II 

114TH CONGRESS 

2D SESSION S. 3426 

To provide nonprofit organizations and local governments with the opportunity 

to match a bid with respect to the sale of certain non-performing loans 

by the Government-sponsored enterprises and the Federal Housing Administration, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 28, 2016 

Mr. BOOKER (for himself and Mr. MENENDEZ) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To provide nonprofit organizations and local governments 

with the opportunity to match a bid with respect to 

the sale of certain non-performing loans by the Government-sponsored enterprises and the Federal Housing Administration, 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 Fore5 closure Reduction Act of 2016’’. 


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1 SEC. 2. LOANS OWNED BY FANNIE MAE. 

2 Section 302 of the Federal National Mortgage Asso3 ciation Charter Act (12 U.S.C. 1717) is amended by add4 ing at the end the following: 

5 ‘‘(d) SALE OF NON-PERFORMING LOANS.— 

6 ‘‘(1) In this subsection— 

7 ‘‘(A) the term ‘covered pool’ means a pool 

8 of non-performing loans owned under this 

9 title— 

10 ‘‘(i) that contains not more than 300 

11 loans; 

12 ‘‘(ii) that is, to the extent practicable, 

13 geographically concentrated; and 

14 ‘‘(iii) for which the corporation, with 

15 respect to the sale of loans in the pool, en16 courages purchase of the loans by quali17 fying nonprofits and qualifying local gov18 ernments; 

19 ‘‘(B) the term ‘non-covered pool’ means a 

20 pool of non-performing loans owned under this 

21 title that is not a covered pool; 

22 ‘‘(C) the term ‘qualifying local government’ 

23 means a local government that the corporation 

24 has permitted to bid, after an initial auction, on 

25 a covered pool or a non-covered pool; and 


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1 ‘‘(D) the term ‘qualifying nonprofit’ means 

2 a nonprofit organization that the corporation 

3 has permitted to bid, after an initial auction, on 

4 a covered pool or a non-covered pool. 

5 ‘‘(2)(A) The corporation, with respect to an 

6 auction for the sale of non-performing loans, shall 

7 ensure that not fewer than 25 percent of the loans 

8 that are offered for sale in the auction are loans in 

9 covered pools. 

10 ‘‘(B) The corporation shall ensure that, after 

11 an entity that is not a qualifying nonprofit or a 

12 qualifying local government submits the highest bid 

13 on a non-covered pool, qualifying nonprofits and 

14 qualifying local governments have the opportunity to 

15 submit a bid to purchase not more than 5 percent 

16 of the loans in the non-covered pool in accordance 

17 with the procedures set forth in paragraph (3)(B). 

18 ‘‘(3)(A) With respect to the sale of a covered 

19 pool when a qualifying nonprofit or a qualifying local 

20 government is a party bidding on the covered pool, 

21 the corporation shall— 

22 ‘‘(i) notify each bidder that a qualifying 

23 nonprofit or a qualifying local government is a 

24 bidder on the covered pool; 


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1 ‘‘(ii) if, after receiving bids from each of 

2 the bidders on the covered pool, the corporation 

3 determines that an entity that is not a quali4 fying nonprofit or a qualifying local government 

5 submitted the highest overall bid— 

6 ‘‘(I) disclose to the qualifying non7 profit or qualifying local government that 

8 submitted the highest bid (among bids sub9 mitted by qualifying nonprofits and quali10 fying local governments) the amount of the 

11 highest overall bid that was submitted; 

12 ‘‘(II) provide the qualifying nonprofit 

13 or qualifying local government that sub14 mitted the highest bid with an opportunity 

15 to, not later than 2 days after receiving 

16 notice from the corporation, submit a bid 

17 in an amount greater than the highest 

18 overall bid; and 

19 ‘‘(III) if a qualifying nonprofit or 

20 qualifying local government, as applicable, 

21 described in subclause (II) chooses not to 

22 submit a bid as described in that sub23 clause, provide each successive qualifying 

24 nonprofit or qualifying local government 

25 that submitted the next highest bid with 


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1 an opportunity to, not later than 2 days 

2 after receiving notice from the corporation 

3 and a disclosure described in subclause (I), 

4 submit a bid in an amount greater than 

5 the highest overall bid; and 

6 ‘‘(iii) sell the covered pool to a qualifying 

7 nonprofit or a qualifying local government if a 

8 qualifying nonprofit or qualifying local govern9 ment, as applicable, under subclause (II) or 

10 (III) of clause (ii), submits a bid in an amount 

11 greater than the highest overall bid. 

