the debtor’s principal residence may commence a fore-
closure on the debtor’s principal residence.’’. 
SEC. 102. PROHIBITING CLAIMS ARISING FROM VIOLA-
TIONS OF THE TRUTH IN LENDING ACT. 
Section 502(b) of title 11, United States Code, is 
amended— 
(1) in paragraph (8) by striking ‘‘or’’ at the 
end, 
(2) in paragraph (9) by striking the period at 
the end and inserting ‘‘; or’’, and 
(3) by adding at the end the following: 
‘‘(10) the claim for a loan secured by a security 
interest in the debtor’s principal residence is subject 
to a remedy for rescission under the Truth in Lend-
ing Act notwithstanding the prior entry of a fore-
closure judgment, except that nothing in this para-
graph shall be construed to modify, impair, or super-
sede any other right of the debtor.’’. 
SEC. 103. AUTHORITY TO MODIFY CERTAIN MORTGAGES. 
Section 1322 of title 11, United States Code, is 
amended— 
(1) in subsection (b)— 
(A) by redesignating paragraph (11) as 
paragraph (12), 
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(B) in paragraph (10) by striking ‘‘and’’ at 
the end, and 
(C) by inserting after paragraph (10) the 
following: 
‘‘(11) notwithstanding paragraph (2), with re-
spect to a claim for a loan originated before the ef-
fective date of this paragraph and secured by a secu-
rity interest in the debtor’s principal residence that 
is the subject of a notice that a foreclosure may be 
commenced with respect to such loan, modify the 
rights of the holder of such claim (and the rights of 
the holder of any claim secured by a subordinate se-
curity interest in such residence)— 
‘‘(A) by providing for payment of the 
amount of the allowed secured claim as deter-
mined under section 506(a)(1); 
‘‘(B) if any applicable rate of interest is 
adjustable under the terms of such loan by pro-
hibiting, reducing, or delaying adjustments to 
such rate of interest applicable on and after the 
date of filing of the plan; 
‘‘(C) by modifying the terms and condi-
tions of such loan— 
‘‘(i) to extend the repayment period 
for a period that is no longer than the 
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longer of 40 years (reduced by the period 
for which such loan has been outstanding) 
or the remaining term of such loan, begin-
ning on the date of the order for relief 
under this chapter; and 
‘‘(ii) to provide for the payment of in-
terest accruing after the date of the order 
for relief under this chapter at a fixed an-
nual rate equal to the currently applicable 
average prime offer rate as of the date of 
the order for relief under this chapter, cor-
responding to the repayment term deter-
mined under the preceding paragraph, as 
published by the Federal Financial Institu-
tions Examination Council in its table enti-
tled ‘Average Prime Offer Rates—Fixed’, 
plus a reasonable premium for risk; and 
‘‘(D) by providing for payments of such 
modified loan directly to the holder of the claim 
or, at the discretion of the court, through the 
trustee during the term of the plan; and’’, and 
(2) by adding at the end the following: 
‘‘(g) A claim may be reduced under subsection 
(b)(11)(A) only on the condition that if the debtor sells 
the principal residence securing such claim, before com-
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pleting all payments under the plan (or, if applicable, be-
fore receiving a discharge under section 1328(b)) and re-
ceives net proceeds from the sale of such residence, then 
the debtor agrees to pay to such holder not later than 15 
days after receiving such proceeds— 
‘‘(1) if such residence is sold in the 1st year oc-
curring after the effective date of the plan, 80 per-
cent of the amount of the difference between the 
sales price and the amount of such claim as origi-
nally determined under section 1322(b)(11) (plus 
costs of sale and improvements), but not to exceed 
the unpaid amount of the allowed secured claim de-
termined as if such claim had not been reduced 
under such subsection; 
‘‘(2) if such residence is sold in the 2d year oc-
curring after the effective date of the plan, 60 per-
cent of the amount of the difference between the 
sales price and the amount of such claim as origi-
nally determined under section 1322(b)(11) (plus 
costs of sale and improvements), but not to exceed 
the unpaid amount of the allowed secured claim de-
termined as if such claim had not been reduced 
under such subsection; 
‘‘(3) if such residence is sold in the 3d year oc-
curring after the effective date of the plan, 40 per-
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cent of the amount of the difference between the 
sales price and the amount of such claim as origi-
nally determined under section 1322(b)(11) (plus 
costs of sale and improvements), but not to exceed 
the unpaid amount of the allowed secured claim de-
termined as if such claim had not been reduced 
under such subsection; and 
‘‘(4) if such residence is sold in the 4th year oc-
curring after the effective date of the plan, 20 per-
cent of the amount of the difference between the 
sales price and the amount of such claim as origi-
nally determined under section 1322(b)(11) (plus 
costs of sale and improvements), but not to exceed 
the unpaid amount of the allowed secured claim de-
termined as if such claim had not been reduced 
under such subsection. 
‘‘(h) With respect to a claim of the kind described 
in subsection (b)(11), the plan may not contain a modi-
fication under the authority of subsection (b)(11)— 
‘‘(1) in a case commenced under this chapter 
after the expiration of the 15-day period beginning 
on the effective date of this subsection, unless— 
‘‘(A) the debtor certifies that the debtor 
attempted, not less than 15 days before the 
commencement of the case, to contact the hold-
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