owner who is registered with the Center who is 


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1 more than 60 days late on any mortgage pay2 ment with the goal of— 

3 ‘‘(i) determining— 

4 ‘‘(I) if such homeowner needs as5 sistance in avoiding foreclosure on 

6 their home; and 

7 ‘‘(II) what kind of assistance is 

8 needed by such homeowner to avoid 

9 foreclosure on their home; and 

10 ‘‘(ii) providing referrals to any appro11 priate programs or entities that may be 

12 able to provide any such assistance. 

13 ‘‘(5) HOMEOWNERSHIP PROTECTION CEN14 TERS.— 

15 ‘‘(A) USE OF FUNDS.—Each State housing 

16 finance agency or any other designated State 

17 agency, who is a recipient of a grant under 

18 paragraph (1) may only use such grant 

19 amounts to establish and operate State Home20 ownership Protection Centers in that State. 

21 ‘‘(B) REQUIRED ACTIVITIES.—Each State 

22 Homeownership Protection Center established 

23 under this section shall, at a minimum— 


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1 ‘‘(i) provide a toll-free number 

2 through which any homeowner in financial 

3 distress can receive— 

4 ‘‘(I) information on— 

5 ‘‘(aa) the Center and its 

6 services; and 

7 ‘‘(bb) public programs that 

8 provide assistance to home9 owners; and 

10 ‘‘(II) a listing of counseling agen11 cies approved by the Department of 

12 Housing and Urban Development; 

13 ‘‘(ii) provide information to home14 owners on available community resources 

15 relating to homeownership, including— 

16 ‘‘(I) public assistance or benefits 

17 programs; 

18 ‘‘(II) mortgage assistance pro19 grams; 

20 ‘‘(III) home repair assistance 

21 programs; 

22 ‘‘(IV) legal assistance programs; 

23 ‘‘(V) utility assistance programs; 

24 ‘‘(VI) food assistance programs; 

25 and 


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1 ‘‘(VII) other Federal, State, or 

2 local government funded social serv3 ice; 

4 ‘‘(iii) provide staff who— 

5 ‘‘(I) are able to conduct a brief 

6 assessment of the situation of a home7 owner; and 

8 ‘‘(II) based on such assessment 

9 can— 

10 ‘‘(aa) make appropriate re11 ferrals to, and provide applica12 tion information regarding, pro13 grams that can provide assist14 ance to such homeowner; and 

15 ‘‘(bb) provide a listing of 

16 counseling agencies approved by 

17 the Department of Housing and 

18 Urban Development; and 

19 ‘‘(iv) provide to any homeowner in fi20 nancial distress access to applications for 

21 public assistance or benefits program 

22 which may be of assistance to such home23 owner. 

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1 graph (B), each State Homeownership Protec2 tion Center shall— 

3 ‘‘(i) be technologically capable of— 

4 ‘‘(I) accepting and recording in a 

5 secure database the contact informa6 tion of any homeowner forwarded to 

7 the Center by a mortgagee pursuant 

8 to subsection (c)(5)(A)(ii)(III); and 

9 ‘‘(II) accessing the contact infor10 mation described in subclause (I), if 

11 the Center is notified by a mortgagee 

12 pursuant to subsection 

13 (c)(5)(A)(ii)(III) that the homeowner 

14 is 60 or more days late in paying any 

15 amount due under the home loan of 

16 such homeowner; 

17 ‘‘(ii) if notified by a mortgagee pursu18 ant to subsection (c)(5)(A)(ii)(III) that a 

19 homeowner who is registered with the Cen20 ter is 60 or more days late in paying any 

21 amount due under the home loan of such 

22 homeowner, attempt to contact such home23 owner to provide assistance or suggest 

24 public programs or counseling agencies 


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1 that may provide assistance to the home2 owner; and 

3 ‘‘(iii) not release to the public or to 

4 any third party the name of any home5 owner who is registered with the Center, or 

6 of any person who visits the Center for as7 sistance, or any other information that 

8 would make it possible to identify such a 

9 person, without the prior written consent 

10 of such homeowner or person. 