12 ‘‘(B) With respect to the sale of a non-covered 

13 pool— 

14 ‘‘(i) not later than 2 days after the date on 

15 which an entity that is not a qualifying non16 profit or a qualifying local government submits 

17 the highest overall bid on the non-covered 

18 pool— 

19 ‘‘(I) the corporation shall disclose to 

20 qualifying nonprofits and qualifying local 

21 governments the amount of the highest 

22 overall bid submitted on the non-covered 

23 pool, including the amount of the bid for 

24 each individual loan in the non-covered 

25 pool; and 


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1 ‘‘(II) a qualifying nonprofit or a quali2 fying local government may submit to the 

3 corporation a bid to purchase not more 

4 than 5 percent of the loans in the non-cov5 ered pool; 

6 ‘‘(ii) except as provided in subparagraph 

7 (C), the corporation shall sell a loan described 

8 in clause (i)(II) to a qualifying nonprofit or 

9 qualifying local government, as applicable, if, 

10 with respect to that loan, the bid of the quali11 fying nonprofit or qualifying local government 

12 is equal to or more than the bid of the entity 

13 that submitted the highest overall bid for the 

14 non-covered pool; and 

15 ‘‘(iii) the total number of loans sold under 

16 clause (ii) may not exceed 10 percent of the 

17 number of loans in the non-covered pool. 

18 ‘‘(C)(i) The corporation shall determine which 

19 loans in a non-covered pool shall be sold to a quali20 fying nonprofit or a qualifying local government if 

21 the aggregate number of loans sold under subpara22 graph (B)(ii) to qualifying nonprofits and qualifying 

23 local governments would violate subparagraph 

24 (B)(iii). 


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1 ‘‘(ii) If, under subparagraph (B)(i)(II), more 

2 than 1 qualifying nonprofit or qualifying local gov3 ernment submits a bid for a loan that is equal to or 

4 higher than the bid submitted by the entity that had 

5 submitted the highest overall bid, the corporation 

6 shall sell the loan to the qualifying nonprofit or 

7 qualifying local government that submitted the high8 est bid. 

9 ‘‘(4) Before submitting a bid with respect to a 

10 covered pool or a non-covered pool, a nonprofit orga11 nization or local government, in order to be consid12 ered a qualifying nonprofit or qualifying local gov13 ernment, as applicable, shall submit to the corpora14 tion an application containing such information as 

15 the corporation determines appropriate. 

16 ‘‘(5) Any entity that purchases a covered pool 

17 under this subsection— 

18 ‘‘(A) may not foreclose on any of the occu19 pied properties that secure loans in the pool 

20 during the 12-month period following the pur21 chase; and 

22 ‘‘(B) shall ensure that, not later than 4 

23 years after the settlement date, not less than 50 

24 percent of the loans in the pool result in— 

25 ‘‘(i) a modified loan that— 


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1 ‘‘(I) has a loan-to-value ratio 

2 after the modification of the loan that 

3 is not greater than 115 percent; 

4 ‘‘(II) performs over a period of 

5 not less than 6 months; 

6 ‘‘(III) does not include an up7 front fee or require prepayment of any 

8 amount of the mortgage debt; and 

9 ‘‘(IV)(aa) is fixed rate for the en10 tire period in which the loan being 

11 modified is in effect; or 

12 ‘‘(bb) offers an initial period in 

13 which the interest rate is reduced and 

14 an increase in the interest rate is lim15 ited to not more than 1 percent per 

16 year after an initial 5-year period in 

17 which the interest rate is fixed, with a 

18 maximum interest rate not exceeding 

19 the prevailing market rate for loans; 

