‘‘(i) SALE
OF
PROPERTY
PROHIB-
ITED.—If the servicer of a mortgage does 
not file a certification with the appropriate 
land records office in the jurisdiction where 
the property securing the mortgage is lo-
cated, stating that the servicer has deter-
mined the eligibility of the mortgagor for 
an affordable loan modification in compli-
ance with this subsection— 
‘‘(I) the mortgagee may not sell 
the property securing the mortgage; 
and 
‘‘(II) no person that purchases 
the property securing the mortgage 
may initiate an action to recover pos-
session of the property. 
‘‘(ii) VIOLATIONS.—A sale of property 
in violation of this subparagraph shall be 
void. 
‘‘(G) INITIAL
APPLICATION
DEFINED.— 
For purposes of this paragraph, the term ‘ini-
tial application’ means a completed Uniform 
Borrower Assistance Form 710 of the Federal 
National Mortgage Association or the Federal 
Home Loan Mortgage Corporation, a Request 
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lotter on DSKBCFDHB2PROD with BILLS
for Modification and Affidavit of the Making 
Home Affordable Program, or other equivalent 
form that sets forth the borrower’s financial, in-
come, and hardship information and Form 
4506–T of the Internal Revenue Service. 
‘‘(6) AFFORDABLE LOAN MODIFICATIONS.— 
‘‘(A) AFFORDABLE
LOAN
MODIFICATION 
DEFINED.—For purposes of this subsection, the 
term ‘affordable loan modification’ means an 
agreement to reduce the amount of scheduled 
regular payments, determined by the borrower’s 
debt-to-income ratio or residual income, and 
subject to such terms and conditions as may be 
set by the Bureau, including any reduction of 
the principal amount of the mortgage note as 
described in paragraph (4), that is reflected in 
a permanent change to the terms of the mort-
gage note under such terms as the Bureau shall 
define. 
‘‘(B) CALCULATION OF TARGET AFFORD-
ABLE
REGULAR
MORTGAGE
PAYMENT.—For 
purposes of this paragraph, the target afford-
able regular mortgage payment shall be an 
amount determined by the borrower’s debt-to- 
income ratio or residual income, and subject to 
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such terms and conditions as may be set by the 
Bureau, subject to such terms and conditions as 
may be set by the Bureau. Such terms shall be 
based on a fully amortizing principal and inter-
est payment over the remainder of the term of 
the mortgage, as modified by any reduction in 
principal. 
‘‘(C) ELIGIBILITY.—A mortgagor shall be 
eligible to participate in an affordable loan 
modification if— 
‘‘(i) such person is a borrower under 
a federally related loan secured by the 
principal residence of the borrower or a 
person eligible to assume such a loan as a 
successor homeowner protected from an ac-
celeration of a mortgage loan under the 
Garn-St Germain Depository Institutions 
Act of 1982, who is unable to make pay-
ments on a federally related mortgage loan 
under such criteria as the Director of the 
Bureau shall define, in consultation with 
the Secretary of Housing and Urban De-
velopment and the Secretary of the Treas-
ury; 
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‘‘(ii) such residence is occupied by the 
mortgagor; and 
‘‘(iii) the loan modification has a posi-
tive net present value (as defined under 
subparagraph (D)(ii)(IV)(bb)). 
‘‘(D) EARNED PRINCIPAL FORGIVENESS.— 
‘‘(i) IN GENERAL.—If, after reducing 
mortgage note principal under earned prin-
cipal forgiveness provided in clause (ii), a 
target affordable regular mortgage pay-
ment has not been achieved, the servicer of 
the mortgage shall comply with the afford-
able loan modification plan waterfall steps 
as set out by the Bureau of interest rate 
reduction, term extension, and principal 
forbearance, as necessary to achieve a tar-
get affordable regular mortgage payment. 
‘‘(ii) EARNED
PRINCIPAL
FORGIVE-
NESS.— 
‘‘(I) PRINCIPAL
REDUCTION.— 
The Bureau shall determine standards 
by which a mortgagor who has re-
ceived an affordable loan modification 
shall remain in good standing in order 
to participate in a reduction in mort-
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gage note principal under this para-
graph. 
‘‘(II) PRINCIPAL REDUCTION RE-
QUIRED.—Except as provided under 
subclause (III), a servicer shall offer a 
borrower an affordable loan modifica-
tion having the maximum amount of 
principal reduction that results in a 
positive net present value calculation. 
For 
purposes 
of 
calculating 
net 
present value, a servicer may use their 
own formula, if it has been approved 
by the Bureau, or may use a default 
formula determined by the Bureau. 
‘‘(III) EXCEPTIONS.— 
‘‘(aa) GREATER
PRINCIPAL 
REDUCTION.—A 
servicer 
may 
offer a greater principal reduc-
tion, if such a reduction is con-
sistent with the terms of any con-
tract with respect to the mort-
gage. 
‘‘(bb) 
LOAN-TO-VALUE 
RATIO.—A servicer is not re-
quired to offer a principal reduc-
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tion that would result in a loan- 
to-value ratio of less than 100 
percent. 
‘‘(IV) 
RULES
OF
CONSTRUC-
TION.— 
‘‘(aa) MAXIMUM AMOUNT OF 
PRINCIPAL REDUCTION.—A prin-
cipal reduction amount may be 
considered the maximum amount 
if it is within $1,000 of the ac-
tual maximum amount. 