11 ‘‘(6) GRANTS TO STATES WITH HOMEOWNER12 SHIP PROTECTION CENTERS TO ASSIST HOME13 OWNERS IN DEFAULT.— 

14 ‘‘(A) GRANT AUTHORITY.—The Secretary 

15 shall award competitive grants to State housing 

16 finance agencies, or to any other designated 

17 State agency, located in a State with a State 

18 Homeownership Protection Center established 

19 under paragraph (1), to enable such agencies in 

20 partnership with State Homeownership Protec21 tion Centers to provide 1-time emergency 

22 grants or subsidized loans to eligible home23 owners to assist such homeowners in satisfying 

24 any amounts past due on their home loans. 


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1 ‘‘(B) NOTIFICATION OF FUNDING AVAIL2 ABILITY.—The Secretary shall release a Notifi3 cation of Funding Availability for grants award4 ed under this paragraph for a fiscal year not 

5 later than 3 months after the date of enactment 

6 of the appropriate Act making appropriations 

7 for the Department of Housing and Urban De8 velopment for the fiscal year. 

9 ‘‘(C) APPLICATION.— 

10 ‘‘(i) SUBMISSION TO THE SEC11 RETARY.—To be eligible to receive a grant 

12 under this paragraph a State housing fi13 nance agency or any other designated 

14 State agency located in a State where a 

15 State Homeownership Protection Center is 

16 located, shall submit an application to the 

17 Secretary at such time and in such manner 

18 as the Secretary may require, and con19 taining such information as the Secretary 

20 determines necessary— 

21 ‘‘(I) to determine compliance 

22 with the requirements and criteria 

23 under this paragraph; and 

24 ‘‘(II) to establish priorities for 

25 funding based on need. 


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1 ‘‘(ii) ANNOUNCEMENT OF AWARDS.— 

2 The Secretary shall announce, within 4 

3 months after the last date for the submis4 sion of applications described in this para5 graph for a fiscal year, the grants condi6 tionally awarded under this paragraph for 

7 that fiscal year. 

8 ‘‘(D) OTHER REQUIREMENTS.— 

9 ‘‘(i) SEPARATE ACCOUNTS.—To be eli10 gible to receive any amounts awarded 

11 under this paragraph and prior to pro12 viding any emergency grants or subsidized 

13 loans, a State housing finance agency or 

14 any other designated State agency shall es15 tablish a separate account in which such 

16 amounts are to be held. 

17 ‘‘(ii) LIMITED USE.—Any amounts 

18 made available for purposes of this para19 graph in any appropriations Act shall be 

20 used only to provide 1-time emergency 

21 grants or subsidized loans to eligible home22 owners to assist such homeowners in satis23 fying any amounts past due on their home 

24 loan as authorized under subparagraph 

25 (A). 


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1 ‘‘(iii) REPAYMENT OF LOANS.—Any 

2 amounts repaid on a subsidized loan made 

3 under this paragraph shall be deposited 

4 back into the separate account established 

5 under clause (i) from which the loan funds 

6 originated. 

7 ‘‘(iv) OTHER FUNDING.—Amounts do8 nated or otherwise directed to be used for 

9 purposes of this paragraph may be depos10 ited in any separate account established 

11 under clause (i) to help capitalize such ac12 count. 

13 ‘‘(E) PROGRAM REQUIREMENTS.— 

14 ‘‘(i) IN GENERAL.—Each State hous15 ing finance agency or any other designated 

16 State agency that is a recipient of a grant 

17 to assist homeowners in default under this 

18 paragraph, in cooperation with the State 

19 Homeownership Protection Centers in such 

20 State, shall develop program requirements 

21 for eligible homeowners seeking a 1-time 

22 emergency grant or subsidized loan under 

23 this paragraph. 

