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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4745 Introduced in House (IH)]

  2d Session
                                H. R. 4745

 To establish a program to assist homeowners experiencing unavoidable, 
  temporary difficulty making payments on mortgages insured under the 
                         National Housing Act.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            October 8, 1998

Mr. Gutierrez introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL

 
 To establish a program to assist homeowners experiencing unavoidable, 
  temporary difficulty making payments on mortgages insured under the 
                         National Housing Act.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    The Act may be cited as the ``Homeowners' Emergency Mortgage 
Assistance Act''.

SEC. 2. MORTGAGE EMERGENCY ASSISTANCE PROGRAM.

    (a) In General.--The Secretary shall establish a program to make 
payments on a mortgage insured under the National Housing Act for a 1- 
to 4-family residence when--
            (1) the mortgagee has given the mortgagor notice in 
        accordance with section 3(b) that it intends to foreclose the 
        mortgage;
            (2) at least 2 full monthly installments due on the 
        mortgage are unpaid after the application of any partial 
        payments that may have been accepted but not yet applied to the 
        mortgage account;
            (3) the mortgagor is suffering financial hardship due to 
        circumstances beyond the mortgagor's control which render the 
        mortgagor unable to correct the delinquency on the mortgage and 
        unable to make full mortgage payments before the expiration of 
        the 60-day period beginning on the date that notice was sent to 
        the mortgagor in accordance with section 3(b);
            (4) there is a reasonable prospect that the mortgagor will 
        be able to resume full mortgage payments not later than 36 
        months after the beginning of the period for which assistance 
        payments are provided and to pay the mortgage in full by its 
        maturity date or by a later date agreed upon by the mortgagee;
            (5) the property mortgaged is the mortgagor's principal 
        place of residence;
            (6) the mortgagor does not own other property which is 
        subject to a mortgage insured or held by the Secretary;
            (7) the mortgagor has applied to the Secretary for 
        assistance in accordance with section 4; and
            (8) the mortgagor has not been more than 60 days in arrears 
        on a residential mortgage within the 2-year period preceding 
        the delinquency for which assistance is requested, unless the 
        mortgagor can demonstrate that the prior delinquency was the 
        result of financial hardship due to circumstances beyond the 
        control of the mortgagor.
    (b) Waiver of Certain Conditions.--The conditions set forth in 
paragraphs (4) and (5) of subsection (a) may be waived by the Secretary 
in any case where requiring the conditions to be met would adversely 
affect achievement of the purposes of the National Housing Act.
    (c) Effect of Finding of Ineligibility.--If, after reviewing an 
application for assistance submitted in accordance with section 4, the 
Secretary determines that the mortgagor has not met the conditions of 
eligibility described in subsection (a), the mortgagor shall be 
prohibited from reapplying for assistance under this Act until the 
expiration of the 6-month period beginning on the date of such 
determination unless there is a material change in the financial 
circumstances of the mortgagor.
    (d) Determination Relating to Financial Hardship.--In determining 
whether a financial hardship is due to circumstances beyond a 
mortgagor's control, the Secretary may consider information regarding 
the mortgagor's employment record, credit history, and current income.
    (e) Housing Counseling Agencies.--The Secretary shall designate and 
approve nonprofit housing counseling agencies in each State to be 
available to assist the Secretary in implementing the program 
established pursuant to subsection (a).

SEC. 3. LEGAL ACTION.

    (a) Conditions Under Which Legal Action Is Prohibited.--Except as 
otherwise provided in the Act, a mortgagee of a mortgage which is 
insured under the National Housing Act for a 1- to 4-family residence 
may not accelerate the maturity of or commence any legal action 
regarding such a mortgage (including mortgage foreclosure to recover 
under such obligation) or take possession of any security of the 
mortgagor for such mortgage obligation--
            (1) before the expiration of the 30-day period beginning on 
        the date that notice of the intent to take such action was sent 
        to the mortgagor in accordance with subsection (b);
            (2) before the expiration of the 30-day period beginning on 
        the date of the initial meeting between the mortgagor and an 
        approved counseling agency held in accordance with section 
        4(a);
            (3) if an application for such assistance under this Act 
        has been submitted to the Secretary on behalf of the mortgagor 
        and such application--
                    (A) is pending; or
                    (B) has been approved by payments have not yet been 
                made toward the mortgage; or
            (4) if payment toward the mortgage is being made under this 
        Act.
    (b) Requirements of Notice.--Notice under this section shall--
            (1) give a brief description of the legal action intended 
        and the basis therefore;
            (2) be sent via first class mail;
            (3) include a list of approved counseling agencies located 
        in the State in which the mortgagor resides; and
            (4) be subject to such other requirements as prescribed by 
        the Secretary.