20 ‘‘(ii) a short sale of the property that 

21 secures the loan to an owner-occupant; 

22 ‘‘(iii) with respect to a qualifying non23 profit or a qualifying local government that 

24 purchases a covered pool under paragraph 

25 (3)(A)(iii), holding the property that seVerDate Sep 11 2014 02:24 Oct 04, 2016 Jkt 069002 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426

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1 cures the loan for rental for a period of not 

2 less than 3 years, where such rental is af3 fordable to a household with an annual in4 come at or below the area median income; 

5 ‘‘(iv) with the approval of the corpora6 tion, gifting the property that secures the 

7 loan to a land bank, a nonprofit organiza8 tion, or a State or local government, with 

9 additional funds provided for demolition 

10 and maintenance; or 

11 ‘‘(v) with the approval of the corpora12 tion, sale of the loan or the property that 

13 secures the loan to a nonprofit organiza14 tion. 

15 ‘‘(6) A qualifying nonprofit or a qualifying local 

16 government that purchases a covered pool under 

17 paragraph (3)(A)(iii) shall ensure that not less than 

18 60 percent of the loans in the pool result in not less 

19 than one of the outcomes described in clauses (i) 

20 through (v) of paragraph (5)(B). 

21 ‘‘(7)(A) Any entity that purchases a covered 

22 pool under this subsection that contains a loan for 

23 which the property securing the loan is vacant shall 

24 ensure that the servicer of the loan— 


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1 ‘‘(i) does not release the lien on the prop2 erty; and 

3 ‘‘(ii) maintains the property in accordance 

4 with generally acceptable maintenance stand5 ards. 

6 ‘‘(B) If the servicer of a loan described in sub7 paragraph (A) does not comply with the require8 ments of that subparagraph, the entity that pur9 chased the covered pool shall sell or donate the loan 

10 to another entity, including a government or non11 profit entity. 

12 ‘‘(8) Nothing in this subsection shall be con13 strued to prevent the corporation from ensuring that 

14 a qualifying nonprofit or a qualifying local govern15 ment has the opportunity to be the last bidder on a 

16 covered pool or a non-covered pool under procedures 

17 other than those described in this section. 

18 ‘‘(9) In addition to the requirements under this 

19 subsection— 

20 ‘‘(A) any entity that purchases a non-cov21 ered pool shall meet all of the requirements of 

22 the corporation in effect on the day before the 

23 date of enactment of this subsection; and 

24 ‘‘(B) the corporation may impose any other 

25 requirements with respect to the purchase of a 


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1 covered pool or a non-covered pool that the cor2 poration determines are appropriate.’’. 

3 SEC. 3. LOANS OWNED BY FREDDIE MAC. 

4 Section 305 of the Federal Home Loan Mortgage 

5 Corporation Act (12 U.S.C. 1454) is amended by adding 

6 at the end the following: 

7 ‘‘(d) SALE OF NON-PERFORMING LOANS.— 

8 ‘‘(1) In this subsection— 

9 ‘‘(A) the term ‘covered pool’ means a pool 

10 of non-performing loans owned under this 

11 title— 

12 ‘‘(i) that contains not more than 300 

13 loans; 

14 ‘‘(ii) that is, to the extent practicable, 

15 geographically concentrated; and 

16 ‘‘(iii) for which the corporation, with 

17 respect to the sale of loans in the pool, en18 courages purchase of the loans by quali19 fying nonprofits and qualifying local gov20 ernments; 

21 ‘‘(B) the term ‘non-covered pool’ means a 

22 pool of non-performing loans owned under this 

23 title that is not a covered pool; 

24 ‘‘(C) the term ‘qualifying local government’ 

25 means a local government that the corporation 


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1 has permitted to bid, after an initial auction, on 

2 a covered pool or a non-covered pool; and 

3 ‘‘(D) the term ‘qualifying nonprofit’ means 

4 a nonprofit organization that the corporation 

5 has permitted to bid, after an initial auction, on 

6 a covered pool or a non-covered pool. 

