Keeping Families Home Act of 2015

To require servicers to establish a deed-for-lease program under which eligible mortgagors may remain in their homes as renters. 1. Short title This Act may be cited as the Keeping Families Home Act of 2015 2. Deed-for-lease program (a) Establishment (1) In general Each servicer shall establish a deed-for-lease program (hereinafter referred to as the Program (A) enter into a deed in lieu of foreclosure agreement; (B) continue to occupy and lease the property that is the subject of such agreement for a 1-year period that begins on the date of such agreement; and (C) have a right of first refusal to purchase such property after the end of the 1-year lease period, if the owner of the property intends to sell the property at that time. (2) Exception for small servicers The Program requirement under paragraph (1) shall not apply to a small servicer, as such term is defined by the Secretary of Housing and Urban Development. (b) Notice requirement Servicers shall provide each eligible mortgagor with information about the Program and how to apply to participate in the Program. (c) Lease terms A lease entered into by an eligible mortgagor under the Program shall— (1) carry a monthly rent amount equal to the fair market rent for such property, as determined by an independent private appraiser hired by and paid by the servicer; and (2) contain all typical lease provisions for similar rental property. (d) Application process (1) In general An eligible mortgagor may apply for the Program at any time. (2) Effect of foreclosure sale If there is a foreclosure sale pending with respect to the property— (A) the eligible mortgagor may only apply for the Program before the date that is 7 days before the date of such foreclosure sale; and (B) once the eligible mortgagor applies for the Program, the foreclosure sale shall be halted until after the eligible mortgagor’s Program application has been evaluated. (3) Contents of application (A) In general In applying for the Program, an eligible mortgagor shall provide the servicer with proof of the following information: (i) The eligible mortgagor is subject to a financial hardship that makes the eligible mortgagor unable to continue making timely payments on the eligible mortgage loan. (ii) The eligible mortgagor is eligible to pay the monthly rent amount described under subsection (c)(1) and such amount is no more than 31 percent of the eligible mortgagor’s monthly income. (iii) The eligible mortgagor currently lives in the property and intends to continue doing so during the 1-year lease term. (B) Ability to pay higher percentage of income in rent Notwithstanding subparagraph (A)(ii), if an eligible mortgagor believes they are able pay the monthly rent amount despite such amount exceeding 31 percent of the eligible mortgagor’s monthly income, the eligible mortgagor may request that the Department of Housing and Urban Development review their information, along with any contributing factors the eligible mortgagor may have (such as a low debt burden) and, if the Department notifies the eligible mortgagor that the Department agrees that the eligible mortgagor is able to pay a monthly rent amount that is equal to a percentage of their monthly income that is higher than 31 percent, such higher percentage shall be used for purposes of subparagraph (A)(ii). (4) Effect of junior liens If an eligible mortgagor applies for a Program with respect to a single family property subject to a junior lien— (A) if the servicer of the Program is also the holder of the junior lien, the servicer shall release the junior lien and, subject to the other requirements of this section, the eligible mortgagor shall be eligible to participate in the Program; and (B) if the servicer of the Program is not the holder of the junior lien, the servicer shall contact such junior lien holder and request that the holder release the lien, and— (i) if the holder releases the lien, then, subject to the other requirements of this section, the eligible mortgagor shall be eligible to participate in the Program; and (ii) if the holder does not release the lien, then the eligible mortgagor shall not be eligible to participate in the Program. (e) Evaluation and notification (1) Deadline for evaluation The servicer shall evaluate the eligible mortgagor’s application within 30 days of receiving such application and shall accept an eligible mortgagor into the Program if the eligible mortgagor has provided the proof described under subsection (d)(3)(A). (2) Notification Promptly after making a determination under paragraph (1), the servicer shall notify the eligible mortgagor of such determination in writing and, if the servicer determines that the eligible mortgagor may not be accepted into the Program, the servicer shall specifically explain in writing why the eligible mortgage was not accepted. (f) Subsequent owners follow Program requirements Any subsequent owner of the property being leased pursuant to the Program shall— (1) maintain the Program and abide by the terms of the Program to the same extent as the servicer of the eligible mortgage; and (2) certify to the Department of Housing and Urban Development, before finalizing any purchase of the property, that they will abide by the terms of the Program. (g) Rulemaking; compliance evaluation The Department of Housing and Urban Development shall— (1) issue such regulations as may be necessary to carry out this section; (2) evaluate the compliance by servicers and owners with the requirements of this section; and (3) enforce the requirements of this section. (h) Definitions For purposes of this section: (1) Eligible mortgagor The term eligible mortgagor (2) Eligible mortgage The term eligible mortgage (A) is a single family property; and (B) is currently being used as the principal residence of the eligible mortgagor. (3) Single family property The term single family property (A) a structure consisting of 1 to 4 dwelling units; (B) a dwelling unit in a multi-unit condominium property together with an undivided interest in the common areas and facilities serving the property; (C) a dwelling unit in a multi-unit project for which purchase of stock or a membership interest entitles the purchaser to permanent occupancy of that unit; or (D) a manufactured housing unit.

Summary: Keeping Families Home Act of 2015 Directs each mortgage servicer to establish a deed-for-lease program which shall permit an eligible mortgagor to: enter into a deed in lieu of foreclosure agreement; continue to occupy and lease the property that is the subject of the agreement for one year; and have a right of first refusal to purchase such property after the end of the one-year lease period, if the owner intends to sell the property at that time. Exempts small servicers from such requirement. Requires a lease to carry a monthly rent amount equal to the fair market rent for the property, as determined by an independent private appraiser hired by and paid by the servicer.