24 ‘‘(ii) REQUIRED CONTENT.—The pro25 gram requirements developed under clause 


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1 (i) shall, at a minimum, include the fol2 lowing: 

3 ‘‘(I) That any loan or grant 

4 under this paragraph may be provided 

5 for up to a four-family owner-occupied 

6 residence, including one-family units 

7 in a condominium project or a mem8 bership interest and occupancy agree9 ment in a cooperative housing project, 

10 that is used as the principal residence 

11 of the applicant seeking such grant or 

12 loan. 

13 ‘‘(II) That each applicant for a 

14 loan or grant shall be a permanent 

15 resident of the State in which the 

16 principal residence of such applicant 

17 is located. 

18 ‘‘(III) That each applicant— 

19 ‘‘(aa) provide documentation 

20 that such applicant either— 

21 ‘‘(AA) is suffering from 

22 financial hardship which is 

23 unexpected or due to cir24 cumstances beyond the con25 trol of the applicant; or 


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1 ‘‘(BB) is eligible for 

2 homeownership counseling 

3 under subsection (c)(4); and 

4 ‘‘(bb) offer proof that such 

5 applicant is unable, without fi6 nancial assistance— 

7 ‘‘(AA) to correct any 

8 delinquency on any amounts 

9 past due on the home loan 

10 of such applicant within a 

11 reasonable time; and 

12 ‘‘(BB) to make full 

13 payment on any home loan 

14 payment due within the next 

15 30 days. 

16 ‘‘(IV) That a State Homeowner17 ship Protection Center, State housing 

18 finance agency, or any other des19 ignated State agency, or its designee, 

20 has determined, in its discretion, that 

21 there is a reasonable prospect that 

22 any applicant for a grant or loan 

23 under this paragraph will be able to 

24 resume full payments on the home 

25 loan of such applicant not later than 


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1 12 months after the date on which 

2 such applicant will first receive any 

3 grant or loan amounts under this 

4 paragraph. 

5 ‘‘(V) That the applicant has not, 

6 at any point prior, and with respect to 

7 the same real property, previously re8 ceived a grant or loan under this 

9 paragraph. 

10 ‘‘(F) LOAN REQUIREMENTS.— 

11 ‘‘(i) RATE OF INTEREST.—Any loan 

12 under this section shall carry a simple an13 nual percentage rate of interest which shall 

14 not exceed the prime rate of interest, as 

15 such prime rate is determined from time to 

16 time by at least 75 percent of the 30 larg17 est depository institutions in the Nation. 

18 ‘‘(ii) NO COMPOUNDING.—Interest on 

19 the outstanding principal balance of any 

20 loan under this section shall not com21 pound. 

22 ‘‘(iii) BALANCE DUE.— 

23 ‘‘(I) IN GENERAL.—The principal 

24 of any loan made under this para25 graph, including any interest accrued 


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1 on such principal, shall not be due 

2 and payable unless— 

3 ‘‘(aa) the real property se4 curing such loan is sold or trans5 ferred; or 

6 ‘‘(bb) the last surviving 

7 homeowner of such real property 

8 dies. 

9 ‘‘(II) DEPOSIT OF BALANCE

10 DUE.—If either event described in 

11 subclause (I) occurs, the principal of 

12 any loan made under this paragraph, 

13 including any interest accrued on such 

14 principal, shall immediately become 

15 due and payable to the State entity 

16 from which the loan originated. 

17 ‘‘(iv) NO PENALTY FOR PREPAY18 MENT.—Any homeowner who receives a 

19 loan under this paragraph may repay the 

20 loan in full, without penalty, by lump sum 

21 or by installment payments, at any time 

22 prior to the loan becoming due and pay23 able. 

24 ‘‘(v) CAP ON LOAN AMOUNT.—The 

25 amount of any loan to any 1 homeowner 


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1 under this section shall not exceed 20 per2 cent of the original mortgage amount bor3 rowed by the homeowner. 