7 ‘‘(2)(A) The corporation, with respect to an 

8 auction for the sale of non-performing loans, shall 

9 ensure that not fewer than 25 percent of the loans 

10 that are offered for sale in the auction are loans in 

11 covered pools. 

12 ‘‘(B) The corporation shall ensure that, after 

13 an entity that is not a qualifying nonprofit or a 

14 qualifying local government submits the highest bid 

15 on a non-covered pool, qualifying nonprofits and 

16 qualifying local governments have the opportunity to 

17 submit a bid to purchase not more than 5 percent 

18 of the loans in the non-covered pool in accordance 

19 with the procedures set forth in paragraph (3)(B). 

20 ‘‘(3)(A) With respect to the sale of a covered 

21 pool when a qualifying nonprofit or a qualifying local 

22 government is a party bidding on the covered pool, 

23 the corporation shall— 


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1 ‘‘(i) notify each bidder that a qualifying 

2 nonprofit or a qualifying local government is a 

3 bidder on the covered pool; 

4 ‘‘(ii) if, after receiving bids from each of 

5 the bidders on the covered pool, the corporation 

6 determines that an entity that is not a quali7 fying nonprofit or a qualifying local government 

8 submitted the highest overall bid— 

9 ‘‘(I) disclose to the qualifying non10 profit or qualifying local government that 

11 submitted the highest bid (among bids sub12 mitted by qualifying nonprofits and quali13 fying local governments) the amount of the 

14 highest overall bid that was submitted; 

15 ‘‘(II) provide the qualifying nonprofit 

16 or qualifying local government that sub17 mitted the highest bid with an opportunity 

18 to, not later than 2 days after receiving 

19 notice from the corporation, submit a bid 

20 in an amount greater than the highest 

21 overall bid; and 

22 ‘‘(III) if a qualifying nonprofit or 

23 qualifying local government, as applicable, 

24 described in subclause (II) chooses not to 

25 submit a bid as described in that subVerDate Sep 11 2014 02:24 Oct 04, 2016 Jkt 069002 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426

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1 clause, provide each successive qualifying 

2 nonprofit or qualifying local government 

3 that submitted the next highest bid with 

4 an opportunity to, not later than 2 days 

5 after receiving notice from the corporation 

6 and a disclosure described in subclause (I), 

7 submit a bid in an amount greater than 

8 the highest overall bid; and 

9 ‘‘(iii) sell the covered pool to a qualifying 

10 nonprofit or a qualifying local government if a 

11 qualifying nonprofit or qualifying local govern12 ment, as applicable, under subclause (II) or 

13 (III) of clause (ii), submits a bid in an amount 

14 greater than the highest overall bid. 

15 ‘‘(B) With respect to the sale of a non-covered 

16 pool— 

17 ‘‘(i) not later than 2 days after the date on 

18 which an entity that is not a qualifying non19 profit or a qualifying local government submits 

20 the highest overall bid on the non-covered 

21 pool— 

22 ‘‘(I) the corporation shall disclose to 

23 qualifying nonprofits and qualifying local 

24 governments the amount of the highest 

25 overall bid submitted on the non-covered 


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1 pool, including the amount of the bid for 

2 each individual loan in the non-covered 

3 pool; and 

4 ‘‘(II) a qualifying nonprofit or a quali5 fying local government may submit to the 

6 corporation a bid to purchase not more 

7 than 5 percent of the loans in the non-cov8 ered pool; 

9 ‘‘(ii) except as provided in subparagraph 

10 (C), the corporation shall sell a loan described 

11 in clause (i)(II) to a qualifying nonprofit or 

12 qualifying local government, as applicable, if, 

13 with respect to that loan, the bid of the quali14 fying nonprofit or qualifying local government 

15 is equal to or more than the bid of the entity 

16 that submitted the highest overall bid for the 

17 non-covered pool; and 

18 ‘‘(iii) the total number of loans sold under 

19 clause (ii) may not exceed 10 percent of the 

20 number of loans in the non-covered pool. 

