I 

111TH CONGRESS 

1ST SESSION H. R. 2666 

To require the Federal Trade Commission to conduct a rulemaking proceeding 

with respect to mortgage foreclosure rescue and loan modification services, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 2, 2009 

Ms. MATSUI (for herself and Ms. MOORE of Wisconsin) introduced the following bill; which was referred to the Committee on Financial Services, 

and in addition to the Committee on Energy and Commerce, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To require the Federal Trade Commission to conduct a rulemaking proceeding with respect to mortgage foreclosure 

rescue and loan modification services, 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 ‘‘Mortgage Foreclosure 

5 Rescue and Loan Modification Services Fraud Prevention 

6 Act of 2009’’. 

mstockstill on PROD1PC66 with BILLS

2 

•HR 2666 IH

1 SEC. 2. FTC RULEMAKING AUTHORITY MORTGAGE FORE2 CLOSURE RESCUE AND LOAN MODIFICATION 

3 SERVICES. 

4 (a) RULEMAKING.— 

5 (1) IN GENERAL.—The Federal Trade Commis6 sion shall conduct a rulemaking proceeding, begin7 ning no later than 90 days after the date of the en8 actment of this Act, with respect to mortgage fore9 closure rescue and loan modification services, in ac10 cordance with section 553 of title 5, United States 

11 Code. The rulemaking shall include the requirements 

12 set forth in paragraph (4) below. 

13 (2) EXCLUSION.—A rule described in para14 graph (1) shall not apply to an entity that is not 

15 subject to enforcement by the Commission under the 

16 Federal Trade Commission Act. 

17 (3) ENFORCEMENT.— 

18 (A) VIOLATIONS.—Any violation of a rule 

19 prescribed under this subsection shall be treat20 ed as a violation of a rule under section 18 of 

21 the Federal Trade Commission Act (15 U.S.C. 

22 57a) regarding unfair or deceptive acts or prac23 tices. 

24 (B) POWERS AND MANNER OF ENFORCE25 MENT.—The Federal Trade Commission shall 

26 enforce any rule prescribed under this submstockstill on PROD1PC66 with BILLS

3 

•HR 2666 IH

1 section in the same manner, by the same 

2 means, and with the same jurisdiction, powers, 

3 and duties as though all applicable terms and 

4 provisions of the Federal Trade Commission 

5 Act were incorporated into and made part of 

6 this section. 

7 (4) RULE REQUIREMENTS.—The Federal Trade 

8 Commission shall include in the rule prescribed 

9 under this subsection the following: 

10 (A) A requirement that any mortgage fore11 closure rescue or loan modification service pro12 vided to a homeowner related to the foreclosure 

13 of residential real property contain a written 

14 contract that contains clear and prominent dis15 closures regarding the nature of the contract, 

16 the services to be provided and results to be 

17 achieved, and the total amount and terms of 

18 compensation. 

19 (B) A requirement that any contract re20 ferred to in subparagraph (A) contain a clearly 

21 and prominently disclosed right for the home22 owner to cancel within a set number of business 

23 days as determined by the Federal Trade Com24 mission with no penalty or obligation. 

mstockstill on PROD1PC66 with BILLS

4 

•HR 2666 IH

1 (C) A requirement that prohibits or re2 stricts mortgage foreclosure rescue and loan 

3 modification services from requesting or receiv4 ing any funds until any such services have been 

5 fully performed and results have been achieved 

6 and the services and results have been docu7 mented to the consumer. 

8 (D) Other prohibitions or restrictions on 

9 mortgage foreclosure rescue and loan modifica10 tion services that are unfair or deceptive acts or 

11 practices. 

12 (5) EXEMPTION.—The Commission shall have 

13 the authority to exempt entities from the require14 ments of the rule that it issues to implement this 

15 Act, if it determines that the inclusion of such enti16 ties in the rule is not necessary to prevent or deter 

17 consumer injury. 

18 (6) NO PREEMPTION.—No rule prescribed 

19 under this subsection may be construed as pre20 empting any provision of the law of any State. 