4 ‘‘(vi) SUBORDINATION PERMITTED.— 

5 Any loan made under this paragraph will 

6 be subordinated to any refinancing of the 

7 first mortgage, any preexisting subordinate 

8 financing, any purchase money mortgage, 

9 or subordinated for any other reason, as 

10 determined by the State. 

11 ‘‘(G) EXISTING LOAN FUNDS.—Any State 

12 or State housing finance agency with a pre13 viously existing fund established to make loans 

14 to assist homeowners in satisfying any amounts 

15 past due on their home loan may use funds ap16 propriated for purposes of this section for that 

17 existing loan fund, even if the eligibility, appli18 cation, program, or use requirements for that 

19 loan program differ from the eligibility, applica20 tion, program, and use requirements of this 

21 paragraph, unless such use is expressly deter22 mined by the Secretary to be inappropriate.’’; 

23 (3) in subsection (f)(2)(A), by striking ‘‘and 

24 rental counselors.’’ and inserting ‘‘counselors in both 


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1 pre-purchase and post-purchase counseling and in 

2 training rental counselors.’’; and 

3 (4) by adding at the end the following: 

4 ‘‘(g) DUTY TO ENGAGE IN LOSS MITIGATION.— 

5 ‘‘(1) IN GENERAL.—Upon default of any feder6 ally related mortgage, as defined in section 3(1)(B) 

7 of the Real Estate Settlement Procedures Act of 

8 1974 (12 U.S.C. 2202(1)(B)), a mortgagee shall en9 gage in reasonable loss mitigation activities for the 

10 purpose of providing an alternative to foreclosure. 

11 ‘‘(2) DEFENSE TO FORECLOSURE.—A mortga12 gee’s failure to comply with the requirements of 

13 paragraph (1) constitutes a defense to the fore14 closure. 

15 ‘‘(3) NO FORECLOSURE IF NOTICE OF APPLICA16 TION FOR HOME PRESERVATION LOAN.—A mort17 gagee shall not initiate or continue a foreclosure— 

18 ‘‘(A) upon receipt of a written confirma19 tion that the homeowner has applied for a home 

20 preservation loan under subsection (d)(6); and 

21 ‘‘(B) for the period of 1 month after re22 ceipt of such written confirmation or until the 

23 mortgagee is informed, in writing, that the 

24 homeowner is not eligible for a home preserva25 tion loan, whichever occurs first. 


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1 ‘‘(4) DEFINITION OF LOSS MITIGATION ACTIVI2 TIES.— 

3 ‘‘(A) IN GENERAL.—As used in this sub4 section, the term ‘loss mitigation activities’ 

5 means activities that minimize the potential 

6 losses to a homeowner or investor that may re7 sult from— 

8 ‘‘(i) a homeowner’s inability to pay 

9 the mortgage payments due on a home 

10 loan; and 

11 ‘‘(ii) any subsequent foreclosure ac12 tion. 

13 ‘‘(B) ALTERNATIVE TO FORECLOSURE.— 

14 Loss mitigation activities provide alternatives to 

15 foreclosure whenever possible and reasonably 

16 ensure the long-term affordability of any mort17 gage retained pursuant to such activities. 

18 ‘‘(C) PROCESS OF MITIGATION.— 

19 ‘‘(i) IN GENERAL.—Loss mitigation 

20 activities involve reasonably analyzing the 

21 borrower’s financial situation, evaluating 

22 the property value of the property to be 

23 mortgaged, and assessing the feasibility of 

24 measures including— 


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1 ‘‘(I) waiver of any late payment 

2 charge or, if applicable, penalty inter3 est; 

4 ‘‘(II) forbearance pursuant to a 

5 written agreement between the bor6 rower and the servicer providing for a 

7 temporary reduction in monthly pay8 ments followed by a reamortization 

9 and new repayment schedule including 

10 the arrearage; 