21 ‘‘(C)(i) The corporation shall determine which 

22 loans in a non-covered pool shall be sold to a quali23 fying nonprofit or a qualifying local government if 

24 the aggregate number of loans sold under subpara25 graph (B)(ii) to qualifying nonprofits and qualifying 


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1 local governments would violate subparagraph 

2 (B)(iii). 

3 ‘‘(ii) If, under subparagraph (B)(i)(II), more 

4 than 1 qualifying nonprofit or qualifying local gov5 ernment submits a bid for a loan that is equal to or 

6 higher than the bid submitted by the entity that had 

7 submitted the highest overall bid, the corporation 

8 shall sell the loan to the qualifying nonprofit or 

9 qualifying local government that submitted the high10 est bid. 

11 ‘‘(4) Before submitting a bid with respect to a 

12 covered pool or a non-covered pool, a nonprofit orga13 nization or local government, in order to be consid14 ered a qualifying nonprofit or qualifying local gov15 ernment, as applicable, shall submit to the corpora16 tion an application containing such information as 

17 the corporation determines appropriate. 

18 ‘‘(5) Any entity that purchases a covered pool 

19 under this subsection— 

20 ‘‘(A) may not foreclose on any of the occu21 pied properties that secure loans in the pool 

22 during the 12-month period following the pur23 chase; and 


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1 ‘‘(B) shall ensure that, not later than 4 

2 years after the settlement date, not less than 50 

3 percent of the loans in the pool result in— 

4 ‘‘(i) a modified loan that— 

5 ‘‘(I) has a loan-to-value ratio 

6 after the modification of the loan that 

7 is not greater than 115 percent; 

8 ‘‘(II) performs over a period of 

9 not less than 6 months; 

10 ‘‘(III) does not include an up11 front fee or require prepayment of any 

12 amount of the mortgage debt; and 

13 ‘‘(IV)(aa) is fixed rate for the en14 tire period in which the loan being 

15 modified is in effect; or 

16 ‘‘(bb) offers an initial period in 

17 which the interest rate is reduced and 

18 an increase in the interest rate is lim19 ited to not more than 1 percent per 

20 year after an initial 5-year period in 

21 which the interest rate is fixed, with a 

22 maximum interest rate not exceeding 

23 the prevailing market rate for loans; 

24 ‘‘(ii) a short sale of the property that 

25 secures the loan to an owner-occupant; 


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1 ‘‘(iii) with respect to a qualifying non2 profit or a qualifying local government that 

3 purchases a covered pool under paragraph 

4 (3)(A)(iii), holding the property that se5 cures the loan for rental for a period of not 

6 less than 3 years, where such rental is af7 fordable to a household with an annual in8 come at or below the area median income; 

9 ‘‘(iv) with the approval of the corpora10 tion, gifting the property that secures the 

11 loan to a land bank, a nonprofit organiza12 tion, or a State or local government, with 

13 additional funds provided for demolition 

14 and maintenance; or 

15 ‘‘(v) with the approval of the corpora16 tion, sale of the loan or the property that 

17 secures the loan to a nonprofit organiza18 tion. 

19 ‘‘(6) A qualifying nonprofit or a qualifying local 

20 government that purchases a covered pool under 

21 paragraph (3)(A)(iii) shall ensure that not less than 

22 60 percent of the loans in the pool result in not less 

23 than one of the outcomes described in clauses (i) 

24 through (v) of paragraph (5)(B). 


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1 ‘‘(7)(A) Any entity that purchases a covered 

2 pool under this subsection that contains a loan for 

3 which the property securing the loan is vacant shall 

4 ensure that the servicer of the loan— 

5 ‘‘(i) does not release the lien on the prop6 erty; and 

7 ‘‘(ii) maintains the property in accordance 

8 with generally acceptable maintenance stand9 ards. 

10 ‘‘(B) If the servicer of a loan described in sub11 paragraph (A) does not comply with the require12 ments of that subparagraph, the entity that pur13 chased the covered pool shall sell or donate the loan 

14 to another entity, including a government or non15 profit entity. 