21 (b) ENFORCEMENT BY STATE ATTORNEYS GEN22 ERAL.— 

23 (1) IN GENERAL.—Except as provided in para24 graph (6), in any case in which the attorney general 

25 of a State has reason to believe that an interest of 

mstockstill on PROD1PC66 with BILLS

5 

•HR 2666 IH

1 the residents of that State has been or is threatened 

2 or adversely affected by the engagement of any per3 son in a practice that violates a rule prescribed 

4 under subsection (a), the State, as parens patriae, 

5 may bring a civil action on behalf of the residents 

6 of the State in an appropriate district court of the 

7 United States or other court of competent jurisdic8 tion to— 

9 (A) enjoin that practice; 

10 (B) enforce compliance with the rule; 

11 (C) obtain damages, restitution, or other 

12 compensation on behalf of residents of the 

13 State; 

14 (D) obtain penalties provided for under 

15 subsection (a); and 

16 (E) obtain such other relief as the court 

17 may consider to be appropriate. 

18 (2) NOTICE.— 

19 (A) NOTICE TO COMMISSION.—The State 

20 shall serve written notice to the Commission of 

21 any civil action under paragraph (1) at least 60 

22 days prior to initiating such civil action. 

23 (B) COPY OF COMPLAINT.—The notice 

24 served under subparagraph (A) shall include a 

25 copy of the complaint to be filed to initiate such 

mstockstill on PROD1PC66 with BILLS

6 

•HR 2666 IH

1 civil action, except that if it is not feasible for 

2 the State to provide such prior notice, the State 

3 shall provide notice immediately upon insti4 tuting such civil action. 

5 (3) INTERVENTION BY FTC.—Upon receiving 

6 the notice required by paragraph (2), the Commis7 sion may intervene in such civil action and upon in8 tervening— 

9 (A) be heard on all matters arising in such 

10 civil action; 

11 (B) remove the action to the appropriate 

12 United States district court; and 

13 (C) file petitions for appeal of a decision in 

14 such civil action. 

15 (4) SAVINGS CLAUSE.—No provision of this sec16 tion shall be construed as— 

17 (A) preventing the attorney general of a 

18 State from exercising the powers conferred on 

19 the attorney general by the laws of such State 

20 to conduct investigations or to administer oaths 

21 or affirmations or to compel the attendance of 

22 witnesses or the production of documentary and 

23 other evidence; or 

24 (B) prohibiting the attorney general of a 

25 State, or other authorized State officer, from 

mstockstill on PROD1PC66 with BILLS

7 

•HR 2666 IH

1 proceeding in State or Federal court on the 

2 basis of an alleged violation of any civil or 

3 criminal statute of that State. 

4 (5) VENUE; SERVICE OF PROCESS; JOINDER.— 

5 In a civil action brought under paragraph (1)— 

6 (A) the venue shall be a judicial district in 

7 which the defendant or a related party is found, 

8 is an inhabitant, or transacts business, or wher9 ever venue is proper under section 1391 of title 

10 28, United States Code; 

11 (B) process may be served without regard 

12 to the territorial limits of the district or of the 

13 State in which the civil action is instituted; and 

14 (C) a person who participated with the de15 fendant or a related party in an alleged viola16 tion that is being litigated in the civil action 

17 may be joined in the civil action without regard 

18 to the residence of the person. 

19 (6) PREEMPTIVE ACTION BY FTC.—Whenever a 

20 civil action or an administrative action has been in21 stituted by or on behalf of the Commission for viola22 tion of any rule described under paragraph (1), no 

23 State may, during the pendency of such action insti24 tuted by or on behalf of the Commission, institute 

25 a civil action under paragraph (1) against any demstockstill on PROD1PC66 with BILLS

8 

•HR 2666 IH

1 fendant named in the complaint in such action for 

2 violation of any rule as alleged in such complaint. 

3 (7) AWARD OF COSTS AND FEES.—If the attor4 ney general of a State prevails in any civil action 

5 under paragraph (1), the State may recover reason6 able costs and attorney fees from the defendant or 

7 a related party. 

Æ 

mstockstill on PROD1PC66 with BILLS