11 ‘‘(III) waiver, modification, or 

12 variation of any term of a mortgage, 

13 including modifications that change 

14 the mortgage rate, forgive the pay15 ment of principal or interest, extend 

16 the final maturity date of such mort17 gage, or begin to include an escrow 

18 for taxes and insurance; 

19 ‘‘(IV) acceptance of payment 

20 from the homeowner of an amount 

21 less than the stated principal balance 

22 in final satisfaction of such mortgage; 

23 ‘‘(V) assumption; 

24 ‘‘(VI) pre-foreclosure sale; and 

25 ‘‘(VII) deed in lieu of foreclosure. 


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1 ‘‘(ii) PRIORITY.—Activities described 

2 in subclauses (V), (VI), and (VII) shall 

3 only be pursued after a reasonable evalua4 tion of the feasibility of activities described 

5 in subclause (I), (II), (III), and (IV), 

6 based upon the homeowner’s cir7 cumstances. 

8 ‘‘(h) OVERSIGHT OF PUBLIC AND PRIVATE EFFORTS

9 TO REDUCE MORTGAGE DEFAULTS AND FORE10 CLOSURES.— 

11 ‘‘(1) MONITORING OF HOME LOANS.—The Sec12 retary, in consultation with the Department of 

13 Housing and Urban Development, the Office of the 

14 Comptroller of the Currency, the Board of Gov15 ernors of the Federal Reserve System, the Federal 

16 Deposit Insurance Corporation, the National Credit 

17 Union Administration, and the Office of Thrift Su18 pervision, shall develop and implement a plan to 

19 monitor— 

20 ‘‘(A) conditions and trends in the mort21 gage industry in order to predict, as best as 

22 possible, likely future trends in foreclosures; 

23 and 

24 ‘‘(B) the effectiveness of public efforts to 

25 reduce mortgage defaults and foreclosures. 


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1 ‘‘(2) ANNUAL REPORT TO CONGRESS ON MONI2 TORING OF HOME LOANS.—Not later than 1 year 

3 after the development of the plan under paragraph 

4 (1), and every year thereafter, the Secretary shall 

5 submit a report to Congress that— 

6 ‘‘(A) summarizes and describes the find7 ings of the monitoring required under that sub8 paragraph; and 

9 ‘‘(B) includes recommendations or pro10 posals for legislative or administrative action— 

11 ‘‘(i) to increase the authority of the 

12 Secretary to levy penalties against any 

13 mortgagee, or other person or entity, who 

14 fails to comply with the requirements de15 scribed in this section; and 

16 ‘‘(ii) to improve coordination between 

17 various public and private initiatives to re18 duce the overall rate of mortgage defaults 

19 and foreclosures. 

20 ‘‘(3) COMPLIANCE PLAN AND REPORT.—The 

21 Secretary, in consultation with the Department of 

22 Housing and Urban Development, the Office of the 

23 Comptroller of the Currency, the Board of Gov24 ernors of the Federal Reserve System, the Federal 

25 Deposit Insurance Corporation, the National Credit 


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1 Union Administration, and the Office of Thrift Su2 pervision, shall— 

3 ‘‘(A) develop a plan to monitor the compli4 ance with the requirements established in this 

5 section by mortgagees and other persons or en6 tities; and 

7 ‘‘(B) report such plan to Congress. 

8 ‘‘(4) DEVELOPMENT OF A NATIONAL DATABASE

9 ON DEFAULTS AND FORECLOSURES.— 

10 ‘‘(A) IN GENERAL.—The Secretary, in con11 sultation with the Department of Housing and 

12 Urban Development, the Office of the Comp13 troller of the Currency, the Board of Governors 

14 of the Federal Reserve System, the Federal De15 posit Insurance Corporation, the National Cred16 it Union Administration, and the Office of 

17 Thrift Supervision, shall develop recommenda18 tions for a national database on mortgage de19 faults and foreclosures. 