16 ‘‘(8) Nothing in this subsection shall be con17 strued to prevent the corporation from ensuring that 

18 a qualifying nonprofit or a qualifying local govern19 ment has the opportunity to be the last bidder on a 

20 covered pool or a non-covered pool under procedures 

21 other than those described in this section. 

22 ‘‘(9) In addition to the requirements under this 

23 subsection— 

24 ‘‘(A) any entity that purchases a non-cov25 ered pool shall meet all of the requirements of 


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1 the corporation in effect on the day before the 

2 date of enactment of this subsection; and 

3 ‘‘(B) the corporation may impose any other 

4 requirements with respect to the purchase of a 

5 covered pool or a non-covered pool that the cor6 poration determines are appropriate.’’. 

7 SEC. 4. LOANS INSURED BY THE FHA. 

8 Title II of the National Housing Act (12 U.S.C. 1707 

9 et seq.) is amended by adding at the end the following: 

10 ‘‘SEC. 259. SALE OF NON-PERFORMING MORTGAGES. 

11 ‘‘(a) DEFINITIONS.—In this section— 

12 ‘‘(1) the term ‘covered pool’ means a pool of 

13 non-performing mortgages insured under this title— 

14 ‘‘(A) that contains not more than 300 

15 mortgages; 

16 ‘‘(B) that is, to the extent practicable, geo17 graphically concentrated; and 

18 ‘‘(C) for which the Secretary, with respect 

19 to the sale of mortgages in the pool, encourages 

20 purchase of the mortgages by qualifying non21 profits and qualifying local governments; 

22 ‘‘(2) the term ‘non-covered pool’ means a pool 

23 of non-performing mortgages insured under this title 

24 that is not a covered pool; 


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1 ‘‘(3) the term ‘qualifying local government’ 

2 means a local government that the Secretary has 

3 permitted to bid, after an initial auction, on a cov4 ered pool or a non-covered pool; and 

5 ‘‘(4) the term ‘qualifying nonprofit’ means a 

6 nonprofit organization that the Secretary has per7 mitted to bid, after an initial auction, on a covered 

8 pool or a non-covered pool. 

9 ‘‘(b) REQUIREMENTS.— 

10 ‘‘(1) COVERED POOLS.—The Secretary, with re11 spect to an auction for the sale of non-performing 

12 mortgages, shall ensure that not fewer than 50 per13 cent of the mortgages that are offered for sale in the 

14 auction are mortgages in covered pools. 

15 ‘‘(2) NON-COVERED POOLS.—The Secretary 

16 shall ensure that, after an entity that is not a quali17 fying nonprofit or a qualifying local government sub18 mits the highest bid on a non-covered pool, quali19 fying nonprofits and qualifying local governments 

20 have the opportunity to submit a bid to purchase not 

21 more than 5 percent of the mortgages in the non22 covered pool in accordance with the procedures set 

23 forth in subsection (c)(2). 

24 ‘‘(c) PROCEDURES FOR SALE OF COVERED AND NON25 COVERED POOLS.— 


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1 ‘‘(1) COVERED POOLS.—With respect to the 

2 sale of a covered pool when a qualifying nonprofit or 

3 a qualifying local government is a party bidding on 

4 the covered pool, the Secretary shall— 

5 ‘‘(A) notify each bidder that a qualified 

6 nonprofit or a qualifying local government is a 

7 bidder on the covered pool; 

8 ‘‘(B) if, after receiving bids from each of 

9 the bidders on the covered pool, the Secretary 

10 determines that an entity that is not a quali11 fying nonprofit or a qualifying local government 

12 submitted the highest overall bid— 

13 ‘‘(i) disclose to the qualifying non14 profit or qualifying local government that 

15 submitted the highest bid (among bids sub16 mitted by qualifying nonprofits and quali17 fying local governments) the amount of the 

18 highest overall bid that was submitted; 

19 ‘‘(ii) provide the qualifying nonprofit 

20 or qualifying local government that sub21 mitted the highest bid with an opportunity 