SEC. 4. APPLICATION FOR ASSISTANCE.

    (a) Meeting.--
            (1) In general.--To apply for assistance under this Act, 
        not later than 30 days after receiving notice in accordance 
        with section 3(b), a mortgagor shall attend a meeting with the 
        mortgagee or an approved counseling agency to attempt to 
        prevent legal action for which the notice was sent by 
        restructuring the scheduled mortgage payment. A meeting under 
        this paragraph may be conducted over the telephone.
            (2) Notice.--If the mortgagor meets with the approved 
        counseling agency within the period specified in paragraph (1), 
        the approved counseling agency shall send notice of the 
        meeting, including the date of the meeting, to the mortgagee 
        not later than 5 business days after the meeting.
    (b) Preparation; Submission.--
            (1) In general.--If it is determined at the meeting that 
        the mortgagor is not likely to be able to pay the mortgage 
        delinquency or otherwise resolve the default and prevent 
        foreclosure before the expiration of the 60-day period 
        beginning on the date of the meeting, the mortgagor may file an 
        application for mortgage assistance under this Act. At the 
        request of the mortgagor, an approved counseling agency shall--
                    (A) assist the mortgagor in preparing an 
                application for assistance under this Act; and
                    (B) not later than 30 days after the mortgagor 
                initially requests assistance in the preparation of the 
                application, submit the completed application to the 
                Secretary.
            (2) Fees.--The Secretary may pay approved counseling 
        agencies a fee, in an amount determined by the Secretary, for 
        rendering assistance pursuant to this Act.
    (c) Notice to Mortgagee.--If the approved counseling agency submits 
an application for assistance to the Secretary on behalf of a 
mortgagor, the approved counseling agency shall, not later than 5 
business days after submitting the application, inform the mortgagee of 
the date that the application was submitted.
    (d) Form; Contents.--An application for assistance under this Act 
shall be submitted on a form prescribed by the Secretary and shall 
include a financial statement disclosing all assets and liabilities of 
the mortgagor, whether singly or jointly held, and all household income 
regardless of source.
    (e) Effect of Misrepresentation.--A mortgagor who intentionally 
misrepresents any financial information in conjunction with the filing 
of an application for assistance under this Act may be denied 
assistance and required to immediately repay any amount of assistance 
received, and the mortgagee may, at any time thereafter, take any legal 
action to enforce the mortgage without any further restrictions or 
requirements under this Act.
    (f) Availability.--An application for assistance under this Act may 
be obtained from an approved counseling agency.
    (g) Determination on Application.--
            (1) Time period.--The Secretary shall determine eligibility 
        of a mortgagor for assistance under this Act not later than 90 
        days after receipt of the application of the mortgagor.
            (2) Notification.--Not later than 5 business days after 
        making the determination on an application for assistance, the 
        Secretary will notify the mortgagor and the mortgagee as to 
        whether the application has been approved or disapproved.

SEC. 5. PAYMENTS.

    (a) Amount To Bring Mortgage Current.--If the Secretary determines 
that a mortgagor is eligible for assistance under this Act, the 
Secretary shall pay to the mortgagee from the Mutual Mortgage Insurance 
Fund the full amount due to the mortgagee pursuant to the terms of the 
mortgage without regard to any acceleration under the mortgage, or the 
full amount of any alternative mortgage payments agreed to by the 
mortgagee and mortgagor on the date that the application is approved by 
the Secretary. This amount shall include the amount of principal, 
interest, taxes, assessments, ground rents, hazard insurance, any 
mortgage insurance or credit insurance premiums, and reasonable 
attorneys' fees incurred by such mortgagee in relation to the 
arrearage.
    (b) Monthly Assistance.--After the Secretary has paid to the 
mortgagee the amount pursuant to subsection (a), the Secretary may 
provide monthly mortgage assistance payments to the mortgagee on behalf 
of the mortgagor.
    (c) Period for Assistance.--Payments under this Act shall be 
provided for a period not to exceed 36 months, either consecutively or 
nonconsecutively. The Secretary shall establish procedures for periodic 
review of the mortgagor's financial circumstances for the purpose of 
determining the necessity for continuation, termination, or adjustment 
of the amount of the payments.