‘‘(bb) 
POSITIVE
NET 
PRESENT
VALUE
CALCULA-
TION.—A net present value cal-
culation shall be deemed to be 
‘positive’ for the mortgage inves-
tors if the net present value re-
sult for an affordable loan modi-
fication scenario is greater than 
the net present value result if no 
affordable loan modification is 
made. Net present value shall be 
calculated as the benefit of all in-
vestors in a securitization rather 
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under subclause (II) on each of 
the following dates: 
‘‘(AA) The date that is 
1 year after the date on 
which the affordable loan 
modification begins. 
‘‘(BB) The date that is 
2 years after the date on 
which the affordable loan 
medication begins. 
‘‘(CC) The date that is 
3 years after the date on 
which the affordable loan 
modification begins. 
‘‘(VI) 
CERTAIN
MODIFICA-
TIONS.—With respect to a borrower 
that is not underwater and does not 
qualify for principle reduction, the 
servicer shall offer such borrower an 
affordable loan modification to reach 
the target affordable regular mortgage 
payment amount, if the borrower 
qualifies. 
‘‘(E) TREATMENT
OF
JUNIOR
LIENS.— 
With respect to a borrower, if a primary mort-
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gage loan is modified pursuant to this para-
graph, the servicer of any junior mortgage loan 
shall offer to modify or extinguish the second 
lien according to requirements established by 
the Bureau. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this subsection shall be construed as prohib-
iting a servicer from providing a loan modifica-
tion that does not produce a positive net 
present value (as defined under subparagraph 
(D)(ii)(IV)(bb)). 
‘‘(7) BAR TO FORECLOSURE.—In any judicial 
or nonjudicial foreclosure proceeding, it shall be a 
bar to foreclosure that the servicer of the federally 
related mortgage loan on the property to be fore-
closed violated any provision of this subsection. 
‘‘(o) MORTGAGE SERVICER OMBUDSMAN.— 
‘‘(1) IN GENERAL.—The Director of the Bureau 
shall appoint a Mortgage Servicer Ombudsman (the 
‘Ombudsman’) within the Bureau. 
‘‘(2) DUTIES.—The Ombudsman shall provide 
assistance to servicers and borrowers in complying 
with Federal law with respect to the servicing of 
mortgage loans and offer resolution to borrowers 
who are facing noncompliance. 
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‘‘(3) FOCUS ON LOW-INCOME BORROWERS.—In 
carrying out this subsection, the Ombudsman shall 
focus on providing assistance to low-income bor-
rowers. 
‘‘(4) CONSULTATION.—The Ombudsman shall 
consult with— 
‘‘(A) attorneys general of States in car-
rying out this section; and 
‘‘(B) other offices of the Bureau that en-
gage in dispute resolution. 
‘‘(5) NONDUPLICATION.—The Ombudsman may 
not carry out any activities that would be duplicative 
with activities of other Bureau offices. 
‘‘(p) PENALTIES FOR ROBO-SIGNING.—Any servicer 
who records or files with a land records office or a court 
more than one document with material deficiencies with 
respect to a mortgage loan shall be subject to a fine of 
not more than $7,500 for each such loan.’’. 
(b) DAMAGES AND COSTS.—Section 6(f) of the Real 
Estate Settlement Procedures Act of 1974 (12 U.S.C. 
2605(f)) is amended by striking ‘‘a pattern or practice of’’ 
each place such term appears. 
SEC. 3. PREFERRED LANGUAGE OF CONSUMER. 
Section 129B of the Truth in Lending Act (15 U.S.C. 
1639b) is amended by adding at the end the following: 
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‘‘(g) PREFERRED LANGUAGE OF CONSUMER.— 
‘‘(1) APPLICATION QUESTION.—In any applica-
tion used by a mortgage originator for a residential 
mortgage loan, the originator shall ask the consumer 
to state the consumer’s preferred language. 
‘‘(2) LETTERS OF EXPLANATION FOR ORIGINA-
TION.—A mortgage originator for a residential mort-
gage loan shall— 
‘‘(A) accept letters of explanation for origi-
nation in the consumer’s preferred language; 
and 
‘‘(B) include any such letters in the con-
sumer’s file. 
‘‘(3) SHARING OF INFORMATION.—Any time a 
mortgage originator assigns a residential mortgage 
loan or contracts with a servicer with respect to a 
residential mortgage loan, the originator shall in-
form the assignee or servicer of the consumer’s pre-
ferred language reported under paragraph (1) and 
provide the assignee or servicer with any letters of 
explanation for origination described under para-
graph (2).’’. 
SEC. 4. PROTECTING TENANTS AT FORECLOSURE. 
(a) EFFECT
OF FORECLOSURE
ON PREEXISTING 
TENANCY.— 
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(1) IN
GENERAL.—In the case of any fore-
closure on a federally-related mortgage loan or on 
any dwelling or residential real property after the 
date of enactment of this section, any immediate 
successor in interest in such property pursuant to 
the foreclosure shall assume such interest subject 
to— 
(A) the provision, by such successor in in-
terest of a notice to vacate to any bona fide ten-
ant at least 90 days before the effective date of 
such notice; and 
(B) the rights of any bona fide tenant, as 
of the date of such notice of foreclosure— 
(i) under any bona fide lease entered 
into before the notice of foreclosure to oc-
cupy the premises until the end of the re-
maining term of the lease, except that a 
successor in interest may terminate a lease 
effective on the date of sale of the unit to 
a purchaser who will occupy the unit as a 
primary residence, subject to the receipt by 
the tenant of the 90-day notice under sub-
paragraph (A); or 
(ii) without a lease or with a lease ter-
minable at will under State law, subject to 
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