22 to, not later than 2 days after receiving 

23 notice from the Secretary, submit a bid in 

24 an amount greater than the highest overall 

25 bid; and 


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1 ‘‘(iii) if a qualifying nonprofit or 

2 qualifying local government, as applicable, 

3 described in clause (ii) chooses not to sub4 mit a bid as described in that clause, pro5 vide each successive qualifying nonprofit or 

6 qualifying local government that submitted 

7 the next highest bid with an opportunity 

8 to, not later than 2 days after receiving 

9 notice from the Secretary and a disclosure 

10 described in clause (i), submit a bid in an 

11 amount greater than the highest overall 

12 bid; and 

13 ‘‘(C) sell the covered pool to a qualifying 

14 nonprofit or a qualifying local government if a 

15 qualifying nonprofit or qualifying local govern16 ment, as applicable, under clause (ii) or (iii) of 

17 subparagraph (B), submits a bid in an amount 

18 greater than the highest overall bid. 

19 ‘‘(2) NON-COVERED POOLS.— 

20 ‘‘(A) IN GENERAL.—With respect to the 

21 sale of a non-covered pool— 

22 ‘‘(i) not later than 2 days after the 

23 date on which an entity that is not a quali24 fying nonprofit or a qualifying local govVerDate Sep 11 2014 02:24 Oct 04, 2016 Jkt 069002 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S3426.IS S3426

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1 ernment submits the highest overall bid on 

2 the non-covered pool— 

3 ‘‘(I) the Secretary shall disclose 

4 to qualifying nonprofits and qualifying 

5 local governments the amount of the 

6 highest overall bid submitted on the 

7 non-covered pool, including the 

8 amount of the bid for each individual 

9 mortgage in the non-covered pool; and 

10 ‘‘(II) a qualifying nonprofit or a 

11 qualifying local government may sub12 mit to the Secretary a bid to purchase 

13 not more than 5 percent of the mort14 gages in the non-covered pool; 

15 ‘‘(ii) except as provided in subpara16 graphs (B) and (C), the Secretary shall 

17 sell a mortgage described in clause (i)(II) 

18 to a qualifying nonprofit or qualifying local 

19 government, as applicable, if, with respect 

20 to that mortgage, the bid of the qualifying 

21 nonprofit or qualifying local government is 

22 equal to or more than the bid of the entity 

23 that submitted the highest overall bid for 

24 the non-covered pool; and 


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1 ‘‘(iii) the total number of mortgages 

2 sold under clause (ii) may not exceed 10 

3 percent of the number of mortgages in the 

4 non-covered pool. 

5 ‘‘(B) SELECTION BY THE SECRETARY.— 

6 The Secretary shall determine which mortgages 

7 in a non-covered pool shall be sold to a quali8 fying nonprofit or a qualifying local government 

9 if the aggregate number of mortgages sold 

10 under subparagraph (A)(ii) to qualifying non11 profits and qualifying local governments would 

12 violate subparagraph (A)(iii). 

13 ‘‘(C) MULTIPLE HIGH BIDS.—If, under 

14 subparagraph (A)(i)(II), more than 1 qualifying 

15 nonprofit or qualifying local government sub16 mits a bid for a mortgage that is equal to or 

17 higher than the bid submitted by the entity that 

18 had submitted the highest overall bid, the Sec19 retary shall sell the mortgage to the qualifying 

20 nonprofit or qualifying local government that 

21 submitted the highest bid. 

22 ‘‘(d) APPLICATION.—Before submitting a bid with re23 spect to a covered pool or a non-covered pool, a nonprofit 

24 organization or local government, in order to be considered 

25 a qualifying nonprofit or qualifying local government, as 


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1 applicable, shall submit to the Secretary an application 

2 containing such information as the Secretary determines 

3 appropriate. 