SEC. 6. REPAYMENT OF ASSISTANCE.

    (a) Monthly Payments.--Before making assistance payments under this 
Act on behalf of a mortgagor, the Secretary shall enter into an 
agreement with the mortgagor for repayment of all mortgage assistance 
made by the Secretary plus interest as provided in subsection (b). The 
agreement shall provide for monthly payments by the mortgagor in an 
amount determined as follows:
            (1) If the mortgagor's total housing expense is less than 
        35 percent of the mortgagor's net effective income, the 
        mortgagor shall pay to the Secretary the difference between 35 
        percent of the mortgagor's net effective income and the 
        mortgagor's total housing expense unless otherwise determined 
        by the Secretary after examining the mortgagor's financial 
        circumstances and ability to contribute to repayment of the 
        mortgage assistance.
            (2) If the mortgagor's total housing expense is more than 
        35 percent of the mortgagor's net effective income, repayment 
        of the mortgage assistance shall be deferred until the 
        mortgagor's total housing expense is less than 35 percent of 
        the mortgagor's net effective income.
            (3) Notwithstanding paragraphs (1) and (2), if repayment of 
        mortgage assistance is not made by the date that the mortgage 
        is paid in full, the mortgagor shall make mortgage assistance 
        repayments in an amount not less than the previous regular 
        mortgage payment until the mortgage assistance is repaid.
    (b) Interest.--Interest shall accrue on all mortgage assistance 
made under this Act at the rate determined monthly by the Secretary of 
the Treasury to be equal to the then current average yield on 
outstanding 30-year bonds issued by the Secretary of the Treasury under 
section 3102 of title 31, United States Code, and shall accrue only 
during the period in which the mortgagor is required to make repayment 
under this section.
    (c) Assistance Loans.--The amount by which the mortgagor assistance 
payments made by the Secretary to the mortgagee exceeds the amount of 
payments made by the mortgagor to the Secretary shall be a loan by the 
Secretary to the mortgagor. The loan shall be evidenced by such 
documents as the Secretary shall determine necessary to protect the 
interests of the United States.
    (d) Lien To Secure Repayment of Assistance.--Repayment of amounts 
owed to the Secretary from a mortgagor shall be secured by a mortgage 
lien on the property and by such other obligation as the Secretary may 
require. The lien or other security interest of the Secretary shall not 
be deemed to take priority over any other secured lien or secured 
interest in effect against the mortgagor's property on the date 
assistance payments begin. The Secretary may allow subordination of the 
mortgage assistance lien if such subordination is necessary to permit 
the mortgagor to obtain a home improvement loan for repairs necessary 
to preserve the property.
    (e) Time for Payment.--The mortgagor shall make the above payment 
to the Secretary at least 7 days before each mortgage payment is due 
under the mortgage.
    (f) Review Upon Delinquency.--If the mortgagor fails to pay to the 
Secretary any amounts due directly from him or her under this section 
not later than 15 days after the due date, the Secretary shall review 
the mortgagor's financial circumstances to determine whether the 
delinquency is the result of a change in the mortgagor's financial 
circumstance since the payment amount last was determined. If the 
delinquency is not the result of a change in the mortgagor's financial 
circumstances, the Secretary shall terminate the mortgage assistance 
payments and the mortgagee may, at any time thereafter, take any legal 
action to enforce its mortgage without any further restriction or 
requirement. If the delinquency is the result of such a change, the 
Secretary shall modify the mortgagor's required payments to the 
Secretary as the Secretary shall determine.

SEC. 7. DEFINITIONS.

    For the purposes of this Act, the following definitions apply:
            (1) Approved counseling agency.--The term ``approved 
        counseling agency'' means a nonprofit housing counseling agency 
        approved by the Secretary pursuant to section 2(e).
            (2) Gross household income.--The term ``gross household 
        income'' means the total income of a mortgagor, the mortgagor's 
        spouse, children residing in the same household as the 
        mortgagor, and any other resident of the household declared by 
        the mortgagor as a dependent for Federal tax purposes.
            (3) Housing expense.--The term ``housing expense'' means 
        the sum of the mortgagor's monthly maintenance, utility, and 
        hazard insurance expense, taxes, and required mortgage 
        payments, including escrows.
            (4) Net effective income.--The term ``net effective 
        income'' means the gross household income of the mortgagor, 
        less city, State, and Federal income and social security taxes.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
                                 <all>
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