Prompt Notification of Short Sales Act

To require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale. 1. Short title This Act may be cited as the Prompt Notification of Short Sales Act 2. Definitions For purposes of this Act, the following definitions shall apply: (a) Residential mortgage loan The term residential mortgage loan (b) Securitization vehicle The term securitization vehicle (c) Servicer The term servicer 15 U.S.C. 1639a (d) Short sale The term short sale (1) will result in proceeds in an amount that is less than the remaining amount due under the mortgage loan; and (2) requires authorization by the securitization vehicle or other investment vehicle or holder of the mortgage loan, or the servicer acting on behalf of such a vehicle or holder. 3. Prompt notifications and decision regarding short sale (a) Requirement for prompt notifications, decisions (1) Notifications (A) In general Each servicer shall provide in writing to a mortgagor of a residential mortgage loan— (i) an acknowledgment of receipt of a written request of the mortgagor, not later than 3 days after the date of such receipt; (ii) a notice of any missing or incomplete information required with respect to such request, not later than 5 days after the date of such receipt; and (iii) a definitive response to such request approving or denying such request, not later than 30 days after the date of such receipt. (B) Exceptional circumstances In any case in which a servicer is unable to provide a decision with respect to a written request of a mortgagor of a residential mortgage loan during the 30-day period required by subparagraph (A), such period may be extended to not later than 60 days after the date of receipt of a completed application, except that the servicer shall, verbally or in writing— (i) notify the mortgagor during the initial 30-day period that the application is still under review; and (ii) each week thereafter provide to the mortgagor a status update indicating the reasons why a decision is pending beyond the required 30-day period. (C) Applicability Subparagraph (A) shall apply, except as provided in subsection (b), and notwithstanding any other provision of law or of any contract, including a contract between a servicer of a residential mortgage loan and a securitization vehicle or other investment vehicle. (D) Content A written response by a servicer under subparagraph (A) shall specify a decision on whether such request has been denied, approved, or that such request has been approved subject to specified changes. (2) Mortgagor submission Paragraph (1) shall apply in any case in which the mortgagor under a residential mortgage loan submits to the servicer thereof— (A) a written offer for a short sale of the dwelling or residential real property that is subject to the mortgage, deed of trust, or other security interest that secures the mortgage loan; and (B) all information required by the servicer in connection with such a request (including a copy of an executed contract between the owner of the dwelling or property and the prospective buyer that is subject to approval by the servicer). (3) Civil actions authorized An aggrieved individual may bring an action in a court of competent jurisdiction, asserting a violation of this Act. Aggrieved individuals may be awarded all appropriate relief, including equitable relief, and a monetary award of $1,000 per violation, plus reasonable attorneys’ fees, or such higher amount as may be appropriate in the case of an established pattern or practice of such failures. (b) Inapplicability to certain existing mortgages Subsection (a) shall not apply with respect to any residential mortgage with respect to which the mortgagor and the mortgagee or servicer have entered into a written agreement before the date of enactment of this Act explicitly providing a procedure or terms for approval of a short sale. (c) Treatment of other time limits This section may not be construed to preempt, annul, or otherwise affect any other provision of law or of any contract or program that provides a shorter period than is provided under subsection (a) for a decision by the servicer of a residential mortgage loan regarding a short sale of the dwelling or residential real property that is subject to the mortgage, deed or trust, or other security interest that secures the mortgage loan.

Summary: Prompt Notification of Short Sales Act This bill requires each servicer of a home mortgage to provide in writing to a mortgagor of a residential mortgage loan specified prompt notifications and decisions regarding the mortgagor's written request for a short sale of the dwelling or residential real property subject to the mortgage, deed of trust, or other security interest securing the mortgage loan. An aggrieved individual may bring a civil action for equitable relief and a monetary award of $1,000 for any violation of this Act. This bill shall not apply to certain residential mortgages entered into before its enactment whose mortgage agreements explicitly provide a procedure or terms for a short sale approval.