4 ‘‘(e) ADDITIONAL REQUIREMENTS FOR COVERED

5 POOLS.— 

6 ‘‘(1) IN GENERAL.—Any entity that purchases 

7 a covered pool under this section— 

8 ‘‘(A) may not foreclose on any of the occu9 pied properties that secure mortgages in the 

10 pool during the 12-month period following the 

11 purchase; and 

12 ‘‘(B) shall ensure that, not later than 4 

13 years after the settlement date, not less than 50 

14 percent of the mortgages in the pool result in— 

15 ‘‘(i) a modified mortgage that— 

16 ‘‘(I) has a loan-to-value ratio 

17 after the modification of the mortgage 

18 that is not greater than 115 percent; 

19 ‘‘(II) performs over a period of 

20 not less than 6 months; 

21 ‘‘(III) does not include an up22 front fee or require prepayment of any 

23 amount of the mortgage debt; and 


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1 ‘‘(IV)(aa) is fixed rate for the en2 tire period in which the mortgage 

3 being modified is in effect; or 

4 ‘‘(bb) offers an initial period in 

5 which the interest rate is reduced and 

6 an increase in the interest rate is lim7 ited to not more than 1 percent per 

8 year after an initial 5-year period in 

9 which the interest rate is fixed, with a 

10 maximum interest rate not exceeding 

11 the prevailing market rate for mort12 gages; 

13 ‘‘(ii) a short sale of the property that 

14 secures the mortgage to an owner-occu15 pant; 

16 ‘‘(iii) with respect to a qualifying non17 profit or a qualifying local government that 

18 purchases a covered pool under subsection 

19 (c)(1)(C), holding the property that se20 cures the mortgage for rental for a period 

21 of not less than 3 years, where such rental 

22 is affordable to a household with an annual 

23 income at or below the area median in24 come; 


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1 ‘‘(iv) with the approval of the Sec2 retary, gifting the property that secures 

3 the mortgage to a land bank, a nonprofit 

4 organization, or a State or local govern5 ment, with additional funds provided for 

6 demolition and maintenance; and 

7 ‘‘(v) with the approval of the Sec8 retary, sale of the mortgage or the prop9 erty that secures the mortgage to a non10 profit organization. 

11 ‘‘(2) QUALIFYING NONPROFITS AND LOCAL

12 GOVERNMENTS.—A qualifying nonprofit or a quali13 fying local government that purchases a covered pool 

14 under subsection (c)(1)(C) shall ensure that not less 

15 than 60 percent of the mortgages in the pool result 

16 in not less than one of the outcomes described in 

17 clauses (i) through (v) of paragraph (1)(B). 

18 ‘‘(3) VACANT PROPERTIES.— 

19 ‘‘(A) IN GENERAL.—Any entity that pur20 chases a covered pool under this section that 

21 contains a mortgage for which the property se22 curing the mortgage is vacant shall ensure that 

23 the servicer of the mortgage— 

24 ‘‘(i) does not release the lien on the 

25 property; and 


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1 ‘‘(ii) maintains the property in accord2 ance with generally acceptable maintenance 

3 standards. 

4 ‘‘(B) SALE OF MORTGAGE.—If the servicer 

5 of a mortgage described in subparagraph (A) 

6 does not comply with the requirements of that 

7 subparagraph, the entity that purchased the 

8 covered pool shall sell or donate the mortgage 

9 to another entity, including a government or 

10 nonprofit entity. 

11 ‘‘(f) RULE OF CONSTRUCTION.—Nothing in this sec12 tion shall be construed to prevent the Secretary from en13 suring that a qualifying nonprofit or a qualifying local 

14 government has the opportunity to be the last bidder on 

15 a covered pool or a non-covered pool under procedures 

16 other than those described in this section. 

17 ‘‘(g) ADDITIONAL REQUIREMENTS.—In addition to 

18 the requirements under this section— 

19 ‘‘(1) any entity that purchases a non-covered 

20 pool shall meet all of the requirements of the Sec21 retary in effect on the day before the date of enact22 ment of this section; and 

23 ‘‘(2) the Secretary may impose any other re24 quirements with respect to the purchase of a covered 


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1 pool or a non-covered pool that the Secretary deter2 mines are appropriate.’’. 

Æ 


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