20 ‘‘(B) GOALS OF NATIONAL DATABASE.—In 

21 developing the recommendations under subpara22 graph (A), the Secretary shall consider the 

23 goals of such a national database, which are as 

24 follows: 


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1 ‘‘(i) To provide Federal regulatory 

2 agencies with information on— 

3 ‘‘(I) mortgagees that generate 

4 home loans which go into default or 

5 foreclosure at a rate significantly 

6 higher than the national average for 

7 such mortgagees; and 

8 ‘‘(II) the various factors associ9 ated with those higher rates. 

10 ‘‘(ii) To provide information to the 

11 Federal Government on loans, defaults, 

12 foreclosures, and sheriff sales— 

13 ‘‘(I) which is not otherwise read14 ily available; 

15 ‘‘(II) which would allow for a 

16 better understanding of local, re17 gional, and national trends in delin18 quencies, defaults, and foreclosures; 

19 and 

20 ‘‘(III) so that public policies to 

21 reduce defaults and foreclosures may 

22 be improved. 

23 ‘‘(C) REPORT ON OUTCOMES OF HOME

24 LOANS.— 


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1 ‘‘(i) IN GENERAL.—In order to satisfy 

2 the requirement set forth in this paragraph 

3 and paragraph (1), the Secretary shall pro4 mulgate rules within 18 months of the date 

5 of enactment of the Homeownership Pro6 tection and Enhancement Act of 2007 re7 quiring each lender who has originated 100 

8 or more loans in the previous calendar year 

9 on behalf of itself or another person or en10 tity, or each person or entity that has serv11 iced 100 or more loans in the previous cal12 endar year on behalf of itself or another 

13 entity, to report to the Secretary, on an 

14 annual basis, whatever data the Secretary, 

15 in consultation with the Department of 

16 Housing and Urban Development, the Of17 fice of the Comptroller of the Currency, 

18 the Board of Governors of the Federal Re19 serve System, the Federal Deposit Insur20 ance Corporation, the National Credit 

21 Union Administration, and the Office of 

22 Thrift Supervision, deems sufficient to 

23 meet the requirements set forth in sub24 paragraph (B). 


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1 ‘‘(ii) CONTENT OF REPORT.—At a 

2 minimum, each report required under 

3 clause (i) shall include data— 

4 ‘‘(I) using the same identification 

5 requirements for each loan for which 

6 information is submitted as are estab7 lished under the Home Mortgage Dis8 closure Act (12 U.S.C. 2801 et seq.) 

9 for data reporting, namely— 

10 ‘‘(aa) year of origination; 

11 ‘‘(bb) agency code of origi12 nator; 

13 ‘‘(cc) respondent identifica14 tion number of originator; and 

15 ‘‘(dd) the identifying num16 ber for the loan; 

17 ‘‘(II) regarding the characteris18 tics of each home loan originated in 

19 the preceding 12 months by the lend20 er, person, or entity, including— 

21 ‘‘(aa) loan-to-value ratio at 

22 the time of origination for each 

23 mortgage on the property; 


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1 ‘‘(bb) whether or not there 

2 is an escrow account for taxes 

3 and insurance; 

4 ‘‘(cc) the type of mortgage, 

5 such as a fixed-rate or adjust6 able-rate mortgage; and 

7 ‘‘(dd) any other loan or loan 

8 underwriting characteristics de9 termined by the Secretary, and 

10 the regulators with whom the 

11 Secretary consults under the 

12 terms of subparagraph (C)(i), to 

13 be necessary in order to meet the 

14 requirements of subparagraph 

15 (B) and that are not already 

16 available to the Secretary 

17 through a national mortgage 

18 database; 

19 ‘‘(III) regarding the performance 

20 outcomes of each home loan origi21 nated in the preceding 12 months by 

22 the lender, person, or entity, includ23 ing— 


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1 ‘‘(aa) if such home loan was 

2 in delinquency at any point in 

3 such 12-month period; and 

4 ‘‘(bb) if any foreclosure pro5 ceeding was initiated on such 

6 home loan during such 12-month 

7 period; 

8 ‘‘(IV) sufficient to establish for 

9 each home loan that at any point dur10 ing the preceding 12 months had be11 come 60 or more days delinquent with 

12 respect to a payment on any amount 

13 due under the home loan, or for which 

14 a foreclosure proceeding was initiated, 

15 the interest rate on such home loan at 

16 the time of such delinquency or fore17 closure; 

18 ‘‘(V) regarding foreclosures, in19 cluding— 

20 ‘‘(aa) the date of all fore21 closures initiated by the lender, 

22 person, or entity; and 

23 ‘‘(bb) the combined loan-to24 value ratio of all mortgages on a 


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1 home at the time foreclosure pro2 ceedings were initiated; and 

3 ‘‘(VI) indicating each home loan 

4 for which a foreclosure proceeding was 

5 completed in the preceding 12 

6 months, including— 

7 ‘‘(aa) foreclosure pro8 ceedings initiated in such 12- 

9 month period; and 

10 ‘‘(bb) the date of the fore11 closure completion. 

12 ‘‘(D) REQUIREMENT OF FEDERAL FINAN13 CIAL INSTITUTIONS EXAMINATION COUNCIL TO

14 CREATE A CONSOLIDATED DATABASE.—The 

15 Federal Financial Institutions Examination 

16 Council shall create a consolidated database 

17 that establishes a connection between the data 

18 provided under the Home Mortgage Disclosure 

19 Act (12 U.S.C. 2801 et seq.) and the data pro20 vided under this subsection. 

21 ‘‘(E) REPORT TO CONGRESS ON NATIONAL

22 DATABASE.—Not later than 12 months after 

23 the date of enactment of the Homeownership 

24 Protection and Enhancement Act of 2007, the 

25 Secretary shall report to Congress the recVerDate Aug 31 2005 02:21 May 15, 2007 Jkt 059200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 E:\BILLS\S1386.IS S1386

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1 ommendations required under subparagraph 

2 (A). 

3 ‘‘(i) RULE OF CONSTRUCTION REGARDING MORTGA4 GEES.—As used in this section— 

5 ‘‘(1) the term ‘mortgagee’— 

6 ‘‘(A) means the original lender under a 

7 mortgage; and 

8 ‘‘(B) includes— 

9 ‘‘(i) any servicers, affiliates, agents, 

10 subsidiaries, successors, or assignees of 

11 such lender; and 

12 ‘‘(ii) any subsequent purchaser, trust13 ee, or transferee of any mortgage or credit 

14 instrument issued by such lender; and 

15 ‘‘(2) the term ‘servicer’ means any person who 

16 collects on a home loan, whether they are the owner, 

17 the holder, the assignee, the nominee for the loan, 

18 or the beneficiary of a trust, or any person acting 

19 on behalf of such person. 

20 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated to carry out this sec22 tion— 

23 ‘‘(1) $615,000,000 for fiscal year 2008, of 

24 which— 


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1 ‘‘(A) $300,000,000 shall be for grants to 

2 counseling organizations under subsection (c); 

3 ‘‘(B) $260,000,000 shall be for competitive 

4 grants to States to establish revolving loan 

5 funds under subsection (d)(6); 

6 ‘‘(C) $50,000,000 shall be for grants to es7 tablish and operate State Homeownership Pro8 tection Centers under subsection (d)(1); and 

9 ‘‘(D) $5,000,000 shall be to create the 

10 Federal database under subsection (h)(4); 

11 ‘‘(2) $635,000,000 for fiscal year 2009; and 

12 ‘‘(3) such sums as necessary for each of fiscal 

13 years 2010 through 2012.’’. 

Æ 


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